0001564590-20-050454.txt : 20201104 0001564590-20-050454.hdr.sgml : 20201104 20201104160443 ACCESSION NUMBER: 0001564590-20-050454 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20200930 FILED AS OF DATE: 20201104 DATE AS OF CHANGE: 20201104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Owl Rock Capital Corp CENTRAL INDEX KEY: 0001655888 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-233186 FILM NUMBER: 201286621 BUSINESS ADDRESS: STREET 1: 399 PARK AVENUE STREET 2: 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: (212) 419-3000 MAIL ADDRESS: STREET 1: 399 PARK AVENUE STREET 2: 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 10-Q 1 owl-10q_20200930.htm 10-Q owl-10q_20200930.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended September 30, 2020

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 814-01190

 

OWL ROCK CAPITAL CORPORATION

(Exact name of Registrant as specified in its Charter)

 

Maryland

 

47-5402460

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

399 Park Avenue, 38th Floor, New York, New York

 

10022

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (212) 419-3000

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

ORCC

The New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES ☒  NO ☐

Indicate by check mark whether the Registrant has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    YES ☐  NO ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Large accelerated filer

☐

 

Accelerated filer

☐

 

 

 

 

 

Non-accelerated filer

☒

 

Small reporting company

☐

 

 

 

 

 

Emerging growth company

☐

 

 

 

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   YES ☐  NO ☒

As of November 4, 2020 the registrant had 388,227,871 shares of common stock, $0.01 par value per share, outstanding.

 

i

 

Table of Contents

 

 

 

 

 

Page

PART I

 

FINANCIAL INFORMATION

 

 

Item 1.

 

Consolidated Financial Statements

 

2

 

 

Consolidated Statements of Assets and Liabilities as of September 30, 2020 (Unaudited) and December 31, 2019

 

2

 

 

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

 

3

 

 

Consolidated Schedules of Investments as of September 30, 2020 (Unaudited) and December 31, 2019

 

4

 

 

Consolidated Statements of Changes in Net Assets for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

 

27

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)

 

28

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

30

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

70

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

114

Item 4.

 

Controls and Procedures

 

115

 

 

 

 

 

PART II

 

OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

116

Item 1A.

 

Risk Factors

 

116

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

123

Item 3.

 

Defaults Upon Senior Securities

 

123

Item 4.

 

Mine Safety Disclosures

 

123

Item 5.

 

Other Information

 

123

Item 6.

 

Exhibits

 

124

Signatures

 

 

 

125

 

 

ii

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about Owl Rock Capital Corporation (the “Company,” “we” or “our”), our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

 

 

•

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

 

•

an economic downturn could disproportionately impact the companies that we intend to target for investment, potentially causing us to experience a decrease in investment opportunities and diminished demand for capital from these companies;

 

•

an economic downturn could also impact availability and pricing of our financing;

 

•

a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;

 

•

the impact of the novel strain of coronavirus known as “COVID-19” and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy;

 

•

interest rate volatility, including the decommissioning of LIBOR, could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;

 

•

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars;

 

•

our future operating results;

 

•

our business prospects and the prospects of our portfolio companies including our and their ability to achieve our respective objectives as a result of the current COVID-19 pandemic;

 

•

our contractual arrangements and relationships with third parties;

 

•

the ability of our portfolio companies to achieve their objectives;

 

•

competition with other entities and our affiliates for investment opportunities;

 

•

the speculative and illiquid nature of our investments;

 

•

the use of borrowed money to finance a portion of our investments as well as any estimates regarding potential use of leverage;

 

•

the adequacy of our financing sources and working capital;

 

•

the loss of key personnel;

 

•

the timing of cash flows, if any, from the operations of our portfolio companies;

 

•

the ability of Owl Rock Capital Advisors LLC (“the Adviser” or “our Adviser”) to locate suitable investments for us and to monitor and administer our investments;

 

•

the ability of the Adviser to attract and retain highly talented professionals;

 

•

our ability to qualify for and maintain our tax treatment as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and as a business development company (“BDC”);

 

•

the effect of legal, tax and regulatory changes; and

 

•

other risks, uncertainties and other factors previously identified in the reports and other documents we have filed with the Securities and Exchange Commission (“SEC”).

 

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this report. Moreover, we assume no duty and do not undertake to update the forward-looking statements. Because we are an investment company, the forward-looking statements and projections contained in this report are excluded from the safe harbor protection provided by Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).


1

PART I. CONSOLIDATED FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

 

Owl Rock Capital Corporation

Consolidated Statements of Assets and Liabilities

(Amounts in thousands, except share and per share amounts)

 

 

 

September 30, 2020

(Unaudited)

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments (amortized cost of $9,929,182 and

     $8,738,520, respectively)

 

$

9,711,690

 

 

$

8,709,700

 

Controlled, affiliated investments (amortized cost of $210,959 and $90,336,

     respectively)

 

 

206,612

 

 

 

89,525

 

Total investments at fair value (amortized cost of $10,140,141 and $8,828,856, respectively)

 

 

9,918,302

 

 

 

8,799,225

 

Cash (restricted cash of $6,824 and $7,587, respectively)

 

 

220,466

 

 

 

317,159

 

Interest receivable

 

 

49,634

 

 

 

57,632

 

Receivable for investments sold

 

 

653

 

 

 

9,250

 

Receivable from a controlled affiliate

 

 

2,267

 

 

 

2,475

 

Prepaid expenses and other assets

 

 

42,939

 

 

 

17,878

 

Total Assets

 

$

10,234,261

 

 

$

9,203,619

 

Liabilities

 

 

 

 

 

 

 

 

Debt (net of unamortized debt issuance costs of $67,017 and $44,302, respectively)

 

$

4,305,643

 

 

$

3,038,232

 

Distribution payable

 

 

151,409

 

 

 

137,245

 

Management fee payable

 

 

18,230

 

 

 

16,256

 

Payables to affiliates

 

 

4,321

 

 

 

5,775

 

Payable for investments purchased

 

 

26,537

 

 

 

—

 

Accrued expenses and other liabilities

 

 

33,773

 

 

 

28,828

 

Total Liabilities

 

 

4,539,913

 

 

 

3,226,336

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

Net Assets

 

 

 

 

 

 

 

 

Common shares $0.01 par value, 500,000,000 shares authorized; 388,227,871 and

     392,129,619 shares issued and outstanding, respectively

 

 

3,882

 

 

 

3,921

 

Additional paid-in-capital

 

 

5,919,509

 

 

 

5,955,610

 

Total distributable earnings (losses)

 

 

(229,043

)

 

 

17,752

 

Total Net Assets

 

 

5,694,348

 

 

 

5,977,283

 

Total Liabilities and Net Assets

 

$

10,234,261

 

 

$

9,203,619

 

Net Asset Value Per Share

 

$

14.67

 

 

$

15.24

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

2

 

Owl Rock Capital Corporation

Consolidated Statements of Operations

(Amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Investment Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income from non-controlled, non-affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

179,597

 

 

$

180,944

 

 

$

561,236

 

 

$

498,747

 

Dividend Income

 

 

2,688

 

 

 

—

 

 

 

3,608

 

 

 

—

 

Other income

 

 

2,507

 

 

 

4,921

 

 

 

10,473

 

 

 

9,447

 

Total investment income from non-controlled, non-affiliated investments

 

 

184,792

 

 

 

185,865

 

 

 

575,317

 

 

 

508,194

 

Investment income from controlled, affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend income

 

 

2,267

 

 

 

2,289

 

 

 

6,716

 

 

 

7,570

 

Total investment income from controlled, affiliated investments

 

 

2,267

 

 

 

2,289

 

 

 

6,716

 

 

 

7,570

 

Total Investment Income

 

 

187,059

 

 

 

188,154

 

 

 

582,033

 

 

 

515,764

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

37,391

 

 

 

29,434

 

 

 

110,533

 

 

 

101,021

 

Management fee

 

 

36,460

 

 

 

26,793

 

 

 

104,852

 

 

 

57,434

 

Performance based incentive fees

 

 

22,302

 

 

 

19,674

 

 

 

70,500

 

 

 

19,674

 

Professional fees

 

 

3,330

 

 

 

2,886

 

 

 

9,782

 

 

 

7,361

 

Directors' fees

 

 

179

 

 

 

169

 

 

 

633

 

 

 

445

 

Other general and administrative

 

 

1,659

 

 

 

2,697

 

 

 

5,564

 

 

 

6,248

 

Total Operating Expenses

 

 

101,321

 

 

 

81,653

 

 

 

301,864

 

 

 

192,183

 

Management and incentive fees waived (Note 3)

 

 

(40,531

)

 

 

(31,707

)

 

 

(122,925

)

 

 

(31,707

)

Net Operating Expenses

 

 

60,790

 

 

 

49,946

 

 

 

178,939

 

 

 

160,476

 

Net Investment Income (Loss) Before Taxes

 

 

126,269

 

 

 

138,208

 

 

 

403,094

 

 

 

355,288

 

Excise tax expense (benefit)

 

 

(1,168

)

 

 

302

 

 

 

239

 

 

 

1,754

 

Net Investment Income (Loss) After Taxes

 

$

127,437

 

 

$

137,906

 

 

$

402,855

 

 

$

353,534

 

Net Realized and Change in Unrealized Gain (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

$

80,619

 

 

$

(20,846

)

 

$

(196,001

)

 

$

(376

)

Controlled affiliated investments

 

 

4,615

 

 

 

284

 

 

 

(3,536

)

 

 

3,346

 

Translation of assets and liabilities in foreign currencies

 

 

3,113

 

 

 

(146

)

 

 

3,237

 

 

 

(168

)

Total Net Change in Unrealized Gain (Loss)

 

 

88,347

 

 

 

(20,708

)

 

 

(196,300

)

 

 

2,802

 

Net realized gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

2,537

 

 

 

1,285

 

 

 

2,885

 

 

 

1,102

 

Foreign currency transactions

 

 

(2,274

)

 

 

169

 

 

 

(2,364

)

 

 

372

 

Total Net Realized Gain (Loss)

 

 

263

 

 

 

1,454

 

 

 

521

 

 

 

1,474

 

Total Net Realized and Change in Unrealized Gain (Loss)

 

 

88,610

 

 

 

(19,254

)

 

 

(195,779

)

 

 

4,276

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

$

216,047

 

 

$

118,652

 

 

$

207,076

 

 

$

357,810

 

Earnings Per Share - Basic and Diluted

 

$

0.56

 

 

$

0.31

 

 

$

0.53

 

 

$

1.18

 

Weighted Average Shares Outstanding - Basic and Diluted

 

 

386,534,213

 

 

 

384,846,445

 

 

 

388,474,850

 

 

 

302,373,486

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

 

 

3

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Non-controlled/non-affiliated portfolio company investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and media

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IRI Holdings, Inc.(4)(5)(25)

 

First lien senior secured loan

 

L + 4.25%

 

 

12/1/2025

 

$

14,080

 

 

$

13,971

 

 

$

13,940

 

 

 

0.2

 

%

PAK Acquisition Corporation (dba Valpak)(4)(7)

 

First lien senior secured loan

 

L + 8.00%

 

 

6/30/2022

 

 

28,475

 

 

 

28,263

 

 

 

28,475

 

 

 

0.5

 

%

Swipe Acquisition Corporation (dba PLI)(4)(7)(25)(30)

 

First lien senior secured loan

 

L + 8.00%

 

 

6/29/2024

 

 

155,640

 

 

 

153,490

 

 

 

96,497

 

 

 

1.7

 

%

Swipe Acquisition Corporation (dba PLI)(4)(5)(18)(20)(25)(30)

 

First lien senior secured delayed draw term loan

 

L + 8.00%

 

 

11/13/2020

 

 

3,114

 

 

 

2,910

 

 

 

1,931

 

 

 

-

 

%

 

 

 

 

 

 

 

 

 

 

 

201,309

 

 

 

198,634

 

 

 

140,843

 

 

 

2.4

 

%

Aerospace and defense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation Solutions Midco, LLC (dba STS Aviation)(4)(7)(25)

 

First lien senior secured loan

 

L + 9.25% (incl. 9.25% PIK)

 

 

1/6/2025

 

 

205,340

 

 

 

202,207

 

 

 

174,540

 

 

 

3.1

 

%

Valence Surface Technologies LLC(4)(8)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

6/30/2025

 

 

98,750

 

 

 

97,529

 

 

 

89,369

 

 

 

1.6

 

%

Valence Surface Technologies LLC(4)(7)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

 

6/28/2021

 

 

23,880

 

 

 

23,558

 

 

 

21,041

 

 

 

0.4

 

%

Valence Surface Technologies LLC(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 5.75%

 

 

6/30/2025

 

 

—

 

 

 

(118

)

 

 

(950

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

327,970

 

 

 

323,176

 

 

 

284,000

 

 

 

5.1

 

%

Automotive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mavis Tire Express Services Corp.(4)(7)(23)(25)

 

First lien senior secured loan

 

L + 3.25%

 

 

3/20/2025

 

 

866

 

 

 

813

 

 

 

820

 

 

 

—

 

%

Mavis Tire Express Services Corp.(4)(7)(25)

 

Second lien senior secured loan

 

L + 7.57%

 

 

3/20/2026

 

 

179,905

 

 

 

177,040

 

 

 

172,447

 

 

 

3.0

 

%

Mavis Tire Express Services Corp.(4)(18)(19)(20)(25)

 

Second lien senior secured delayed draw term loan

 

L + 8.00%

 

 

3/20/2021

 

 

—

 

 

 

-

 

 

 

(402

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

180,771

 

 

 

177,853

 

 

 

172,865

 

 

 

3.0

 

%

Buildings and real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Associations, Inc.(4)(7)(25)

 

First lien senior secured loan

 

L + 7.00% (incl. 3.00% PIK)

 

 

7/30/2024

 

 

265,273

 

 

 

263,117

 

 

 

262,619

 

 

 

4.6

 

%

Associations, Inc.(4)(7)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 7.00% (incl. 3.00% PIK)

 

 

7/30/2021

 

 

58,822

 

 

 

58,362

 

 

 

58,225

 

 

 

1.0

 

%

Associations, Inc.(4)(7)(25)

 

First lien senior secured revolving loan

 

L + 6.00%

 

 

7/30/2024

 

 

11,543

 

 

 

11,451

 

 

 

11,370

 

 

 

0.2

 

%

4

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Reef Global, Inc. (fka Cheese Acquisition, LLC)(4)(8)(25)

 

First lien senior secured loan

 

L + 5.75%  (incl. 1.00% PIK)

 

 

11/28/2024

 

 

134,232

 

 

 

132,829

 

 

 

128,192

 

 

 

2.3

 

%

Imperial Parking Canada(4)(10)(25)

 

First lien senior secured loan

 

C + 6.00%  (incl. 1.00% PIK)

 

 

11/28/2024

 

 

26,483

 

 

 

26,558

 

 

 

25,292

 

 

 

0.4

 

%

Reef Global, Inc. (fka Cheese Acquisition, LLC)(4)(5)(18)(25)

 

First lien senior secured revolving loan

 

L + 4.75%

 

 

11/28/2023

 

 

10,987

 

 

 

10,871

 

 

 

10,251

 

 

 

0.2

 

%

Velocity Commercial Capital, LLC(4)(7)(25)

 

First lien senior secured loan

 

L + 7.50%

 

 

8/29/2024

 

 

63,980

 

 

 

63,327

 

 

 

62,861

 

 

 

1.1

 

%

 

 

 

 

 

 

 

 

 

 

 

571,320

 

 

 

566,515

 

 

 

558,810

 

 

 

9.8

 

%

Business services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access CIG, LLC(4)(7)(25)

 

Second lien senior secured loan

 

L + 7.75%

 

 

2/27/2026

 

 

58,760

 

 

 

58,240

 

 

 

57,291

 

 

 

1.0

 

%

CIBT Global, Inc.(4)(7)(25)

 

First lien senior secured loan

 

L + 3.75%

 

 

6/3/2024

 

 

846

 

 

 

651

 

 

 

617

 

 

 

—

 

%

CIBT Global, Inc.(4)(7)(25)(30)

 

Second lien senior secured loan

 

L + 7.75% (incl. 6.75% PIK)

 

 

6/2/2025

 

 

61,559

 

 

 

58,356

 

 

 

40,013

 

 

 

0.7

 

%

ConnectWise, LLC(4)(7)(25)

 

First lien senior secured loan

 

L + 5.50%

 

 

2/28/2025

 

 

179,106

 

 

 

177,341

 

 

 

178,211

 

 

 

3.1

 

%

ConnectWise, LLC(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 5.50%

 

 

2/28/2025

 

 

—

 

 

 

(188

)

 

 

(100

)

 

 

—

 

%

Entertainment Benefits Group, LLC(4)(7)(25)

 

First lien senior secured loan

 

L + 8.25% (incl. 2.50% PIK)

 

 

9/30/2025

 

 

80,619

 

 

 

79,585

 

 

 

70,945

 

 

 

1.2

 

%

Entertainment Benefits Group, LLC(4)(7)(18)(25)

 

First lien senior secured revolving loan

 

L + 8.25% (incl. 2.50% PIK)

 

 

9/30/2024

 

 

10,146

 

 

 

10,012

 

 

 

8,796

 

 

 

0.2

 

%

Vestcom Parent Holdings, Inc.(4)(5)

 

Second lien senior secured loan

 

L + 8.25%

 

 

12/19/2024

 

 

78,987

 

 

 

78,286

 

 

 

78,592

 

 

 

1.4

 

%

 

 

 

 

 

 

 

 

 

 

 

470,023

 

 

 

462,283

 

 

 

434,365

 

 

 

7.6

 

%

Chemicals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Douglas Products and Packaging Company LLC(4)(7)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

10/19/2022

 

 

98,190

 

 

 

97,724

 

 

 

96,716

 

 

 

1.7

 

%

Douglas Products and Packaging Company LLC(4)(11)(18)(25)

 

First lien senior secured revolving loan

 

P + 4.75%

 

 

10/19/2022

 

 

6,661

 

 

 

6,629

 

 

 

6,525

 

 

 

0.1

 

%

Innovative Water Care Global Corporation(4)(7)(25)

 

First lien senior secured loan

 

L + 5.00%

 

 

2/27/2026

 

 

147,750

 

 

 

139,253

 

 

 

124,110

 

 

 

2.2

 

%

 

 

 

 

 

 

 

 

 

 

 

252,601

 

 

 

243,606

 

 

 

227,351

 

 

 

4.0

 

%

Consumer products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CD&R Smokey Buyer (fka Radio Systems)(23)(25)(28)

 

First lien senior secured note

 

6.75%

 

 

7/15/2025

 

 

103,250

 

 

 

103,304

 

 

 

109,042

 

 

 

1.9

 

%

5

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Feradyne Outdoors, LLC(4)(7)(25)

 

First lien senior secured loan

 

L + 8.25% (incl. 2.00% PIK)

 

 

5/25/2023

 

 

112,890

 

 

 

112,214

 

 

 

101,601

 

 

 

1.8

 

%

WU Holdco, Inc. (dba Weiman Products, LLC)(4)(7)(25)

 

First lien senior secured loan

 

L + 5.25%

 

 

3/26/2026

 

 

158,897

 

 

 

156,272

 

 

 

157,307

 

 

 

2.8

 

%

WU Holdco, Inc. (dba Weiman Products, LLC)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 5.25%

 

 

3/26/2025

 

 

—

 

 

 

(208

)

 

 

(139

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

375,037

 

 

 

371,582

 

 

 

367,811

 

 

 

6.5

 

%

Containers and packaging

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pregis Topco LLC(4)(5)(23)(25)

 

First lien senior secured loan

 

L + 3.75%

 

 

7/31/2026

 

 

866

 

 

 

819

 

 

 

852

 

 

 

-

 

%

Pregis Topco LLC(4)(5)(25)

 

Second lien senior secured loan

 

L + 7.75%

 

 

7/30/2027

 

 

186,333

 

 

 

183,000

 

 

 

184,470

 

 

 

3.2

 

%

 

 

 

 

 

 

 

 

 

 

 

187,199

 

 

 

183,819

 

 

 

185,322

 

 

 

3.2

 

%

Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ABB/Con-cise Optical Group LLC(4)(5)

 

First lien senior secured loan

 

L + 5.00%

 

 

6/15/2023

 

 

75,818

 

 

 

75,196

 

 

 

68,236

 

 

 

1.2

 

%

ABB/Con-cise Optical Group LLC(4)(5)

 

Second lien senior secured loan

 

L + 9.00%

 

 

6/17/2024

 

 

25,000

 

 

 

24,579

 

 

 

21,500

 

 

 

0.4

 

%

Aramsco, Inc.(4)(5)(25)

 

First lien senior secured loan

 

L + 5.25%

 

 

8/28/2024

 

 

56,622

 

 

 

55,647

 

 

 

55,489

 

 

 

1.0

 

%

Aramsco, Inc.(4)(5)(18)(25)

 

First lien senior secured revolving loan

 

L + 5.25%

 

 

8/28/2024

 

 

4,468

 

 

 

4,332

 

 

 

4,301

 

 

 

0.1

 

%

Endries Acquisition, Inc.(4)(9)(25)

 

First lien senior secured loan

 

L + 6.25%

 

 

12/10/2025

 

 

177,300

 

 

 

174,845

 

 

 

173,311

 

 

 

3.0

 

%

Endries Acquisition, Inc.(4)(9)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 6.25%

 

 

12/10/2020

 

 

25,433

 

 

 

24,624

 

 

 

24,030

 

 

 

0.4

 

%

Endries Acquisition, Inc.(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 6.25%

 

 

12/10/2024

 

 

—

 

 

 

(330

)

 

 

(608

)

 

 

—

 

%

Individual Foodservice Holdings, LLC(4)(8)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

11/22/2025

 

 

120,470

 

 

 

118,149

 

 

 

115,651

 

 

 

2.0

 

%

Individual Foodservice Holdings, LLC(4)(8)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

 

5/22/2021

 

 

12,619

 

 

 

11,952

 

 

 

11,193

 

 

 

0.2

 

%

Individual Foodservice Holdings, LLC(4)(5)(18)(25)

 

First lien senior secured revolving loan

 

L + 5.75%

 

 

11/22/2024

 

 

7,140

 

 

 

6,752

 

 

 

6,283

 

 

 

0.1

 

%

JM Swank, LLC(4)(7)

 

First lien senior secured loan

 

L + 7.50%

 

 

7/25/2022

 

 

115,265

 

 

 

114,349

 

 

 

114,688

 

 

 

2.0

 

%

Offen, Inc.(4)(5)(25)

 

First lien senior secured loan

 

L + 5.00%

 

 

6/22/2026

 

 

14,507

 

 

 

14,383

 

 

 

13,999

 

 

 

0.2

 

%

Offen, Inc.(4)(18)(19)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 5.00%

 

 

12/21/2020

 

 

—

 

 

 

(44

)

 

 

(186

)

 

 

—

 

%

QC Supply, LLC(4)(5)

 

First lien senior secured loan

 

L + 6.50% (incl. 0.50% PIK)

 

 

12/29/2022

 

 

34,560

 

 

 

34,201

 

 

 

31,104

 

 

 

0.5

 

%

6

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

QC Supply, LLC(4)(5)(18)

 

First lien senior secured revolving loan

 

L + 6.50% (incl. 0.50% PIK)

 

 

12/29/2021

 

 

4,366

 

 

 

4,335

 

 

 

3,869

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

 

 

673,568

 

 

 

662,970

 

 

 

642,860

 

 

 

11.2

 

%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Instructure, Inc.(4)(7)(25)

 

First lien senior secured loan

 

L + 7.00%

 

 

3/24/2026

 

 

77,799

 

 

 

76,723

 

 

 

77,799

 

 

 

1.4

 

%

Instructure, Inc.(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 7.00%

 

 

3/24/2026

 

 

-

 

 

 

(63

)

 

 

-

 

 

 

-

 

%

Learning Care Group (US) No. 2 Inc.(4)(8)(25)

 

Second lien senior secured loan

 

L + 7.50%

 

 

3/13/2026

 

 

26,967

 

 

 

26,592

 

 

 

22,787

 

 

 

0.4

 

%

Severin Acquisition, LLC (dba PowerSchool)(4)(5)(25)

 

Second lien senior secured loan

 

L + 6.75%

 

 

8/3/2026

 

 

112,000

 

 

 

111,232

 

 

 

108,640

 

 

 

1.9

 

%

TSB Purchaser, Inc. (dba Teaching Strategies, Inc.)(4)(7)(25)

 

First lien senior secured loan

 

L + 6.00%

 

 

5/14/2024

 

 

61,740

 

 

 

60,727

 

 

 

61,122

 

 

 

1.1

 

%

TSB Purchaser, Inc. (dba Teaching Strategies, Inc.)(4)(7)(18)(25)

 

First lien senior secured revolving loan

 

L + 6.00%

 

 

5/14/2024

 

 

1,229

 

 

 

1,165

 

 

 

1,187

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

279,735

 

 

 

276,376

 

 

 

271,535

 

 

 

4.8

 

%

Energy equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liberty Oilfield Services LLC(4)(5)(21)(25)

 

First lien senior secured loan

 

L + 7.63%

 

 

9/19/2022

 

 

13,814

 

 

 

13,703

 

 

 

13,573

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

 

 

13,814

 

 

 

13,703

 

 

 

13,573

 

 

 

0.2

 

%

Financial services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blackhawk Network Holdings, Inc.(4)(5)(25)

 

Second lien senior secured loan

 

L + 7.00%

 

 

6/15/2026

 

 

106,400

 

 

 

105,617

 

 

 

98,686

 

 

 

1.7

 

%

Hg Genesis 8 Sumoco Limited(4)(13)(21)(25)

 

Unsecured facility

 

G + 7.50% (incl. 7.50% PIK)

 

 

8/28/2025

 

 

41,463

 

 

 

42,121

 

 

 

40,841

 

 

 

0.7

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(4)(5)(25)

 

First lien senior secured loan

 

L + 5.50%

 

 

9/6/2022

 

 

27,977

 

 

 

27,673

 

 

 

27,557

 

 

 

0.5

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 5.50%

 

 

9/6/2022

 

 

-

 

 

 

(6

)

 

 

(10

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

175,840

 

 

 

175,405

 

 

 

167,074

 

 

 

2.9

 

%

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Caiman Merger Sub LLC (dba City Brewing)(4)(5)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

11/3/2025

 

 

175,790

 

 

 

174,257

 

 

 

175,790

 

 

 

3.1

 

%

Caiman Merger Sub LLC (dba City Brewing)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 5.75%

 

 

11/1/2024

 

 

—

 

 

 

(105

)

 

 

-

 

 

 

—

 

%

CM7 Restaurant Holdings, LLC(4)(5)(25)

 

First lien senior secured loan

 

L + 8.75%

 

 

5/22/2023

 

 

38,410

 

 

 

38,016

 

 

 

36,489

 

 

 

0.6

 

%

H-Food Holdings, LLC(4)(5)(23)(25)

 

First lien senior secured loan

 

L + 4.00%

 

 

5/23/2025

 

 

14,840

 

 

 

14,728

 

 

 

14,460

 

 

 

0.3

 

%

H-Food Holdings, LLC(4)(5)(25)

 

Second lien senior secured loan

 

L + 7.00%

 

 

3/2/2026

 

 

121,800

 

 

 

119,450

 

 

 

118,146

 

 

 

2.1

 

%

Hometown Food Company(4)(5)(25)

 

First lien senior secured loan

 

L + 5.00%

 

 

8/31/2023

 

 

21,388

 

 

 

21,124

 

 

 

21,388

 

 

 

0.4

 

%

7

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Hometown Food Company(4)(6)(18)(25)

 

First lien senior secured revolving loan

 

L + 5.00%

 

 

8/31/2023

 

 

1,129

 

 

 

1,080

 

 

 

1,129

 

 

 

—

 

%

Manna Development Group, LLC(4)(5)(25)

 

First lien senior secured loan

 

L + 6.75%

 

 

10/24/2022

 

 

53,571

 

 

 

53,183

 

 

 

49,286

 

 

 

0.9

 

%

Manna Development Group, LLC(4)(5)(25)

 

First lien senior secured revolving loan

 

L + 6.75%

 

 

10/24/2022

 

 

3,223

 

 

 

3,164

 

 

 

2,965

 

 

 

0.1

 

%

Nellson Nutraceutical, LLC(4)(7)(25)

 

First lien senior secured loan

 

L + 5.25%

 

 

12/23/2023

 

 

27,644

 

 

 

26,537

 

 

 

26,537

 

 

 

0.5

 

%

Nutraceutical International Corporation(4)(5)(25)

 

First lien senior secured loan

 

L + 7.00%

 

 

9/30/2026

 

 

188,740

 

 

 

185,909

 

 

 

185,909

 

 

 

3.3

 

%

Nutraceutical International Corporation(4)(18)(19)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 7.00%

 

 

12/30/2021

 

 

—

 

 

 

(428

)

 

 

(428

)

 

 

—

 

%

Nutraceutical International Corporation(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 7.00%

 

 

9/30/2025

 

 

—

 

 

 

(204

)

 

 

(204

)

 

 

—

 

%

Recipe Acquisition Corp. (dba Roland Corporation)(4)(7)

 

Second lien senior secured loan

 

L + 9.00%

 

 

12/1/2022

 

 

32,000

 

 

 

31,744

 

 

 

27,200

 

 

 

0.5

 

%

Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)(4)(5)(25)

 

First lien senior secured loan

 

L + 4.50%

 

 

7/30/2025

 

 

44,427

 

 

 

43,788

 

 

 

42,427

 

 

 

0.7

 

%

Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)(4)(5)(18)(25)

 

First lien senior secured revolving loan

 

L + 4.50%

 

 

7/30/2023

 

 

4,320

 

 

 

4,206

 

 

 

3,915

 

 

 

0.1

 

%

Shearer's Foods, LLC(4)(7)(25)

 

Second lien senior secured loan

 

L + 7.75%

 

 

9/22/2028

 

 

120,000

 

 

 

118,802

 

 

 

118,800

 

 

 

2.1

 

%

Tall Tree Foods, Inc.(4)(5)

 

First lien senior secured loan

 

L + 7.25%

 

 

8/12/2022

 

 

51,100

 

 

 

50,850

 

 

 

49,695

 

 

 

0.9

 

%

Ultimate Baked Goods Midco, LLC(4)(5)(25)

 

First lien senior secured loan

 

L + 4.00%

 

 

8/11/2025

 

 

26,528

 

 

 

26,090

 

 

 

25,997

 

 

 

0.5

 

%

Ultimate Baked Goods Midco, LLC(4)(5)(18)(25)

 

First lien senior secured revolving loan

 

L + 4.00%

 

 

8/9/2023

 

 

381

 

 

 

316

 

 

 

280

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

925,291

 

 

 

912,507

 

 

 

899,781

 

 

 

16.1

 

%

Healthcare providers and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Confluent Health, LLC.(4)(5)(25)

 

First lien senior secured loan

 

L + 5.00%

 

 

6/24/2026

 

 

17,775

 

 

 

17,628

 

 

 

17,153

 

 

 

0.3

 

%

Geodigm Corporation (dba National Dentex)(4)(11)(14)(25)

 

First lien senior secured loan

 

P + 5.87%

 

 

12/1/2021

 

 

143,470

 

 

 

133,887

 

 

 

142,036

 

 

 

2.5

 

%

GI CCLS Acquisition LLC (fka GI Chill Acquisition LLC)(4)(7)(25)

 

Second lien senior secured loan

 

L + 7.50%

 

 

8/6/2026

 

 

135,400

 

 

 

134,320

 

 

 

133,031

 

 

 

2.3

 

%

KS Management Services, L.L.C.(4)(5)(25)

 

First lien senior secured loan

 

L + 4.25%

 

 

1/9/2026

 

 

124,062

 

 

 

122,675

 

 

 

124,062

 

 

 

2.2

 

%

Nelipak Holding Company(4)(8)(25)

 

First lien senior secured loan

 

L + 4.25%

 

 

7/2/2026

 

 

47,641

 

 

 

46,830

 

 

 

46,212

 

 

 

0.8

 

%

Nelipak Holding Company(4)(8)(18)(25)

 

First lien senior secured revolving loan

 

L + 4.25%

 

 

7/2/2024

 

 

4,422

 

 

 

4,311

 

 

 

4,201

 

 

 

0.1

 

%

Nelipak Holding Company(4)(12)(18)(25)

 

First lien senior secured revolving loan

 

E + 4.50%

 

 

7/2/2024

 

 

3,143

 

 

 

2,792

 

 

 

2,910

 

 

 

0.1

 

%

Nelipak Holding Company(4)(8)(25)

 

Second lien senior secured loan

 

L + 8.25%

 

 

7/2/2027

 

 

67,006

 

 

 

66,111

 

 

 

64,996

 

 

 

1.1

 

%

Nelipak Holding Company(4)(12)(25)

 

Second lien senior secured loan

 

E + 8.50%

 

 

7/2/2027

 

 

70,477

 

 

 

66,359

 

 

 

67,305

 

 

 

1.2

 

%

8

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Premier Imaging, LLC (dba LucidHealth)(4)(5)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

1/2/2025

 

 

33,405

 

 

 

32,909

 

 

 

32,570

 

 

 

0.6

 

%

TC Holdings, LLC (dba TrialCard)(4)(7)(25)

 

First lien senior secured loan

 

L + 4.50%

 

 

11/14/2023

 

 

83,537

 

 

 

82,565

 

 

 

83,537

 

 

 

1.5

 

%

TC Holdings, LLC (dba TrialCard)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 4.50%

 

 

11/14/2022

 

 

—

 

 

 

(66

)

 

 

—

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

730,338

 

 

 

710,321

 

 

 

718,013

 

 

 

12.7

 

%

Healthcare technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11849573 Canada Inc. (dba Intelerad Medical Systems Incorporated)(4)(8)(21)(25)

 

First lien senior secured loan

 

L + 6.25%

 

 

2/20/2026

 

 

56,420

 

 

 

55,773

 

 

 

55,291

 

 

 

1.0

 

%

11849573 Canada Inc. (dba Intelerad Medical Systems Incorporated)(4)(7)(18)(20)(21)(25)

 

First lien senior secured delayed draw term loan

 

L + 6.25%

 

 

2/21/2021

 

 

930

 

 

 

905

 

 

 

885

 

 

 

—

 

%

11849573 Canada Inc. (dba Intelerad Medical Systems Incorporated)(4)(7)(18)(21)(25)

 

First lien senior secured revolving loan

 

L + 6.25%

 

 

2/20/2026

 

 

1,126

 

 

 

1,063

 

 

 

1,013

 

 

 

—

 

%

Bracket Intermediate Holding Corp.(4)(7)(25)

 

First lien senior secured loan

 

L + 4.25%

 

 

9/5/2025

 

 

522

 

 

 

484

 

 

 

512

 

 

 

—

 

%

Bracket Intermediate Holding Corp.(4)(7)(25)

 

Second lien senior secured loan

 

L + 8.13%

 

 

9/7/2026

 

 

26,250

 

 

 

25,824

 

 

 

25,528

 

 

 

0.4

 

%

Definitive Healthcare Holdings, LLC(4)(5)(25)

 

First lien senior secured loan

 

L + 5.50%

 

 

7/16/2026

 

 

198,222

 

 

 

196,556

 

 

 

194,753

 

 

 

3.4

 

%

Definitive Healthcare Holdings, LLC(4)(18)(19)(25)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

 

7/16/2026

 

 

—

 

 

 

(180

)

 

 

(217

)

 

 

—

 

%

Definitive Healthcare Holdings, LLC(4)(7)(25)

 

First lien senior secured revolving loan

 

L + 5.50%

 

 

7/16/2024

 

 

10,870

 

 

 

10,787

 

 

 

10,679

 

 

 

0.2

 

%

Interoperability Bidco, Inc.(4)(7)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

6/25/2026

 

 

76,235

 

 

 

75,422

 

 

 

73,376

 

 

 

1.3

 

%

Interoperability Bidco, Inc.(4)(18)(19)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

 

6/25/2021

 

 

—

 

 

 

(8

)

 

 

(210

)

 

 

—

 

%

Interoperability Bidco, Inc.(4)(8)(25)

 

First lien senior secured revolving loan

 

L + 5.75%

 

 

6/25/2024

 

 

4,000

 

 

 

3,963

 

 

 

3,850

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

 

 

374,575

 

 

 

370,589

 

 

 

365,460

 

 

 

6.4

 

%

Household products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hayward Industries, Inc.(4)(5)(23)(25)

 

First lien senior secured loan

 

L + 3.50%

 

 

8/5/2024

 

 

918

 

 

 

898

 

 

 

892

 

 

 

—

 

%

Hayward Industries, Inc.(4)(5)(25)

 

Second lien senior secured loan

 

L + 8.25%

 

 

8/4/2025

 

 

52,149

 

 

 

51,427

 

 

 

51,106

 

 

 

0.9

 

%

HGH Purchaser, Inc. (dba Horizon Services)(4)(7)(25)

 

First lien senior secured loan

 

L + 6.75%

 

 

11/3/2025

 

 

77,177

 

 

 

76,165

 

 

 

74,090

 

 

 

1.3

 

%

HGH Purchaser, Inc. (dba Horizon Services)(4)(7)(18)(25)

 

First lien senior secured revolving loan

 

L + 6.75%

 

 

11/3/2025

 

 

1,782

 

 

 

1,658

 

 

 

1,393

 

 

 

—

 

%

HGH Purchaser, Inc. (dba Horizon Services)(4)(7)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 6.75%

 

 

11/1/2021

 

 

14,710

 

 

 

14,312

 

 

 

13,635

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

 

 

146,736

 

 

 

144,460

 

 

 

141,116

 

 

 

2.4

 

%

Human resource support services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Ultimate Software Group, Inc.(4)(7)(25)

 

Second lien senior secured loan

 

L + 6.75%

 

 

5/3/2027

 

 

1,592

 

 

 

1,577

 

 

 

1,608

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

1,592

 

 

 

1,577

 

 

 

1,608

 

 

 

-

 

%

9

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Infrastructure and environmental services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FR Arsenal Holdings II Corp. (dba Applied-Cleveland Holdings, Inc.)(4)(8)

 

First lien senior secured loan

 

L + 7.25%

 

 

9/8/2022

 

 

144,696

 

 

 

143,382

 

 

 

137,461

 

 

 

2.4

 

%

LineStar Integrity Services LLC(4)(8)(25)

 

First lien senior secured loan

 

L + 7.25%

 

 

2/12/2024

 

 

89,079

 

 

 

88,022

 

 

 

78,389

 

 

 

1.4

 

%

 

 

 

 

 

 

 

 

 

 

 

233,775

 

 

 

231,404

 

 

 

215,850

 

 

 

3.8

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ardonagh Midco 2 PLC(21)(25)(28)

 

Unsecured notes

 

11.50%

 

 

1/15/2027

 

 

9,300

 

 

 

9,211

 

 

 

9,370

 

 

 

0.2

 

%

Ardonagh Midco 3 PLC(4)(13)(21)(25)

 

First lien senior secured loan

 

G + 7.50%

 

 

7/14/2026

 

 

90,595

 

 

 

83,803

 

 

 

88,784

 

 

 

1.6

 

%

Ardonagh Midco 3 PLC(4)(12)(21)(25)

 

First lien senior secured loan

 

E + 7.50%

 

 

7/14/2026

 

 

10,469

 

 

 

9,710

 

 

 

10,260

 

 

 

0.2

 

%

Ardonagh Midco 3 PLC(4)(13)(18)(19)(20)(21)(25)

 

First lien senior secured delayed draw term loan

 

G + 7.50%

 

 

6/26/2022

 

 

—

 

 

 

(538

)

 

 

(384

)

 

 

—

 

%

Asurion, LLC(4)(5)(23)(25)

 

Second lien senior secured loan

 

L + 6.50%

 

 

8/4/2025

 

 

57,450

 

 

 

57,306

 

 

 

57,462

 

 

 

1.0

 

%

Integrity Marketing Acquisition, LLC(4)(8)(25)

 

First lien senior secured loan

 

L + 5.50%

 

 

8/27/2025

 

 

221,667

 

 

 

218,431

 

 

 

217,235

 

 

 

3.8

 

%

Integrity Marketing Acquisition, LLC(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 5.50%

 

 

8/27/2025

 

 

—

 

 

 

(182

)

 

 

(297

)

 

 

—

 

%

KWOR Acquisition, Inc. (dba Worley Claims Services)(4)(5)(25)

 

First lien senior secured loan

 

L + 4.00%

 

 

6/3/2026

 

 

20,364

 

 

 

19,809

 

 

 

19,702

 

 

 

0.3

 

%

KWOR Acquisition, Inc. (dba Worley Claims Services)(4)(18)(19)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 4.00%

 

 

6/3/2021

 

 

—

 

 

 

(54

)

 

 

(67

)

 

 

—

 

%

KWOR Acquisition, Inc. (dba Worley Claims Services)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 4.00%

 

 

6/3/2024

 

 

—

 

 

 

(86

)

 

 

(169

)

 

 

—

 

%

KWOR Acquisition, Inc. (dba Worley Claims Services)(4)(5)(25)

 

Second lien senior secured loan

 

L + 7.75%

 

 

12/3/2026

 

 

49,600

 

 

 

48,955

 

 

 

48,360

 

 

 

0.8

 

%

Norvax, LLC (dba GoHealth)(4)(7)(25)

 

First lien senior secured loan

 

L + 6.50%

 

 

9/15/2025

 

 

199,860

 

 

 

195,399

 

 

 

199,860

 

 

 

3.5

 

%

Norvax, LLC (dba GoHealth)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 6.50%

 

 

9/13/2024

 

 

—

 

 

 

(145

)

 

 

—

 

 

 

—

 

%

Peter C. Foy & Associated Insurance Services, LLC(4)(8)(25)

 

First lien senior secured loan

 

L + 6.25%

 

 

3/31/2026

 

 

83,445

 

 

 

82,379

 

 

 

83,238

 

 

 

1.5

 

%

Peter C. Foy & Associated Insurance Services, LLC(4)(8)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 6.25%

 

 

9/30/2021

 

 

343

 

 

 

129

 

 

 

308

 

 

 

—

 

%

Peter C. Foy & Associated Insurance Services, LLC(4)(8)(18)(25)

 

First lien senior secured revolving loan

 

L + 6.25%

 

 

3/31/2026

 

 

3,389

 

 

 

3,266

 

 

 

3,362

 

 

 

0.1

 

%

RSC Acquisition, Inc (dba Risk Strategies)(4)(5)(25)

 

First lien senior secured loan

 

L + 5.50%

 

 

10/30/2026

 

 

51,529

 

 

 

50,733

 

 

 

49,983

 

 

 

0.9

 

%

RSC Acquisition, Inc (dba Risk Strategies)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 5.50%

 

 

10/30/2026

 

 

—

 

 

 

(30

)

 

 

(51

)

 

 

—

 

%

RSC Acquisition, Inc (dba Risk Strategies)(4)(18)(19)(25)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

 

10/30/2026

 

 

—

 

 

 

(40

)

 

 

(68

)

 

 

—

 

%

THG Acquisition, LLC (dba Hilb)(4)(7)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

12/2/2026

 

 

59,617

 

 

 

58,266

 

 

 

57,828

 

 

 

1.0

 

%

10

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

THG Acquisition, LLC (dba Hilb)(4)(7)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

 

12/2/2021

 

 

4,251

 

 

 

4,017

 

 

 

3,904

 

 

 

0.1

 

%

THG Acquisition, LLC (dba Hilb)(4)(7)(18)(25)

 

First lien senior secured revolving loan

 

L + 5.75%

 

 

12/2/2025

 

 

3,817

 

 

 

3,696

 

 

 

3,649

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

 

 

865,696

 

 

 

844,035

 

 

 

852,269

 

 

 

15.1

 

%

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accela, Inc.(4)(5)

 

First lien senior secured loan

 

L + 4.91%  (incl. 1.66% PIK)

 

 

9/28/2023

 

 

21,996

 

 

 

21,758

 

 

 

21,996

 

 

 

0.4

 

%

Accela, Inc.(4)(18)(19)

 

First lien senior secured revolving loan

 

L + 7.00%

 

 

9/28/2023

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

%

Apptio, Inc.(4)(8)(25)

 

First lien senior secured loan

 

L + 7.25%

 

 

1/10/2025

 

 

50,916

 

 

 

49,927

 

 

 

50,534

 

 

 

0.9

 

%

Apptio, Inc.(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 7.25%

 

 

1/10/2025

 

 

—

 

 

 

(40

)

 

 

(21

)

 

 

—

 

%

3ES Innovation Inc. (dba Aucerna)(4)(7)(21)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

5/13/2025

 

 

39,829

 

 

 

39,427

 

 

 

38,336

 

 

 

0.7

 

%

3ES Innovation Inc. (dba Aucerna)(4)(18)(19)(21)(25)

 

First lien senior secured revolving loan

 

L + 5.75%

 

 

5/13/2025

 

 

—

 

 

 

(37

)

 

 

(146

)

 

 

—

 

%

Forescout Technologies, Inc.(4)(7)(25)

 

First lien senior secured loan

 

L + 9.50%  (9.50% PIK)

 

 

8/17/2026

 

 

48,108

 

 

 

47,283

 

 

 

47,266

 

 

 

0.8

 

%

Forescout Technologies, Inc.(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 8.50%

 

 

8/18/2025

 

 

—

 

 

 

(91

)

 

 

(94

)

 

 

—

 

%

Genesis Acquisition Co. (dba Procare Software)(4)(7)(25)

 

First lien senior secured loan

 

L + 4.00%

 

 

7/31/2024

 

 

18,362

 

 

 

18,116

 

 

 

17,628

 

 

 

0.3

 

%

Genesis Acquisition Co. (dba Procare Software)(4)(7)(25)

 

First lien senior secured revolving loan

 

L + 4.00%

 

 

7/31/2024

 

 

2,637

 

 

 

2,603

 

 

 

2,532

 

 

 

—

 

%

Granicus, Inc.(4)(8)(25)

 

First lien senior secured loan

 

L + 7.00%

 

 

8/21/2026

 

 

38,486

 

 

 

37,538

 

 

 

37,524

 

 

 

0.7

 

%

Granicus, Inc.(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 7.00%

 

 

8/21/2026

 

 

—

 

 

 

(65

)

 

 

(66

)

 

 

—

 

%

H&F Opportunities LUX III S.À R.L (dba Checkmarx)(4)(7)(21)(25)

 

First lien senior secured loan

 

L + 7.75%

 

 

4/16/2026

 

 

42,250

 

 

 

41,057

 

 

 

41,933

 

 

 

0.7

 

%

H&F Opportunities LUX III S.À R.L (dba Checkmarx)(4)(18)(19)(21)(25)

 

First lien senior secured revolving loan

 

L + 7.75%

 

 

4/16/2026

 

 

—

 

 

 

(450

)

 

 

(122

)

 

 

—

 

%

Hyland Software, Inc.(4)(5)(25)

 

Second lien senior secured loan

 

L + 7.00%

 

 

7/7/2025

 

 

28,074

 

 

 

27,718

 

 

 

27,874

 

 

 

0.5

 

%

IQN Holding Corp. (dba Beeline)(4)(7)(25)

 

First lien senior secured loan

 

L + 5.50%

 

 

8/20/2024

 

 

190,442

 

 

 

188,453

 

 

 

188,061

 

 

 

3.3

 

%

IQN Holding Corp. (dba Beeline)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 5.50%

 

 

8/21/2023

 

 

—

 

 

 

(196

)

 

 

(283

)

 

 

—

 

%

11

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Lightning Midco, LLC (dba Vector Solutions)(4)(7)(25)

 

First lien senior secured loan

 

L + 5.50%

 

 

11/21/2025

 

 

139,258

 

 

 

138,188

 

 

 

137,866

 

 

 

2.4

 

%

Lightning Midco, LLC (dba Vector Solutions)(4)(7)(18)(25)

 

First lien senior secured revolving loan

 

L + 5.50%

 

 

11/21/2023

 

 

12,427

 

 

 

12,343

 

 

 

12,293

 

 

 

0.2

 

%

Litera Bidco LLC(4)(5)(25)

 

First lien senior secured loan

 

L + 5.25%

 

 

5/29/2026

 

 

66,280

 

 

 

65,468

 

 

 

65,615

 

 

 

1.2

 

%

Litera Bidco LLC(4)(5)(18)(25)

 

First lien senior secured revolving loan

 

L + 5.25%

 

 

5/30/2025

 

 

1,434

 

 

 

1,376

 

 

 

1,377

 

 

 

—

 

%

MINDBODY, Inc.(4)(8)(25)

 

First lien senior secured loan

 

L + 8.50%  (incl. 1.50% PIK)

 

 

2/14/2025

 

 

57,967

 

 

 

57,520

 

 

 

52,750

 

 

 

0.9

 

%

MINDBODY, Inc.(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 8.00%

 

 

2/14/2025

 

 

—

 

 

 

(44

)

 

 

(546

)

 

 

—

 

%

SURF HOLDINGS, LLC (dba Sophos Group plc)(4)(7)(21)(25)

 

Second lien senior secured loan

 

L + 8.00%

 

 

3/6/2028

 

 

40,385

 

 

 

39,435

 

 

 

39,577

 

 

 

0.7

 

%

Trader Interactive, LLC (fka Dominion Web Solutions, LLC)(4)(7)(25)

 

First lien senior secured loan

 

L + 6.50%

 

 

6/17/2024

 

 

132,909

 

 

 

131,779

 

 

 

130,915

 

 

 

2.3

 

%

Trader Interactive, LLC (fka Dominion Web Solutions, LLC)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 6.50%

 

 

6/15/2023

 

 

—

 

 

 

(44

)

 

 

(96

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

931,760

 

 

 

919,022

 

 

 

912,703

 

 

 

16.0

 

%

Leisure and entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Troon Golf, L.L.C.(4)(7)(16)(25)

 

First lien senior secured term loan A and B

 

L + 5.50%

(TLA: L + 3.5%; TLB: L + 5.98%)

 

 

3/29/2025

 

 

175,820

 

 

 

174,132

 

 

 

174,501

 

 

 

3.1

 

%

Troon Golf, L.L.C.(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 5.50%

 

 

3/29/2025

 

 

—

 

 

 

(108

)

 

 

(108

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

175,820

 

 

 

174,024

 

 

 

174,393

 

 

 

3.1

 

%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ideal Tridon Holdings, Inc.(4)(7)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

7/31/2024

 

 

55,225

 

 

 

54,609

 

 

 

53,707

 

 

 

0.9

 

%

Ideal Tridon Holdings, Inc.(4)(7)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

 

12/25/2020

 

 

520

 

 

 

509

 

 

 

499

 

 

 

—

 

%

Ideal Tridon Holdings, Inc.(4)(5)(18)(25)

 

First lien senior secured revolving loan

 

L + 5.75%

 

 

7/31/2023

 

 

2,291

 

 

 

2,243

 

 

 

2,134

 

 

 

—

 

%

MHE Intermediate Holdings, LLC(dba Material Handling Services)(4)(7)(25)

 

First lien senior secured loan

 

L + 5.00%

 

 

3/8/2024

 

 

23,778

 

 

 

23,610

 

 

 

22,827

 

 

 

0.4

 

%

PHM Netherlands Midco B.V. (dba Loparex)(4)(7)(25)

 

First lien senior secured loan

 

L + 4.50%

 

 

8/3/2026

 

 

796

 

 

 

737

 

 

 

766

 

 

 

-

 

%

PHM Netherlands Midco B.V. (dba Loparex)(4)(7)(25)

 

Second lien senior secured loan

 

L + 8.75%

 

 

8/2/2027

 

 

112,000

 

 

 

104,942

 

 

 

104,720

 

 

 

1.8

 

%

Professional Plumbing Group, Inc.(4)(7)(25)

 

First lien senior secured loan

 

L + 6.75%

 

 

4/16/2024

 

 

51,814

 

 

 

51,309

 

 

 

49,742

 

 

 

0.9

 

%

12

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

  Professional Plumbing Group, Inc.(4)(7)(18)(25)

 

First lien senior secured revolving loan

 

L + 6.75%

 

 

4/16/2023

 

 

11,071

 

 

 

11,004

 

 

 

10,575

 

 

 

0.2

 

%

Safety Products/JHC Acquisition Corp.(dba Justrite Safety Group)(4)(5)(25)

 

First lien senior secured loan

 

L + 4.50%

 

 

6/28/2026

 

 

13,378

 

 

 

13,266

 

 

 

12,140

 

 

 

0.2

 

%

Safety Products/JHC Acquisition Corp.(dba Justrite Safety Group)(4)(5)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 4.50%

 

 

6/28/2021

 

 

723

 

 

 

709

 

 

 

571

 

 

 

—

 

%

Sonny's Enterprises LLC(4)(5)(25)

 

First lien senior secured loan

 

L + 7.00%

 

 

8/5/2026

 

 

162,500

 

 

 

159,317

 

 

 

159,250

 

 

 

2.8

 

%

Sonny's Enterprises LLC(4)(18)(19)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 7.00%

 

 

8/5/2021

 

 

—

 

 

 

(478

)

 

 

(491

)

 

 

—

 

%

Sonny's Enterprises LLC(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 7.00%

 

 

8/5/2025

 

 

—

 

 

 

(348

)

 

 

(359

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

434,096

 

 

 

421,429

 

 

 

416,081

 

 

 

7.2

 

%

Oil and gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Black Mountain Sand Eagle Ford LLC(4)(7)(25)

 

First lien senior secured loan

 

L + 8.25%

 

 

8/17/2022

 

 

73,152

 

 

 

72,770

 

 

 

67,482

 

 

 

1.2

 

%

Project Power Buyer, LLC (dba PEC-Veriforce)(4)(7)(25)

 

First lien senior secured loan

 

L + 6.25%

 

 

5/14/2026

 

 

45,668

 

 

 

45,132

 

 

 

44,983

 

 

 

0.8

 

%

Project Power Buyer, LLC (dba PEC-Veriforce)(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 6.25%

 

 

5/14/2025

 

 

—

 

 

 

(31

)

 

 

(48

)

 

 

—

 

%

Zenith Energy U.S. Logistics Holdings, LLC(4)(7)(25)

 

First lien senior secured loan

 

L + 6.50%

 

 

12/20/2024

 

 

85,365

 

 

 

84,200

 

 

 

84,084

 

 

 

1.5

 

%

Zenith Energy U.S. Logistics Holdings, LLC(4)(18)(19)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 6.50%

 

 

1/9/2021

 

 

—

 

 

 

(85

)

 

 

—

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

204,185

 

 

 

201,986

 

 

 

196,501

 

 

 

3.5

 

%

Professional services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AmSpec Services Inc.(4)(7)(25)

 

First lien senior secured loan

 

L + 5.75%

 

 

7/2/2024

 

 

111,688

 

 

 

110,280

 

 

 

108,338

 

 

 

1.9

 

%

AmSpec Services Inc.(4)(7)(18)(25)

 

First lien senior secured revolving loan

 

L + 4.75%

 

 

7/2/2024

 

 

10,499

 

 

 

10,341

 

 

 

10,065

 

 

 

0.2

 

%

Cardinal US Holdings, Inc.(4)(7)(21)(25)

 

First lien senior secured loan

 

L + 5.00%

 

 

7/31/2023

 

 

89,504

 

 

 

87,024

 

 

 

88,609

 

 

 

1.6

 

%

DMT Solutions Global Corporation(4)(7)(25)

 

First lien senior secured loan

 

L + 7.00%

 

 

7/2/2024

 

 

57,966

 

 

 

56,380

 

 

 

56,082

 

 

 

1.0

 

%

GC Agile Holdings Limited (dba Apex Fund Services)(4)(7)(21)(25)

 

First lien senior secured loan

 

L + 7.00%

 

 

6/15/2025

 

 

159,268

 

 

 

157,011

 

 

 

155,684

 

 

 

2.7

 

%

GC Agile Holdings Limited (dba Apex Fund Services)(4)(7)(21)(25)

 

First lien senior secured revolving loan

 

L + 7.00%

 

 

6/15/2023

 

 

10,386

 

 

 

10,206

 

 

 

10,152

 

 

 

0.2

 

%

Gerson Lehrman Group, Inc.(4)(9)(25)

 

First lien senior secured loan

 

L + 4.25%

 

 

12/12/2024

 

 

295,960

 

 

 

293,793

 

 

 

295,960

 

 

 

5.2

 

%

Gerson Lehrman Group, Inc.(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 4.25%

 

 

12/12/2024

 

 

—

 

 

 

(151

)

 

 

-

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

 

 

735,271

 

 

 

724,884

 

 

 

724,890

 

 

 

12.8

 

%

Specialty retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BIG Buyer, LLC(4)(8)(25)

 

First lien senior secured loan

 

L + 6.50%

 

 

11/20/2023

 

 

50,079

 

 

 

49,303

 

 

 

48,702

 

 

 

0.9

 

%

13

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

BIG Buyer, LLC(4)(18)(19)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 6.50%

 

 

12/18/2020

 

 

-

 

 

 

(79

)

 

 

(56

)

 

 

—

 

%

BIG Buyer, LLC(4)(8)(18)(25)

 

First lien senior secured revolving loan

 

L + 6.50%

 

 

11/20/2023

 

 

1,250

 

 

 

1,175

 

 

 

1,147

 

 

 

—

 

%

EW Holdco, LLC (dba European Wax)(4)(5)(25)

 

First lien senior secured loan

 

L + 5.50%

 

 

9/25/2024

 

 

71,477

 

 

 

70,969

 

 

 

68,618

 

 

 

1.2

 

%

Galls, LLC(4)(7)(25)

 

First lien senior secured loan

 

L + 6.50%  (incl. 0.25% PIK)

 

 

1/31/2025

 

 

105,347

 

 

 

104,308

 

 

 

100,606

 

 

 

1.8

 

%

Galls, LLC(4)(7)(18)(25)

 

First lien senior secured revolving loan

 

L + 6.50%  (incl. 0.25% PIK)

 

 

1/31/2024

 

 

11,104

 

 

 

10,915

 

 

 

10,156

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

 

 

239,257

 

 

 

236,591

 

 

 

229,173

 

 

 

4.1

 

%

Telecommunications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DB Datacenter Holdings Inc.(4)(5)(25)

 

Second lien senior secured loan

 

L + 8.00%

 

 

4/3/2025

 

 

47,409

 

 

 

46,896

 

 

 

47,054

 

 

 

0.8

 

%

 

 

 

 

 

 

 

 

 

 

 

47,409

 

 

 

46,896

 

 

 

47,054

 

 

 

0.8

 

%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lazer Spot G B Holdings, Inc.(4)(7)(25)

 

First lien senior secured loan

 

L + 6.00%

 

 

12/9/2025

 

 

132,534

 

 

 

130,492

 

 

 

130,877

 

 

 

2.3

 

%

Lazer Spot G B Holdings, Inc.(4)(8)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

 

6/9/2021

 

 

11,806

 

 

 

11,618

 

 

 

11,659

 

 

 

0.2

 

%

Lazer Spot G B Holdings, Inc.(4)(18)(19)(25)

 

First lien senior secured revolving loan

 

L + 6.00%

 

 

12/9/2025

 

 

-

 

 

 

(401

)

 

 

(335

)

 

 

—

 

%

Lytx, Inc.(4)(5)(25)

 

First lien senior secured loan

 

L + 6.00%

 

 

2/28/2026

 

 

53,749

 

 

 

52,892

 

 

 

52,540

 

 

 

0.9

 

%

Lytx, Inc.(4)(5)(18)(20)(25)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

 

2/28/2022

 

 

4,674

 

 

 

4,505

 

 

 

4,252

 

 

 

0.1

 

%

Motus, LLC and Runzheimer International LLC(4)(7)(14)(25)

 

First lien senior secured loan

 

L + 6.36%

 

 

1/17/2024

 

 

59,435

 

 

 

58,518

 

 

 

59,435

 

 

 

1.0

 

%

 

 

 

 

 

 

 

 

 

 

 

262,198

 

 

 

257,624

 

 

 

258,428

 

 

 

4.5

 

%

Total non-controlled/non-affiliated portfolio company debt investments

 

 

 

 

 

 

 

 

 

 

10,017,186

 

 

 

9,853,271

 

 

 

9,619,729

 

 

 

169.2

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CM7 Restaurant Holdings, LLC(25)(26)

 

LLC Interest

 

N/A

 

 

N/A

 

 

340

 

 

 

340

 

 

 

64

 

 

 

—

 

%

H-Food Holdings, LLC(25)(26)

 

LLC Interest

 

N/A

 

 

N/A

 

 

10,875

 

 

 

10,875

 

 

 

11,159

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

 

 

11,215

 

 

 

11,215

 

 

 

11,223

 

 

 

0.2

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

Norvax, LLC (dba GoHealth)(25)(26)

 

Common stock

 

N/A

 

 

N/A

 

 

1,439,481

 

 

 

7,315

 

 

 

17,619

 

 

 

0.3

 

%

 

 

 

 

 

 

 

 

 

 

 

1,439,481

 

 

 

7,315

 

 

 

17,619

 

 

 

0.3

 

%

14

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

Company(1)(2)(17)

 

Investment

 

Interest

 

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(27)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

Moore Holdings, LLC(21)(25)(26)(29)

 

LLC Interest

 

N/A

 

 

N/A

 

 

31,822

 

 

 

57,381

 

 

 

63,119

 

 

 

1.1

 

%

 

 

 

 

 

 

 

 

 

 

 

31,822

 

 

 

57,381

 

 

 

63,119

 

 

 

1.1

 

%

Total non-controlled/non-affiliated portfolio company equity investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75,911

 

 

 

91,961

 

 

 

1.6

 

%

Total non-controlled/non-affiliated portfolio company investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,929,182

 

 

 

9,711,690

 

 

 

170.8

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlled/affiliated portfolio company investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wingspire Capital Holdings LLC(18)(22)(24)(26)

 

LLC Interest

 

N/A

 

 

N/A

 

 

103,121

 

 

 

103,121

 

 

 

103,121

 

 

 

1.8

 

%

 

 

 

 

 

 

 

 

 

 

 

103,121

 

 

 

103,121

 

 

 

103,121

 

 

 

1.8

 

%

Investment funds and vehicles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sebago Lake LLC(15)(21)(22)(24)(26)

 

LLC Interest

 

N/A

 

 

N/A

 

 

107,838

 

 

 

107,838

 

 

 

103,491

 

 

 

1.8

 

%

 

 

 

 

 

 

 

 

 

 

 

107,838

 

 

 

107,838

 

 

 

103,491

 

 

 

1.8

 

%

Total controlled/affiliated portfolio company investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

210,959

 

 

 

206,612

 

 

 

3.6

 

%

Total Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

10,140,141

 

 

$

9,918,302

 

 

 

174.4

 

%

 

 

 

Interest Rate Swaps as of September 30, 2020

 

 

Company Receives

 

 

Company Pays

 

Maturity Date

 

Notional Amount

 

 

Hedged Instrument

 

Footnote Reference

Interest rate swap

 

4.75%

 

 

L + 2.545%

 

12/21/2021

 

$

150,000

 

 

2023 Notes

 

Note 6

Interest rate swap

 

5.25%

 

 

L + 2.937%

 

4/10/2024

 

 

400,000

 

 

2024 Notes

 

Note 6

Total

 

 

 

 

 

 

 

 

 

$

550,000

 

 

 

 

 

________________

 

(1)

Certain portfolio company investments are subject to contractual restrictions on sales.

 

(2)

Unless otherwise indicated, all investments are considered Level 3 investments.

 

(3)

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

 

(4)

Loan contains a variable rate structure and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR), Euro Interbank Offered Rate (“EURIBOR” or “E”), British pound sterling LIBOR (“GBPLIBOR” or “G”), or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.

 

(5)

The interest rate on these loans is subject to 1 month LIBOR, which as of September 30, 2020 was 0.15%.

 

(6)

The interest rate on these loans is subject to 2 month LIBOR, which as of September 30, 2020 was 0.19%.

 

(7)

The interest rate on these loans is subject to 3 month LIBOR, which as of September 30, 2020 was 0.23%.

 

(8)

The interest rate on these loans is subject to 6 month LIBOR, which as of September 30, 2020 was 0.26%.

 

(9)

The interest rate on these loans is subject to 12 month LIBOR, which as of September 30, 2020 was 0.36%.

 

(10)

The interest rate on this loan is subject to 3 month Canadian Dollar Offered Rate (“CDOR” or “C”), which as of September 30, 2020 was 0.51%.

 

(11)

The interest rate on these loans is subject to Prime, which as of September 30, 2020 was 3.25%.

 

(12)

The interest rate on this loan is subject to 6 month EURIBOR, which as of September 30, 2020 was (0.50)%.

 

(13)

The interest rate on this loan is subject to 6 month GBPLIBOR, which as of September 30, 2020 was 0.06%.

 

(14)

The Company may be entitled to receive additional interest as a result of an arrangement with other lenders in the syndication. In exchange for the higher interest rate, the “last-out” portion is at a greater risk of loss.

 

(15)

Investment measured at NAV.

 

(16)

The first lien term loan is comprised of two components: Term Loan A and Term Loan B. The Company's Term Loan A and Term Loan B principal amounts are $34.0 million and $141.8 million, respectively. Both Term Loan A and Term Loan B have the same maturity date. Interest disclosed reflects the blended rate of the first lien term loan. The Term Loan A represents a ‘first out’ tranche and the Term Loan B

15

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of September 30, 2020

(Amounts in thousands, except share amounts)

(Unaudited)

 

 

represents a ‘last out’ tranche. The ‘first out’ tranche has priority as to the ‘last out’ tranche with respect to payments of principal, interest and any amounts due thereunder.

 

(17)

Unless otherwise indicated, the Company’s portfolio companies are pledged as collateral supporting the amounts outstanding under the Revolving Credit Facility, SPV Asset Facilities and CLOs. See Note 6 “Debt”.

 

(18)

Position or portion thereof is an unfunded loan commitment. See Note 7 “Commitments and Contingencies”.

 

(19)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

 

(20)

The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.

 

(21)

This portfolio company is not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of total assets. As of September 30, 2020, non-qualifying assets represented 6.8% of total assets as calculated in accordance with the regulatory requirements.

 

(22)

As defined in the 1940 Act, the Company is deemed to be both an "Affiliated Person" and has "Control" of this portfolio company as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). The Company’s investment in affiliates for the nine months ended September 30, 2020, were as follows:

($ in thousands)

 

Fair value

as of December 31, 2019

 

 

Gross Additions

 

 

Gross Reductions

 

 

Change in Unrealized Gains (Losses)

 

 

Fair value

as of September 30, 2020

 

 

Dividend Income

 

 

Other Income

 

Controlled Affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sebago Lake LLC

 

$

88,077

 

 

$

18,950

 

 

$

—

 

 

$

(3,536

)

 

$

103,491

 

 

$

6,716

 

 

$

—

 

Wingspire Capital Holdings LLC

 

 

1,448

 

 

 

114,673

 

 

 

(13,000

)

 

 

—

 

 

 

103,121

 

 

 

—

 

 

 

—

 

Total Controlled Affiliates

 

$

89,525

 

 

$

133,623

 

 

$

(13,000

)

 

$

(3,536

)

 

$

206,612

 

 

$

6,716

 

 

$

—

 

 

(23)

Level 2 investment.

 

(24)

Investment is not pledged as collateral for the credit facilities.

 

(25)

Represents co-investment made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company received from the U.S. Securities and Exchange Commission. See Note 3 “Agreements and Related Party Transactions.”

 

(26)

Securities acquired in transactions exempt from registration under the Securities Act and may be deemed to be “restricted securities” under the Securities Act. As of September 30, 2020, the aggregate fair value of these securities is $298.6 million or 5.2% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:

Portfolio Company

 

Investment

 

Acquisition Date

CM7 Restaurant Holdings, LLC

 

LLC Interest

 

May 21, 2018

H-Food Holdings, LLC

 

LLC Interest

 

November 23, 2018

Moore Holdings, LLC

 

LLC Interest

 

January 16 2020

Norvax, LLC (dba GoHealth)

 

Common Stock

 

March 23, 2020

Sebago Lake LLC*

 

LLC Interest

 

June 20, 2017

Wingspire Capital Holdings LLC**

 

LLC Interest

 

September 24, 2019

* Refer to Note 4 “Investments – Sebago Lake LLC,” for further information.  

** Refer to Note 3 “Agreements and Related Party Transactions – Controlled/Affiliated Portfolio Companies”.

 

 

(27)

As of September 30, 2020, the net estimated unrealized loss for U.S. federal income tax purposes was $0.2 billion based on a tax cost basis of $10.2 billion. As of September 30, 2020, the estimated aggregate gross unrealized loss for U.S. federal income tax purposes was $0.3 billion and the estimated aggregate gross unrealized gain for U.S. federal income tax purposes was $61.9 million.

 

(28)

Loan contains a fixed-rate structure.

 

(29)

Investment represents multiple underlying investments, one of which is considered a non-qualifying asset, with a fair value of $4.9 million as of September 30, 2020.

 

(30)

Loan was on non-accrual status as of September 30, 2020

 

The accompanying notes are an integral part of these consolidated financial statements.

16

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

Company(1)(17)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(24)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Non-controlled/non-affiliated portfolio company investments(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and media

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IRI Holdings, Inc.(4)(7)(22)

 

First lien senior secured loan

 

L + 4.50%

 

11/28/2025

 

$

14,850

 

 

$

14,721

 

 

$

14,541

 

 

 

0.2

 

%

PAK Acquisition Corporation (dba Valpak)(4)(7)

 

First lien senior secured loan

 

L + 8.00%

 

6/30/2022

 

 

61,725

 

 

 

61,087

 

 

 

61,725

 

 

 

1.0

 

%

Swipe Acquisition Corporation (dba PLI)(4)(5)(22)

 

First lien senior secured loan

 

L + 7.75%

 

6/29/2024

 

 

158,726

 

 

 

156,160

 

 

 

154,361

 

 

 

2.7

 

%

 

 

 

 

 

 

 

 

 

235,301

 

 

 

231,968

 

 

 

230,627

 

 

 

3.9

 

%

Aerospace and defense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation Solutions Midco, LLC (dba STS Aviation)(4)(7)(22)

 

First lien senior secured loan

 

L + 6.25%

 

1/3/2025

 

 

195,562

 

 

 

191,944

 

 

 

192,824

 

 

 

3.2

 

%

Valence Surface Technologies LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 5.75%

 

6/28/2025

 

 

99,500

 

 

 

98,110

 

 

 

98,008

 

 

 

1.6

 

%

Valence Surface Technologies LLC(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

6/28/2021

 

 

—

 

 

 

(69

)

 

 

(450

)

 

 

—

 

%

Valence Surface Technologies LLC(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

6/28/2025

 

 

—

 

 

 

(137

)

 

 

(150

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

295,062

 

 

 

289,848

 

 

 

290,232

 

 

 

4.8

 

%

Automotive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mavis Tire Express Services Corp.(4)(5)(22)

 

Second lien senior secured loan

 

L + 7.50%

 

3/20/2026

 

 

155,000

 

 

 

152,119

 

 

 

150,350

 

 

 

2.5

 

%

Mavis Tire Express Services Corp.(4)(5)(14)(16)(22)

 

Second lien senior secured delayed draw term loan

 

L + 8.00%

 

3/20/2020

 

 

1,449

 

 

 

1,218

 

 

 

884

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

156,449

 

 

 

153,337

 

 

 

151,234

 

 

 

2.5

 

%

Buildings and real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Associations, Inc.(4)(7)(22)

 

First lien senior secured loan

 

L + 4.00%  (3.00% PIK)

 

7/30/2024

 

 

259,307

 

 

 

256,774

 

 

 

256,714

 

 

 

4.3

 

%

Associations, Inc.(4)(7)(14)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 4.00%  (3.00% PIK)

 

7/30/2021

 

 

40,708

 

 

 

40,158

 

 

 

40,122

 

 

 

0.7

 

%

Associations, Inc.(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 6.00%

 

7/30/2024

 

 

—

 

 

 

(110

)

 

 

(173

)

 

 

—

 

%

Reef (fka Cheese Acquisition, LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 4.75%

 

11/28/2024

 

 

134,995

 

 

 

133,263

 

 

 

132,970

 

 

 

2.2

 

%

Imperial Parking Canada(4)(8)(22)

 

First lien senior secured loan

 

C + 5.00%

 

11/28/2024

 

 

27,500

 

 

 

26,717

 

 

 

27,086

 

 

 

0.5

 

%

Reef (fka Cheese Acquisition, LLC)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 4.75%

 

11/28/2023

 

 

—

 

 

 

(160

)

 

 

(245

)

 

 

—

 

%

Velocity Commercial Capital, LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 7.50%

 

8/29/2024

 

 

125,500

 

 

 

124,018

 

 

 

124,245

 

 

 

2.1

 

%

 

 

 

 

 

 

 

 

 

588,010

 

 

 

580,660

 

 

 

580,719

 

 

 

9.8

 

%

Business services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access CIG, LLC(4)(5)(22)

 

Second lien senior secured loan

 

L + 7.75%

 

2/27/2026

 

 

44,637

 

 

 

44,329

 

 

 

44,414

 

 

 

0.7

 

%

CIBT Global, Inc.(4)(7)(22)

 

Second lien senior secured loan

 

L + 7.75%

 

6/2/2025

 

 

59,500

 

 

 

58,352

 

 

 

58,756

 

 

 

1.0

 

%

ConnectWise, LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 6.00%

 

2/28/2025

 

 

180,466

 

 

 

178,439

 

 

 

178,210

 

 

 

3.0

 

%

ConnectWise, LLC(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 6.00%

 

2/28/2025

 

 

—

 

 

 

(220

)

 

 

(250

)

 

 

—

 

%

Entertainment Benefits Group, LLC(4)(5)(22)

 

First lien senior secured loan

 

L + 5.75%

 

9/27/2025

 

 

81,795

 

 

 

80,612

 

 

 

80,568

 

 

 

1.3

 

%

17

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

Company(1)(17)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(24)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Entertainment Benefits Group, LLC(4)(5)(14)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

9/27/2024

 

 

2,400

 

 

 

2,229

 

 

 

2,220

 

 

 

—

 

%

Vistage International, Inc.(4)(5)(22)

 

Second lien senior secured loan

 

L + 8.00%

 

2/9/2026

 

 

34,800

 

 

 

34,557

 

 

 

34,626

 

 

 

0.6

 

%

Vestcom Parent Holdings, Inc.(4)(5)

 

Second lien senior secured loan

 

L + 8.00%

 

12/19/2024

 

 

78,987

 

 

 

78,186

 

 

 

78,395

 

 

 

1.3

 

%

 

 

 

 

 

 

 

 

 

482,585

 

 

 

476,484

 

 

 

476,939

 

 

 

7.9

 

%

Chemicals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Douglas Products and Packaging Company LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 5.75%

 

10/19/2022

 

 

98,942

 

 

 

98,308

 

 

 

97,459

 

 

 

1.6

 

%

Douglas Products and Packaging Company LLC(4)(9)(14)(22)

 

First lien senior secured revolving loan

 

P + 4.75%

 

10/19/2022

 

 

1,211

 

 

 

1,167

 

 

 

1,075

 

 

 

—

 

%

Innovative Water Care Global Corporation(4)(7)(22)

 

First lien senior secured loan

 

L + 5.00%

 

2/27/2026

 

 

148,875

 

 

 

139,368

 

 

 

131,010

 

 

 

2.2

 

%

 

 

 

 

 

 

 

 

 

249,028

 

 

 

238,843

 

 

 

229,544

 

 

 

3.8

 

%

Consumer products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Feradyne Outdoors, LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 6.25%

 

5/25/2023

 

 

112,613

 

 

 

111,761

 

 

 

99,099

 

 

 

1.7

 

%

WU Holdco, Inc. (dba Weiman Products, LLC)(4)(7)(22)

 

First lien senior secured loan

 

L + 5.25%

 

3/26/2026

 

 

140,134

 

 

 

137,569

 

 

 

137,332

 

 

 

2.3

 

%

WU Holdco, Inc. (dba Weiman Products, LLC)(4)(7)(14)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.25%

 

3/26/2021

 

 

2,936

 

 

 

2,731

 

 

 

2,707

 

 

 

—

 

%

WU Holdco, Inc. (dba Weiman Products, LLC)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.25%

 

3/26/2025

 

 

—

 

 

 

(243

)

 

 

(278

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

255,683

 

 

 

251,818

 

 

 

238,860

 

 

 

4.0

 

%

Containers and packaging

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pregis Topco LLC(4)(5)(22)

 

Second lien senior secured loan

 

L + 8.00%

 

7/30/2027

 

 

186,333

 

 

 

182,737

 

 

 

182,607

 

 

 

3.1

 

%

 

 

 

 

 

 

 

 

 

186,333

 

 

 

182,737

 

 

 

182,607

 

 

 

3.1

 

%

Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ABB/Con-cise Optical Group LLC(4)(7)

 

First lien senior secured loan

 

L + 5.00%

 

6/15/2023

 

 

76,410

 

 

 

75,632

 

 

 

72,590

 

 

 

1.2

 

%

ABB/Con-cise Optical Group LLC(4)(7)

 

Second lien senior secured loan

 

L + 9.00%

 

6/17/2024

 

 

25,000

 

 

 

24,506

 

 

 

23,375

 

 

 

0.4

 

%

Aramsco, Inc.(4)(5)(22)

 

First lien senior secured loan

 

L + 5.25%

 

8/28/2024

 

 

57,055

 

 

 

55,908

 

 

 

55,771

 

 

 

0.9

 

%

Aramsco, Inc.(4)(5)(14)(22)

 

First lien senior secured revolving loan

 

L + 5.25%

 

8/28/2024

 

 

1,536

 

 

 

1,373

 

 

 

1,348

 

 

 

—

 

%

Dealer Tire, LLC(4)(5)(20)(22)

 

First lien senior secured loan

 

L + 5.50%

 

12/15/2025

 

 

113,889

 

 

 

108,862

 

 

 

113,958

 

 

 

1.9

 

%

Endries Acquisition, Inc.(4)(5)(22)

 

First lien senior secured loan

 

L + 6.25%

 

12/10/2025

 

 

178,650

 

 

 

175,890

 

 

 

175,524

 

 

 

2.9

 

%

Endries Acquisition, Inc.(4)(5)(14)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 6.25%

 

12/10/2020

 

 

10,834

 

 

 

9,906

 

 

 

9,741

 

 

 

0.2

 

%

Endries Acquisition, Inc.(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 6.25%

 

12/10/2024

 

 

—

 

 

 

(389

)

 

 

(473

)

 

 

—

 

%

Individual Foodservice Holdings, LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 5.75%

 

11/22/2025

 

 

144,500

 

 

 

141,389

 

 

 

141,350

 

 

 

2.4

 

%

Individual Foodservice Holdings, LLC(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

5/22/2021

 

 

—

 

 

 

(912

)

 

 

(927

)

 

 

—

 

%

Individual Foodservice Holdings, LLC(4)(5)(14)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

11/22/2024

 

 

1,275

 

 

 

730

 

 

 

719

 

 

 

—

 

%

JM Swank, LLC(4)(7)

 

First lien senior secured loan

 

L + 7.50%

 

7/25/2022

 

 

116,167

 

 

 

114,901

 

 

 

114,715

 

 

 

1.9

 

%

Offen, Inc.(4)(7)(22)

 

First lien senior secured loan

 

L + 5.00%

 

6/22/2026

 

 

14,617

 

 

 

14,478

 

 

 

14,434

 

 

 

0.2

 

%

18

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

Company(1)(17)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(24)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Offen, Inc.(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.00%

 

12/21/2020

 

 

—

 

 

 

(50

)

 

 

(66

)

 

 

—

 

%

QC Supply, LLC(4)(5)

 

First lien senior secured loan

 

L + 5.50%  (1.00% PIK)

 

12/29/2022

 

 

34,465

 

 

 

33,992

 

 

 

33,001

 

 

 

0.6

 

%

QC Supply, LLC(4)(5)

 

First lien senior secured revolving loan

 

L + 6.50%

 

12/29/2021

 

 

4,969

 

 

 

4,919

 

 

 

4,758

 

 

 

0.1

 

%

 

 

 

 

 

 

 

 

 

779,367

 

 

 

761,135

 

 

 

759,818

 

 

 

12.7

 

%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2U, Inc.(4)(5)(18)(22)

 

First lien senior secured loan

 

L + 5.75%

 

5/22/2024

 

 

115,000

 

 

 

113,453

 

 

 

112,700

 

 

 

1.9

 

%

Learning Care Group (US) No. 2 Inc.(4)(7)(22)

 

Second lien senior secured loan

 

L + 7.50%

 

3/13/2026

 

 

26,967

 

 

 

26,539

 

 

 

26,832

 

 

 

0.4

 

%

Severin Acquisition, LLC (dba PowerSchool)(4)(7)(22)

 

Second lien senior secured loan

 

L + 6.75%

 

8/3/2026

 

 

108,000

 

 

 

107,176

 

 

 

107,460

 

 

 

1.8

 

%

TSB Purchaser, Inc. (dba Teaching Strategies, Inc.)(4)(7)(22)

 

First lien senior secured loan

 

L + 6.00%

 

5/14/2024

 

 

62,213

 

 

 

61,013

 

 

 

61,435

 

 

 

1.0

 

%

TSB Purchaser, Inc. (dba Teaching Strategies, Inc.)(4)(7)(14)(22)

 

First lien senior secured revolving loan

 

L + 6.00%

 

5/14/2024

 

 

1,229

 

 

 

1,152

 

 

 

1,176

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

313,409

 

 

 

309,333

 

 

 

309,603

 

 

 

5.1

 

%

Energy equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liberty Oilfield Services LLC(4)(5)(18)(22)

 

First lien senior secured loan

 

L + 7.63%

 

9/19/2022

 

 

13,981

 

 

 

13,830

 

 

 

14,050

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

13,981

 

 

 

13,830

 

 

 

14,050

 

 

 

0.2

 

%

Financial services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blackhawk Network Holdings, Inc.(4)(5)(22)

 

Second lien senior secured loan

 

L + 7.00%

 

6/15/2026

 

 

104,700

 

 

 

103,837

 

 

 

104,439

 

 

 

1.7

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(4)(5)(22)

 

First lien senior secured loan

 

L + 5.75%

 

9/6/2022

 

 

28,193

 

 

 

27,778

 

 

 

27,770

 

 

 

0.5

 

%

NMI Acquisitionco, Inc. (dba Network Merchants)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

9/6/2022

 

 

-

 

 

 

(9

)

 

 

(10

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

132,893

 

 

 

131,606

 

 

 

132,199

 

 

 

2.2

 

%

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Caiman Merger Sub LLC (dba City Brewing)(4)(5)(22)

 

First lien senior secured loan

 

L + 5.75%

 

11/3/2025

 

 

177,119

 

 

 

175,387

 

 

 

175,347

 

 

 

2.9

 

%

Caiman Merger Sub LLC (dba City Brewing)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

11/1/2024

 

 

—

 

 

 

(125

)

 

 

(129

)

 

 

—

 

%

CM7 Restaurant Holdings, LLC(4)(5)(22)

 

First lien senior secured loan

 

L + 8.00%

 

5/22/2023

 

 

37,232

 

 

 

36,738

 

 

 

36,674

 

 

 

0.6

 

%

Give and Go Prepared Foods Corp.(4)(7)(18)

 

Second lien senior secured loan

 

L + 8.50%

 

1/29/2024

 

 

42,000

 

 

 

41,704

 

 

 

38,430

 

 

 

0.6

 

%

H-Food Holdings, LLC(4)(5)(22)

 

Second lien senior secured loan

 

L + 7.00%

 

3/2/2026

 

 

121,800

 

 

 

119,175

 

 

 

119,364

 

 

 

2.0

 

%

H-Food Holdings, LLC(4)(5)(20)(22)

 

First lien senior secured loan

 

L + 4.00%

 

5/23/2025

 

 

23,515

 

 

 

23,314

 

 

 

23,384

 

 

 

0.4

 

%

Hometown Food Company(4)(5)(22)

 

First lien senior secured loan

 

L + 5.00%

 

8/31/2023

 

 

28,825

 

 

 

28,388

 

 

 

28,465

 

 

 

0.5

 

%

Hometown Food Company(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.00%

 

8/31/2023

 

 

—

 

 

 

(62

)

 

 

(53

)

 

 

—

 

%

Manna Development Group, LLC(4)(5)(22)

 

First lien senior secured loan

 

L + 6.00%

 

10/24/2022

 

 

56,655

 

 

 

56,092

 

 

 

55,947

 

 

 

0.9

 

%

Manna Development Group, LLC(4)(5)(14)(22)

 

First lien senior secured revolving loan

 

L + 6.00%

 

10/24/2022

 

 

867

 

 

 

759

 

 

 

813

 

 

 

—

 

%

Recipe Acquisition Corp. (dba Roland Corporation)(4)(7)

 

Second lien senior secured loan

 

L + 8.00%

 

12/1/2022

 

 

32,000

 

 

 

31,666

 

 

 

31,760

 

 

 

0.5

 

%

Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)(4)(5)(22)

 

First lien senior secured loan

 

L + 4.50%

 

7/30/2025

 

 

38,595

 

 

 

37,930

 

 

 

37,823

 

 

 

0.6

 

%

19

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

Company(1)(17)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(24)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)(4)(5)(14)(22)

 

First lien senior secured revolving loan

 

L + 4.50%

 

7/31/2023

 

 

5,520

 

 

 

5,375

 

 

 

5,340

 

 

 

0.1

 

%

Tall Tree Foods, Inc.(4)(5)

 

First lien senior secured loan

 

L + 7.25%

 

8/12/2022

 

 

45,550

 

 

 

45,211

 

 

 

43,728

 

 

 

0.7

 

%

Ultimate Baked Goods Midco, LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 4.00%

 

8/11/2025

 

 

26,730

 

 

 

26,230

 

 

 

26,195

 

 

 

0.4

 

%

Ultimate Baked Goods Midco, LLC(4)(5)(14)(22)

 

First lien senior secured revolving loan

 

L + 4.00%

 

8/9/2023

 

 

1,016

 

 

 

934

 

 

 

915

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

637,424

 

 

 

628,716

 

 

 

624,003

 

 

 

10.2

 

%

Healthcare providers and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Confluent Health, LLC.(4)(5)(22)

 

First lien senior secured loan

 

L + 5.00%

 

6/24/2026

 

 

17,910

 

 

 

17,746

 

 

 

17,641

 

 

 

0.3

 

%

Covenant Surgical Partners, Inc.(4)(5)(22)

 

First lien senior secured loan

 

L + 4.00%

 

7/1/2026

 

 

13,965

 

 

 

13,832

 

 

 

13,860

 

 

 

0.2

 

%

Covenant Surgical Partners, Inc.(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 4.00%

 

7/1/2021

 

 

—

 

 

 

(26

)

 

 

(21

)

 

 

—

 

%

Geodigm Corporation (dba National Dentex)(4)(5)(11)(22)

 

First lien senior secured loan

 

L + 6.87%

 

12/1/2021

 

 

123,460

 

 

 

122,795

 

 

 

120,990

 

 

 

2.0

 

%

GI CCLS Acquisition LLC (fka GI Chill Acquisition LLC)(4)(7)(22)

 

First lien senior secured loan

 

L + 4.00%

 

8/6/2025

 

 

12,029

 

 

 

11,979

 

 

 

11,985

 

 

 

0.2

 

%

GI CCLS Acquisition LLC (fka GI Chill Acquisition LLC)(4)(7)(22)

 

Second lien senior secured loan

 

L + 7.50%

 

8/6/2026

 

 

135,400

 

 

 

134,215

 

 

 

133,708

 

 

 

2.2

 

%

Nelipak Holding Company(4)(5)(22)

 

First lien senior secured loan

 

L + 4.25%

 

7/2/2026

 

 

48,003

 

 

 

47,097

 

 

 

47,523

 

 

 

0.8

 

%

Nelipak Holding Company(4)(5)(14)(22)

 

First lien senior secured revolving loan

 

L + 4.25%

 

7/2/2024

 

 

2,680

 

 

 

2,547

 

 

 

2,607

 

 

 

—

 

%

Nelipak Holding Company(4)(10)(14)(22)

 

First lien senior secured revolving loan

 

E + 4.50%

 

7/2/2024

 

 

451

 

 

 

309

 

 

 

335

 

 

 

—

 

%

Nelipak Holding Company(4)(5)(22)

 

Second lien senior secured loan

 

L + 8.25%

 

7/2/2027

 

 

67,006

 

 

 

66,042

 

 

 

66,001

 

 

 

1.1

 

%

Nelipak Holding Company(4)(10)(22)

 

Second lien senior secured loan

 

E + 8.50%

 

7/2/2027

 

 

67,464

 

 

 

66,288

 

 

 

66,281

 

 

 

1.1

 

%

Premier Imaging, LLC (dba LucidHealth)(4)(5)(22)

 

First lien senior secured loan

 

L + 5.75%

 

1/2/2025

 

 

33,660

 

 

 

33,086

 

 

 

32,987

 

 

 

0.6

 

%

RxSense Holdings, LLC(4)(5)(22)

 

First lien senior secured loan

 

L + 6.00%

 

2/15/2024

 

 

129,847

 

 

 

128,189

 

 

 

127,574

 

 

 

2.1

 

%

RxSense Holdings, LLC(4)(7)(14)(22)

 

First lien senior secured revolving loan

 

L + 6.00%

 

2/15/2024

 

 

4,047

 

 

 

3,947

 

 

 

3,906

 

 

 

0.1

 

%

TC Holdings, LLC (dba TrialCard)(4)(7)(22)

 

First lien senior secured loan

 

L + 4.50%

 

11/14/2023

 

 

84,179

 

 

 

82,984

 

 

 

84,179

 

 

 

1.4

 

%

TC Holdings, LLC (dba TrialCard)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 4.50%

 

11/14/2022

 

 

—

 

 

 

(89

)

 

 

—

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

740,101

 

 

 

730,941

 

 

 

729,556

 

 

 

12.1

 

%

Healthcare technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bracket Intermediate Holding Corp.(4)(7)(22)

 

Second lien senior secured loan

 

L + 8.13%

 

9/7/2026

 

 

26,250

 

 

 

25,785

 

 

 

25,725

 

 

 

0.4

 

%

Definitive Healthcare Holdings, LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 5.50%

 

7/16/2026

 

 

196,485

 

 

 

194,633

 

 

 

194,520

 

 

 

3.3

 

%

Definitive Healthcare Holdings, LLC(4)(14)(15)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

7/16/2026

 

 

—

 

 

 

(203

)

 

 

-

 

 

 

—

 

%

Definitive Healthcare Holdings, LLC(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.50%

 

7/16/2024

 

 

—

 

 

 

(99

)

 

 

(109

)

 

 

—

 

%

Interoperability Bidco, Inc.(4)(5)(22)

 

First lien senior secured loan

 

L + 5.75%

 

6/25/2026

 

 

76,814

 

 

 

75,909

 

 

 

75,662

 

 

 

1.4

 

%

Interoperability Bidco, Inc.(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

6/25/2021

 

 

—

 

 

 

(9

)

 

 

(30

)

 

 

—

 

%

20

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

Company(1)(17)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(24)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Interoperability Bidco, Inc.(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

6/25/2024

 

 

—

 

 

 

(45

)

 

 

(60

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

299,549

 

 

 

295,971

 

 

 

295,708

 

 

 

5.1

 

%

Household products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hayward Industries, Inc.(4)(5)(22)

 

Second lien senior secured loan

 

L + 8.25%

 

8/4/2025

 

 

52,149

 

 

 

51,340

 

 

 

51,628

 

 

 

0.9

 

%

HGH Purchaser, Inc. (dba Horizon Services)(4)(5)(22)

 

First lien senior secured loan

 

L + 6.00%

 

11/3/2025

 

 

77,760

 

 

 

76,620

 

 

 

76,594

 

 

 

1.4

 

%

HGH Purchaser, Inc. (dba Horizon Services)(4)(9)(14)(22)

 

First lien senior secured revolving loan

 

P + 5.00%

 

11/3/2025

 

 

1,782

 

 

 

1,640

 

 

 

1,636

 

 

 

—

 

%

HGH Purchaser, Inc. (dba Horizon Services)(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

11/1/2021

 

 

—

 

 

 

(79

)

 

 

(81

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

131,691

 

 

 

129,521

 

 

 

129,777

 

 

 

2.3

 

%

Infrastructure and environmental services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FR Arsenal Holdings II Corp. (dba Applied-Cleveland Holdings, Inc.)(4)(7)

 

First lien senior secured loan

 

L + 7.25%

 

9/8/2022

 

 

145,827

 

 

 

144,048

 

 

 

145,827

 

 

 

2.4

 

%

LineStar Integrity Services LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 7.25%

 

2/12/2024

 

 

89,759

 

 

 

88,357

 

 

 

88,638

 

 

 

1.5

 

%

 

 

 

 

 

 

 

 

 

235,586

 

 

 

232,405

 

 

 

234,465

 

 

 

3.9

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asurion, LLC(4)(5)(20)(22)

 

Second lien senior secured loan

 

L + 6.50%

 

8/4/2025

 

 

40,000

 

 

 

40,518

 

 

 

40,460

 

 

 

0.7

 

%

Integrity Marketing Acquisition, LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 5.75%

 

8/27/2025

 

 

136,900

 

 

 

134,941

 

 

 

134,846

 

 

 

2.3

 

%

Integrity Marketing Acquisition, LLC(4)(7)(14)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

2/29/2020

 

 

37,283

 

 

 

36,447

 

 

 

36,724

 

 

 

0.6

 

%

Integrity Marketing Acquisition, LLC(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

2/27/2021

 

 

—

 

 

 

(192

)

 

 

—

 

 

 

—

 

%

Integrity Marketing Acquisition, LLC(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

8/27/2025

 

 

—

 

 

 

(210

)

 

 

(222

)

 

 

—

 

%

KWOR Acquisition, Inc. (dba Worley Claims Services)(4)(5)(22)

 

First lien senior secured loan

 

L + 4.00%

 

6/3/2026

 

 

24,153

 

 

 

23,421

 

 

 

23,489

 

 

 

0.4

 

%

KWOR Acquisition, Inc. (dba Worley Claims Services)(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 4.00%

 

6/3/2021

 

 

—

 

 

 

(72

)

 

 

(67

)

 

 

—

 

%

KWOR Acquisition, Inc. (dba Worley Claims Services)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 4.00%

 

6/3/2024

 

 

—

 

 

 

(103

)

 

 

(143

)

 

 

—

 

%

KWOR Acquisition, Inc. (dba Worley Claims Services)(4)(5)(22)

 

Second lien senior secured loan

 

L + 7.75%

 

12/3/2026

 

 

49,600

 

 

 

48,897

 

 

 

48,608

 

 

 

0.8

 

%

Norvax, LLC (dba GoHealth)(4)(7)(22)

 

First lien senior secured loan

 

L + 6.50%

 

9/15/2025

 

 

122,420

 

 

 

120,657

 

 

 

120,584

 

 

 

2.0

 

%

Norvax, LLC (dba GoHealth)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 6.50%

 

9/13/2024

 

 

—

 

 

 

(173

)

 

 

(184

)

 

 

—

 

%

RSC Acquisition, Inc (dba Risk Strategies)(4)(7)(22)

 

First lien senior secured loan

 

L + 5.50%

 

10/30/2026

 

 

40,783

 

 

 

39,982

 

 

 

39,967

 

 

 

0.7

 

%

RSC Acquisition, Inc (dba Risk Strategies)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.50%

 

10/30/2026

 

 

—

 

 

 

(33

)

 

 

(34

)

 

 

—

 

%

RSC Acquisition, Inc (dba Risk Strategies)(4)(7)(14)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

10/30/2026

 

 

2,451

 

 

 

2,191

 

 

 

2,184

 

 

 

—

 

%

THG Acquisition, LLC (dba Hilb)(4)(7)(22)

 

First lien senior secured loan

 

L + 5.75%

 

12/2/2026

 

 

60,067

 

 

 

58,579

 

 

 

58,565

 

 

 

1.0

 

%

THG Acquisition, LLC (dba Hilb)(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

12/2/2021

 

 

—

 

 

 

(208

)

 

 

(211

)

 

 

—

 

%

THG Acquisition, LLC (dba Hilb)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

12/2/2025

 

 

—

 

 

 

(138

)

 

 

(140

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

513,657

 

 

 

504,504

 

 

 

504,426

 

 

 

8.5

 

%

21

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

Company(1)(17)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(24)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accela, Inc.(4)(7)

 

First lien senior secured loan

 

L + 3.25%  (1.64% PIK)

 

9/28/2023

 

 

21,714

 

 

 

21,422

 

 

 

21,714

 

 

 

0.4

 

%

Apptio, Inc.(4)(5)(22)

 

First lien senior secured loan

 

L + 7.25%

 

1/10/2025

 

 

41,727

 

 

 

40,992

 

 

 

41,205

 

 

 

0.7

 

%

Apptio, Inc.(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 7.25%

 

1/10/2025

 

 

—

 

 

 

(47

)

 

 

(35

)

 

 

—

 

%

3ES Innovation Inc. (dba Aucerna)(4)(7)(18)(22)

 

First lien senior secured loan

 

L + 5.75%

 

5/13/2025

 

 

40,132

 

 

 

39,672

 

 

 

39,329

 

 

 

0.7

 

%

3ES Innovation Inc. (dba Aucerna)(4)(14)(15)(18)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

5/13/2025

 

 

—

 

 

 

(43

)

 

 

(78

)

 

 

—

 

%

Genesis Acquisition Co. (dba Procare Software)(4)(7)(22)

 

First lien senior secured loan

 

L + 3.75%

 

7/31/2024

 

 

17,974

 

 

 

17,690

 

 

 

17,614

 

 

 

0.3

 

%

Genesis Acquisition Co. (dba Procare Software)(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 3.75%

 

7/31/2020

 

 

—

 

 

 

(36

)

 

 

(47

)

 

 

—

 

%

Genesis Acquisition Co. (dba Procare Software)(4)(7)(14)(22)

 

First lien senior secured revolving loan

 

L + 3.75%

 

7/31/2024

 

 

923

 

 

 

883

 

 

 

870

 

 

 

—

 

%

IQN Holding Corp. (dba Beeline)(4)(7)(22)

 

First lien senior secured loan

 

L + 5.50%

 

8/20/2024

 

 

191,899

 

 

 

189,564

 

 

 

189,501

 

 

 

3.2

 

%

IQN Holding Corp. (dba Beeline)(4)(7)(14)(22)

 

First lien senior secured revolving loan

 

L + 5.50%

 

8/21/2023

 

 

7,139

 

 

 

6,892

 

 

 

6,856

 

 

 

0.1

 

%

Lightning Midco, LLC (dba Vector Solutions)(4)(7)(22)

 

First lien senior secured loan

 

L + 5.50%

 

11/21/2025

 

 

113,765

 

 

 

112,777

 

 

 

112,058

 

 

 

1.9

 

%

Lightning Midco, LLC (dba Vector Solutions)(4)(9)(14)(16)(22)

 

First lien senior secured delayed draw term loan

 

P + 4.50%

 

11/23/2020

 

 

24,788

 

 

 

24,565

 

 

 

24,390

 

 

 

0.4

 

%

Lightning Midco, LLC (dba Vector Solutions)(4)(7)(14)(22)

 

First lien senior secured revolving loan

 

L + 5.50%

 

11/21/2023

 

 

8,044

 

 

 

7,940

 

 

 

7,844

 

 

 

0.1

 

%

Litera Bidco LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 5.75%

 

5/29/2026

 

 

60,245

 

 

 

59,449

 

 

 

59,490

 

 

 

1.0

 

%

Litera Bidco LLC(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

5/30/2025

 

 

—

 

 

 

(66

)

 

 

(72

)

 

 

—

 

%

MINDBODY, Inc.(4)(5)(22)

 

First lien senior secured loan

 

L + 7.00%

 

2/14/2025

 

 

57,679

 

 

 

57,168

 

 

 

57,102

 

 

 

1.0

 

%

MINDBODY, Inc.(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 7.00%

 

2/14/2025

 

 

—

 

 

 

(52

)

 

 

(61

)

 

 

—

 

%

Trader Interactive, LLC (fka Dominion Web Solutions, LLC)(4)(5)(22)

 

First lien senior secured loan

 

L + 6.50%

 

6/17/2024

 

 

133,936

 

 

 

132,603

 

 

 

132,597

 

 

 

2.2

 

%

Trader Interactive, LLC (fka Dominion Web Solutions, LLC)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 6.50%

 

6/15/2023

 

 

—

 

 

 

(56

)

 

 

(64

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

719,965

 

 

 

711,317

 

 

 

710,213

 

 

 

12.0

 

%

Leisure and entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Troon Golf, L.L.C.(4)(7)(11)(13)(22)

 

First lien senior secured term loan A and B

 

L + 5.50%

(TLA: L + 3.5%; TLB: L + 5.98%)

 

3/29/2025

 

 

177,718

 

 

 

175,774

 

 

 

177,718

 

 

 

3.0

 

%

Troon Golf, L.L.C.(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.50%

 

3/29/2025

 

 

—

 

 

 

(135

)

 

 

—

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

177,718

 

 

 

175,639

 

 

 

177,718

 

 

 

3.0

 

%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ideal Tridon Holdings, Inc.(4)(7)(22)

 

First lien senior secured loan

 

L + 5.75%

 

7/31/2024

 

 

55,651

 

 

 

54,894

 

 

 

55,373

 

 

 

0.9

 

%

Ideal Tridon Holdings, Inc.(4)(7)(14)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.75%

 

12/25/2020

 

 

524

 

 

 

511

 

 

 

522

 

 

 

—

 

%

Ideal Tridon Holdings, Inc.(4)(5)(14)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

7/31/2023

 

 

327

 

 

 

262

 

 

 

298

 

 

 

—

 

%

MHE Intermediate Holdings, LLC(dba Material Handling Services)(4)(7)(22)

 

First lien senior secured delayed draw term loan

 

L + 5.00%

 

3/10/2024

 

 

23,933

 

 

 

23,727

 

 

 

23,455

 

 

 

0.4

 

%

22

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

Company(1)(17)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(24)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

PHM Netherlands Midco B.V. (dba Loparex)(4)(7)(22)

 

Second lien senior secured loan

 

L + 8.75%

 

8/2/2027

 

 

112,000

 

 

 

104,427

 

 

 

103,880

 

 

 

1.8

 

%

Professional Plumbing Group, Inc.(4)(7)(22)

 

First lien senior secured loan

 

L + 6.75%

 

4/16/2024

 

 

52,213

 

 

 

51,612

 

 

 

51,038

 

 

 

0.9

 

%

Professional Plumbing Group, Inc.(4)(7)(14)(22)

 

First lien senior secured revolving loan

 

L + 6.75%

 

4/16/2023

 

 

6,643

 

 

 

6,555

 

 

 

6,364

 

 

 

0.1

 

%

Safety Products/JHC Acquisition Corp.(dba Justrite Safety Group)(4)(5)(22)

 

First lien senior secured loan

 

L + 4.50%

 

6/28/2026

 

 

13,480

 

 

 

13,354

 

 

 

13,278

 

 

 

0.2

 

%

Safety Products/JHC Acquisition Corp.(dba Justrite Safety Group)(4)(5)(14)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 4.50%

 

6/28/2021

 

 

729

 

 

 

713

 

 

 

704

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

265,500

 

 

 

256,055

 

 

 

254,912

 

 

 

4.3

 

%

Oil and gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Black Mountain Sand Eagle Ford LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 8.25%

 

8/17/2022

 

 

88,246

 

 

 

87,574

 

 

 

87,805

 

 

 

1.5

 

%

Project Power Buyer, LLC (dba PEC-Veriforce)(4)(7)(22)

 

First lien senior secured loan

 

L + 5.75%

 

5/14/2026

 

 

32,773

 

 

 

32,392

 

 

 

32,199

 

 

 

0.5

 

%

Project Power Buyer, LLC (dba PEC-Veriforce)(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 5.75%

 

5/14/2025

 

 

—

 

 

 

(36

)

 

 

(56

)

 

 

—

 

%

Zenith Energy U.S. Logistics Holdings, LLC(4)(5)(22)

 

First lien senior secured loan

 

L + 5.50%

 

12/20/2024

 

 

85,365

 

 

 

84,022

 

 

 

82,804

 

 

 

1.4

 

%

 

 

 

 

 

 

 

 

 

206,384

 

 

 

203,952

 

 

 

202,752

 

 

 

3.4

 

%

Professional services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AmSpec Services Inc.(4)(7)(22)

 

First lien senior secured loan

 

L + 6.25%

 

7/2/2024

 

 

112,542

 

 

 

110,882

 

 

 

110,292

 

 

 

1.8

 

%

AmSpec Services Inc.(4)(9)(14)(22)

 

First lien senior secured revolving loan

 

P + 4.25%

 

7/2/2024

 

 

5,423

 

 

 

5,233

 

 

 

5,134

 

 

 

0.1

 

%

Cardinal US Holdings, Inc.(4)(7)(18)(22)

 

First lien senior secured loan

 

L + 5.00%

 

7/31/2023

 

 

90,196

 

 

 

87,114

 

 

 

90,196

 

 

 

1.5

 

%

DMT Solutions Global Corporation(4)(7)(22)

 

First lien senior secured loan

 

L + 7.00%

 

7/2/2024

 

 

51,800

 

 

 

50,142

 

 

 

50,376

 

 

 

0.8

 

%

GC Agile Holdings Limited (dba Apex Fund Services)(4)(7)(18)(22)

 

First lien senior secured loan

 

L + 7.00%

 

6/15/2025

 

 

160,486

 

 

 

157,898

 

 

 

157,275

 

 

 

2.6

 

%

GC Agile Holdings Limited (dba Apex Fund Services)(4)(14)(15)(18)(22)

 

First lien senior secured revolving loan

 

L + 7.00%

 

6/15/2023

 

 

—

 

 

 

(230

)

 

 

(208

)

 

 

—

 

%

Gerson Lehrman Group, Inc.(4)(5)(22)

 

First lien senior secured loan

 

L + 4.25%

 

12/12/2024

 

 

306,813

 

 

 

304,206

 

 

 

302,978

 

 

 

5.1

 

%

Gerson Lehrman Group, Inc.(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 4.25%

 

12/12/2024

 

 

—

 

 

 

(178

)

 

 

(270

)

 

 

—

 

%

 

 

 

 

 

 

 

 

 

727,260

 

 

 

715,067

 

 

 

715,773

 

 

 

11.9

 

%

Specialty retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BIG Buyer, LLC(4)(7)(22)

 

First lien senior secured loan

 

L + 6.50%

 

11/20/2023

 

 

50,459

 

 

 

49,486

 

 

 

49,323

 

 

 

0.8

 

%

BIG Buyer, LLC(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 6.50%

 

12/18/2020

 

 

-

 

 

 

(195

)

 

 

(56

)

 

 

—

 

%

BIG Buyer, LLC(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 6.50%

 

11/20/2023

 

 

-

 

 

 

(93

)

 

 

(84

)

 

 

—

 

%

EW Holdco, LLC (dba European Wax)(4)(5)(22)

 

First lien senior secured loan

 

L + 4.50%

 

9/25/2024

 

 

72,018

 

 

 

71,415

 

 

 

71,478

 

 

 

1.2

 

%

Galls, LLC(4)(6)(22)

 

First lien senior secured loan

 

L + 6.25%

 

1/31/2025

 

 

90,999

 

 

 

90,112

 

 

 

89,406

 

 

 

1.5

 

%

Galls, LLC(4)(5)(14)(22)

 

First lien senior secured revolving loan

 

L + 6.25%

 

1/31/2024

 

 

21,880

 

 

 

21,598

 

 

 

21,431

 

 

 

0.4

 

%

Galls, LLC(4)(6)(14)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 6.25%

 

1/31/2020

 

 

10,368

 

 

 

9,939

 

 

 

10,187

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

245,724

 

 

 

242,262

 

 

 

241,685

 

 

 

4.1

 

%

23

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

Company(1)(17)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)(24)

 

 

Fair Value

 

 

Percentage of Net Assets

 

 

Telecommunications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DB Datacenter Holdings Inc.(4)(5)(22)

 

Second lien senior secured loan

 

L + 8.00%

 

4/3/2025

 

 

47,409

 

 

 

46,826

 

 

 

46,934

 

 

 

0.8

 

%

 

 

 

 

 

 

 

 

 

47,409

 

 

 

46,826

 

 

 

46,934

 

 

 

0.8

 

%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lazer Spot G B Holdings, Inc.(4)(5)(22)

 

First lien senior secured loan

 

L + 6.00%

 

12/9/2025

 

 

133,200

 

 

 

130,892

 

 

 

130,896

 

 

 

2.2

 

%

Lazer Spot G B Holdings, Inc.(4)(14)(15)(16)(22)

 

First lien senior secured delayed draw term loan

 

L + 6.00%

 

6/9/2021

 

 

-

 

 

 

(49

)

 

 

(64

)

 

 

—

 

%

Lazer Spot G B Holdings, Inc.(4)(7)(14)(22)

 

First lien senior secured revolving loan

 

L + 6.00%

 

12/9/2025

 

 

2,147

 

 

 

1,683

 

 

 

1,682

 

 

 

—

 

%

Lytx, Inc.(4)(5)(22)

 

First lien senior secured loan

 

L + 6.75%

 

8/31/2023

 

 

43,688

 

 

 

42,797

 

 

 

43,688

 

 

 

0.7

 

%

Lytx, Inc.(4)(14)(15)(22)

 

First lien senior secured revolving loan

 

L + 6.75%

 

8/31/2022

 

 

—

 

 

 

(33

)

 

 

—

 

 

 

—

 

%

Motus, LLC and Runzheimer International LLC(4)(7)(11)(22)

 

First lien senior secured loan

 

L + 6.33%

 

1/17/2024

 

 

58,300

 

 

 

57,240

 

 

 

57,717

 

 

 

1.0

 

%

 

 

 

 

 

 

 

 

 

237,335

 

 

 

232,530

 

 

 

233,919

 

 

 

3.9

 

%

Total non-controlled/non-affiliated portfolio company debt investments

 

 

 

 

 

 

 

 

8,873,404

 

 

 

8,727,305

 

 

 

8,698,273

 

 

 

145.5

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CM7 Restaurant Holdings, LLC(22)(23)

 

LLC Interest

 

N/A

 

N/A

 

 

340

 

 

 

340

 

 

 

324

 

 

 

—

 

%

H-Food Holdings, LLC(22)(23)

 

LLC Interest

 

N/A

 

N/A

 

 

10,875

 

 

 

10,875

 

 

 

11,103

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

11,215

 

 

 

11,215

 

 

 

11,427

 

 

 

0.2

 

%

Total non-controlled/non-affiliated portfolio company equity investments

 

 

 

 

 

 

 

 

11,215

 

 

 

11,215

 

 

 

11,427

 

 

 

0.2

 

%

Total non-controlled/non-affiliated portfolio company investments

 

 

 

 

 

 

 

 

8,884,619

 

 

 

8,738,520

 

 

 

8,709,700

 

 

 

145.7

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlled/affiliated portfolio company investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wingspire Capital Holdings LLC(14)(19)(21)(23)

 

 

 

N/A

 

N/A

 

 

1,448

 

 

 

1,448

 

 

 

1,448

 

 

 

—

 

%

 

 

 

 

 

 

 

 

 

1,448

 

 

 

1,448

 

 

 

1,448

 

 

 

—

 

%

Investment funds and vehicles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sebago Lake LLC(12)(18)(19)(21)(23)

 

 

 

N/A

 

N/A

 

 

88,888

 

 

 

88,888

 

 

 

88,077

 

 

 

1.5

 

%

 

 

 

 

 

 

 

 

 

88,888

 

 

 

88,888

 

 

 

88,077

 

 

 

1.5

 

%

Total controlled/affiliated portfolio company investments

 

 

 

 

 

 

 

 

90,336

 

 

 

90,336

 

 

 

89,525

 

 

 

1.5

 

%

Total Investments

 

 

 

 

 

 

 

$

8,974,955

 

 

$

8,828,856

 

 

$

8,799,225

 

 

 

147.2

 

%

 

24

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

 

 

Interest Rate Swaps as of December 31, 2019

 

 

Company Receives

 

 

Company Pays

 

Maturity Date

 

Notional Amount

 

 

Hedged Instrument

 

Footnote Reference

Interest rate swap

 

4.75%

 

 

L + 2.545%

 

12/21/2021

 

$

150,000

 

 

2023 Notes

 

Note 6

Interest rate swap

 

5.25%

 

 

L + 2.937%

 

4/10/2024

 

 

400,000

 

 

2024 Notes

 

Note 6

Total

 

 

 

 

 

 

 

 

 

$

550,000

 

 

 

 

 

________________

 

(1)

Certain portfolio company investments are subject to contractual restrictions on sales.

 

(2)

Unless otherwise indicated, all investments are considered Level 3 investments.

 

(3)

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

 

(4)

Loan contains a variable rate structure and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR), Euro Interbank Offered Rate (“EURIBOR” or “E”), or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.

 

(5)

The interest rate on these loans is subject to 1 month LIBOR, which as of December 31, 2019 was 1.8%.

 

(6)

The interest rate on these loans is subject to 2 month LIBOR, which as of December 31, 2019 was 1.8%.

 

(7)

The interest rate on these loans is subject to 3 month LIBOR, which as of December 31, 2019 was 1.9%.

 

(8)

The interest rate on this loan is subject to 3 month Canadian Dollar Offered Rate (“CDOR” or “C”), which as of December 31, 2019 was 2.1%.

 

(9)

The interest rate on these loans is subject to Prime, which as of December 31, 2019 was 4.75%.

 

(10)

The interest rate on this loan is subject to 3 month EURIBOR, which as of December 31, 2019 was (0.4)%.

 

(11)

The Company may be entitled to receive additional interest as a result of an arrangement with other lenders in the syndication. In exchange for the higher interest rate, the “last-out” portion is at a greater risk of loss.

 

(12)

Investment measured at NAV.

 

(13)

The first lien term loan is comprised of two components: Term Loan A and Term Loan B. The Company's Term Loan A and Term Loan B principal amounts are $34.4 million and $143.3 million, respectively. Both Term Loan A and Term Loan B have the same maturity date. Interest disclosed reflects the blended rate of the first lien term loan. The Term Loan A represents a ‘first out’ tranche and the Term Loan B represents a ‘last out’ tranche. The ‘first out’ tranche has priority as to the ‘last out’ tranche with respect to payments of principal, interest and any amounts due thereunder.

 

(14)

Position or portion thereof is an unfunded loan commitment. See Note 7 “Commitments and Contingencies”.

 

(15)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

 

(16)

The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.

 

(17)

Unless otherwise indicated, the Company’s portfolio companies are pledged as collateral supporting the amounts outstanding under the Revolving Credit Facility, SPV Asset Facilities and CLOs. See Note 6 “Debt”.

 

(18)

This portfolio company is not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of total assets. As of December 31, 2019, non-qualifying assets represented 5.9% of total assets as calculated in accordance with the regulatory requirements.

 

(19)

As defined in the 1940 Act, the Company is deemed to be both an "Affiliated Person" and has "Control" of this portfolio company as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). The Company’s investment in affiliates for the year ended December 31, 2019, were as follows:

($ in thousands)

 

Fair value

as of December 31, 2018

 

 

Gross Additions

 

 

Gross Reductions

 

 

Change in Unrealized Gains (Losses)

 

 

Fair value

as of December 31, 2019

 

 

Dividend Income

 

 

Other Income

 

Controlled Affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sebago Lake LLC

 

$

86,622

 

 

$

—

 

 

$

(2,250

)

 

$

3,705

 

 

$

88,077

 

 

$

10,046

 

 

$

—

 

Wingspire Capital Holdings LLC

 

 

—

 

 

 

1,448

 

 

 

—

 

 

 

—

 

 

 

1,448

 

 

 

—

 

 

 

—

 

Total Controlled Affiliates

 

$

86,622

 

 

$

1,448

 

 

$

(2,250

)

 

$

3,705

 

 

$

89,525

 

 

$

10,046

 

 

$

—

 

 

(20)

Level 2 investment.

 

(21)

Investment is not pledged as collateral for the credit facilities.

 

(22)

Represents co-investment made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company received from the U.S. Securities and Exchange Commission. See Note 3 “Agreements and Related Party Transactions.”

 

(23)

Securities acquired in transactions exempt from registration under the Securities Act and may be deemed to be “restricted securities” under the Securities Act. As of December 31, 2019, the aggregate fair value of these securities is $101.0 million or 1.7% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:

25

Owl Rock Capital Corporation

Consolidated Schedules of Investments

As of December 31, 2019

(Amounts in thousands, except share amounts)

Portfolio Company

 

Investment

 

Acquisition Date

CM7 Restaurant Holdings, LLC

 

LLC Interest

 

May 21, 2018

H-Food Holdings, LLC

 

LLC Interest

 

November 23, 2018

Sebago Lake LLC*

 

LLC Interest

 

June 20, 2017

Wingspire Capital Holdings LLC**

 

LLC Interest

 

September 24, 2019

* Refer to Note 4 “Investments – Sebago Lake LLC,” for further information.  

** Refer to Note 3 “Agreements and Related Party Transactions – Controlled/Affiliated Portfolio Companies”.

 

 

(24)

As of December 31, 2019, the net estimated unrealized loss for U.S. federal income tax purposes was $40.2 million based on a tax cost basis of $8.8 billion. As of December 31, 2019, the estimated aggregate gross unrealized loss for U.S. federal income tax purposes was $64.4 million and the estimated aggregate gross unrealized gain for U.S. federal income tax purposes was $24.2 million.

  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

 

 

26

 

Owl Rock Capital Corporation

Consolidated Statements of Changes in Net Assets

(Amounts in thousands)

(Unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Increase (Decrease) in Net Assets Resulting from Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

$

127,437

 

 

$

137,906

 

 

$

402,855

 

 

$

353,534

 

Net change in unrealized gain (loss)

 

 

88,347

 

 

 

(20,708

)

 

 

(196,300

)

 

 

2,802

 

Net realized gain (loss)

 

 

263

 

 

 

1,454

 

 

 

521

 

 

 

1,474

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

 

216,047

 

 

 

118,652

 

 

 

207,076

 

 

 

357,810

 

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared from earnings(1)

 

 

(151,409

)

 

 

(128,421

)

 

 

(453,871

)

 

 

(336,522

)

Net Decrease in Net Assets Resulting from Shareholders' Distributions

 

 

(151,409

)

 

 

(128,421

)

 

 

(453,871

)

 

 

(336,522

)

Capital Share Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares, net of offering and underwriting costs

 

 

—

 

 

 

163,941

 

 

 

—

 

 

 

2,494,452

 

Repurchase of common stock

 

 

—

 

 

 

—

 

 

 

(150,250

)

 

 

—

 

Reinvestment of distributions

 

 

43,947

 

 

 

60,597

 

 

 

114,110

 

 

 

144,040

 

Net Increase in Net Assets Resulting from Capital Share Transactions

 

 

43,947

 

 

 

224,538

 

 

 

(36,140

)

 

 

2,638,492

 

Total Increase (Decrease) in Net Assets

 

 

108,585

 

 

 

214,769

 

 

 

(282,935

)

 

 

2,659,780

 

Net Assets, at beginning of period

 

 

5,585,763

 

 

 

5,709,856

 

 

 

5,977,283

 

 

 

3,264,845

 

Net Assets, at end of period

 

$

5,694,348

 

 

$

5,924,625

 

 

$

5,694,348

 

 

$

5,924,625

 

________________

 

(1)

For the three and nine months ended September 30, 2020 and 2019, distributions declared from earnings were derived from net investment income.

 

The accompanying notes are an integral part of these consolidated financial statements.

27

 

Owl Rock Capital Corporation

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

$

207,076

 

 

$

357,810

 

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:

 

 

 

 

 

 

 

 

Purchases of investments, net

 

 

(2,288,298

)

 

 

(3,497,458

)

Proceeds from investments and investment repayments, net

 

 

1,035,753

 

 

 

1,049,582

 

Net amortization of discount on investments

 

 

(31,923

)

 

 

(24,855

)

Payment-in-kind interest

 

 

(23,942

)

 

 

(12,084

)

Net change in unrealized (gain) loss on investments

 

 

198,756

 

 

 

(2,970

)

Net change in unrealized (gains) losses on translation of assets and liabilities in foreign currencies

 

 

(3,237

)

 

 

168

 

Net realized (gain) loss on investments

 

 

(2,885

)

 

 

(1,102

)

Net realized (gain) loss on foreign currency transactions relating to investments

 

 

11

 

 

 

—

 

Amortization of debt issuance costs

 

 

13,095

 

 

 

7,273

 

Amortization of offering costs

 

 

—

 

 

 

—

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) decrease in receivable for investments sold

 

 

8,597

 

 

 

(23,261

)

(Increase) decrease in interest receivable

 

 

7,998

 

 

 

(25,854

)

(Increase) decrease in receivable from a controlled affiliate

 

 

208

 

 

 

5,810

 

(Increase) decrease in prepaid expenses and other assets

 

 

(25,073

)

 

 

(17,518

)

Increase (decrease) in management fee payable

 

 

1,974

 

 

 

711

 

Increase (decrease) in payables to affiliate

 

 

(1,454

)

 

 

1,810

 

Increase (decrease) in payables for investments purchased

 

 

26,537

 

 

 

(1,553

)

Increase (decrease) in fair value of interest rate swap attributed to unsecured notes

 

 

19,353

 

 

 

17,403

 

Increase (decrease) in accrued expenses and other liabilities

 

 

4,945

 

 

 

15,500

 

Net cash used in operating activities

 

 

(852,509

)

 

 

(2,150,588

)

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Borrowings on debt

 

 

3,664,754

 

 

 

3,170,376

 

Payments on debt

 

 

(2,397,250

)

 

 

(3,278,100

)

Debt issuance costs

 

 

(35,810

)

 

 

(23,114

)

Proceeds from issuance of common shares (net of underwriting costs)

 

 

—

 

 

 

2,495,851

 

Repurchase of common stock

 

 

(150,250

)

 

 

—

 

Offering costs paid

 

 

—

 

 

 

(1,999

)

Cash distributions paid to shareholders

 

 

(325,628

)

 

 

(142,411

)

Net cash provided by financing activities

 

 

755,816

 

 

 

2,220,603

 

Net increase (decrease) in cash and restricted cash (restricted cash of

    $(763) and $6,956, respectively)

 

 

(96,693

)

 

 

70,015

 

Cash and restricted cash, beginning of period (restricted cash of $7,587 and

     $6,013, respectively)

 

 

317,159

 

 

 

127,603

 

Cash and restricted cash, end of period (restricted cash of $6,824

     and $12,969, respectively)

 

$

220,466

 

 

$

197,618

 

28

 

Owl Rock Capital Corporation

Consolidated Statements of Cash Flows - Continued

(Amounts in thousands)

(Unaudited)

 

 

 

 

For the Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

Supplemental and Non-Cash Information

 

 

 

 

 

 

 

 

Interest paid during the period

 

$

89,988

 

 

$

74,302

 

Distributions declared during the period

 

$

453,871

 

 

$

336,522

 

Reinvestment of distributions during the period

 

$

114,110

 

 

$

144,040

 

Distributions Payable

 

$

151,409

 

 

$

128,421

 

Excise taxes paid

 

$

1,990

 

 

$

1,100

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Organization

Owl Rock Capital Corporation (the “Company”) is a Maryland corporation formed on October 15, 2015. The Company was formed primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. The Company invests in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity. The Company’s investment objective is to generate current income and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.

The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes, the Company is treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Because the Company has elected to be regulated as a BDC and qualifies as a RIC under the Code, the Company’s portfolio is subject to diversification and other requirements.

On April 27, 2016, the Company formed a wholly-owned subsidiary, OR Lending LLC, a Delaware limited liability company, which holds a California finance lenders license. OR Lending LLC makes loans to borrowers headquartered in California. From time to time the Company may form wholly-owned subsidiaries to facilitate the normal course of business.

Owl Rock Capital Advisors LLC (the “Adviser”) serves as the Company’s investment adviser. The Adviser is an indirect subsidiary of Owl Rock Capital Partners LP (“Owl Rock Capital Partners”). The Adviser is registered with the Securities and Exchange Commission (“SEC”) as an investment adviser under the 1940 Act. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Adviser manages the day-to-day operations of, and provides investment advisory and management services to, the Company.  

On July 22, 2019, the Company closed its initial public offering ("IPO"), issuing 10 million shares of its common stock at a public offering price of $15.30 per share, and on August 2, 2019, the underwriters exercised their option to purchase an additional 1.5 million shares of common stock at a purchase price of $15.30 per share.  Net of underwriting fees and offering costs, the Company received total cash proceeds of $164.0 million. The Company’s common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “ORCC” on July 18, 2019.

 

Note 2. Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company is an investment company and, therefore, applies the specialized accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. In the opinion of management, all adjustments considered necessary for the fair presentation of the consolidated financial statements have been included. The Company was initially capitalized on March 1, 2016 and commenced operations on March 3, 2016. The Company’s fiscal year ends on December 31.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual amounts could differ from those estimates and such differences could be material.

Cash

Cash consists of deposits held at a custodian bank and restricted cash pledged as collateral. Cash is carried at cost, which approximates fair value. The Company deposits its cash with highly-rated banking corporations and, at times, may exceed the insured limits under applicable law.

Investments at Fair Value

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

30

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of the Company’s investments, are valued at fair value as determined in good faith by the Board, based on, among other things, the input of the Adviser, the Company’s audit committee and independent third-party valuation firm(s) engaged at the direction of the Board.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of the Company’s investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase or sale transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.

The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:

 

•

With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;

 

•

With respect to investments for which market quotations are not readily available, the valuation process begins with the independent valuation firm(s) providing a preliminary valuation of each investment to the Adviser’s valuation committee;

 

•

Preliminary valuation conclusions are documented and discussed with the Adviser’s valuation committee. Agreed upon valuation recommendations are presented to the Audit Committee;

 

•

The Audit Committee reviews the valuation recommendations and recommends values for each investment to the Board; and

 

•

The Board reviews the recommended valuations and determines the fair value of each investment.

The Company conducts this valuation process on a quarterly basis.

The Company applies Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date.  Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact.  In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value.  In accordance with ASC 820, these levels are summarized below:

 

•

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

 

•

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

 

•

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfer occurs. In addition to using the above inputs in investment valuations, the Company applies the valuation policy approved by its Board that is consistent with ASC 820.  Consistent with the valuation policy, the Company evaluates the source of the inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (such as broker quotes), the Company subjects those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, the Company, or the independent valuation firm(s), reviews pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.

31

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein.

Financial and Derivative Instruments

Pursuant to ASC 815 Derivatives and Hedging, further clarified by the FASB’s issuance of the Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging, which was adopted early in 2017 by the Company, all derivative instruments entered into by the Company are designated as hedging instruments. For all derivative instruments designated as a hedge, the entire change in the fair value of the hedging instrument shall be recorded in the same line item of the Consolidated Statements of Operations as the hedged item. The Company’s derivative instruments are used to hedge the Company’s fixed rate debt, and therefore both the periodic payment and the change in fair value for the effective hedge, if applicable, will be recognized as components of interest expense in the Consolidated Statements of Operations. Fair value is estimated by discounting remaining payments using applicable current market rates, or market quotes, if available.

Foreign Currency

Foreign currency amounts are translated into U.S. dollars on the following basis:

 

•

cash, fair value of investments, outstanding debt, other assets and liabilities: at the spot exchange rate on the last business day of the period; and

 

•

purchases and sales of investments, borrowings and repayments of such borrowings, income and expenses: at the rates of exchange prevailing on the respective dates of such transactions.

The Company includes net changes in fair values on investments held resulting from foreign exchange rate fluctuations with the change in unrealized gains (losses) on translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations. The Company’s current approach to hedging the foreign currency exposure in its non-U.S. dollar denominated investments is primarily to borrow the par amount in local currency under the Company’s Revolving Credit Facility to fund these investments.  Fluctuations arising from the translation of foreign currency borrowings are included with the net change in unrealized gains (losses) on translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations.

Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. dollar.

Interest and Dividend Income Recognition

Interest income is recorded on the accrual basis and includes amortization of discounts or premiums. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK interest represents accrued interest that is added to the principal amount of the investment on the respective interest payment dates rather than being paid in cash and generally becomes due at maturity. For the three and nine months ended September 30, 2020, PIK interest earned was $9.8 million and $24.6 million, representing approximately 5.2% and less than 5.0% of investment income, respectively. For the three and nine months ended September 30, 2019, PIK interest earned was less than 5% of investment income. Discounts and premiums to par value on securities purchased are amortized into interest income over the contractual life of the respective security using the effective yield method.  The amortized cost of investments represents the original cost adjusted for the amortization of discounts or premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. If at any point the Company believes PIK interest is not expected to be realized, the investment generating PIK interest will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest income. Non-accrual loans are restored to accrual status when past due principal and interest is paid current

32

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

Other Income

From time to time, the Company may receive fees for services provided to portfolio companies. These fees are generally only available to the Company as a result of closing investments, are normally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when earned upon closing of the investment. The services that the Adviser provides vary by investment, but can include closing, work, diligence or other similar fees and fees for providing managerial assistance to our portfolio companies.

Offering Expenses

Costs associated with the private placement offering of common shares of the Company were capitalized as deferred offering expenses and included in prepaid expenses and other assets in the Consolidated Statements of Assets and Liabilities and were amortized over a twelve-month period from incurrence. The Company records expenses related to public equity offerings as a reduction of capital upon completion of an offering of registered securities. The costs associated with renewals of the Company’s shelf registration statement will be expensed as incurred.

Debt Issuance Costs

The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized utilizing the effective yield method, over the life of the related debt instrument. Debt issuance costs are presented on the Consolidated Statements of Assets and Liabilities as a direct deduction from the debt liability. In circumstances in which there is not an associated debt liability amount recorded in the consolidated financial statements when the debt issuance costs are incurred, such debt issuance costs will be reported on the Consolidated Statements of Assets and Liabilities as an asset until the debt liability is recorded.

Reimbursement of Transaction-Related Expenses

The Company may receive reimbursement for certain transaction-related expenses in pursuing investments. Transaction-related expenses, which are generally expected to be reimbursed by the Company’s portfolio companies, are typically deferred until the transaction is consummated and are recorded in prepaid expenses and other assets on the date incurred. The costs of successfully completed investments not otherwise reimbursed are borne by the Company and are included as a component of the investment’s cost basis.

Cash advances received in respect of transaction-related expenses are recorded as cash with an offset to accrued expenses and other liabilities. Accrued expenses and other liabilities are relieved as reimbursable expenses are incurred.

Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act. The Company has elected to be treated as a RIC under the Code beginning with its taxable year ending December 31, 2016 and intends to continue to qualify as a RIC. So long as the Company maintains its tax treatment as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its shareholders as dividends. Instead, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s investors and will not be reflected in the consolidated financial statements of the Company.

To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its shareholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income.

33

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. There were no material uncertain tax positions through December 31, 2019. The 2017 through 2019 tax years remain subject to examination by U.S. federal, state and local tax authorities.

Distributions to Common Shareholders

Distributions to common shareholders are recorded on the record date. The amount to be distributed is determined by the Board and is generally based upon the earnings estimated by the Adviser. Net realized long-term capital gains, if any, would be generally distributed at least annually, although the Company may decide to retain such capital gains for investment.

The Company has adopted a dividend reinvestment plan that provides for reinvestment of any cash distributions on behalf of shareholders, unless a shareholder elects to receive cash. As a result, if the Board authorizes and declares a cash distribution, then the shareholders who have not “opted out” of the dividend reinvestment plan will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. The Company expects to use newly issued shares to implement the dividend reinvestment plan.

Consolidation

As provided under Regulation S-X and ASC Topic 946 - Financial Services - Investment Companies, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company's wholly-owned subsidiaries that meet the aforementioned criteria in its consolidated financial statements.  All significant intercompany balances and transactions have been eliminated in consolidation.

The Company does not consolidate its equity interest in Sebago Lake LLC (“Sebago Lake”) or Wingspire Capital Holdings LLC (“Wingspire”).  For further description of the Company’s investment in Sebago Lake, see Note 4 “Investments”. For further description of the Company’s investment in Wingspire, see Note 3 “Agreements and Related Party Transactions - Controlled/Affiliated Portfolio Companies”.

New Accounting Pronouncements

The Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying consolidated financial statements.

 

Note 3. Agreements and Related Party Transactions

Administration Agreement

On March 1, 2016, the Company entered into an Administration Agreement (the “Administration Agreement”) with the Adviser. Under the terms of the Administration Agreement, the Adviser performs, or oversees, the performance of, required administrative services, which includes providing office space, equipment and office services, maintaining financial records, preparing reports to shareholders and reports filed with the SEC, and managing the payment of expenses and the performance of administrative and professional services rendered by others.

The Administration Agreement also provides that the Company reimburses the Adviser for certain organization costs incurred prior to the commencement of the Company’s operations, and for certain offering costs.

The Company reimburses the Adviser for services performed for it pursuant to the terms of the Administration Agreement. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and the Company will reimburse the Adviser for any services performed for it by such affiliate or third party.

On February 19, 2020, the Board approved the continuation of the Administration Agreement. Unless earlier terminated as described below, the Administration Agreement will remain in effect from year to year if approved annually by (1) the vote of the Board, or by the vote of a majority of its outstanding voting securities, and (2) the vote of a majority of the Company’s directors who are not “interested persons” of the Company, of the Adviser or of any of their respective affiliates, as defined in the 1940 Act. The

34

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Administration Agreement may be terminated at any time, without the payment of any penalty, on 60 days’ written notice, by the vote of a majority of the outstanding voting securities of the Company, or by the vote of the Board or by the Adviser.

No person who is an officer, director, or employee of the Adviser or its affiliates and who serves as a director of the Company receives any compensation from the Company for his or her services as a director. However, the Company reimburses the Adviser (or its affiliates) for an allocable portion of the compensation paid by the Adviser or its affiliates to the Company’s Chief Compliance Officer, Chief Financial Officer and their respective staffs (based on the percentage of time those individuals devote, on an estimated basis, to the business and affairs of the Company). Directors who are not affiliated with the Adviser receive compensation for their services and reimbursement of expenses incurred to attend meetings.

For the three and nine months ended September 30, 2020, the Company incurred expenses of approximately $1.3 million and $4.4 million, respectively, for costs and expenses reimbursable to the Adviser under the terms of the Administration Agreement. For the three and nine months ended September 30, 2019, the Company incurred expenses of approximately $2.2 million and $5.1 million, respectively, for costs and expenses reimbursable to the Adviser under the terms of the Administration Agreement.

Investment Advisory Agreement

On March 1, 2016, the Company entered into the Original Investment Advisory Agreement with the Adviser. On February 27, 2019, the Board determined to amend and restate the Original Investment Advisory Agreement (the "First Amended and Restated Investment Advisory Agreement") to reduce the fees that the Company will pay the Adviser following the listing of the Company's common stock on a national securities exchange, which occurred on July 18, 2019 (the “Listing Date”). On February 19, 2020, the Board approved the continuation of the First Amended and Restated Investment Advisory Agreement. On March 31, 2020, the Board determined to amend and restate the First Amendment and Restated Investment Advisory Agreement to reduce the management fee payable to the Adviser when the Company’s asset coverage ratio, calculated in accordance with Section 18 and 61 of the 1940 Act is below 200% (as amended and restated, the “Investment Advisory Agreement”).

Under the terms of the Investment Advisory Agreement, the Adviser is responsible for managing the Company’s business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring its investments, and monitoring its portfolio companies on an ongoing basis through a team of investment professionals.

The Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to the Company are not impaired.

Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect from year-to-year if approved annually by a majority of the Board or by the holders of a majority of our outstanding voting securities and, in each case, by a majority of independent directors.

The Investment Advisory Agreement will automatically terminate within the meaning of the 1940 Act and related SEC guidance and interpretations in the event of its assignment. In accordance with the 1940 Act, without payment of any penalty, the Company may terminate the Investment Advisory Agreement with the Adviser upon 60 days’ written notice. The decision to terminate the agreement may be made by a majority of the Board or the shareholders holding a majority (as defined under the 1940 Act) of the outstanding shares of the Company’s common stock or the Adviser. In addition, without payment of any penalty, the Adviser may generally terminate the Investment Advisory Agreement upon 60 days’ written notice and, in certain circumstances, the Adviser may only be able to terminate the Investment Advisory Agreement upon 120 days’ written notice.

From time to time, the Adviser may pay amounts owed by the Company to third-party providers of goods or services, including the Board, and the Company will subsequently reimburse the Adviser for such amounts paid on its behalf. Amounts payable to the Adviser are settled in the normal course of business without formal payment terms.

Under the terms of the Investment Advisory Agreement, the Company will pay the Adviser a base management fee and may also pay to it certain incentive fees. The cost of both the management fee and the incentive fee will ultimately be borne by the Company’s shareholders.

The management fee is payable quarterly in arrears. Prior to the Listing Date, the management fee was payable at an annual rate of 0.75% of the Company’s (i) average gross assets, excluding cash and cash equivalents but including assets purchased with borrowed amounts, at the end of the Company’s two most recently completed calendar quarters plus (ii) the average of any remaining unfunded Capital Commitments at the end of the two most recently completed calendar quarters.

Following the Listing Date, the management fee is payable at an annual rate of (x) 1.50% of the Company’s average gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) that is above an asset coverage ratio of 200% calculated in accordance with Sections 18 and 61 of the 1940 Act and (y) 1.00% of the Company’s average gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) that is below an asset coverage ratio of

35

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

200% calculated in accordance with Section 18 and 61 of the 1940 Act, in each case, at the end of the two most recently completed calendar quarters. The management fee for any partial month or quarter, as the case may be, will be appropriately prorated and adjusted for any share issuances or repurchases during the relevant calendar months or quarters, as the case may be.

On February 27, 2019, the Adviser agreed at all times prior to the fifteen-month anniversary of the Listing Date, to waive any portion of the Management Fee that is in excess of 0.75% of the Company’s gross assets, excluding cash and cash-equivalents but including assets purchased with borrowed amounts at the end of the two most recently completed calendar quarters, calculated in accordance with the Investment Advisory Agreement. This waiver expired on October 18, 2020.

For the three and nine months ended September 30, 2020, management fees, net of $18.2 million and $52.4 million in management fee waivers, respectively, were $18.2 million and $52.4 million, respectively. For the three and nine months ended September 30, 2019, net of $12.0 million and $12.0 million in management fee waivers, respectively, management fees were $14.8 million and $45.4 million, respectively.

Pursuant to the Investment Advisory Agreement, the Adviser was not entitled to an incentive fee prior to the Listing Date.

Following the Listing Date, the incentive fee consists of two components that are independent of each other, with the result that one component may be payable even if the other is not. A portion of the incentive fee is based on the Company’s pre-incentive fee net investment income and a portion is based on the Company’s capital gains. The portion of the incentive fee based on pre-incentive fee net investment income is determined and paid quarterly in arrears commencing with the first calendar quarter following the Listing Date, and equals 100% of the pre-incentive fee net investment income in excess of a 1.5% quarterly “hurdle rate,” until the Adviser has received 17.5% of the total pre-incentive fee net investment income for that calendar quarter and, for pre-incentive fee net investment income in excess of 1.82% quarterly, 17.5% of all remaining pre-incentive fee net investment income for that calendar quarter.

The second component of the incentive fee, the capital gains incentive fee, payable at the end of each calendar year in arrears, equals 17.5% of cumulative realized capital gains from the Listing Date to the end of each calendar year, less cumulative realized capital losses and unrealized capital depreciation from the Listing Date to the end of each calendar year, less the aggregate amount of any previously paid capital gains incentive fee for prior periods. In no event will the capital gains incentive fee payable pursuant to the Investment Advisory Agreement be in excess of the amount permitted by the Advisers Act of 1940, as amended, including Section 205 thereof.

While the Investment Advisory Agreement neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, as required by U.S. GAAP, the Company accrues capital gains incentive fees on unrealized gains. This accrual reflects the incentive fees that would be payable to the Adviser if the Company’s entire investment portfolio was liquidated at its fair value as of the balance sheet date even though the Adviser is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

On February 27, 2019, the Adviser agreed at all times prior to the fifteen-month anniversary of the Listing Date to waive the entire incentive fee (including, for the avoidance of doubt, both the portion of the incentive fee based on the Company’s income and the capital gains incentive fee). This waiver expired on October 18, 2020.

For the three and nine months ended September 30, 2020, due to the fee waivers of $22.3 million and $70.5 million, respectively, the Company did not incur any performance based incentive fees on net investment income. For the three and nine months ended September 30, 2019, due to the fee waiver of $19.7 million and $19.7 million, respectively, the Company did not incur any performance based incentive fees on net investment income.

For the three and nine months ended September 30, 2020, the Company did not accrue capital gains based incentive fees (net of waivers). For the three and nine months ended September 30, 2019, the Company did not accrue capital gains based on incentive fees (net of waivers).

Any portion of the management fee, incentive fee on net investment income and capital gains based incentive fee waived shall not be subject to recoupment.

Affiliated Transactions

The Company may be prohibited under the 1940 Act from participating in certain transactions with its affiliates without prior approval of the directors who are not interested persons, and in some cases, the prior approval of the SEC.  The Company, the Adviser and certain of their affiliates have been granted exemptive relief by the SEC for the Company to co-invest with other funds managed by the Adviser or its affiliates in a manner consistent with the Company’s investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. Pursuant to such exemptive relief, the Company generally is permitted to co-invest with certain of its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Board

36

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Company and its shareholders and do not involve overreaching of the Company or its shareholders on the part of any person concerned, (2) the transaction is consistent with the interests of the Company’s shareholders and is consistent with its investment objective and strategies, and (3) the investment by its affiliates would not disadvantage the Company, and the Company’s participation would not be on a basis different from or less advantageous than that on which its affiliates are investing. In addition, pursuant to an exemptive order issued by the SEC on April 8, 2020 and applicable to all BDCs, through December 31, 2020, the Company may, subject to the satisfaction of certain conditions, co-invest in its existing portfolio companies with certain other funds managed by the Adviser or its affiliates and covered by the Company’s exemptive relief, even if such other funds have not previously invested in such existing portfolio company. Without this order, affiliated funds would not be able to participate in such co-investments with the Company unless the affiliated funds had previously acquired securities of the portfolio company in a co-investment transaction with the Company. The Adviser is under common control with Owl Rock Technology Advisors LLC (“ORTA”), Owl Rock Capital Private Fund Advisors LLC (“ORPFA”) and Owl Rock Diversified Advisors LLC (“ORDA”), which are also investment advisers and indirect subsidiaries of Owl Rock Capital Partners. The Adviser, ORTA, ORPFA and ORDA are referred to as the “Owl Rock Advisers” and together with Owl Rock Capital Partners are referred to, collectively, as “Owl Rock.” Owl Rock Advisers’ allocation policy seeks to ensure equitable allocation of investment opportunities over time between the Company, Owl Rock Capital Corporation II, a BDC advised by the Adviser, Owl Rock Technology Finance Corp., a BDC advised by ORTA, Owl Rock Capital Corporation III, a BDC advised by ORDA, and other funds managed by the Adviser or its affiliates. As a result of exemptive relief, there could be significant overlap in the Company’s investment portfolio and the investment portfolio of Owl Rock Capital Corporation II, Owl Rock Technology Finance Corp., Owl Rock Capital Corporation III and/or other funds established by the Adviser or its affiliates that could avail themselves of the exemptive relief.

License Agreement

The Company has entered into a license agreement (the “License Agreement”), pursuant to which an affiliate of Owl Rock Capital Partners LP has granted the Company a non-exclusive license to use the name “Owl Rock.” Under the License Agreement, the Company has a right to use the Owl Rock name for so long as the Adviser or one of its affiliates remains the Company’s investment adviser. Other than with respect to this limited license, the Company will have no legal right to the “Owl Rock” name or logo.

Controlled/Affiliated Portfolio Companies

Under the 1940 Act, the Company is required to separately identify non-controlled investments where it owns 5% or more of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Under the 1940 Act, "non-affiliated investments" are defined as investments that are neither controlled investments nor affiliated investments. Detailed information with respect to the Company’s non-controlled, non-affiliated; non-controlled, affiliated; and controlled affiliated investments is contained in the accompanying consolidated financial statements, including the consolidated schedule of investments.

The Company has made investments in two controlled/affiliated companies, Sebago Lake and Wingspire. For further description of Sebago Lake, see “Note 4. Investments”. Wingspire conducts its business through an indirectly owned subsidiary, Wingspire Capital LLC. Wingspire is an independent diversified direct lender focused on providing asset-based commercial finance loans and related senior secured loans to U.S.-based middle market borrowers. Wingspire offers a wide variety of asset-based financing solutions to businesses in an array of industries, including revolving credit facilities, machinery and equipment term loans, real estate term loans, first-in/last-out tranches, cash flow term loans, and opportunistic / bridge financings. The addition of Wingspire to the portfolio allows ORCC to participate in an asset class that offers differentiated yield with full collateral packages and covenants. Wingspire is led by a seasoned team of commercial finance veterans. The Company committed $50 million to Wingspire on September 24, 2019, and subsequently increased its commitment to $100 million on March 25, 2020 and again to $150 million on July 31, 2020. The Company does not consolidate its equity interest in Wingspire.

 

Note 4. Investments

The information in the tables below is presented on an aggregate portfolio basis, without regard to whether they are non-controlled non-affiliated, non-controlled affiliated or controlled affiliated investments.

37

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Investments at fair value and amortized cost consisted of the following as of September 30, 2020 and December 31, 2019:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

($ in thousands)

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

First-lien senior secured debt investments

 

$

8,038,131

 

 

$

7,852,727

 

 

$

7,136,866

 

 

$

7,113,356

 

Second-lien senior secured debt investments

 

 

1,763,808

 

 

 

1,716,791

 

 

 

1,590,439

 

 

 

1,584,917

 

Unsecured debt investments

 

 

51,332

 

 

 

50,211

 

 

 

—

 

 

 

—

 

Equity investments(1)

 

 

179,032

 

 

 

195,082

 

 

 

12,663

 

 

 

12,875

 

Investment funds and vehicles(2)

 

 

107,838

 

 

 

103,491

 

 

 

88,888

 

 

 

88,077

 

Total Investments

 

$

10,140,141

 

 

$

9,918,302

 

 

$

8,828,856

 

 

$

8,799,225

 

________________

 

(1)

Includes equity investment in Wingspire.

 

(2)

Includes equity investment in Sebago Lake.  See below, within Note 4, for more information regarding Sebago Lake.

 

The industry composition of investments based on fair value as of September 30, 2020 and December 31, 2019 was as follows:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

Advertising and media

 

 

1.4

 

%

 

2.6

 

%

Aerospace and defense

 

 

2.9

 

 

 

3.3

 

 

Automotive

 

 

1.7

 

 

 

1.7

 

 

Buildings and real estate

 

 

5.6

 

 

 

6.6

 

 

Business services

 

 

4.5

 

 

 

5.4

 

 

Chemicals

 

 

2.3

 

 

 

2.6

 

 

Consumer products

 

 

3.7

 

 

 

2.7

 

 

Containers and packaging

 

 

1.9

 

 

 

2.1

 

 

Distribution

 

 

6.5

 

 

 

8.6

 

 

Education

 

 

2.7

 

 

 

3.5

 

 

Energy equipment and services

 

 

0.1

 

 

 

0.2

 

 

Financial services (1)

 

 

2.7

 

 

 

1.6

 

 

Food and beverage

 

 

9.2

 

 

 

7.2

 

 

Healthcare providers and services

 

 

7.2

 

 

 

8.3

 

 

Healthcare technology

 

 

3.7

 

 

 

3.4

 

 

Household products

 

 

1.4

 

 

 

1.5

 

 

Human resource support services(3)

 

 

0.0

 

 

 

-

 

 

Infrastructure and environmental services

 

 

2.2

 

 

 

2.7

 

 

Insurance

 

 

8.8

 

 

 

5.7

 

 

Internet software and services

 

 

9.2

 

 

 

8.1

 

 

Investment funds and vehicles (2)

 

 

1.0

 

 

 

1.0

 

 

Leisure and entertainment

 

 

1.8

 

 

 

2.0

 

 

Manufacturing

 

 

4.8

 

 

 

2.9

 

 

Oil and gas

 

 

2.0

 

 

 

2.3

 

 

Professional services

 

 

7.3

 

 

 

8.1

 

 

Specialty retail

 

 

2.3

 

 

 

2.7

 

 

Telecommunications

 

 

0.5

 

 

 

0.5

 

 

Transportation

 

 

2.6

 

 

 

2.7

 

 

Total

 

 

100.0

 

%

 

100.0

 

%

________________

 

(1)

Includes equity investment in Wingspire.

 

(2)

Includes equity investment in Sebago Lake. See below, within Note 4, for more information regarding Sebago Lake.

 

(3)

Rounds to less than 0.1%.

 

38

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

The geographic composition of investments based on fair value as of September 30, 2020 and December 31, 2019 was as follows:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

United States:

 

 

 

 

 

 

 

 

 

Midwest

 

 

18.9

 

%

 

19.5

 

%

Northeast

 

 

15.9

 

 

 

18.7

 

 

South

 

 

42.6

 

 

 

42.8

 

 

West

 

 

16.7

 

 

 

15.3

 

 

Belgium

 

 

0.9

 

 

 

1.0

 

 

Canada

 

 

1.0

 

 

 

0.9

 

 

Israel

 

 

0.4

 

 

 

-

 

 

United Kingdom

 

 

3.6

 

 

 

1.8

 

 

Total

 

 

100.0

 

%

 

100.0

 

%

Sebago Lake LLC

 

Sebago Lake, a Delaware limited liability company, was formed as a joint venture between the Company and The Regents of the University of California (“Regents”) and commenced operations on June 20, 2017. Sebago Lake’s principal purpose is to make investments, primarily in senior secured loans that are made to middle-market companies or in broadly syndicated loans. Both the Company and Regents (the “Members”) have a 50% economic ownership in Sebago Lake. Except under certain circumstances, contributions to Sebago Lake cannot be redeemed. Each of the Members initially agreed to contribute up to $100 million to Sebago Lake. On July 26, 2018, each of the Members increased their contribution to Sebago Lake up to an aggregate of $125 million. As of September 30, 2020, each Member has funded $107.8 million of their respective $125 million commitments. Sebago Lake is managed by the Members, each of which have equal voting rights. Investment decisions must be approved by each of the Members.

The Company has determined that Sebago Lake is an investment company under ASC 946; however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Other than for purposes of the 1940 Act, the Company does not believe that it has control over this portfolio company. Accordingly, the Company does not consolidate its non-controlling interest in Sebago Lake.

As of September 30, 2020 and December 31, 2019, Sebago Lake had total investments in senior secured debt at fair value of $543.7 million and $478.5 million, respectively. The determination of fair value is in accordance with ASC 820; however, such fair value is not included in the Board’s valuation process described herein. The following table is a summary of Sebago Lake’s portfolio as well as a listing of the portfolio investments in Sebago Lake’s portfolio as of September 30, 2020 and December 31, 2019:

 

($ in thousands)

 

September 30, 2020

 

 

December 31, 2019

 

Total senior secured debt investments(1)

 

$

556,984

 

 

$

484,439

 

Weighted average spread over LIBOR(1)

 

 

4.47

%

 

 

4.56

%

Number of portfolio companies

 

17

 

 

16

 

Largest funded investment to a single borrower(1)

 

$

49,750

 

 

$

50,000

 

________________

 

(1)

At par.

 

39

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Sebago Lake's Portfolio as of September 30, 2020

($ in thousands)

(Unaudited)

 

Company(1)(2)(4)(5)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)

 

 

Fair Value

 

 

Percentage of Members' Equity

 

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace and defense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(7)

 

First lien senior secured loan

 

L + 5.25%

 

12/21/2023

 

$

34,918

 

 

$

34,509

 

 

$

34,738

 

 

 

16.8

 

%

Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(7)(11)(14)

 

First lien senior secured revolving loan

 

L + 5.25%

 

12/21/2022

 

 

3,000

 

 

 

2,974

 

 

 

2,984

 

 

 

1.4

 

%

Bleriot US Bidco Inc.(7)(10)

 

First lien senior secured loan

 

L + 4.75%

 

10/30/2026

 

 

14,925

 

 

 

14,795

 

 

 

14,801

 

 

 

7.1

 

%

Dynasty Acquisition Co., Inc. (dba StandardAero Limited)(7)

 

First lien senior secured loan

 

L + 3.50%

 

4/6/2026

 

 

39,600

 

 

 

39,438

 

 

 

35,769

 

 

 

17.3

 

%

 

 

 

 

 

 

 

 

 

92,443

 

 

 

91,716

 

 

 

88,292

 

 

 

42.6

 

%

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vistage Worldwide, Inc.(7)

 

First lien senior secured loan

 

L + 4.00%

 

2/10/2025

 

 

16,584

 

 

 

16,509

 

 

 

16,252

 

 

 

7.9

 

%

Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dealer Tire, LLC (6)(10)

 

First lien senior secured loan

 

L + 4.25%

 

12/12/2025

 

 

36,723

 

 

 

36,533

 

 

 

35,804

 

 

 

17.3

 

%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)(7)

 

First lien senior secured loan

 

L + 4.25%

 

7/30/2025

 

 

34,300

 

 

 

34,224

 

 

 

32,116

 

 

 

15.5

 

%

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DecoPac, Inc.(7)

 

First lien senior secured loan

 

L + 4.25%

 

9/30/2024

 

 

20,561

 

 

 

20,499

 

 

 

20,472

 

 

 

9.9

 

%

DecoPac, Inc.(11)(12)(14)

 

First lien senior secured revolving loan

 

L + 4.25%

 

9/29/2023

 

 

-

 

 

 

(9

)

 

 

(85

)

 

 

—

 

%

FQSR, LLC (dba KBP Investments)(7)

 

First lien senior secured loan

 

L + 5.50%

 

5/15/2023

 

 

24,321

 

 

 

24,130

 

 

 

23,970

 

 

 

11.6

 

%

FQSR, LLC (dba KBP Investments)(8)(11)(13)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

9/10/2021

 

 

9,477

 

 

 

9,245

 

 

 

9,141

 

 

 

4.4

 

%

Sovos Brands Intermediate, Inc.(6)

 

First lien senior secured loan

 

L + 4.75%

 

11/20/2025

 

 

44,213

 

 

 

43,877

 

 

 

44,213

 

 

 

21.4

 

%

 

 

 

 

 

 

 

 

 

98,572

 

 

 

97,742

 

 

 

97,711

 

 

 

47.3

 

%

Healthcare equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cadence, Inc.(6)

 

First lien senior secured loan

 

L + 4.50%

 

5/21/2025

 

 

27,059

 

 

 

26,589

 

 

 

26,796

 

 

 

12.9

 

%

Cadence, Inc.(9)(11)(14)

 

First lien senior secured revolving loan

 

L + 3.50%

 

5/21/2023

 

 

2,936

 

 

 

2,839

 

 

 

2,864

 

 

 

1.4

 

%

 

 

 

 

 

 

 

 

 

29,995

 

 

 

29,428

 

 

 

29,660

 

 

 

14.3

 

%

Healthcare technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VVC Holdings Corp. (dba Athenahealth, Inc.)(7)(10)

 

First lien senior secured loan

 

L + 4.50%

 

2/11/2026

 

 

17,353

 

 

 

17,073

 

 

 

17,049

 

 

 

8.2

 

%

Infrastructure and environmental services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHA Holding, Inc.(7)

 

First lien senior secured loan

 

L + 4.50%

 

4/10/2025

 

 

41,250

 

 

 

40,951

 

 

 

41,002

 

 

 

19.8

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Integro Parent Inc.(6)

 

First lien senior secured loan

 

L + 5.75%

 

10/31/2022

 

 

30,165

 

 

 

30,088

 

 

 

29,958

 

 

 

14.5

 

%

Integro Parent Inc.(11)(12)(14)

 

First lien senior secured revolving loan

 

L + 4.50%

 

4/30/2022

 

 

-

 

 

 

(10

)

 

 

(58

)

 

 

—

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(7)

 

First lien senior secured loan

 

L + 4.25%

 

3/29/2025

 

 

40,252

 

 

 

39,568

 

 

 

38,669

 

 

 

18.7

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(8)(11)(14)

 

First lien senior secured revolving loan

 

L + 4.25%

 

3/29/2023

 

 

625

 

 

 

532

 

 

 

439

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

71,042

 

 

 

70,178

 

 

 

69,008

 

 

 

33.4

 

%

40

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Sebago Lake's Portfolio as of September 30, 2020

($ in thousands)

(Unaudited)

 

Company(1)(2)(4)(5)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)

 

 

Fair Value

 

 

Percentage of Members' Equity

 

 

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DCert Buyer, Inc.(6)(10)

 

First lien senior secured loan

 

L + 4.00%

 

10/16/2026

 

 

49,750

 

 

 

49,584

 

 

 

49,049

 

 

 

23.7

 

%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Machinery Holdings(7)

 

First lien senior secured loan

 

L + 4.25%

 

7/19/2024

 

 

44,510

 

 

 

44,164

 

 

 

43,509

 

 

 

21.0

 

%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Uber Technologies, Inc.(6)(10)

 

First lien senior secured loan

 

L + 4.00%

 

4/4/2025

 

 

24,462

 

 

 

24,346

 

 

 

24,239

 

 

 

11.7

 

%

Total Debt Investments

 

 

 

 

 

 

 

 

556,984

 

 

 

552,448

 

 

 

543,691

 

 

 

262.7

 

%

Total Investments

 

 

 

 

 

 

 

$

556,984

 

 

$

552,448

 

 

$

543,691

 

 

 

262.7

 

%

________________

 

(1)

Certain portfolio company investments are subject to contractual restrictions on sales.

 

(2)

Unless otherwise indicated, Sebago Lake’s investments are pledged as collateral supporting the amounts outstanding under Sebago Lake’s credit facility.

 

(3)

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

 

(4)

Unless otherwise indicated, all investments are considered Level 3 investments.

 

(5)

Unless otherwise indicated, loan contains a variable rate structure, and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR) or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.

 

(6)

The interest rate on these loans is subject to 1 month LIBOR, which as of September 30, 2020 was 0.15%.

 

(7)

The interest rate on these loans is subject to 3 month LIBOR, which as of September 30, 2020 was 0.23%.

 

(8)

The interest rate on these loans is subject to 6 month LIBOR, which as of September 30, 2020 was 0.26%.

 

(9)

The interest rate on these loans is subject to Prime, which as of September 30, 2020 was 3.25%.

 

(10)

Level 2 investment.

 

(11)

Position or portion thereof is an unfunded loan commitment.

 

(12)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

 

(13)

The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.

 

(14)

Investment is not pledged as collateral under Sebago Lake’s credit facility.

 

41

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Sebago Lake's Portfolio as of December 31, 2019

($ in thousands)

Company(1)(2)(4)(5)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)

 

 

Fair Value

 

 

Percentage of Members' Equity

 

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace and defense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(7)

 

First lien senior secured loan

 

L + 5.25%

 

12/21/2023

 

$

35,188

 

 

$

34,690

 

 

$

34,805

 

 

 

19.8

 

%

Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(9)(10)(12)

 

First lien senior secured revolving loan

 

L + 5.25%

 

12/21/2022

 

 

-

 

 

 

(36

)

 

 

(31

)

 

 

-

 

%

Bleriot US Bidco Inc.(7)

 

First lien senior secured term loan

 

L + 4.75%

 

10/31/2026

 

 

12,973

 

 

 

12,844

 

 

 

12,843

 

 

 

7.3

 

%

Bleriot US Bidco Inc.(9)(10)(11)(12)

 

First lien senior secured delayed draw term loan

 

L + 4.75%

 

10/31/2020

 

 

-

 

 

 

(20

)

 

 

(20

)

 

 

-

 

%

Dynasty Acquisition Co., Inc. (dba StandardAero Limited)(7)

 

First lien senior secured loan

 

L + 4.00%

 

4/4/2026

 

 

39,900

 

 

 

39,717

 

 

 

39,707

 

 

 

22.6

 

%

 

 

 

 

 

 

 

 

 

88,061

 

 

 

87,195

 

 

 

87,304

 

 

 

49.7

 

%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)(7)

 

First lien senior secured loan

 

L + 4.25%

 

7/30/2025

 

 

34,562

 

 

 

34,475

 

 

 

34,488

 

 

 

19.5

 

%

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DecoPac, Inc.(7)

 

First lien senior secured loan

 

L + 4.25%

 

9/30/2024

 

 

20,561

 

 

 

20,489

 

 

 

20,561

 

 

 

11.7

 

%

DecoPac, Inc.(9)(10)(12)

 

First lien senior secured revolving loan

 

L + 4.25%

 

9/29/2023

 

 

-

 

 

 

(11

)

 

 

-

 

 

 

-

 

%

FQSR, LLC (dba KBP Investments)(7)

 

First lien senior secured loan

 

L + 5.50%

 

5/14/2023

 

 

24,507

 

 

 

24,246

 

 

 

24,236

 

 

 

13.7

 

%

FQSR, LLC (dba KBP Investments)(7)(9)(11)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

9/10/2021

 

 

8,373

 

 

 

8,075

 

 

 

8,115

 

 

 

4.6

 

%

Give & Go Prepared Foods Corp.(7)

 

First lien senior secured loan

 

L + 4.25%

 

7/29/2023

 

 

24,438

 

 

 

24,398

 

 

 

23,093

 

 

 

13.0

 

%

Sovos Brands Intermediate, Inc.(6)

 

First lien senior secured loan

 

L + 5.00%

 

11/20/2025

 

 

44,550

 

 

 

44,171

 

 

 

44,143

 

 

 

25.1

 

%

 

 

 

 

 

 

 

 

 

122,429

 

 

 

121,368

 

 

 

120,148

 

 

 

68.1

 

%

Healthcare equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cadence, Inc.(6)

 

First lien senior secured loan

 

L + 4.50%

 

5/21/2025

 

 

27,266

 

 

 

26,727

 

 

 

26,749

 

 

 

15.2

 

%

Cadence, Inc.(9)(10)(12)

 

First lien senior secured revolving loan

 

L + 4.50%

 

5/21/2025

 

 

-

 

 

 

(124

)

 

 

(139

)

 

 

(0.1

)

%

 

 

 

 

 

 

 

 

 

27,266

 

 

 

26,603

 

 

 

26,610

 

 

 

15.1

 

%

Healthcare technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VVC Holdings Corp. (dba Athenahealth, Inc.)(7)(8)

 

First lien senior secured loan

 

L + 4.50%

 

2/11/2026

 

 

19,850

 

 

 

19,491

 

 

 

19,925

 

 

 

11.3

 

%

Infrastructure and environmental services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHA Holding, Inc.(7)

 

First lien senior secured loan

 

L + 4.50%

 

4/10/2025

 

 

29,816

 

 

 

29,709

 

 

 

29,694

 

 

 

16.8

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Integro Parent Inc.(6)

 

First lien senior secured loan

 

L + 5.75%

 

10/28/2022

 

 

30,520

 

 

 

30,416

 

 

 

30,224

 

 

 

17.2

 

%

Integro Parent Inc.(9)(10)(12)

 

First lien senior secured revolving loan

 

L + 4.50%

 

10/30/2021

 

 

-

 

 

 

(16

)

 

 

(54

)

 

 

-

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(7)

 

First lien senior secured loan

 

L + 4.25%

 

3/29/2025

 

 

34,475

 

 

 

33,800

 

 

 

33,406

 

 

 

19.0

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(7)(9)(12)

 

First lien senior secured revolving loan

 

L + 4.25%

 

3/29/2023

 

 

1,875

 

 

 

1,754

 

 

 

1,690

 

 

 

1.0

 

%

42

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Sebago Lake's Portfolio as of December 31, 2019

($ in thousands)

Company(1)(2)(4)(5)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)

 

 

Fair Value

 

 

Percentage of Members' Equity

 

 

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(7)(9)(11)

 

First lien senior secured delayed draw term loan

 

L + 4.25%

 

3/29/2020

 

 

6,085

 

 

 

5,923

 

 

 

5,817

 

 

 

3.3

 

%

 

 

 

 

 

 

 

 

 

72,955

 

 

 

71,877

 

 

 

71,083

 

 

 

40.5

 

%

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DCert Buyer, Inc.(6)

 

First lien senior secured loan

 

L + 4.00%

 

10/16/2026

 

 

50,000

 

 

 

49,816

 

 

 

49,878

 

 

 

28.3

 

%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Machinery Holdings(7)(8)

 

First lien senior secured loan

 

L + 4.25%

 

7/19/2024

 

 

14,850

 

 

 

14,596

 

 

 

14,801

 

 

 

8.3

 

%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Uber Technologies, Inc.(6)(8)

 

First lien senior secured loan

 

L + 4.00%

 

4/4/2025

 

 

24,650

 

 

 

24,517

 

 

 

24,578

 

 

 

14.0

 

%

Total Debt Investments

 

 

 

 

 

 

 

 

484,439

 

 

 

479,647

 

 

 

478,509

 

 

 

271.6

 

%

Total Investments

 

 

 

 

 

 

 

$

484,439

 

 

$

479,647

 

 

$

478,509

 

 

 

271.6

 

%

________________

 

(1)

Certain portfolio company investments are subject to contractual restrictions on sales.

 

(2)

Unless otherwise indicated, Sebago Lake’s investments are pledged as collateral supporting the amounts outstanding under Sebago Lake’s credit facility.

 

(3)

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

 

(4)

Unless otherwise indicated, all investments are considered Level 3 investments.

 

(5)

Unless otherwise indicated, loan contains a variable rate structure, and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR) or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.

 

(6)

The interest rate on these loans is subject to 1 month LIBOR, which as of December 31, 2019 was 1.8%.

 

(7)

The interest rate on these loans is subject to 3 month LIBOR, which as of December 31, 2019 was 1.9%.

 

(8)

Level 2 investment.

 

(9)

Position or portion thereof is an unfunded loan commitment.

 

(10)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

 

(11)

The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.

 

(12)

Investment is not pledged as collateral under Sebago Lake’s credit facility.

 

43

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Below is selected balance sheet information for Sebago Lake as of September 30, 2020 and December 31, 2019:

 

($ in thousands)

 

September 30, 2020 (Unaudited)

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Investments at fair value (amortized cost of $552,448 and $479,647, respectively)

 

$

543,691

 

 

$

478,509

 

Cash

 

 

18,039

 

 

 

34,104

 

Interest receivable

 

 

608

 

 

 

1,281

 

Prepaid expenses and other assets

 

 

386

 

 

 

162

 

Total Assets

 

$

562,724

 

 

$

514,056

 

Liabilities

 

 

 

 

 

 

 

 

Debt (net of unamortized debt issuance costs of $2,787 and $3,895, respectively)

 

$

349,369

 

 

$

330,289

 

Distributions payable

 

 

4,534

 

 

 

4,950

 

Accrued expenses and other liabilities

 

 

1,840

 

 

 

2,663

 

Total Liabilities

 

$

355,743

 

 

$

337,902

 

Members' Equity

 

 

 

 

 

 

 

 

Members' Equity

 

 

206,981

 

 

 

176,154

 

Members' Equity

 

 

206,981

 

 

 

176,154

 

Total Liabilities and Members' Equity

 

$

562,724

 

 

$

514,056

 

 

Below is selected statement of operations information for Sebago Lake for the three and nine months ended September 30, 2020 and 2019:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

($ in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Investment Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

7,759

 

 

$

9,163

 

 

$

24,530

 

 

$

29,646

 

Other income

 

 

60

 

 

 

69

 

 

 

216

 

 

 

194

 

Total Investment Income

 

 

7,819

 

 

 

9,232

 

 

 

24,746

 

 

 

29,840

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

2,833

 

 

 

4,227

 

 

 

10,021

 

 

 

13,411

 

Professional fees

 

 

181

 

 

 

182

 

 

 

526

 

 

 

537

 

Total Expenses

 

 

3,014

 

 

 

4,409

 

 

 

10,547

 

 

 

13,948

 

Net Investment Income Before Taxes

 

 

4,805

 

 

 

4,823

 

 

 

14,199

 

 

 

15,892

 

Taxes

 

 

484

 

 

 

181

 

 

 

223

 

 

 

768

 

Net Investment Income After Taxes

 

$

4,321

 

 

$

4,642

 

 

$

13,976

 

 

$

15,124

 

Net Realized and Change in Unrealized Gain (Loss) on Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gain (loss) on investments

 

 

9,441

 

 

 

505

 

 

 

(7,619

)

 

 

6,710

 

Net realized gain (loss) on investments

 

 

4

 

 

 

—

 

 

 

4

 

 

 

—

 

Total Net Realized and Change in Unrealized Gain (Loss) on Investments

 

 

9,445

 

 

 

505

 

 

 

(7,615

)

 

 

6,710

 

Net Increase (Decrease) in Members' Equity Resulting from Operations

 

$

13,766

 

 

$

5,147

 

 

$

6,361

 

 

$

21,834

 

 

Loan Origination and Structuring Fees

 

If the loan origination and structuring fees earned by Sebago Lake during a fiscal year exceed Sebago Lake’s expenses and other obligations (excluding financing costs), such excess is allocated to the Member(s) responsible for the origination of the loans pro rata in accordance with the total loan origination and structuring fees earned by Sebago Lake with respect to the loans originated by such Member; provided, that in no event will the amount allocated to a Member exceed 1% of the par value of the loans originated by such Member in any fiscal year. The loan origination and structuring fee is accrued quarterly and included in other income from controlled,

44

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

affiliated investments on the Company’s Consolidated Statements of Operations and paid annually. On February 27, 2019, the Members agreed to amend the terms of Sebago Lake’s operating agreement to eliminate the allocation of excess loan origination and structuring fees to the Members. As such, for the three and nine months ended September 30, 2020 and 2019, the Company accrued no income based on loan origination and structuring fees.

 

Note 5. Fair Value of Investments

Investments

The following tables present the fair value hierarchy of investments as of September 30, 2020 and December 31, 2019:

 

 

 

Fair Value Hierarchy as of September 30, 2020

 

($ in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

First-lien senior secured debt investments

 

$

—

 

 

$

126,066

 

 

$

7,726,661

 

 

$

7,852,727

 

Second-lien senior secured debt investments

 

 

—

 

 

 

57,462

 

 

 

1,659,329

 

 

 

1,716,791

 

Unsecured debt investments

 

 

—

 

 

 

—

 

 

 

50,211

 

 

 

50,211

 

Equity investments(1)

 

 

—

 

 

 

17,619

 

 

 

177,463

 

 

 

195,082

 

Subtotal

 

$

—

 

 

$

201,147

 

 

$

9,613,664

 

 

$

9,814,811

 

Investments measured at NAV(2)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

103,491

 

Total Investments at fair value

 

$

—

 

 

$

201,147

 

 

$

9,613,664

 

 

$

9,918,302

 

________________

 

(1)

Includes equity investment in Wingspire.

 

(2)

Includes equity investment in Sebago Lake.

 

 

 

 

Fair Value Hierarchy as of December 31, 2019

 

($ in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

First-lien senior secured debt investments

 

$

—

 

 

$

137,342

 

 

$

6,976,014

 

 

$

7,113,356

 

Second-lien senior secured debt investments

 

 

—

 

 

 

40,460

 

 

 

1,544,457

 

 

 

1,584,917

 

Equity investments(1)

 

 

—

 

 

 

—

 

 

 

12,875

 

 

 

12,875

 

Subtotal

 

$

—

 

 

$

177,802

 

 

$

8,533,346

 

 

$

8,711,148

 

Investments measured at NAV(2)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

88,077

 

Total Investments at fair value

 

$

—

 

 

$

177,802

 

 

$

8,533,346

 

 

$

8,799,225

 

________________

 

(1)

Includes equity investment in Wingspire.

 

(2)

Includes equity investment in Sebago Lake.

 

45

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

The following tables present changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and nine months ended September 30, 2020 and 2019:

 

 

 

As of and for the Three Months Ended September 30, 2020

 

($ in thousands)

 

First-lien senior secured debt investments

 

 

Second-lien senior secured debt investments

 

 

Unsecured debt investments

 

 

Equity investments

 

 

Total

 

Fair value, beginning of period

 

$

7,270,521

 

 

$

1,510,227

 

 

$

9,207

 

 

$

137,407

 

 

$

8,927,362

 

Purchases of investments, net

 

 

643,473

 

 

 

120,433

 

 

 

42,116

 

 

 

53,307

 

 

 

859,329

 

Payment-in-kind

 

 

9,248

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,248

 

Proceeds from investments, net

 

 

(248,745

)

 

 

(37

)

 

 

—

 

 

 

(10,000

)

 

 

(258,782

)

Net change in unrealized gain (loss)

 

 

43,981

 

 

 

27,866

 

 

 

(1,121

)

 

 

6,976

 

 

 

77,702

 

Net realized gains (losses)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Net amortization of discount on investments

 

 

8,183

 

 

 

840

 

 

 

9

 

 

 

—

 

 

 

9,032

 

Transfers into (out of) Level 3(1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(10,227

)

 

 

(10,227

)

Fair value, end of period

 

$

7,726,661

 

 

$

1,659,329

 

 

$

50,211

 

 

$

177,463

 

 

$

9,613,664

 

________________

 

(1)

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur. For the three months ended September 30, 2020, transfers out of Level 3 to Level 2 were as a result of changes in the observability of significant inputs for certain portfolio companies.

 

 

 

 

As of and for the Nine Months Ended September 30, 2020

 

($ in thousands)

 

First-lien senior secured debt investments

 

 

Second-lien senior secured debt investments

 

 

Unsecured debt investments

 

 

Equity investments

 

 

Total

 

Fair value, beginning of period

 

$

6,976,014

 

 

$

1,544,457

 

 

$

—

 

 

$

12,875

 

 

$

8,533,346

 

Purchases of investments, net

 

 

1,679,645

 

 

 

230,254

 

 

 

51,323

 

 

 

172,054

 

 

 

2,133,276

 

Payment-in-kind

 

 

23,938

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23,938

 

Proceeds from investments, net

 

 

(814,748

)

 

 

(76,837

)

 

 

—

 

 

 

(13,000

)

 

 

(904,585

)

Net change in unrealized gain (loss)

 

 

(162,230

)

 

 

(41,709

)

 

 

(1,121

)

 

 

5,534

 

 

 

(199,526

)

Net realized gains (losses)

 

 

268

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

268

 

Net amortization of discount on investments

 

 

23,774

 

 

 

3,164

 

 

 

9

 

 

 

—

 

 

 

26,947

 

Transfers into (out of) Level 3(1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Fair value, end of period

 

$

7,726,661

 

 

$

1,659,329

 

 

$

50,211

 

 

$

177,463

 

 

$

9,613,664

 

________________

 

(1)

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

 

46

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

 

 

As of and for the Three Months Ended September 30, 2019

 

($ in thousands)

 

First-lien senior secured debt investments

 

 

Second-lien senior secured debt investments

 

 

Equity investments

 

 

Total

 

Fair value, beginning of period

 

$

5,824,549

 

 

$

1,186,337

 

 

$

14,355

 

 

$

7,025,241

 

Purchases of investments, net(1)

 

 

1,020,755

 

 

 

431,245

 

 

 

129

 

 

 

1,452,129

 

Proceeds from investments, net

 

 

(313,833

)

 

 

(52,000

)

 

 

(80

)

 

 

(365,913

)

Net change in unrealized gain (loss)

 

 

(14,880

)

 

 

(7,654

)

 

 

511

 

 

 

(22,023

)

Net realized gains (losses)

 

 

92

 

 

 

—

 

 

 

80

 

 

 

172

 

Net amortization of discount on investments

 

 

6,840

 

 

 

1,450

 

 

 

—

 

 

 

8,290

 

Transfers into (out of) Level 3(2)

 

 

14,870

 

 

 

—

 

 

 

—

 

 

 

14,870

 

Fair value, end of period

 

$

6,538,393

 

 

$

1,559,378

 

 

$

14,995

 

 

$

8,112,766

 

________________

 

(1)

Purchases may include PIK.

 

(2)

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

 

 

 

As of and for the Nine Months Ended September 30, 2019

 

($ in thousands)

 

First-lien senior secured debt investments

 

 

Second-lien senior secured debt investments

 

 

Equity investments

 

 

Total

 

Fair value, beginning of period

 

$

4,554,835

 

 

$

1,074,873

 

 

$

11,063

 

 

$

5,640,771

 

Purchases of investments, net(1)

 

 

2,888,956

 

 

 

541,314

 

 

 

2,120

 

 

 

3,432,390

 

Proceeds from investments, net

 

 

(895,241

)

 

 

(60,700

)

 

 

(80

)

 

 

(956,021

)

Net change in unrealized gain (loss)

 

 

(6,708

)

 

 

1,387

 

 

 

1,812

 

 

 

(3,509

)

Net realized gains (losses)

 

 

(92

)

 

 

—

 

 

 

80

 

 

 

(12

)

Net amortization of discount on investments

 

 

22,091

 

 

 

2,504

 

 

 

—

 

 

 

24,595

 

Transfers into (out of) Level 3(2)

 

 

(25,448

)

 

 

—

 

 

 

—

 

 

 

(25,448

)

Fair value, end of period

 

$

6,538,393

 

 

$

1,559,378

 

 

$

14,995

 

 

$

8,112,766

 

________________

 

(1)

Purchases may include PIK.

 

(2)

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

 

The following tables present information with respect to net change in unrealized gains on investments for which Level 3 inputs were used in determining the fair value that are still held by the Company for the three and nine months ended September 30, 2020 and 2019:

 

($ in thousands)

 

Net change in unrealized gain (loss) for the Three Months Ended September 30, 2020 on Investments Held at September 30, 2020

 

 

Net change in unrealized gain (loss) for the Three Months Ended September 30, 2019 on Investments Held at September 30, 2019

 

First-lien senior secured debt investments

 

$

43,981

 

 

$

(12,874

)

Second-lien senior secured debt investments

 

 

27,866

 

 

 

(6,587

)

Unsecured debt investments

 

 

(1,121

)

 

 

—

 

Equity investments

 

 

6,976

 

 

 

511

 

Total Investments

 

$

77,702

 

 

$

(18,950

)

47

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

 

($ in thousands)

 

Net change in unrealized gain (loss) for the Nine Months Ended September 30, 2020 on Investments Held at September 30, 2020

 

 

Net change in unrealized gain (loss) for the Nine Months Ended September 30, 2019 on Investments Held at September 30, 2019

 

First-lien senior secured debt investments

 

$

(163,567

)

 

$

(3,600

)

Second-lien senior secured debt investments

 

 

(44,914

)

 

 

828

 

Unsecured debt investments

 

 

(1,121

)

 

 

—

 

Equity investments

 

 

5,534

 

 

 

1,812

 

Total Investments

 

$

(204,068

)

 

$

(960

)

 

 

The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of September 30, 2020 and December 31, 2019. The weighted average range of unobservable inputs is based on fair value of investments. The tables are not intended to be all-inclusive but instead capture the significant unobservable inputs relevant to the Company’s determination of fair value.

 

 

 

 

As of September 30, 2020

($ in thousands)

 

Fair Value

 

 

Valuation Technique

 

Unobservable Input

 

Range (Weighted Average)

 

Impact to Valuation from an Increase in Input

First-lien senior secured debt investments

 

$

7,128,454

 

 

Yield Analysis

 

Market Yield

 

5.2%-19.9% (9.4%)

 

Decrease

 

 

 

499,779

 

 

Recent Transaction

 

Transaction Price

 

96.0% - 98.5% (98.1%)

 

Increase

 

 

 

98,428

 

 

Collateral Analysis

 

Recovery Rate

 

62.0% - 62.0% (62.0%)

 

Increase

Second-lien senior secured debt investments(1)

 

 

1,512,655

 

 

Yield Analysis

 

Market Yield

 

7.4%-25.5% (11.6%)

 

Decrease

 

 

 

118,800

 

 

Recent Transaction

 

Transaction Price

 

99.0% - 99.0% (99.0%)

 

Increase

Unsecured debt investments

 

 

9,370

 

 

Yield Analysis

 

Market Yield

 

11.6% - 11.6% (11.6%)

 

Decrease

 

 

 

40,841

 

 

Recent Transaction

 

Transaction Price

 

98.5% - 98.5% (98.5%)

 

Increase

Equity Investments

 

 

74,342

 

 

Market Approach

 

EBITDA Multiple

 

3.7x - 11.8x (4.9x)

 

Increase

 

 

 

103,121

 

 

Recent Transaction

 

Transaction Price

 

1.0

 

Increase

________________

 

(1)

Excludes investments with an aggregate fair value amounting to $27,874, which the Company valued using indicative bid prices obtained from brokers.

 

48

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

 

 

 

As of December 31, 2019

($ in thousands)

 

Fair Value

 

 

Valuation Technique

 

Unobservable Input

 

Range (Weighted Average)

 

Impact to Valuation from an Increase in Input

First-lien senior secured debt investments(1)

 

$

5,975,575

 

 

Yield Analysis

 

Market Yield

 

5.4%-13.2% (9.1%)

 

Decrease

 

 

 

985,898

 

 

Recent Transaction

 

Transaction Price

 

95.0%-99.8% (98.1%)

 

Increase

Second-lien senior secured debt investments

 

$

1,517,625

 

 

Yield Analysis

 

Market Yield

 

9.2%-17.2% (11.4%)

 

Decrease

 

 

 

26,832

 

 

Recent Transaction

 

Transaction Price

 

99.5%-99.5% (99.5%)

 

Increase

Equity Investments

 

$

11,427

 

 

Market Approach

 

EBITDA Multiple

 

6.8x - 11.75x (11.61x)

 

Increase

 

 

 

1,448

 

 

Recent Transaction

 

Transaction Price

 

1.0

 

Increase

________________

 

(1)

Excludes investments with an aggregate fair value amounting to $14,541, which the Company valued using indicative bid prices obtained from brokers.

 

The Company typically determines the fair value of its performing Level 3 debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to the expected life, portfolio company performance since close, and other terms and risks associated with an investment. Among other factors, a determinant of risk is the amount of leverage used by the portfolio company relative to its total enterprise value, and the rights and remedies of the Company’s investment within the portfolio company’s capital structure.

Significant unobservable quantitative inputs typically used in the fair value measurement of the Company’s Level 3 debt investments primarily include current market yields, including relevant market indices, but may also include quotes from brokers, dealers, and pricing services as indicated by comparable investments. For the Company’s Level 3 equity investments, a market approach, based on comparable publicly-traded company and comparable market transaction multiples of revenues, earnings before income taxes, depreciation and amortization (“EBITDA”) or some combination thereof and comparable market transactions typically would be used.

49

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Debt Not Carried at Fair Value        

Fair value is estimated by discounting remaining payments using applicable current market rates, which take into account changes in the Company’s marketplace credit ratings, or market quotes, if available. The following table presents the carrying and fair values of the Company’s debt obligations as of ended September 30, 2020 and December 31, 2019.

 

 

 

September 30, 2020

 

 

December 31, 2019

 

($ in thousands)

 

Net Carrying

Value(1)

 

 

Fair Value

 

 

Net Carrying

Value(2)

 

 

Fair Value

 

Revolving Credit Facility

 

$

600,154

 

 

$

600,154

 

 

$

473,655

 

 

$

473,655

 

SPV Asset Facility I

 

 

—

 

 

 

—

 

 

 

297,246

 

 

 

297,246

 

SPV Asset Facility II

 

 

95,439

 

 

 

95,439

 

 

 

346,395

 

 

 

346,395

 

SPV Asset Facility III

 

 

397,803

 

 

 

397,803

 

 

 

251,548

 

 

 

251,548

 

SPV Asset Facility IV

 

 

91,528

 

 

 

91,528

 

 

 

57,201

 

 

 

57,201

 

CLO I

 

 

386,602

 

 

 

386,602

 

 

 

386,405

 

 

 

386,405

 

CLO II

 

 

257,884

 

 

 

257,884

 

 

 

258,028

 

 

 

258,028

 

CLO III

 

 

257,935

 

 

 

257,935

 

 

 

—

 

 

 

—

 

CLO IV

 

 

247,828

 

 

 

247,828

 

 

 

—

 

 

 

—

 

2023 Notes

 

 

152,477

 

 

 

153,375

 

 

 

150,113

 

 

 

151,514

 

2024 Notes

 

 

419,678

 

 

 

415,000

 

 

 

400,955

 

 

 

425,800

 

2025 Notes

 

 

417,781

 

 

 

429,250

 

 

 

416,686

 

 

 

430,406

 

July 2025 Notes

 

 

491,694

 

 

 

498,750

 

 

 

—

 

 

 

—

 

2026 Notes

 

 

488,840

 

 

 

506,250

 

 

 

—

 

 

 

—

 

Total Debt

 

$

4,305,643

 

 

$

4,337,798

 

 

$

3,038,232

 

 

$

3,078,198

 

________________

 

(1)

The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility II, SPV Asset Facility III, SPV Asset Facility IV, CLO I, CLO II, CLO III, CLO IV, 2023 Notes, 2024 Notes, 2025 Notes, July 2025 Notes, and 2026 Notes are presented net of deferred financing costs of $9.7 million, $4.5 million, $2.2 million, $3.5 million, $3.4 million, $2.1 million, $2.1 million, $4.2 million, $1.1 million, $7.5 million, $7.2 million, $8.3 million, and $11.2 million, respectively.

 

(2)

The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility I, SPV Asset Facility II, SPV Asset Facility III, SPV Asset Facility IV, CLO I, CLO II, 2023 Notes, 2024 Notes and 2025 Notes are presented net of deferred financing costs of $7.2 million, $2.8 million, $3.6 million, $3.5 million, $3.0 million, $3.6 million, $2.0 million, $1.4 million, $8.9 million and $8.3 million, respectively.

    

The following table presents fair value measurements of the Company’s debt obligations as of September 30, 2020 and December 31, 2019:

 

 

 

 

($ in thousands)

 

September 30, 2020

 

 

December 31, 2019

 

Level 1

 

$

—

 

 

$

—

 

Level 2

 

 

1,849,250

 

 

 

856,206

 

Level 3

 

 

2,488,548

 

 

 

2,221,992

 

Total Debt

 

$

4,337,798

 

 

$

3,078,198

 

 

Financial Instruments Not Carried at Fair Value

As of September 30, 2020 and December 31, 2019, the carrying amounts of the Company’s assets and liabilities, other than investments at fair value and debt, approximate fair value due to their short maturities.

 

50

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Note 6. Debt

In accordance with the 1940 Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 200% (or 150% if certain conditions are met) after such borrowing. On March 31, 2020, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Small Business Credit Availability Act. On June 8, 2020, the date of the Company’s shareholder meeting, the Company received shareholder approval for the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Small Business Credit Availability Act. As a result, effective on June 9, 2020, the Company’s asset coverage requirement applicable to senior securities was reduced from 200% to 150%. As of September 30, 2020 and December 31, 2019, the Company’s asset coverage was 229% and 293%, respectively.

Debt obligations consisted of the following as of September 30, 2020 and December 31, 2019:

 

 

 

September 30, 2020

 

($ in thousands)

 

Aggregate Principal Committed

 

 

Outstanding Principal

 

 

Amount Available(1)

 

 

Net Carrying Value(2)

 

Revolving Credit Facility(3)(5)

 

$

1,355,000

 

 

$

609,884

 

 

$

719,020

 

 

$

600,154

 

SPV Asset Facility II

 

 

350,000

 

 

 

100,000

 

 

 

250,000

 

 

 

95,439

 

SPV Asset Facility III

 

 

500,000

 

 

 

400,000

 

 

 

100,000

 

 

 

397,803

 

SPV Asset Facility IV

 

 

450,000

 

 

 

95,000

 

 

 

355,000

 

 

 

91,528

 

CLO I

 

 

390,000

 

 

 

390,000

 

 

 

—

 

 

 

386,602

 

CLO II

 

 

260,000

 

 

 

260,000

 

 

 

—

 

 

 

257,884

 

CLO III

 

 

260,000

 

 

 

260,000

 

 

 

—

 

 

 

257,935

 

CLO IV

 

 

252,000

 

 

 

252,000

 

 

 

—

 

 

 

247,828

 

2023 Notes(4)

 

 

150,000

 

 

 

150,000

 

 

 

—

 

 

 

152,477

 

2024 Notes(4)

 

 

400,000

 

 

 

400,000

 

 

 

—

 

 

 

419,678

 

2025 Notes

 

 

425,000

 

 

 

425,000

 

 

 

—

 

 

 

417,781

 

July 2025 Notes

 

 

500,000

 

 

 

500,000

 

 

 

—

 

 

 

491,694

 

2026 Notes

 

 

500,000

 

 

 

500,000

 

 

 

—

 

 

 

488,840

 

Total Debt

 

$

5,792,000

 

 

$

4,341,884

 

 

$

1,424,020

 

 

$

4,305,643

 

________________

 

(1)

The amount available reflects any limitations related to each credit facility’s borrowing base.

 

(2)

The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility II, SPV Asset Facility III, SPV Asset Facility IV, CLO I, CLO II, CLO III, CLO IV, 2023 Notes, 2024 Notes, 2025 Notes, July 2025 Notes, and 2026 Notes are presented net of deferred financing costs of $9.7 million, $4.5 million, $2.2 million, $3.5 million, $3.4 million, $2.1 million, $2.1 million, $4.2 million, $1.1 million, $7.5 million, $7.2 million, $8.3 million, and $11.2 million, respectively.

 

(3)

Includes the unrealized translation gain (loss) on borrowings denominated in foreign currencies.

 

(4)

Inclusive of change in fair value of effective hedge.  

 

(5)

The amount available is reduced by $26.1 million of outstanding letters of credit.  

51

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

 

 

 

December 31, 2019

 

($ in thousands)

 

Aggregate Principal Committed

 

 

Outstanding Principal

 

 

Amount Available(1)

 

 

Net Carrying Value(2)

 

Revolving Credit Facility(3)(5)

 

$

1,170,000

 

 

$

480,861

 

 

$

664,410

 

 

$

473,655

 

SPV Asset Facility I

 

 

400,000

 

 

 

300,000

 

 

 

100,000

 

 

 

297,246

 

SPV Asset Facility II

 

 

350,000

 

 

 

350,000

 

 

 

—

 

 

 

346,395

 

SPV Asset Facility III

 

 

500,000

 

 

 

255,000

 

 

 

245,000

 

 

 

251,548

 

SPV Asset Facility IV

 

 

300,000

 

 

 

60,250

 

 

 

239,750

 

 

 

57,201

 

CLO I

 

 

390,000

 

 

 

390,000

 

 

 

—

 

 

 

386,405

 

CLO II

 

 

260,000

 

 

 

260,000

 

 

 

—

 

 

 

258,028

 

2023 Notes(4)

 

 

150,000

 

 

 

150,000

 

 

 

—

 

 

 

150,113

 

2024 Notes(4)

 

 

400,000

 

 

 

400,000

 

 

 

—

 

 

 

400,955

 

2025 Notes

 

 

425,000

 

 

 

425,000

 

 

 

—

 

 

 

416,686

 

Total Debt

 

$

4,345,000

 

 

$

3,071,111

 

 

$

1,249,160

 

 

$

3,038,232

 

________________

 

(1)

The amount available reflects any limitations related to each credit facility’s borrowing base.

 

(2)

The carrying value of the Company’s Revolving Credit Facility, SPV Asset Facility I, SPV Asset Facility II, SPV Asset Facility III, SPV Asset Facility IV, CLO I, CLO II, 2023 Notes, 2024 Notes and 2025 Notes are presented net of deferred financing costs of $7.2 million, $2.8 million, $3.6 million, $3.5 million, $3.0 million, $3.6 million, $2.0 million, $1.4 million, $8.9 million and $8.3 million, respectively.

 

(3)

Includes the unrealized translation gain (loss) on borrowings denominated in foreign currencies.

 

(4)

Inclusive of change in fair value of effective hedge.  

 

(5)

The amount available is reduced by $24.7 million of outstanding letters of credit.  

 

For the three and nine months ended September 30, 2020 and 2019, the components of interest expense were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

($ in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Interest expense

 

$

32,896

 

 

$

26,969

 

 

$

99,201

 

 

$

93,748

 

 

Amortization of debt issuance costs

 

 

3,973

 

 

 

2,465

 

 

 

13,095

 

 

 

7,273

 

 

Net change in unrealized gain (loss) on effective

     interest rate swaps and hedged items(1)

 

 

522

 

 

 

—

 

 

 

(1,763

)

 

 

—

 

 

Total Interest Expense

 

$

37,391

 

 

$

29,434

 

 

$

110,533

 

 

$

101,021

 

 

Average interest rate

 

 

3.3

 

%

 

5.1

 

%

 

3.7

 

%

 

4.9

 

%

Average daily borrowings

 

$

3,890,731

 

 

$

2,056,484

 

 

$

3,545,786

 

 

$

2,512,055

 

 

________________

 

(1)

Refer to the 2023 Notes and 2024 Notes for details on each facility’s interest rate swap.

 

Credit Facilities

Our credit facilities contain customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and customary events of default (with customary cure and notice provisions).

 

Description of Facilities

Revolving Credit Facility

On February 1, 2017, the Company entered into a senior secured revolving credit agreement (and as amended by that certain First Amendment to Senior Secured Revolving Credit Agreement, dated as of July 17, 2017, the First Omnibus Amendment to Senior Secured Revolving Credit Agreement and Guarantee and Security Agreement, dated as of March 29, 2018, the Third Amendment to Senior Secured Revolving Credit Agreement, dated as of June 21, 2018, the Fourth Amendment to Senior Secured Revolving Credit Agreement, dated as of April 2, 2019, the Fifth Amendment to Senior Secured Revolving Credit Agreement, dated as of May 7, 2020 and the Sixth Amendment to Senior Secured Revolving Credit Agreement, dated as of September 3, 2020, the “Revolving Credit

52

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Facility”). The parties to the Revolving Credit Facility include the Company, as Borrower, the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”) and Truist Securities, Inc. and ING Capital LLC as Joint Lead Arrangers and Joint Book Runners, Truist Bank (as successor by merger to SunTrust Bank) as Administrative Agent and ING Capital LLC as Syndication Agent.

The Revolving Credit Facility is guaranteed by OR Lending LLC, a subsidiary of the Company, and will be guaranteed by certain domestic subsidiaries of the Company that are formed or acquired by the Company in the future (collectively, the “Guarantors”). Proceeds of the Revolving Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.

The maximum principal amount of the Revolving Credit Facility is $1.355 billion (increased from $1,335 billion on September 3, 2020; increased from $1.295 billion on June 12, 2020; increased from $1.24 billion on May 27, 2020; increased from $1.195 on May 7, 2020; increased from $1.17 billion on February 11, 2020; increased from $1.1 billion on August 27, 2019; increased from $1.0 billion on July 26, 2019), subject to availability under the borrowing base, which is based on the Company’s portfolio investments and other outstanding indebtedness. As amended on September 3, 2020, maximum capacity under the Revolving Credit Facility may be increased to $2.0 billion through the Company’s exercise of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility includes a $50 million limit for swingline loans and is secured by a perfected first-priority interest in substantially all of the portfolio investments held by the Company and each Guarantor, subject to certain exceptions.

The availability period under the Revolving Credit Facility will terminate on September 3, 2024, with respect to $1.295 billion of commitments, and on March 31, 2023, with respect to the remaining commitments (together, the “Revolving Credit Facility Commitment Termination Date”). The Revolving Credit Facility will mature on September 3, 2025, with respect to $1.295 billion of commitments, and on April 2, 2024, with respect to the remaining commitments (together, the “Revolving Credit Facility Maturity Date”). During the period from the earliest Revolving Credit Facility Commitment Termination Date to the final Revolving Credit Facility Maturity Date, the Company will be obligated to make mandatory prepayments under the Revolving Credit Facility out of the proceeds of certain asset sales and other recovery events and equity and debt issuances.

The Company may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Revolving Credit Facility will bear interest at either LIBOR plus 2.00%, or the prime rate plus 1.00%. The Company may elect either the LIBOR or prime rate at the time of drawdown, and loans may be converted from one rate to another at any time at the Company’s option, subject to certain conditions. The Company predominantly borrows utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. The Company also pays a fee of 0.375% on undrawn amounts under the Revolving Credit Facility.

The Revolving Credit Facility includes customary covenants, including certain limitations on the incurrence by the Company of additional indebtedness and on the Company’s ability to make distributions to the Company’s shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants related to asset coverage and liquidity and other maintenance covenants, as well as customary events of default. The agreement requires a minimum asset coverage ratio of 150% with respect to the Company’s consolidated assets and its subsidiaries, measured at the last day of any fiscal quarter and a minimum asset coverage ratio of no less than 200% with respect to its consolidated assets and its subsidiary guarantors (including certain limitations on the contribution of equity in financing subsidiaries as specified therein) to its secured debt and its subsidiary guarantors (the “Obligor Asset Coverage Ratio), measured at the last day of each fiscal quarter. The agreement also includes concentration limits in connection with the calculation of the borrowing base, based upon the Obligor Asset Coverage Ratio.

Subscription Credit Facility

On August 1, 2016, the Company entered into a subscription credit facility (as amended, the “Subscription Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent (the “Administrative Agent”) and letter of credit issuer, and Wells Fargo, State Street Bank and Trust Company and the banks and financial institutions from time to time party thereto, as lenders.  

The Subscription Credit Facility permitted the Company to borrow up to $900 million, subject to availability under the “Borrowing Base.” The Borrowing Base was calculated based on the unused Capital Commitments of the investors meeting various eligibility requirements above certain concentration limits based on investors’ credit ratings.  Effective June 19, 2019, the outstanding balance on the Subscription Credit Facility was paid in full and the facility was terminated pursuant to its terms.

Borrowings under the Subscription Credit Facility bore interest, at the Company’s election at the time of drawdown, at a rate per annum equal to (i) in the case of LIBOR rate loans, an adjusted LIBOR rate for the applicable interest period plus 1.60% or (ii) in the case of reference rate loans, the greatest of (A) a prime rate plus 0.60%, (B) the federal funds rate plus 1.10%, and (C) one-month LIBOR plus 1.60%.  Loans were able to be converted from one rate to another at any time at the Company’s election, subject to

53

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

certain conditions.  The Company predominantly borrowed utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. The Company also paid an unused commitment fee of 0.25% per annum on the unused commitments.

SPV Asset Facilities

SPV Asset Facility I

On December 21, 2017 (the “SPV Asset Facility I Closing Date”), ORCC Financing LLC (“ORCC Financing”), a Delaware limited liability company and subsidiary of the Company, entered into a Loan and Servicing Agreement (as amended, the “SPV Asset Facility I”), with ORCC Financing as Borrower, the Company as Transferor and Servicer, the lenders from time to time parties thereto (the “SPV Lenders”), Morgan Stanley Asset Funding Inc. as Administrative Agent, State Street Bank and Trust Company as Collateral Agent and Cortland Capital Market Services LLC as Collateral Custodian.

From time to time, the Company sold and contributed certain investments to ORCC Financing pursuant to a Sale and Contribution Agreement by and between the Company and ORCC Financing. No gain or loss was recognized as a result of the contribution. Proceeds from the SPV Asset Facility I were used to finance the origination and acquisition of eligible assets by ORCC Financing, including the purchase of such assets from the Company. The Company retained a residual interest in assets contributed to or acquired by ORCC Financing through its ownership of ORCC Financing. The maximum principal amount of the SPV Asset Facility I was $400 million; the availability of this amount was subject to a borrowing base test, which was based on the value of ORCC Financing’s assets from time to time, and satisfaction of certain conditions, including certain concentration limits.

The SPV Asset Facility I provided for the ability to draw and redraw amounts under the SPV Asset Facility I for a period of up to three years after the SPV Asset Facility I Closing Date (the “SPV Asset Facility I Commitment Termination Date”). The SPV Asset Facility I was terminated on June 2, 2020 (the “SPV Asset Facility I Termination Date”). Prior to the SPV Asset Facility I Termination Date, proceeds received by ORCC Financing from principal and interest, dividends, or fees on assets were required to be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to the Company, subject to certain conditions. On the SPV Asset Facility I Termination Date, ORCC Financing repaid in full all outstanding fees and expenses and all principal and interest on outstanding borrowings.

Amounts drawn bore interest at LIBOR plus a spread of 2.25% until the six-month anniversary of the SPV Asset Facility I Closing Date, increasing to 2.50% thereafter, until the SPV Asset Facility I Commitment Termination Date. The Company predominantly borrowed utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. After a ramp-up period, there was an unused fee of 0.75% per annum on the amount, if any, by which the undrawn amount under the SPV Asset Facility I exceeded 25% of the maximum principal amount of the SPV Asset Facility I. The SPV Asset Facility I contained customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility I was secured by a perfected first priority security interest in the assets of ORCC Financing and on any payments received by ORCC Financing in respect of those assets. Assets pledged to the SPV Lenders were not available to pay the debts of the Company.

SPV Asset Facility II

On May 22, 2018, ORCC Financing II LLC (“ORCC Financing II”), a Delaware limited liability company and subsidiary of the Company, entered into a Credit Agreement (as amended, the “SPV Asset Facility II”), with ORCC Financing II, as Borrower, the lenders from time to time parties thereto (the “SPV Asset Facility II Lenders”), Natixis, New York Branch, as Administrative Agent, State Street Bank and Trust Company, as Collateral Agent, and Cortland Capital Market Services LLC as Document Custodian. The parties to the SPV Asset Facility II have entered into various amendments, including to admit new lenders, increase or decrease the maximum principal amount available under the facility, extend the availability period and maturity date, change the interest rate and make various other changes.  The following describes the terms of SPV Asset Facility II amended through March 17, 2020 (the “SPV Asset Facility II Fifth Amendment Date”).

From time to time, the Company sells and contributes certain investments to ORCC Financing II pursuant to a sale and contribution agreement by and between the Company and ORCC Financing II. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility II will be used to finance the origination and acquisition of eligible assets by ORCC Financing II, including the purchase of such assets from the Company. The Company retains a residual interest in assets contributed to or acquired by ORCC Financing II through the Company’s ownership of ORCC Financing II. The maximum principal amount of the SPV Asset Facility II following the SPV Asset Facility II Fifth Amendment Date is $350 million (which includes terms loans of $100 million and revolving commitments of $250 million). The availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing II’s assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests.

54

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

The SPV Asset Facility II provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility II for a period of up to 18 months after the SPV Asset Facility II Fifth Amendment Date unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility II (the “SPV Asset Facility II Commitment Termination Date”). Unless otherwise terminated, the SPV Asset Facility II will mature on May 22, 2028 (the “Stated Maturity”). Prior to the Stated Maturity, proceeds received by ORCC Financing II from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to the Company, subject to certain conditions. On the Stated Maturity, ORCC Financing II must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to the Company.

With respect to revolving loans, amounts drawn bear interest at LIBOR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and LIBOR plus 0.25%) plus a spread that steps up from 2.20% to 2.50% during the period from the SPV Asset Facility II Fifth Amendment Date to the six month anniversary of the Reinvestment Period End Date. With respect to term loans, amounts drawn bear interest at LIBOR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and LIBOR plus 0.25%)  plus a spread that steps up from 2.25% to 2.55% during the same period. The Company predominantly borrows utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. From the SPV Asset Facility II Fifth Amendment Date to the SPV Asset Facility II Commitment Termination Date, there is a commitment fee ranging from 0.50% to 0.75% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility II. The SPV Asset Facility II contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing II, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility II is secured by a perfected first priority security interest in the assets of ORCC Financing II and on any payments received by ORCC Financing II in respect of those assets. Assets pledged to the SPV Asset Facility II Lenders will not be available to pay the debts of the Company.

SPV Asset Facility III

On December 14, 2018 (the “SPV Asset Facility III Closing Date”), ORCC Financing III LLC (“ORCC Financing III”), a Delaware limited liability company and newly formed subsidiary of the Company, entered into a Loan Financing and Servicing Agreement (the “SPV Asset Facility III”), with ORCC Financing III, as borrower, the Company, as equityholder and services provider, the lenders from time to time parties thereto (the “SPV Lenders III”), Deutsche Bank AG, New York Branch, as Facility Agent, State Street Bank and Trust Company, as Collateral Agent and Cortland Capital Market Services LLC, as Collateral Custodian. On December 10, 2019, the parties to SPV Asset Facility III amended certain terms of the facility, including those relating to the undrawn fee and make-whole fee. The following describes the terms of SPV Asset Facility III as amended through December 10, 2019.

From time to time, the Company expects to sell and contribute certain loan assets to ORCC Financing III pursuant to a Sale and Contribution Agreement by and between the Company and ORCC Financing III.  No gain or loss will be recognized as a result of the contribution.  Proceeds from the SPV Asset Facility III will be used to finance the origination and acquisition of eligible assets by ORCC Financing III, including the purchase of such assets from the Company.  The Company retains a residual interest in assets contributed to or acquired by ORCC Financing III through its ownership of ORCC Financing III.  The maximum principal amount of the SPV Asset Facility III is $500 million; the availability of this amount is subject to a borrowing base test, which is based on the value of ORCC Financing III’s assets from time to time, and satisfaction of certain conditions, including interest spread and weighted average coupon tests, certain concentration limits and collateral quality tests.

The SPV Asset Facility III provides for the ability to borrow, reborrow, repay and prepay advances under the SPV Asset Facility III for a period of up to three years after the SPV Asset Facility III Closing Date unless such period is extended or accelerated under the terms of the SPV Asset Facility III (the “SPV Asset Facility III Revolving Period”).  Unless otherwise extended, accelerated or terminated under the terms of the SPV Asset Facility III, the SPV Asset Facility III will mature on the date that is two years after the last day of the SPV Asset Facility III Revolving Period (the “SPV Asset Facility III Stated Maturity”).  Prior to the SPV Asset Facility III Stated Maturity, proceeds received by ORCC Financing III from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding advances, and the excess may be returned to the Company, subject to certain conditions.  On the SPV Asset Facility III Stated Maturity, ORCC Financing III must pay in full all outstanding fees and expenses and all principal and interest on outstanding advances, and the excess may be returned to the Company.

Amounts drawn bear interest at LIBOR (or, in the case of certain SPV Lenders III that are commercial paper conduits, the lower of (a) their cost of funds and (b) LIBOR, such LIBOR not to be lower than zero) plus a spread equal to 2.20% per annum, which spread will increase (a) on and after the end of the SPV Asset Facility III Revolving Period by 0.15% per annum if no event of default has occurred and (b) by 2.00% per annum upon the occurrence of an event of default (such spread, the “Applicable Margin”).  LIBOR may be replaced as a base rate under certain circumstances. The Company predominantly borrows utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. During the Revolving Period, ORCC Financing III will pay an undrawn fee

55

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

ranging from 0.25% to 0.50% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility III.  During the Revolving Period, if the undrawn commitments are in excess of a certain portion (initially 20% and increasing in stages to 75%) of the total commitments under the SPV Asset Facility III, ORCC Financing III will also pay a make-whole fee equal to the Applicable Margin multiplied by such excess undrawn commitment amount, reduced by the undrawn fee payable on such excess.  The SPV Asset Facility III contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing III, including limitations on incurrence of incremental indebtedness, and customary events of default.  The SPV Asset Facility III is secured by a perfected first priority security interest in the assets of ORCC Financing III and on any payments received by ORCC Financing III in respect of those assets.  Assets pledged to the SPV Asset Facility III Lenders will not be available to pay the debts of the Company.

SPV Asset Facility IV

On August 2, 2019 (the “SPV Asset Facility IV Closing Date”), ORCC Financing IV LLC (“ORCC Financing IV”), a Delaware limited liability company and newly formed subsidiary of the Company entered into a Credit Agreement (the “SPV Asset Facility IV”), with ORCC Financing IV, as borrower, Société Générale, as initial Lender and as Administrative Agent, State Street Bank and Trust Company, as Collateral Agent, Collateral Administrator and Custodian, and Cortland Capital Market Services LLC as Document Custodian and the lenders from time to time party thereto pursuant to Assignment and Assumption Agreements. On November 22, 2019 (the “SPV Asset Facility IV Amendment Date”), the parties to the SPV Asset Facility IV amended the SPV Asset Facility IV to increase the maximum principal amount of the SPV Asset Facility IV to $450 million in periodic increments through March 22, 2020.

From time to time, the Company expects to sell and contribute certain investments to ORCC Financing IV pursuant to a Sale and Contribution Agreement by and between the Company and ORCC Financing IV.  No gain or loss will be recognized as a result of the contribution.  Proceeds from the SPV Asset Facility IV will be used to finance the origination and acquisition of eligible assets by ORCC Financing IV, including the purchase of such assets from the Company.  The Company retains a residual interest in assets contributed to or acquired by ORCC Financing IV through its ownership of ORCC Financing IV.  The maximum principal amount of the Credit Facility is $450 million, subject to a ramp period; the availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing IV’s assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests.

The SPV Asset Facility IV provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility IV for a period of up to two years after the Closing Date unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility IV (the “Commitment Termination Date”).  Unless otherwise terminated, the SPV Asset Facility IV will mature on August 2, 2029 (the “Stated Maturity”).  Prior to the Stated Maturity, proceeds received by ORCC Financing IV from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to the Company, subject to certain conditions.  On the Stated Maturity, ORCC Financing IV must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to the Company.

Amounts drawn bear interest at LIBOR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and LIBOR plus 0.25%) plus a spread ranging from 2.15% to 2.50%. The Company predominantly borrows utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. From the Closing Date to the Commitment Termination Date, there is a commitment fee ranging from 0.50% to 1.00% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility IV.  The SPV Asset Facility IV contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing IV, including limitations on incurrence of incremental indebtedness, and customary events of default.  The SPV Asset Facility IV is secured by a perfected first priority security interest in the assets of ORCC Financing IV and on any payments received by ORCC Financing IV in respect of those assets.  Assets pledged to the Lenders will not be available to pay the debts of the Company.

CLOs

CLO I

On May 28, 2019 (the “CLO I Closing Date”), the Company completed a $596 million term debt securitization transaction (the “CLO I Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company.  The secured notes and preferred shares issued in the CLO I Transaction and the secured loan borrowed in the CLO I Transaction were issued and incurred, as applicable, by the Company’s consolidated subsidiaries Owl Rock CLO I, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO I Issuer”), and Owl Rock CLO I, LLC, a Delaware limited liability company (the “CLO I Co-Issuer” and together with the CLO I Issuer, the “CLO I Issuers”) and are backed by a

56

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO I Issuer.    

In the CLO I Transaction the CLO I Issuers (A) issued the following notes pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO I Indenture”), by and among the CLO I Issuers and State Street Bank and Trust Company:  (i) $242 million of AAA(sf) Class A Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $30 million of AAA(sf) Class A-F Notes, which bear interest at a fixed rate of 4.165%, and (iii) $68 million of AA(sf) Class B Notes, which bear interest at three-month LIBOR plus 2.70% (together, the “CLO I Notes”) and (B) borrowed $50 million under floating rate loans (the “Class A Loans” and together with the CLO I Notes, the “CLO I Debt”), which bear interest at three-month LIBOR plus 1.80%, under a credit agreement (the “CLO I Credit Agreement”), dated as of the CLO I Closing Date, by and among the CLO I Issuers, as borrowers, various financial institutions, as lenders, and State Street Bank and Trust Company, as collateral trustee and loan agent.  The Class A Loans may be exchanged by the lenders for Class A Notes at any time, subject to certain conditions under the CLO I Credit Agreement and the CLO I Indenture.  The CLO I Debt is scheduled to mature on May 20, 2031. The CLO I Notes were privately placed by Natixis Securities Americas, LLC and SG Americas Securities, LLC.

Concurrently with the issuance of the CLO I Notes and the borrowing under the Class A Loans, the CLO I Issuer issued approximately $206.1 million of subordinated securities in the form of 206,106 preferred shares at an issue price of U.S.$1,000 per share (the “CLO I Preferred Shares”).  The CLO I Preferred Shares were issued by the CLO I Issuer as part of its issued share capital and are not secured by the collateral securing the CLO I Debt. The Company owns all of the CLO I Preferred Shares, and as such, these securities are eliminated in consolidation. The Company acts as retention holder in connection with the CLO I Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO I Preferred Shares.

The Adviser serves as collateral manager for the CLO I Issuer under a collateral management agreement dated as of the CLO I Closing Date.  The Adviser is entitled to receive fees for providing these services.  The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO I Issuers’ equity or notes owned by the Company.

The CLO I Debt is secured by all of the assets of the CLO I Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO I Transaction, ORCC Financing II LLC and the Company sold and contributed approximately $575 million par amount of middle market loans to the CLO I Issuer on the CLO I Closing Date.  Such loans constituted the initial portfolio assets securing the CLO I Debt.  The Company and ORCC Financing II LLC each made customary representations, warranties, and covenants to the CLO I Issuer regarding such sales and contributions under a loan sale agreement.

Through May 20, 2023, a portion of the proceeds received by the CLO I Issuer from the loans securing the CLO I Debt may be used by the CLO I Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager for the CLO I Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.

The CLO I Debt is the secured obligation of the CLO I Issuers, and the CLO I Indenture and the CLO I Credit Agreement include customary covenants and events of default.  Assets pledged to holders of the CLO I Debt and the other secured parties under the CLO I Indenture will not be available to pay the debts of the Company.

The CLO I Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The CLO I Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.

CLO II

On December 12, 2019 (the “CLO II Closing Date”), the Company completed a $396.6 million term debt securitization transaction (the “CLO II Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO II Transaction were issued by the Company’s consolidated subsidiaries Owl Rock CLO II, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO II Issuer”), and Owl Rock CLO II, LLC, a Delaware limited liability company (the “CLO II Co-Issuer” and together with the CLO II Issuer, the “CLO II Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO II Issuer.  

The CLO II Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the CLO II Closing Date (the “CLO II Indenture”), by and among the CLO II Issuers and

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Owl Rock Capital Corporation

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State Street Bank and Trust Company: (i) $157 million of AAA(sf) Class A-1L Notes, which bear interest at three-month LIBOR plus 1.75%, (ii) $40 million of AAA(sf) Class A-1F Notes, which bear interest at a fixed rate of 3.44%, (iii) $20 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.20%, (iv) $40 million of AA(sf) Class B-L Notes, which bear interest at three-month LIBOR plus 2.75% and (v) $3 million of AA(sf) Class B-F Notes, which bear interest at a fixed rate of 4.46% (together, the “CLO II Debt”). The CLO II Debt is scheduled to mature on January 20, 2031. The CLO II Debt was privately placed by Deutsche Bank Securities Inc. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO II Debt.

Concurrently with the issuance of the CLO II Debt, the CLO II Issuer issued approximately $136.6 million of subordinated securities in the form of 136,600 preferred shares at an issue price of U.S.$1,000 per share (the “CLO II Preferred Shares”). The CLO II Preferred Shares were issued by the CLO II Issuer as part of its issued share capital and are not secured by the collateral securing the CLO II Debt. The Company owns all of the CLO II Preferred Shares, and as such, these securities are eliminated in consolidation. The Company acts as retention holder in connection with the CLO II Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO II Preferred Shares.

The Adviser serves as collateral manager for the CLO II Issuer under a collateral management agreement dated as of the CLO II Closing Date.  The Adviser is entitled to receive fees for providing these services.  The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO II Issuers’ equity or notes owned by the Company.

The CLO II Debt is secured by all of the assets of the CLO II Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO II Transaction, ORCC Financing III LLC and the Company sold and contributed approximately $400 million par amount of middle market loans to the CLO II Issuer on the CLO II Closing Date.  Such loans constituted the initial portfolio assets securing the CLO II Debt.  The Company and ORCC Financing III LLC each made customary representations, warranties, and covenants to the CLO II Issuer regarding such sales and contributions under a loan sale agreement.

Through January 20, 2022, a portion of the proceeds received by the CLO II Issuer from the loans securing the CLO II Debt may be used by the CLO II Issuer to purchase additional middle market loans under the direction of the Adviser  as the collateral manager for the CLO II Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.  

The CLO II Debt is the secured obligation of the CLO II Issuers, and the CLO II Indenture includes customary covenants and events of default.  Assets pledged to holders of the CLO II Debt and the other secured parties under the CLO II Indenture will not be available to pay the debts of the Company.

The CLO II Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO II Debt has not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.

CLO III

On March 26, 2020 (the “CLO III Closing Date”), the Company completed a $395.31 million term debt securitization transaction (the “CLO III Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company.  The secured notes and preferred shares issued in the CLO III Transaction were issued by the Company’s consolidated subsidiaries Owl Rock CLO III, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO III Issuer”), and Owl Rock CLO III, LLC, a Delaware limited liability company (the “CLO III Co-Issuer” and together with the CLO III Issuer, the “CLO III Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO III Issuer.  

The CLO III Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the CLO III Closing Date (the “CLO III Indenture”), by and among the CLO III Issuers and State Street Bank and Trust Company:  (i) $166 million of AAA(sf) Class A-1L Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $40 million of AAA(sf) Class A-1F Notes, which bear interest at a fixed rate of 2.75%, (iii) $20 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.00%,  and (iv) $34 million of AA(sf) Class B Notes, which bear interest at three-month LIBOR plus 2.45% (together, the “CLO III Debt”).  The CLO III Debt is scheduled to mature on April 20, 2032.  The CLO III Debt was privately placed by SG Americas Securities, LLC. Upon the occurrence of certain triggering events

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Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO III Debt.

Concurrently with the issuance of the CLO III Debt, the CLO III Issuer issued approximately $135.31 million of subordinated securities in the form of 135,310 preferred shares at an issue price of U.S.$1,000 per share (the “CLO III Preferred Shares”).  The CLO III Preferred Shares were issued by the CLO III Issuer as part of its issued share capital and are not secured by the collateral securing the CLO III Debt. The Company owns all of the CLO III Preferred Shares, and as such, these securities are eliminated in consolidation.  The Company acts as retention holder in connection with the CLO III Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO III Preferred Shares.

The Adviser serves as collateral manager for the  CLO III  Issuer under a collateral management agreement dated as of the CLO III Closing Date.  The Adviser  is entitled to receive fees for providing these services.  The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO III Issuers’ equity or notes owned by the Company.

The CLO III Debt is secured by all of the assets of the CLO III Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO III Transaction, ORCC Financing IV LLC and the Company sold and contributed approximately $400 million par amount of middle market loans to the CLO III Issuer on the CLO III Closing Date.  Such loans constituted the initial portfolio assets securing the CLO III Debt.  The Company and ORCC Financing IV LLC each made customary representations, warranties, and covenants to the CLO III Issuer regarding such sales and contributions under a loan sale agreement.

Through April 20, 2024, a portion of the proceeds received by the CLO III Issuer from the loans securing the CLO III Debt may be used by the CLO III Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager for the CLO III Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.  

The CLO III Debt is the secured obligation of the CLO III Issuers, and the CLO III Indenture includes customary covenants and events of default.  Assets pledged to holders of the CLO III Debt and the other secured parties under the CLO III Indenture will not be available to pay the debts of the Company.

The CLO III Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO III Debt has not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.

CLO IV

On May 28, 2020 (the “CLO IV Closing Date”), the Company completed a $438.9 million term debt securitization transaction (the “CLO IV Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO IV Transaction were issued by the Company’s consolidated subsidiaries Owl Rock CLO IV, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO IV Issuer”), and Owl Rock CLO IV, LLC, a Delaware limited liability company (the “CLO IV Co-Issuer” and together with the CLO IV Issuer, the “CLO IV Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO IV Issuer.

The CLO IV Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO IV Indenture”), by and among the CLO IV Issuers and State Street Bank and Trust Company: (i) $236.5 million of AAA(sf) Class A-1 Notes, which bear interest at three-month LIBOR plus 2.62% and (ii) $15.5 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 3.40% (together, the “CLO IV Secured Notes”). The CLO IV Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the CLO IV Issuer. The CLO IV Secured Notes are scheduled to mature on May 20, 2029. The CLO IV Secured Notes were privately placed by Natixis Securities Americas LLC. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO IV Secured Notes.

Concurrently with the issuance of the CLO IV Secured Notes, the CLO IV Issuer issued approximately $186.9 million of subordinated securities in the form of 186,900 preferred shares at an issue price of U.S.$1,000 per share (the “CLO IV Preferred Shares”). The CLO IV Preferred Shares were issued by the CLO IV Issuer as part of its issued share capital and are not secured by the collateral securing the CLO IV Secured Notes. The Company purchased all of the CLO IV Preferred Shares. The Company acts as

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Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

retention holder in connection with the CLO IV Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO IV Preferred Shares.

As part of the CLO IV Transaction, the Company entered into a loan sale agreement with the CLO IV Issuer dated as of the CLO IV Closing Date, which provided for the sale and contribution of approximately $275.07 million par amount of middle market loans from the Company to the CLO IV Issuer on the CLO IV Closing Date and for future sales from the Company to the CLO IV Issuer on an ongoing basis. Such loans constituted part of the initial portfolio of assets securing the CLO IV Secured Notes. The remainder of the initial portfolio assets securing the CLO IV Secured Notes consisted of approximately $174.92 million par amount of middle market loans purchased by the CLO IV Issuer from ORCC Financing II LLC, a wholly-owned subsidiary of the Company, under an additional loan sale agreement executed on the CLO IV Closing Date between the Issuer and ORCC Financing II LLC. The Company and ORCC Financing II LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement.

Through November 20, 2021, a portion of the proceeds received by the CLO IV Issuer from the loans securing the CLO IV Secured Notes may be used by the CLO IV Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO IV Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.

The Secured Notes are the secured obligation of the CLO IV Issuers, and the CLO IV Indenture includes customary covenants and events of default. The CLO IV Secured Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration.

The Adviser will serve as collateral manager for the CLO IV Issuer under a collateral management agreement dated as of the CLO IV Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO IV Issuers’ equity or notes owned by the Company.

Unsecured Notes

2023 Notes

On December 21, 2017, the Company entered into a Note Purchase Agreement governing the issuance of $150 million in aggregate principal amount of unsecured notes (the “2023 Notes”) to institutional investors in a private placement. The issuance of $138.5 million of the 2023 Notes occurred on December 21, 2017, and $11.5 million of the 2023 Notes were issued in January 2018.  The 2023 Notes have a fixed interest rate of 4.75% and are due on June 21, 2023. Interest on the 2023 Notes will be due semiannually. This interest rate is subject to increase (up to a maximum interest rate of 5.50%) in the event that, subject to certain exceptions, the 2023 Notes cease to have an investment grade rating. The Company is obligated to offer to repay the 2023 Notes at par if certain change in control events occur. The 2023 Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

The Note Purchase Agreement for the 2023 Notes contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a BDC within the meaning of the 1940 Act and a RIC under the Code, minimum shareholders equity, minimum asset coverage ratio and prohibitions on certain fundamental changes at the Company or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of the Company or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy.

The 2023 Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The 2023 Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.

In connection with the offering of the 2023 Notes, on December 21, 2017 the Company entered into a centrally cleared interest rate swap to continue to align the interest rates of its liabilities with its investment portfolio, which consists predominately of floating rate loans.  The notional amount of the interest rate swap is $150 million. The Company will receive fixed rate interest semi-annually at 4.75% and pay variable rate interest monthly based on 1-month LIBOR plus 2.545%. The interest rate swap matures on December 21, 2021. For the three and nine months ended September 30, 2020, the Company made periodic payments of $1.0 million and $3.8 million, respectively. For the three and nine months ended September 30, 2019, the Company made periodic payments of $1.9 million

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Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

and $5.7 million, respectively. The interest expense related to the 2023 Notes is equally offset by the proceeds received from the interest rate swap. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. As of September 30, 2020 and December 31, 2019, the interest rate swap had a fair value of $3.7 million and $1.9 million, respectively. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on the Company’s Consolidated Statements of Assets and Liabilities.  The change in fair value of the interest rate swap is offset by the change in fair value of the 2023 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations.

2024 Notes

On April 10, 2019, the Company issued $400 million aggregate principal amount of notes that mature on April 15, 2024 (the “2024 Notes”). The 2024 Notes bear interest at a rate of 5.25% per year, payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2019. The Company may redeem some or all of the 2024 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2024 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2024 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any 2024 Notes on or after March 15, 2024 (the date falling one month prior to the maturity date of the 2024 Notes), the redemption price for the 2024 Notes will be equal to 100% of the principal amount of the 2024 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

In connection with the issuance of the 2024 Notes, on April 10, 2019 the Company entered into centrally cleared interest rate swaps to continue to align interest rates of its liabilities with the investment portfolio, which consists of predominantly floating rate loans. The notional amount of the interest rate swaps is $400 million. The Company will receive fixed rate interest at 5.25% and pay variable rate interest based on one-month LIBOR plus 2.937%. The interest rate swaps mature on April 10, 2024. For the three and nine months ended September 30, 2020, the Company made periodic payments of $0 and $9.3 million, respectively. For the three and nine months ended September 30, 2019, the Company did not make periodic payments. The interest expense related to the 2024 Notes is equally offset by the proceeds received from the interest rate swaps. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. As of September 30, 2020 and December 31, 2019, the interest rate swap had a fair value of $29.8 million and $10.8 million, respectively.  Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on the Company’s Consolidated Statements of Assets and Liabilities.  The change in fair value of the interest rate swap is offset by the change in fair value of the 2024 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations.

2025 Notes

On October 8, 2019, the Company issued $425 million aggregate principal amount of notes that mature on March 30, 2025 (the “2025 Notes”). The 2025 Notes bear interest at a rate of 4.00% per year, payable semi-annually on March 30 and September 30 of each year, commencing on March 30, 2020. The Company may redeem some or all of the 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 40 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any 2025 Notes on or after February 28, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the 2025 Notes will be equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

July 2025 Notes

On January 22, 2020, the Company issued $500 million aggregate principal amount of notes that mature on July 22, 2025 (the “July 2025 Notes”). The July 2025 Notes bear interest at a rate of 3.75% per year, payable semi-annually on January 22 and July 22, of each year, commencing on July 22, 2020. The Company may redeem some or all of the July 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the July 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the July 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 35 basis points, plus, in each case,

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Owl Rock Capital Corporation

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accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any July 2025 Notes on or after June 22, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the July 2025 Notes will be equal to 100% of the principal amount of the July 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

2026 Notes

On July 23, 2020, the Company issued $500 million aggregate principal amount of notes that mature on January 15, 2026 (the “2026 Notes”). The 2026 Notes bear interest at a rate of 4.25% per year, payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2021. The Company may redeem some or all of the 2026 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any 2026 Notes on or after December, 15 2025 (the date falling one month prior to the maturity date of the 2026 Notes), the redemption price for the 2026 Notes will be equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

 

Note 7. Commitments and Contingencies

Portfolio Company Commitments

From time to time, the Company may enter into commitments to fund investments. As of September 30, 2020 and December 31, 2019, the Company had the following outstanding commitments to fund investments in current portfolio companies:

 

Portfolio Company

 

Investment

 

 

 

September 30, 2020

 

 

December 31, 2019

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

11849573 Canada Inc. (dba Intelerad Medical Systems Incorporated)

 

First lien senior secured delayed draw term loan

 

$

1,332

 

 

$

—

 

11849573 Canada Inc. (dba Intelerad Medical Systems Incorporated)

 

First lien senior secured revolving loan

 

 

4,530

 

 

 

—

 

3ES Innovation Inc. (dba Aucerna)

 

First lien senior secured revolving loan

 

 

3,893

 

 

 

3,893

 

Accela, Inc.

 

First lien senior secured revolving loan

 

 

3,000

 

 

 

—

 

Amspec Services Inc.

 

First lien senior secured revolving loan

 

 

3,962

 

 

 

9,038

 

Apptio, Inc.

 

First lien senior secured revolving loan

 

 

2,779

 

 

 

2,779

 

Aramsco, Inc.

 

First lien senior secured revolving loan

 

 

3,910

 

 

 

6,842

 

Ardonagh Midco 3 PLC

 

First lien senior secured delayed draw term loan

 

 

19,237

 

 

 

—

 

Associations, Inc.

 

First lien senior secured delayed draw term loan

 

 

866

 

 

 

17,949

 

Associations, Inc.

 

First lien senior secured revolving loan

 

 

—

 

 

 

11,543

 

BIG Buyer, LLC

 

First lien senior secured delayed draw term loan

 

 

5,625

 

 

 

11,250

 

BIG Buyer, LLC

 

First lien senior secured revolving loan

 

 

2,500

 

 

 

3,750

 

Caiman Merger Sub LLC (dba City Brewing)

 

First lien senior secured revolving loan

 

 

12,881

 

 

 

12,881

 

ConnectWise, LLC

 

First lien senior secured revolving loan

 

 

20,005

 

 

 

20,005

 

Covenant Surgical Partners, Inc.

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

2,800

 

Definitive Healthcare Holdings, LLC

 

First lien senior secured delayed draw term loan

 

 

43,478

 

 

 

43,478

 

Definitive Healthcare Holdings, LLC

 

First lien senior secured revolving loan

 

 

—

 

 

 

10,870

 

62

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Portfolio Company

 

Investment

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Douglas Products and Packaging Company LLC

 

First lien senior secured revolving loan

 

 

2,422

 

 

 

7,872

 

Endries Acquisition, Inc.

 

First lien senior secured delayed draw term loan

 

 

36,923

 

 

 

51,638

 

Endries Acquisition, Inc.

 

First lien senior secured revolving loan

 

 

27,000

 

 

 

27,000

 

Entertainment Benefits Group, LLC

 

First lien senior secured revolving loan

 

 

1,104

 

 

 

9,600

 

Forescout Technologies, Inc.

 

First lien senior secured revolving loan

 

 

5,345

 

 

 

—

 

Galls, LLC

 

First lien senior secured revolving loan

 

 

9,977

 

 

 

3,719

 

Galls, LLC

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

29,181

 

GC Agile Holdings Limited (dba Apex Fund Services)

 

First lien senior secured revolving loan

 

 

—

 

 

 

10,386

 

Genesis Acquisition Co. (dba Procare Software)

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

4,745

 

Genesis Acquisition Co. (dba Procare Software)

 

First lien senior secured revolving loan

 

 

—

 

 

 

1,714

 

Gerson Lehrman Group, Inc.

 

First lien senior secured revolving loan

 

 

21,563

 

 

 

21,563

 

Granicus, Inc.

 

First lien senior secured revolving loan

 

 

2,636

 

 

 

—

 

H&F Opportunities LUX III S.À R.L (dba Checkmarx)

 

First lien senior secured revolving loan

 

 

16,250

 

 

 

—

 

HGH Purchaser, Inc. (dba Horizon Services)

 

First lien senior secured delayed draw term loan

 

 

17,690

 

 

 

32,400

 

HGH Purchaser, Inc. (dba Horizon Services)

 

First lien senior secured revolving loan

 

 

7,938

 

 

 

7,938

 

Hometown Food Company

 

First lien senior secured revolving loan

 

 

3,106

 

 

 

4,235

 

Ideal Tridon Holdings, Inc.

 

First lien senior secured revolving loan

 

 

3,437

 

 

 

5,400

 

Ideal Tridon Holdings, Inc.

 

First lien senior secured delayed draw term loan

 

 

381

 

 

 

381

 

Individual Foodservice Holdings, LLC

 

First lien senior secured delayed draw term loan

 

 

23,027

 

 

 

42,500

 

Individual Foodservice Holdings, LLC

 

First lien senior secured revolving loan

 

 

14,280

 

 

 

24,225

 

Instructure, Inc.

 

First lien senior secured revolving loan

 

 

5,554

 

 

 

—

 

Integrity Marketing Acquisition, LLC

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

16,587

 

Integrity Marketing Acquisition, LLC

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

32,573

 

Integrity Marketing Acquisition, LLC

 

First lien senior secured revolving loan

 

 

14,832

 

 

 

14,832

 

Interoperability Bidco, Inc.

 

First lien senior secured delayed draw term loan

 

 

8,000

 

 

 

8,000

 

Interoperability Bidco, Inc.

 

First lien senior secured revolving loan

 

 

—

 

 

 

4,000

 

IQN Holding Corp. (dba Beeline)

 

First lien senior secured revolving loan

 

 

22,672

 

 

 

15,532

 

KWOR Acquisition, Inc. (dba Worley Claims Services)

 

First lien senior secured delayed draw term loan

 

 

2,063

 

 

 

2,428

 

KWOR Acquisition, Inc. (dba Worley Claims Services)

 

First lien senior secured revolving loan

 

 

5,200

 

 

 

5,200

 

Lazer Spot G B Holdings, Inc.

 

First lien senior secured delayed draw term loan

 

 

1,556

 

 

 

13,417

 

Lazer Spot G B Holdings, Inc.

 

First lien senior secured revolving loan

 

 

26,833

 

 

 

24,687

 

Lightning Midco, LLC (dba Vector Solutions)

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

1,764

 

Lightning Midco, LLC (dba Vector Solutions)

 

First lien senior secured revolving loan

 

 

935

 

 

 

5,318

 

Litera Bidco LLC

 

First lien senior secured revolving loan

 

 

4,303

 

 

 

5,738

 

Lytx, Inc.

 

First lien senior secured revolving loan

 

 

—

 

 

 

2,033

 

63

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Portfolio Company

 

Investment

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Lytx, Inc.

 

First lien senior secured delayed draw term loan

 

 

14,092

 

 

 

—

 

Manna Development Group, LLC

 

First lien senior secured revolving loan

 

 

—

 

 

 

3,469

 

Mavis Tire Express Services Corp.

 

Second lien senior secured delayed draw term loan

 

 

11,376

 

 

 

34,831

 

MINDBODY, Inc.

 

First lien senior secured revolving loan

 

 

6,071

 

 

 

6,071

 

Nelipak Holding Company

 

First lien senior secured revolving loan

 

 

2,948

 

 

 

4,690

 

Nelipak Holding Company

 

First lien senior secured revolving loan

 

 

4,609

 

 

 

6,970

 

NMI Acquisitionco, Inc. (dba Network Merchants)

 

First lien senior secured revolving loan

 

 

646

 

 

 

646

 

Norvax, LLC (dba GoHealth)

 

First lien senior secured revolving loan

 

 

12,273

 

 

 

12,273

 

Nutraceutical International Corporation

 

First lien senior secured delayed draw term loan

 

 

28,515

 

 

 

—

 

Nutraceutical International Corporation

 

First lien senior secured revolving loan

 

 

13,578

 

 

 

—

 

Offen, Inc.

 

First lien senior secured delayed draw term loan

 

 

5,310

 

 

 

5,310

 

Peter C. Foy & Associated Insurance Services, LLC

 

First lien senior secured delayed draw term loan

 

 

40,412

 

 

 

—

 

Peter C. Foy & Associated Insurance Services, LLC

 

First lien senior secured revolving loan

 

 

7,336

 

 

 

—

 

Project Power Buyer, LLC (dba PEC-Veriforce)

 

First lien senior secured revolving loan

 

 

3,188

 

 

 

3,188

 

Professional Plumbing Group, Inc.

 

First lien senior secured revolving loan

 

 

1,329

 

 

 

5,757

 

QC Supply, LLC

 

First lien senior secured revolving loan

 

 

603

 

 

 

—

 

Reef Global, Inc. (fka Cheese Acquisition, LLC)

 

First lien senior secured revolving loan

 

 

5,377

 

 

 

16,364

 

RSC Acquisition, Inc (dba Risk Strategies)

 

First lien senior secured delayed draw term loan

 

 

2,255

 

 

 

10,894

 

RSC Acquisition, Inc (dba Risk Strategies)

 

First lien senior secured revolving loan

 

 

1,702

 

 

 

1,702

 

RxSense Holdings, LLC

 

First lien senior secured revolving loan

 

 

—

 

 

 

4,047

 

Safety Products/JHC Acquisition Corp. (dba Justrite Safety Group)

 

First lien senior secured delayed draw term loan

 

 

924

 

 

 

924

 

Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)

 

First lien senior secured revolving loan

 

 

4,680

 

 

 

3,480

 

Sonny's Enterprises LLC

 

First lien senior secured delayed draw term loan

 

 

24,531

 

 

 

—

 

Sonny's Enterprises LLC

 

First lien senior secured revolving loan

 

 

17,969

 

 

 

—

 

Swipe Acquisition Corporation (dba PLI)

 

First lien senior secured delayed draw term loan

 

 

3,781

 

 

 

—

 

TC Holdings, LLC (dba TrialCard)

 

First lien senior secured revolving loan

 

 

7,685

 

 

 

7,685

 

THG Acquisition, LLC (dba Hilb)

 

First lien senior secured delayed draw term loan

 

 

12,575

 

 

 

16,841

 

THG Acquisition, LLC (dba Hilb)

 

First lien senior secured revolving loan

 

 

1,796

 

 

 

5,614

 

Trader Interactive, LLC (fka Dominion Web Solutions, LLC)

 

First lien senior secured revolving loan

 

 

6,387

 

 

 

6,387

 

Troon Golf, L.L.C.

 

First lien senior secured revolving loan

 

 

14,426

 

 

 

14,426

 

TSB Purchaser, Inc. (dba Teaching Strategies, Inc.)

 

First lien senior secured revolving loan

 

 

3,010

 

 

 

3,010

 

Ultimate Baked Goods Midco, LLC

 

First lien senior secured revolving loan

 

 

4,702

 

 

 

4,066

 

Valence Surface Technologies LLC

 

First lien senior secured delayed draw term loan

 

 

6,000

 

 

 

30,000

 

Valence Surface Technologies LLC

 

First lien senior secured revolving loan

 

 

10,000

 

 

 

10,000

 

64

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Portfolio Company

 

Investment

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Wingspire Capital Holdings LLC

 

LLC Interest

 

 

46,879

 

 

 

48,552

 

WU Holdco, Inc. (dba Weiman Products, LLC)

 

First lien senior secured revolving loan

 

 

13,920

 

 

 

13,920

 

WU Holdco, Inc. (dba Weiman Products, LLC)

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

16,943

 

Zenith Energy U.S. Logistics Holdings, LLC

 

First lien senior secured delayed draw term loan

 

 

10,000

 

 

 

—

 

Total Unfunded Portfolio Company Commitments

 

 

 

$

763,910

 

 

$

891,744

 

 

The Company maintains sufficient borrowing capacity to cover outstanding unfunded portfolio company commitments that the Company may be required to fund.

Other Commitments and Contingencies

The Company had raised $5.5 billion in total Capital Commitments from investors, of which $112.4 million was from executives of Owl Rock. As of June 17, 2019, all outstanding Capital Commitments had been drawn.

In connection with the IPO, on July 22, 2019, the Company entered into the Company 10b5-1 Plan, to acquire up to $150 million in the aggregate of the Company’s common stock at prices below its net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Company 10b5-1 Plan commenced on August 19, 2019. Goldman, Sachs & Co., as agent has repurchased an aggregate of 12,515,624 shares of the Company's common stock pursuant to the Company 10b5-1 Plan for an aggregate of approximately $150 million. The 10b5-1 Plan was exhausted on August 4, 2020.

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. At September 30, 2020, management was not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

 

 

Note 8. Net Assets

IPO, Subscriptions and Drawdowns

The Company has the authority to issue 500,000,000 common shares at $0.01 per share par value.

On July 22, 2019, the Company closed its initial public offering ("IPO"), issuing 10 million shares of its common stock at a public offering price of $15.30 per share, and on August 2, 2019, the underwriters exercised their option to purchase an additional 1.5 million shares of common stock at a purchase price of $15.30 per share.  Net of underwriting fees and offering costs, the Company received total cash proceeds of $164.0 million. The Company’s common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “ORCC” on July 18, 2019.

On July 7, 2019, the Board of Directors determined to eliminate outstanding fractional shares of the Company’s common stock, as permitted by Maryland General Corporation Law. On July 8, 2019, the Company eliminated the fractional shares by rounding down the number of fractional shares held by each shareholder to the nearest whole share and paying each shareholder cash for such fractional shares based on a price of $15.27 per share.

Prior to March 2, 2018, the Company entered into subscription agreements (the “Subscription Agreements”) with investors providing for the private placement of the Company’s common shares. Under the terms of the Subscription Agreements, investors were required to fund drawdowns to purchase the Company’s common shares up to the amount of their respective Capital Commitment on an as-needed basis each time the Company delivered a drawdown notice to its investors. As of June 17, 2019, all outstanding Capital Commitments had been drawn.

On March 1, 2016, the Company issued 100 common shares for $1,500 to the Adviser.

65

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

During the nine months ended September 30, 2019, the Company delivered the following capital call notices to investors:

Capital Drawdown Notice Date

 

Common Share Issuance Date

 

Number of Common Shares Issued

 

 

Aggregate Offering Price

($ in millions)

 

June 4, 2019

 

June 17, 2019

 

 

103,504,284

 

 

 

1,580.5

 

March 8, 2019

 

March 21, 2019

 

 

19,267,823

 

 

$

300.0

 

January 30, 2019

 

February 12, 2019

 

 

29,220,780

 

 

 

450.0

 

Total

 

 

 

 

151,992,887

 

 

 

2,330.5

 

Distributions

The following table reflects the distributions declared on shares of the Company’s common stock during the nine months ended September 30, 2020:

 

 

September 30, 2020

 

Date Declared

 

Record Date

 

Payment Date

 

Distribution per Share

 

August 4, 2020

 

September 30, 2020

 

November 13, 2020

 

$

0.31

 

May 28, 2019 (special dividend)

 

September 30, 2020

 

November 13, 2020

 

$

0.08

 

May 5, 2020

 

June 30, 2020

 

August 14, 2020

 

$

0.31

 

May 28, 2019 (special dividend)

 

June 30, 2020

 

August 14, 2020

 

$

0.08

 

February 19, 2020

 

March 31, 2020

 

May 15, 2020

 

$

0.31

 

May 28, 2019 (special dividend)

 

March 31, 2020

 

May 15, 2020

 

$

0.08

 

 

On November 3, 2020, the Board declared, in addition to the special dividend of $0.08 per share previously declared on May 28, 2019 for shareholders of record on December 31, 2020 payable on or before January 19, 2021, a distribution of $0.31 per share, for shareholders of record on December 31, 2020 payable on or before January 19, 2021.

 

The following table reflects the distributions declared on shares of the Company’s common stock during the nine months ended September 30, 2019:

 

 

September 30, 2019

 

Date Declared

 

Record Date

 

Payment Date

 

Distribution per Share

 

May 28, 2019

 

September 30, 2019

 

November 15, 2019

 

$

0.31

 

May 28, 2019 (special dividend)

 

September 30, 2019

 

November 15, 2019

 

$

0.02

 

June 4, 2019

 

June 14, 2019

 

August 15, 2019

 

$

0.44

 

February 27, 2019

 

March 31, 2019

 

May 14, 2019

 

$

0.33

 

 

Dividend Reinvestment

With respect to distributions, the Company has adopted an “opt out” dividend reinvestment plan for common shareholders. As a result, in the event of a declared distribution, each shareholder that has not “opted out” of the dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of the Company’s common stock rather than receiving cash distributions. Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the nine months ended September 30, 2020:

 

 

Date Declared

 

Record Date

 

Payment Date

 

Shares

 

May 5, 2020

 

June 30, 2020

 

August 14, 2020

 

 

3,541,285

 

Feburary 19, 2020

 

March 31, 2020

 

May 15, 2020

 

 

2,249,543

 

October 30, 2019

 

December 31, 2019

 

January 31, 2020

 

 

2,823,048

 

66

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

 

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the nine months ended September 30, 2019:

 

 

Date Declared

 

Record Date

 

Payment Date

 

Shares

 

June 4, 2019

 

June 14, 2019

 

August 15, 2019

 

 

3,965,754

 

February 27, 2019

 

March 31, 2019

 

May 14, 2019

 

 

2,882,297

 

November 6, 2018

 

December 31, 2018

 

January 31, 2019

 

 

2,613,223

 

 

 

Stock Repurchase Plan (the “Company 10b5-1 Plan”)

On July 7, 2019, the Board approved the Company 10b5-1 Plan, to acquire up to $150 million in the aggregate of the Company’s common stock at prices below net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Company 10b5-1 Plan commenced on August 19, 2019 and was exhausted on August 4, 2020.

The Company 10b5-1 Plan was intended to allow the Company to repurchase common stock at times when it otherwise might be prevented from doing so under insider trading laws. The Company 10b5-1 Plan required Goldman Sachs & Co. LLC, as agent, to repurchase shares of common stock on the Company’s behalf when the market price per share was below the most recently reported net asset value per share (including any updates, corrections or adjustments publicly announced by us to any previously announced net asset value per share). Under the Company 10b5-1 Plan, the agent would increase the volume of purchases made as the price of the Company’s common stock declined, subject to volume restrictions.

The purchase of shares pursuant to the Company 10b5-1 Plan was intended to satisfy the conditions of Rule 10b5-1 and Rule 10b-18 under the Exchange Act, and was otherwise subject to applicable law, including Regulation M, which may prohibit purchases under certain circumstances.

The following table provides information regarding purchases of the Company’s common stock by Goldman, Sachs & Co., as agent, pursuant to the 10b5-1 plan for each month in the nine months ended September 30, 2020:

 

Period

($ in millions, except share and per share amounts)

 

Total Number

of Shares

Repurchased

 

 

Average Price Paid per Share

 

 

Approximate

Dollar Value of

Shares that have been

Purchased Under

the Plans

 

 

Approximate

Dollar Value

of Shares that

May Yet Be

Purchased Under

the Plan

 

January 1, 2020 - January 31, 2020

 

 

-

 

 

$

-

 

 

$

-

 

 

$

150.0

 

February 1, 2020 - February 29, 2020

 

 

87,328

 

 

$

15.17

 

 

$

1.4

 

 

$

148.6

 

March 1, 2020 - March 31, 2020

 

 

4,009,218

 

 

$

12.46

 

 

$

46.6

 

 

$

102.0

 

April 1, 2020 - April 30, 2020

 

 

6,235,497

 

 

$

11.95

 

 

$

74.3

 

 

$

27.7

 

May 1, 2020 - May 31, 2020

 

 

2,183,581

 

 

$

12.76

 

 

$

27.7

 

 

$

-

 

June 1, 2020 - June 30, 2020

 

 

-

 

 

$

-

 

 

$

-

 

 

$

-

 

July 1, 2020 - July 31, 2020

 

 

-

 

 

$

-

 

 

$

-

 

 

$

-

 

August 1, 2020 - August 31, 2020

 

 

-

 

 

$

-

 

 

$

-

 

 

$

-

 

Total

 

 

12,515,624

 

 

 

 

 

 

$

150.0

 

 

 

 

 

 

On November 3, 2020, the Board approved a repurchase program under which the Company may repurchase up to $100 million of the Company’s outstanding common stock. Under the program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. Unless extended by the Board, the repurchase program will terminate 12-months from the date it was approved.

 

67

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Note 9. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per common share for the three and nine months ended September 30, 2020 and 2019:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

($ in thousands, except per share amounts)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Increase (decrease) in net assets resulting from operations

 

$

216,047

 

 

$

118,652

 

 

$

207,076

 

 

$

357,810

 

 

Weighted average shares of common stock

   outstanding—basic and diluted

 

 

386,534,213

 

 

 

384,846,445

 

 

 

388,474,850

 

 

 

302,373,486

 

 

Earnings per common share-basic and diluted

 

$

0.56

 

 

$

0.31

 

 

$

0.53

 

 

$

1.18

 

 

 

Note 10. Income Taxes

The Company has elected to be treated as a RIC under Subchapter M of the Code, and intends to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, the Company must, among other things, distribute to its shareholders in each taxable year generally at least 90% of the Company’s investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain tax treatment as a RIC, the Company, among other things, intends to make the requisite distributions to its shareholders, which generally relieves the Company from corporate-level U.S. federal income taxes.

Depending on the level of taxable income earned in a tax year, the Company can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, the Company will accrue excise tax on estimated excess taxable income.

For the three and nine months ended September 30, 2020, the Company recorded expenses (benefit) of $(1.2) million and $0.2 million for U.S. federal excise tax, respectively. For the three and nine months ended September 30, 2019, the Company recorded expenses of $0.3 million and $1.8 million for U.S. federal excise tax, respectively.

 

68

Owl Rock Capital Corporation

Notes to Consolidated Financial Statements (Unaudited) – Continued

 

Note 11. Financial Highlights

The following are the financial highlights for a common share outstanding during the nine months ended September 30, 2020 and 2019:

 

 

 

For the Nine Months Ended September 30,

 

 

($ in thousands, except share and per share amounts)

 

2020

 

 

2019

 

 

Per share data:

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

15.24

 

 

$

15.10

 

 

Net investment income(1)

 

 

1.04

 

 

 

1.17

 

 

Net realized and unrealized gain (loss)

 

 

(0.52

)

 

 

0.08

 

 

Total from operations

 

 

0.52

 

 

 

1.25

 

 

Repurchase of common stock

 

 

0.08

 

 

 

(0.03

)

 

Distributions declared from earnings(2)

 

 

(1.17

)

 

 

(1.10

)

 

Total increase (decrease) in net assets

 

 

(0.57

)

 

 

0.12

 

 

Net asset value, end of period

 

$

14.67

 

 

$

15.22

 

 

Shares outstanding, end of period

 

 

388,227,871

 

 

 

389,155,516

 

 

Per share market value at end of period

 

$

12.06

 

 

 

15.77

 

 

Total Return, based on market value(3)

 

 

(26.3

)

%

 

5.2

 

%

Total Return, based on net asset value(4)

 

 

5.2

 

%

 

8.3

 

%

Ratios / Supplemental Data(5)

 

 

 

 

 

 

 

 

 

Ratio of total expenses to average net assets(6)(7)

 

 

4.8

 

%

 

4.5

 

%

Ratio of net investment income to average net assets(7)

 

 

8.9

 

%

 

9.9

 

%

Net assets, end of period

 

$

5,694,348

 

 

$

5,924,625

 

 

Weighted-average shares outstanding

 

 

388,474,850

 

 

 

302,373,486

 

 

Total capital commitments, end of period

 

N/A

 

 

N/A

 

 

Ratio of total contributed capital to total committed capital, end of period

 

N/A

 

 

N/A

 

 

Portfolio turnover rate

 

 

8.4

 

%

 

13.2

 

%

________________

 

(1)

The per share data was derived using the weighted average shares outstanding during the period.

 

(2)

The per share data was derived using actual shares outstanding at the date of the relevant transaction.

 

(3)

Total return based on market value is calculated as the change in market value per share during the respective periods, taking into account dividends and distributions, if any, reinvested in accordance with the Company’s dividend reinvestment plan.

 

(4)

Total return is calculated as the change in net asset value (“NAV”) per share during the period, plus distributions per share (assuming dividends and distributions, if any, are reinvested in accordance with the Company’s dividend reinvestment plan), if any, divided by the beginning NAV per share.  

 

(5)

Does not include expenses of investment companies in which the Company invests.

 

(6)

Prior to the management and incentive fee waivers, the annualized total expenses to average net assets for the nine months ended September 30, 2020 and September 30, 2019 were 7.1% and 6.0%, respectively.

 

(7)

The ratio reflects an annualized amount, except in the case of non-recurring expenses (e.g. initial organization expenses).

 

 

 

Note 12. Subsequent Events

The Company’s management evaluated subsequent events through the date of issuance of these consolidated financial statements. Other than those previously disclosed, there have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in, these consolidated financial statements.

 

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with “ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS”.  This discussion contains forward-looking statements, which relate to future events or the future performance or financial condition of Owl Rock Capital Corporation and involves numerous risks and uncertainties, including, but not limited to, those described in our Form 10-K for the fiscal year December 31, 2019 and in “ITEM 1A. RISK FACTORS.” This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward Looking Statements” set forth on page 1 of this Quarterly Report on Form 10-Q. Actual results could differ materially from those implied or expressed in any forward-looking statements.  

Overview

Owl Rock Capital Corporation (the “Company”, “we”, “us” or “our”) is a Maryland corporation formed on October 15, 2015. We were formed primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. We invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity. Our investment objective is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.

We are managed by Owl Rock Capital Advisors LLC (“the Adviser” or “our Adviser”). The Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940. Subject to the overall supervision of our board of directors (“the Board” or “our Board”), the Adviser manages our day-to-day operations, and provides investment advisory and management services to us. The Adviser or its affiliates may engage in certain origination activities and receive attendant arrangement, structuring or similar fees. The Adviser is responsible for managing our business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring our investments, and monitoring our portfolio companies on an ongoing basis through a team of investment professionals. The Board consists of seven directors, four of whom are independent.

On July 22, 2019, we closed our initial public offering ("IPO"), issuing 10 million shares of our common stock at a public offering price of $15.30 per share, and on August 2, 2019, the underwriters exercised their option to purchase an additional 1.5 million shares of common stock at a purchase price of $15.30 per share.  Net of underwriting fees and offering costs, we received total cash proceeds of $164.0 million. Our common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “ORCC” on July 18, 2019. In connection with the IPO, on July 22, 2019, we entered into a stock repurchase plan (the “Company 10b5-1 Plan”), to acquire up to $150 million in the aggregate of our common stock at prices below its net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. As of September 30, 2020, we have acquired 12,515,624 shares for approximately $150 million, pursuant to the Company 10b5-1 Plan. The Company 10b5-1 Plan commenced on August 19, 2019 and was exhausted on August 4, 2020.

The Adviser also serves as investment adviser to Owl Rock Capital Corporation II. Owl Rock Capital Corporation II is a corporation formed under the laws of the State of Maryland that, like us, has elected to be treated as a business development company (“BDC”) under the 1940 Act. Owl Rock Capital Corporation II’s investment objective is similar to ours, which is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. As of September 30, 2020, Owl Rock Capital Corporation II had raised gross proceeds of approximately $1.2 billion, including seed capital contributed by the Adviser in September 2016 and approximately $10.0 million in gross proceeds raised from certain individuals and entities affiliated with the Adviser.

The Adviser is under common control with Owl Rock Technology Advisors LLC (“ORTA”), Owl Rock Capital Private Fund Advisors LLC (“ORPFA”) and Owl Rock Diversified Advisors LLC (“ORDA”), which also are investment advisers and subsidiaries of Owl Rock Capital Partners. The Adviser, ORTA, ORPFA and ORDA are referred to as the “Owl Rock Advisers” and together with Owl Rock Capital Partners are referred to, collectively, as “Owl Rock.”

We may be prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases, the prior approval of the SEC.  We, our Adviser and certain affiliates have been granted exemptive relief by the SEC to permit us to co-invest with other funds managed by our Adviser or certain of its affiliates, including Owl Rock Capital Corporation II, Owl Rock Technology Finance Corp. and Owl Rock Capital Corporation III, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. Pursuant to such exemptive relief, we generally are permitted to co-invest with certain of our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our shareholders and do not involve overreaching by us or our shareholders on the part of any person concerned, (2) the transaction is consistent with the interests of our shareholders and is consistent with our investment objective and strategies, and (3) the investment by our affiliates would not disadvantage us, and our participation would not be on a basis different from or less advantageous than that on which our affiliates are investing. In addition, pursuant to an exemptive order issued by the

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SEC on April 8, 2020 and applicable to all BDCs, through December 31, 2020, we may, subject to the satisfaction of certain conditions, co-invest in our existing portfolio companies with certain other funds managed by the Adviser or its affiliates and covered by our exemptive relief, even if such other funds have not previously invested in such existing portfolio company. Without this order, affiliated funds would not be able to participate in such co-investments with us unless the affiliated funds had previously acquired securities of the portfolio company in a co-investment transaction with us. Owl Rock Advisers’ allocation policy seeks to ensure equitable allocation of investment opportunities over time between us and other funds managed by our Adviser or its affiliates. As a result of the exemptive relief, there could be significant overlap in our investment portfolio and the investment portfolio of other funds established by the Adviser or its affiliates that could avail themselves of the exemptive relief.

On April 27, 2016, we formed a wholly-owned subsidiary, OR Lending LLC, a Delaware limited liability company, which holds a California finance lenders license. OR Lending LLC makes loans to borrowers headquartered in California. For time to time we may form wholly-owned subsidiaries to facilitate our normal course of business.

We have elected to be regulated as a BDC under the 1940 Act and as a regulated investment company (“RIC”) for tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). As a result, we are required to comply with various statutory and regulatory requirements, such as:

 

•

the requirement to invest at least 70% of our assets in “qualifying assets”, as such term is defined in the 1940 Act;

 

•

source of income limitations;

 

•

asset diversification requirements; and

 

•

the requirement to distribute (or be treated as distributing) in each taxable year at least 90% of our investment company taxable income and tax-exempt interest for that taxable year.

COVID-19 Developments

In March 2020, the outbreak of COVID -19 was recognized as a pandemic by the World Health Organization. Shortly thereafter, the President of the United States declared a National Emergency throughout the United States attributable to such outbreak. The outbreak has become increasingly widespread in the United States, including in the markets in which we operate, and in response to the outbreak, our Adviser instituted a work from home policy until it is deemed safe to return to the office.

We have and continue to assess the impact of COVID-19 on our portfolio companies. We cannot predict the full impact of the COVID-19 pandemic, including its duration in the United States and worldwide, the effectiveness of governmental responses designed to mitigate strain to businesses and the economy and the magnitude of the economic impact of the outbreak. The COVID-19 pandemic and preventative measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, cancellations of events and travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both globally and in the United States. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter.

While several countries, as well as certain states in the United States, have relaxed the public health restrictions with a view to partially or fully reopening their economies, recurring COVID-19 outbreaks have led to the re-introduction of such restrictions in certain states in the United States and globally and could continue to lead to the re-introduction of such restrictions elsewhere.

Additionally, as of late September 2020, travelers from the United States are not allowed to visit Canada, Australia or the majority of countries in Europe, Asia, Africa and South America. These continued travel restrictions may prolong the global economic downturn. The absence or delay of viable treatment options or a vaccine could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time. Even after the COVID-19 pandemic subsides the U.S. economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the U.S. and other major markets. Some economists and major investment banks have expressed concerns that the continued spread of the virus globally could lead to a world-wide economic downturn.

We are unable to predict the duration of any business and supply-chain disruptions, the extent to which COVID-19 will negatively affect our portfolio companies’ operating results or the impact that such disruptions may have on our results of operations and financial condition. Though the magnitude of the impact remains to be seen, we expect our portfolio companies and, by extension, our operating results to be adversely impacted by COVID-19 and depending on the duration and extent of the disruption to the operations of our portfolio companies, we expect that certain portfolio companies will experience financial distress and possibly default on their financial obligations to us and their other capital providers. Some of our portfolio companies have significantly curtailed business operations, furloughed or laid off employees and terminated service providers and deferred capital expenditures, which could impair their business on a permanent basis and we except that additional portfolio companies may take similar actions.

We have built out our portfolio management team to include workout experts and continue to closely monitor our portfolio companies, which includes assessing each portfolio company’s operational and liquidity exposure and outlook. We have executed

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amendments to our loan documents which provide covenant modifications or additional liquidity, sometimes by allowing a portion of our loan to be paid in PIK rather than cash and in connection with these amendments we may receive increased economics. Any of these developments would likely result in a decrease in the value of our investment in any such portfolio company. In addition, to the extent that the impact to our portfolio companies results in reduced interest payments or permanent impairments on our investments, we could see a decrease in our net investment income which could result in an increase in the percentage of our cash flows dedicated to our debt obligations and could require us to reduce the future amount of distributions to our shareholders.

During the nine months ended September 30, 2020, we experienced a decrease in originations, which reflects the lower levels of private equity deal activity in that time period; however, for the three months ended September 30, 2020, we experienced an increase in originations compared to prior quarter. For the three months ending December 31, 2020, we expect the performance of our portfolio companies to continue to be impacted by COVID-19 and the related economic slowdown, and therefore, while we have highlighted our liquidity and available capital, we are focused on preserving that capital for our existing portfolio companies in order to protect the value of our investments.

Our Investment Framework

We are a Maryland corporation organized primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. Our investment objective is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. Since our Adviser and its affiliates began investment activities in April 2016 through September 30, 2020, our Adviser and its affiliates have originated $24.0 billion aggregate principal amount of investments, of which $22.2 billion of aggregate principal amount of investments prior to any subsequent exits or repayments, was retained by either us or a corporation or fund advised by our Adviser or its affiliates. We seek to generate current income primarily in U.S. middle market companies through direct originations of senior secured loans or originations of unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, investments in equity and equity-related securities including warrants, preferred stock and similar forms of senior equity.

We define “middle market companies” generally to mean companies with earnings before interest expense, income tax expense, depreciation and amortization, or “EBITDA,” between $10 million and $250 million annually and/or annual revenue of $50 million to $2.5 billion at the time of investment, although we may on occasion invest in smaller or larger companies if an opportunity presents itself. We generally seek to invest in companies with a loan-to-value ratio of 50% or below.

We expect that generally our portfolio composition will be majority debt or income producing securities, which may include “covenant-lite” loans (as defined below), with a lesser allocation to equity or equity-linked opportunities. In addition, we may invest a portion of our portfolio in opportunistic investments, which will not be our primary focus, but will be intended to enhance returns to our Shareholders. These investments may include high-yield bonds and broadly-syndicated loans. In addition, we generally do not intend to invest more than 20% of our total assets in companies whose principal place of business is outside the United States, although we do not generally intend to invest in companies whose principal place of business is in an emerging market. Our portfolio composition may fluctuate from time to time based on market conditions and interest rates.

Covenants are contractual restrictions that lenders place on companies to limit the corporate actions a company may pursue. Generally, the loans in which we expect to invest will have financial maintenance covenants, which are used to proactively address materially adverse changes in a portfolio company’s financial performance. However, to a lesser extent, we may invest in “covenant-lite” loans. We use the term “covenant-lite” to refer generally to loans that do not have a complete set of financial maintenance covenants. Generally, “covenant-lite” loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition. Accordingly, to the extent we invest in “covenant-lite” loans, we may have fewer rights against a borrower and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with financial maintenance covenants.

As of September 30, 2020, our average debt investment size in each of our portfolio companies was approximately $89.9 million based on fair value. As of September 30, 2020, our portfolio companies, excluding the investment in Sebago Lake and certain investments that fall outside of our typical borrower profile and represent 95.9% of our total portfolio based on fair value, had weighted average annual revenue of $453 million and weighted average annual EBITDA of $95 million.

The companies in which we invest use our capital to support their growth, acquisitions, market or product expansion, refinancings and/or recapitalizations. The debt in which we invest typically is not rated by any rating agency, but if these instruments were rated, they would likely receive a rating of below investment grade (that is, below BBB- or Baa3), which is often referred to as “high yield” or “junk”.

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Key Components of Our Results of Operations

Investments

We focus primarily on the direct origination of loans to middle market companies domiciled in the United States.

Our level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.

In addition, as part of our risk strategy on investments, we may reduce the levels of certain investments through partial sales or syndication to additional lenders.

Revenues

We generate revenues primarily in the form of interest income from the investments we hold. In addition, we may generate income from dividends on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. Our debt investments typically have a term of three to ten years. As of September 30, 2020, 98.8% of our debt investments based on fair value bear interest at a floating rate, subject to interest rate floors, in certain cases. Interest on our debt investments is generally payable either monthly or quarterly.

Our investment portfolio consists primarily of floating rate loans, and our credit facilities bear interest at floating rates. Macro trends in base interest rates like London Interbank Offered Rate (“LIBOR”) may affect our net investment income over the long term. However, because we generally originate loans to a small number of portfolio companies each quarter, and those investments vary in size, our results in any given period, including the interest rate on investments that were sold or repaid in a period compared to the interest rate of new investments made during that period, often are idiosyncratic, and reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macro trends.

Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts under U.S. GAAP as interest income using the effective yield method for term instruments and the straight-line method for revolving or delayed draw instruments. Repayments of our debt investments can reduce interest income from period to period. The frequency or volume of these repayments may fluctuate significantly. We record prepayment premiums on loans as interest income.  We may also generate revenue in the form of commitment, loan origination, structuring, or due diligence fees, fees for providing managerial assistance to our portfolio companies and possibly consulting fees.

Dividend income on equity investments is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded companies.

Our portfolio activity also reflects the proceeds from sales of investments. We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized gains (losses) on investments in the consolidated statement of operations.

Expenses

Our primary operating expenses include the payment of the management fee and, when the incentive fee waiver expires, the incentive fee, and expenses reimbursable under the Administration Agreement and Investment Advisory Agreement. The management fee and incentive fee compensate our Adviser for work in identifying, evaluating, negotiating, closing, monitoring and realizing our investments. The incentive fee waiver expired on October 18, 2020.

Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory and management services to us, the base compensation, bonus and benefits, and the routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser. We bear our allocable portion of the compensation paid by the Adviser (or its affiliates) to our Chief Compliance Officer and Chief Financial Officer and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs). We bear all other costs and expenses of our operations, administration and transactions, including, but not limited to (i) investment advisory fees, including management fees and incentive fees, to the Adviser, pursuant to the Investment Advisory Agreement; (ii) our allocable portion of overhead and other expenses incurred by the Adviser in performing its administrative obligations under the Administration Agreement; and (iii) all other costs and expenses of its operations and transactions including, without limitation, those relating to:

 

•

the cost of our organization and offerings;

 

•

the cost of calculating our net asset value, including the cost of any third-party valuation services;

 

•

the cost of effecting any sales and repurchases of our common stock and other securities;

73

 

 

•

fees and expenses payable under any dealer manager agreements, if any;

 

•

debt service and other costs of borrowings or other financing arrangements;

 

•

costs of hedging;

 

•

expenses, including travel expense, incurred by the Adviser, or members of the investment team, or payable to third parties, performing due diligence on prospective portfolio companies and, if necessary, enforcing our rights;

 

•

transfer agent and custodial fees;

 

•

fees and expenses associated with marketing efforts;

 

•

federal and state registration fees, any stock exchange listing fees and fees payable to rating agencies;

 

•

federal, state and local taxes;

 

•

independent directors’ fees and expenses including certain travel expenses;

 

•

costs of preparing financial statements and maintaining books and records and filing reports or other documents with the SEC (or other regulatory bodies) and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation of the foregoing;

 

•

the costs of any reports, proxy statements or other notices to our shareholders (including printing and mailing costs), the costs of any shareholder or director meetings and the compensation of investor relations personnel responsible for the preparation of the foregoing and related matters;

 

•

commissions and other compensation payable to brokers or dealers;

 

•

research and market data;

 

•

fidelity bond, directors’ and officers’ errors and omissions liability insurance and other insurance premiums;

 

•

direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;

 

•

fees and expenses associated with independent audits, outside legal and consulting costs;

 

•

costs of winding up;

 

•

costs incurred in connection with the formation or maintenance of entities or vehicles to hold our assets for tax or other purposes;

 

•

extraordinary expenses (such as litigation or indemnification); and

 

•

costs associated with reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws.

We expect, but cannot assure, that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will decline as a percentage of total assets during such periods.

Leverage

The amount of leverage we use in any period depends on a variety of factors, including cash available for investing, the cost of financing and general economic and market conditions. Generally, our total borrowings are limited so that we cannot incur additional borrowings, including through the issuance of additional debt securities, if such additional indebtedness would cause our asset coverage ratio to fall below 200% or 150%, if certain requirements are met. This means that generally, we can borrow up to $1 for every $1 of investor equity (or, if certain conditions are met, we can borrow up to $2 for every $1 of investor equity). In any period, our interest expense will depend largely on the extent of our borrowing, and we expect interest expense will increase as we increase our debt outstanding. In addition, we may dedicate assets to financing facilities.

On March 31, 2020, our Board, including a “required majority” (as such term is defined in Section 57(o) of the Investment Company Act) of our Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the Investment Company Act, as amended by the Small Business Credit Availability Act. On June 8, 2020, the date of our shareholder meeting, we received shareholder approval for the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Small Business Credit Availability Act. As a result, effective on June 9, 2020, our asset coverage requirement applicable to senior securities was reduced from 200% to 150% and our current target ratio is 0.90x-1.25x.

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Market Trends

We believe the middle-market lending environment provides opportunities for us to meet our goal of making investments that generate attractive risk-adjusted returns based on a combination of the following factors, which continue to remain true in the current environment, with the economic shutdown resulting from the COVID-19 national health emergency.

Limited Availability of Capital for Middle-Market Companies. We believe that regulatory and structural changes in the market have reduced the amount of capital available to U.S. middle-market companies. In particular, we believe there are currently fewer providers of capital to middle market companies. We believe that many commercial and investment banks have, in recent years, de-emphasized their service and product offerings to middle-market businesses in favor of lending to large corporate clients and managing capital markets transactions. In addition, these lenders may be constrained in their ability to underwrite and hold bank loans and high yield securities for middle-market issuers as they seek to meet existing and future regulatory capital requirements. We also believe that there is a lack of market participants that are willing to hold meaningful amounts of certain middle-market loans. As a result, we believe our ability to minimize syndication risk for a company seeking financing by being able to hold its loans without having to syndicate them, coupled with reduced capacity of traditional lenders to serve the middle-market, present an attractive opportunity to invest in middle-market companies.

Capital Markets Have Been Unable to Fill the Void in U.S. Middle Market Finance Left by Banks. While underwritten bond and syndicated loan markets have been robust in recent years, middle market companies are less able to access these markets for reasons including the following:

High Yield Market – Middle market companies generally are not issuing debt in an amount large enough to be an attractively sized bond. High yield bonds are generally purchased by institutional investors who, among other things, are focused on the liquidity characteristics of the bond being issued. For example, mutual funds and exchange traded funds (“ETFs”) are significant buyers of underwritten bonds. However, mutual funds and ETFs generally require the ability to liquidate their investments quickly in order to fund investor redemptions and/or comply with regulatory requirements. Accordingly, the existence of an active secondary market for bonds is an important consideration in these entities’ initial investment decision. Because there is typically little or no active secondary market for the debt of U.S. middle market companies, mutual funds and ETFs generally do not provide debt capital to U.S. middle market companies. We believe this is likely to be a persistent problem and creates an advantage for those like us who have a more stable capital base and have the ability to invest in illiquid assets.

Syndicated Loan Market – While the syndicated loan market is modestly more accommodating to middle market issuers, as with bonds, loan issue size and liquidity are key drivers of institutional appetite and, correspondingly, underwriters’ willingness to underwrite the loans. Loans arranged through a bank are done either on a “best efforts” basis or are underwritten with terms plus provisions that permit the underwriters to change certain terms, including pricing, structure, yield and tenor, otherwise known as “flex”, to successfully syndicate the loan, in the event the terms initially marketed are insufficiently attractive to investors. Furthermore, banks are generally reluctant to underwrite middle market loans because the arrangement fees they may earn on the placement of the debt generally are not sufficient to meet the banks’ return hurdles. Loans provided by companies such as ours provide certainty to issuers in that we can commit to a given amount of debt on specific terms, at stated coupons and with agreed upon fees. As we are the ultimate holder of the loans, we do not require market “flex” or other arrangements that banks may require when acting on an agency basis.

Robust Demand for Debt Capital. We believe U.S. middle market companies will continue to require access to debt capital to refinance existing debt, support growth and finance acquisitions. In addition, we believe the large amount of uninvested capital held by funds of private equity firms, estimated by Preqin Ltd., an alternative assets industry data and research company, to be $1.5 trillion as of December 2019, will continue to drive deal activity. We expect that private equity sponsors will continue to pursue acquisitions and leverage their equity investments with secured loans provided by companies such as us.

The Middle Market is a Large Addressable Market. According to GE Capital’s National Center for the Middle Market 2nd quarter 2020 Middle Market Indicator, there are approximately 200,000 U.S. middle market companies, which have approximately 48 million aggregate employees. Moreover, the U.S. middle market accounts for one-third of private sector gross domestic product (“GDP”). GE defines U.S. middle market companies as those between $10 million and $1 billion in annual revenue, which we believe has significant overlap with our definition of U.S. middle market companies.

Attractive Investment Dynamics. An imbalance between the supply of, and demand for, middle market debt capital creates attractive pricing dynamics. We believe the directly negotiated nature of middle market financings also generally provides more favorable terms to the lender, including stronger covenant and reporting packages, better call protection, and lender-protective change of control provisions. Additionally, we believe BDC managers’ expertise in credit selection and ability to manage through credit cycles has generally resulted in BDCs experiencing lower loss rates than U.S. commercial banks through credit cycles. Further, we believe that historical middle market default rates have been lower, and recovery rates have been higher, as compared to the larger market capitalization, broadly distributed market, leading to lower cumulative losses. Lastly, we believe that in the current environment, as the economy reopens following the economic shutdown resulting from the COVID-19 national health emergency,

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lenders with available capital may be able to take advantage of attractive investment opportunities as the economy reopens and may be able to achieve improved economic spreads and documentation terms.

Conservative Capital Structures. Following the credit crisis, which we define broadly as occurring between mid-2007 and mid-2009, lenders have generally required borrowers to maintain more equity as a percentage of their total capitalization, specifically to protect lenders during economic downturns. With more conservative capital structures, U.S. middle market companies have exhibited higher levels of cash flows available to service their debt. In addition, U.S. middle market companies often are characterized by simpler capital structures than larger borrowers, which facilitates a streamlined underwriting process and, when necessary, restructuring process.

Attractive Opportunities in Investments in Loans. We invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities. We believe that opportunities in senior secured loans are significant because of the floating rate structure of most senior secured debt issuances and because of the strong defensive characteristics of these types of investments. Given the current low interest rate environment, we believe that debt issues with floating interest rates offer a superior return profile as compared with fixed-rate investments, since floating rate structures are generally less susceptible to declines in value experienced by fixed-rate securities in a rising interest rate environment. Senior secured debt also provides strong defensive characteristics. Senior secured debt has priority in payment among an issuer’s security holders whereby holders are due to receive payment before junior creditors and equity holders. Further, these investments are secured by the issuer’s assets, which may provide protection in the event of a default.

Portfolio and Investment Activity

As of September 30, 2020, based on fair value, our portfolio consisted of 79.2% first lien senior secured debt investments (of which 38% we consider to be unitranche debt investments (including “last out” portions of such loans)), 17.3% second lien senior secured debt investments, 0.5% unsecured investments, 2.0% equity investments, and 1.0% investment funds and vehicles.

As of September 30, 2020, our weighted average total yield of the portfolio at fair value and amortized cost was 7.9% and 7.7%, respectively, and our weighted average yield of accruing debt and income producing securities at fair value and amortized cost was 8.1% and 8.0%, respectively.

As of September 30, 2020, we had investments in 110 portfolio companies with an aggregate fair value of $9.9 billion.

Based on current market conditions, the pace of our investment activities may vary.

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Our investment activity for the three months ended September 30, 2020 and 2019 is presented below (information presented herein is at par value unless otherwise indicated).

 

 

 

For the Three Months Ended September 30,

 

($ in thousands)

 

2020

 

 

2019

 

New investment commitments

 

 

 

 

 

 

 

 

Gross originations

 

$

957,015

 

 

 

1,631,537

 

Less: Sell downs

 

 

(113,404

)

 

 

(88,809

)

Total new investment commitments

 

$

843,611

 

 

$

1,542,728

 

Principal amount of investments funded:

 

 

 

 

 

 

 

 

First-lien senior secured debt investments

 

$

483,756

 

 

$

845,282

 

Second-lien senior secured debt investments

 

 

121,592

 

 

 

443,270

 

Unsecured debt investments

 

 

41,463

 

 

 

—

 

Equity investments

 

 

—

 

 

 

—

 

Investment funds and vehicles

 

 

—

 

 

 

1,500

 

Total principal amount of investments funded

 

$

646,811

 

 

$

1,290,052

 

Principal amount of investments sold or repaid:

 

 

 

 

 

 

 

 

First-lien senior secured debt investments

 

$

(44,711

)

 

$

(140,281

)

Second-lien senior secured debt investments

 

 

(3,517

)

 

 

(52,000

)

Unsecured debt investments

 

 

—

 

 

 

(23,000

)

Equity investments

 

 

—

 

 

 

—

 

Investment funds and vehicles

 

 

—

 

 

 

—

 

Total principal amount of investments sold or repaid

 

$

(48,228

)

 

$

(215,281

)

Number of new investment commitments in new portfolio companies(1)

 

8

 

 

10

 

Average new investment commitment amount

 

$

90,138

 

 

$

129,504

 

Weighted average term for new investment commitments (in years)

 

 

6.1

 

 

 

6.7

 

Percentage of new debt investment commitments at

   floating rates

 

 

100.0

%

 

 

100.0

%

Percentage of new debt investment commitments at

   fixed rates

 

 

0.0

%

 

 

0.0

%

Weighted average interest rate of new investment

   commitments(2)

 

 

8.2

%

 

 

8.7

%

Weighted average spread over LIBOR of new floating rate investment commitments

 

 

7.2

%

 

 

6.6

%

________________

 

(1)

Number of new investment commitments represents commitments to a particular portfolio company.

 

(2)

Assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month LIBOR, which was 0.23% and 2.09% as of September 30, 2020 and 2019, respectively.

 

As of September 30, 2020 and December 31, 2019, our investments consisted of the following:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

($ in thousands)

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

First-lien senior secured debt investments

 

$

8,038,131

 

(3)

$

7,852,727

 

 

$

7,136,866

 

(3)

$

7,113,356

 

Second-lien senior secured debt investments

 

 

1,763,808

 

 

 

1,716,791

 

 

 

1,590,439

 

 

 

1,584,917

 

Unsecured debt investments

 

 

51,332

 

 

 

50,211

 

 

 

—

 

 

 

—

 

Equity investments(1)

 

 

179,032

 

 

 

195,082

 

 

 

12,663

 

 

 

12,875

 

Investment funds and vehicles(2)

 

 

107,838

 

 

 

103,491

 

 

 

88,888

 

 

 

88,077

 

Total Investments

 

$

10,140,141

 

 

$

9,918,302

 

 

$

8,828,856

 

 

$

8,799,225

 

________________

 

(1)

Includes investment in Wingspire.

 

(2)

Includes investment in Sebago Lake.

 

(3)

38% and 43% of which we consider unitranche loans as of September 30, 2020 and December 31, 2019, respectively.

77

 

The table below describes investments by industry composition based on fair value as of September 30, 2020 and December 31, 2019:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

Advertising and media

 

 

1.4

 

%

 

2.6

 

%

Aerospace and defense

 

 

2.9

 

 

 

3.3

 

 

Automotive

 

 

1.7

 

 

 

1.7

 

 

Buildings and real estate

 

 

5.6

 

 

 

6.6

 

 

Business services

 

 

4.5

 

 

 

5.4

 

 

Chemicals

 

 

2.3

 

 

 

2.6

 

 

Consumer products

 

 

3.7

 

 

 

2.7

 

 

Containers and packaging

 

 

1.9

 

 

 

2.1

 

 

Distribution

 

 

6.5

 

 

 

8.6

 

 

Education

 

 

2.7

 

 

 

3.5

 

 

Energy equipment and services

 

 

0.1

 

 

 

0.2

 

 

Financial services (1)

 

 

2.7

 

 

 

1.6

 

 

Food and beverage

 

 

9.2

 

 

 

7.2

 

 

Healthcare providers and services

 

 

7.2

 

 

 

8.3

 

 

Healthcare technology

 

 

3.7

 

 

 

3.4

 

 

Household products

 

 

1.4

 

 

 

1.5

 

 

Human resource support services(3)

 

 

0.0

 

 

 

-

 

 

Infrastructure and environmental services

 

 

2.2

 

 

 

2.7

 

 

Insurance

 

 

8.8

 

 

 

5.7

 

 

Internet software and services

 

 

9.2

 

 

 

8.1

 

 

Investment funds and vehicles (2)

 

 

1.0

 

 

 

1.0

 

 

Leisure and entertainment

 

 

1.8

 

 

 

2.0

 

 

Manufacturing

 

 

4.8

 

 

 

2.9

 

 

Oil and gas

 

 

2.0

 

 

 

2.3

 

 

Professional services

 

 

7.3

 

 

 

8.1

 

 

Specialty retail

 

 

2.3

 

 

 

2.7

 

 

Telecommunications

 

 

0.5

 

 

 

0.5

 

 

Transportation

 

 

2.6

 

 

 

2.7

 

 

Total

 

 

100.0

 

%

 

100.0

 

%

________________

 

(1)

Includes investment in Wingspire.

 

(2)

Includes investment in Sebago Lake.

 

(3)

Rounds to less than 0.1%.

 

The table below describes investments by geographic composition based on fair value as of September 30, 2020 and December 31, 2019:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

United States:

 

 

 

 

 

 

 

 

 

Midwest

 

 

18.9

 

%

 

19.5

 

%

Northeast

 

 

15.9

 

 

 

18.7

 

 

South

 

 

42.6

 

 

 

42.8

 

 

West

 

 

16.7

 

 

 

15.3

 

 

Belgium

 

 

0.9

 

 

 

1.0

 

 

Canada

 

 

1.0

 

 

 

0.9

 

 

Israel

 

 

0.4

 

 

 

-

 

 

United Kingdom

 

 

3.6

 

 

 

1.8

 

 

Total

 

 

100.0

 

%

 

100.0

 

%

 

78

 

The weighted average yields and interest rates of our investments at fair value as of September 30, 2020 and December 31, 2019 were as follows:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

Weighted average total yield of portfolio

 

 

7.9

 

%

 

8.7

 

%

Weighted average total yield of accruing debt and income

  producing securities

 

 

8.1

 

%

 

8.7

 

%

Weighted average interest rate of accruing debt securities

 

 

7.4

 

%

 

8.1

 

%

Weighted average spread over LIBOR of all accruing floating

   rate investments

 

 

6.5

 

%

 

6.3

 

%

 

The weighted average yield of our accruing debt and income producing securities is not the same as a return on investment for our shareholders but, rather, relates to our investment portfolio and is calculated before the payment of all of our and our subsidiaries’ fees and expenses. The weighted average yield was computed using the effective interest rates as of each respective date, including accretion of original issue discount and loan origination fees, but excluding investments on non-accrual status, if any. There can be no assurance that the weighted average yield will remain at its current level.

Our Adviser monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action with respect to each portfolio company. Our Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

 

•

assessment of success of the portfolio company in adhering to its business plan and compliance with covenants;

 

•

periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements and accomplishments;

 

•

comparisons to other companies in the portfolio company’s industry; and

 

•

review of monthly or quarterly financial statements and financial projections for portfolio companies.

As part of the monitoring process, our Adviser employs an investment rating system to categorize our investments.  In addition to various risk management and monitoring tools, our Adviser rates the credit risk of all investments on a scale of 1 to 5. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The rating system is as follows:

 

Investment Rating

 

Description

1

 

Investments rated 1 involve the least amount of risk to our initial cost basis. The borrower is performing above expectations, and the trends and risk factors for this investment since origination or acquisition are generally favorable;

 

2

 

Investments rated 2 involve an acceptable level of risk that is similar to the risk at the time of origination or acquisition. The borrower is generally performing as expected and the risk factors are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a rating of 2;

 

3

 

Investments rated 3 involve a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination or acquisition;

 

4

 

Investments rated 4 involve a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination or acquisition.  In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due); and

 

5

 

Investments rated 5 involve a borrower performing substantially below expectations and indicates that the loan’s risk has increased substantially since origination or acquisition.  Most or all of the debt covenants are out of compliance and payments are substantially delinquent.  Loans rated 5 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.

79

 

Our Adviser rates the investments in our portfolio at least quarterly and it is possible that the rating of a portfolio investment may be reduced or increased over time. For investments rated 3, 4 or 5, our Adviser enhances its level of scrutiny over the monitoring of such portfolio company.

The following table shows the composition of our portfolio on the 1 to 5 rating scale as of September 30, 2020 and December 31, 2019:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

Investment Rating

 

Investments

at Fair Value

 

 

Percentage of

Total Portfolio

 

 

Investments

at Fair Value

 

 

Percentage of

Total Portfolio

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

$

1,052,409

 

 

 

10.6

 

%

$

753,619

 

 

 

8.6

 

%

2

 

 

7,719,407

 

 

 

77.8

 

 

 

7,576,022

 

 

 

86.1

 

 

3

 

 

832,888

 

 

 

8.4

 

 

 

469,584

 

 

 

5.3

 

 

4

 

 

215,170

 

 

 

2.2

 

 

 

—

 

 

 

—

 

 

5

 

 

98,428

 

 

 

1.0

 

 

 

—

 

 

 

—

 

 

Total

 

$

9,918,302

 

 

 

100.0

 

%

$

8,799,225

 

 

 

100.0

 

%

 

The increase in investments rated by our Adviser as a 3, 4 and 5 as of September 30, 2020 as compared to December 31, 2019 can be attributed to either COVID-19 related market disruptions or the underlying performance of the portfolio company. See “COVID-19 Developments” for additional information.

The following table shows the amortized cost of our performing and non-accrual debt investments as of September 30, 2020 and December 31, 2019:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

($ in thousands)

 

Amortized Cost

 

 

Percentage

 

 

Amortized Cost

 

 

Percentage

 

 

Performing

 

$

9,638,515

 

 

 

97.8

 

%

$

8,727,305

 

 

 

100.0

 

%

Non-accrual

 

 

214,756

 

 

 

2.2

 

%

 

—

 

 

 

—

 

%

Total

 

$

9,853,271

 

 

 

100.0

 

%

$

8,727,305

 

 

 

100.0

 

%

 

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status.  Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Swipe Acquisition Corp, which we added to non-accrual this quarter, is not current on its interest. We are finalizing discussions with Swipe regarding a long-term solution which, if completed, would include Owl Rock becoming the controlling shareholder and providing Swipe with the necessary support to execute its operational plan and growth strategy.

Geodigm Corporation (dba National Dentex) was placed on non-accrual status in the second quarter of 2020 and was placed back on accrual status in the third quarter of 2020.  Subsequent to quarter-end, Geodigm Corporation was acquired by a new private equity sponsor and as part of that transaction, our investment was repaid at par, and will result in the full reversal of that unrealized loss in the fourth quarter.

Sebago Lake LLC

Sebago Lake, a Delaware limited liability company, was formed as a joint venture between us and The Regents of the University of California (“Regents”) and commenced operations on June 20, 2017. Sebago Lake’s principal purpose is to make investments, primarily in senior secured loans that are made to middle-market companies or in broadly syndicated loans. Both we and Regents (the “Members”) have a 50% economic ownership in Sebago Lake. Except under certain circumstances, contributions to Sebago Lake cannot be redeemed. Each of the Members initially agreed to contribute up to $100 million to Sebago Lake. On July 26, 2018, each of the Members increased their contribution to Sebago Lake up to an aggregate of $125 million. As of September 30, 2020, each Member has funded $107.8 million of their respective $125 million commitments. Sebago Lake is managed by the Members, each of which have equal voting rights. Investment decisions must be approved by each of the Members.

80

 

We have determined that Sebago Lake is an investment company under Accounting Standards Codification (“ASC”) 946, however, in accordance with such guidance, we will generally not consolidate its investment in a company other than a wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to us. Accordingly, we do not consolidate our non-controlling interest in Sebago Lake.

As of September 30, 2020 and December 31, 2019, Sebago Lake had total investments in senior secured debt at fair value of $543.7 million and $478.5 million, respectively. The determination of fair value is in accordance with ASC 820; however, such fair value is not included in our Board’s valuation process. The following table is a summary of Sebago Lake’s portfolio as well as a listing of the portfolio investments in Sebago Lake’s portfolio as of September 30, 2020 and December 31, 2019:

 

($ in thousands)

 

September 30, 2020

 

 

December 31, 2019

 

Total senior secured debt investments(1)

 

$

556,984

 

 

$

484,439

 

Weighted average spread over LIBOR(1)

 

 

4.47

%

 

 

4.56

%

Number of portfolio companies

 

17

 

 

16

 

Largest funded investment to a single borrower(1)

 

$

49,750

 

 

$

50,000

 

________________

 

(1)

At par.

 

 

Sebago Lake's Portfolio as of September 30, 2020

($ in thousands)

(Unaudited)

 

Company(1)(2)(4)(5)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)

 

 

Fair Value

 

 

Percentage of Members' Equity

 

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace and defense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(7)

 

First lien senior secured loan

 

L + 5.25%

 

12/21/2023

 

$

34,918

 

 

$

34,509

 

 

$

34,738

 

 

 

16.8

 

%

Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(7)(11)(14)

 

First lien senior secured revolving loan

 

L + 5.25%

 

12/21/2022

 

 

3,000

 

 

 

2,974

 

 

 

2,984

 

 

 

1.4

 

%

Bleriot US Bidco Inc.(7)(10)

 

First lien senior secured loan

 

L + 4.75%

 

10/30/2026

 

 

14,925

 

 

 

14,795

 

 

 

14,801

 

 

 

7.1

 

%

Dynasty Acquisition Co., Inc. (dba StandardAero Limited)(7)

 

First lien senior secured loan

 

L + 3.50%

 

4/6/2026

 

 

39,600

 

 

 

39,438

 

 

 

35,769

 

 

 

17.3

 

%

 

 

 

 

 

 

 

 

 

92,443

 

 

 

91,716

 

 

 

88,292

 

 

 

42.6

 

%

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vistage Worldwide, Inc.(7)

 

First lien senior secured loan

 

L + 4.00%

 

2/10/2025

 

 

16,584

 

 

 

16,509

 

 

 

16,252

 

 

 

7.9

 

%

Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dealer Tire, LLC (6)(10)

 

First lien senior secured loan

 

L + 4.25%

 

12/12/2025

 

 

36,723

 

 

 

36,533

 

 

 

35,804

 

 

 

17.3

 

%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)(7)

 

First lien senior secured loan

 

L + 4.25%

 

7/30/2025

 

 

34,300

 

 

 

34,224

 

 

 

32,116

 

 

 

15.5

 

%

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DecoPac, Inc.(7)

 

First lien senior secured loan

 

L + 4.25%

 

9/30/2024

 

 

20,561

 

 

 

20,499

 

 

 

20,472

 

 

 

9.9

 

%

DecoPac, Inc.(11)(12)(14)

 

First lien senior secured revolving loan

 

L + 4.25%

 

9/29/2023

 

 

-

 

 

 

(9

)

 

 

(85

)

 

 

—

 

%

FQSR, LLC (dba KBP Investments)(7)

 

First lien senior secured loan

 

L + 5.50%

 

5/15/2023

 

 

24,321

 

 

 

24,130

 

 

 

23,970

 

 

 

11.6

 

%

FQSR, LLC (dba KBP Investments)(8)(11)(13)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

9/10/2021

 

 

9,477

 

 

 

9,245

 

 

 

9,141

 

 

 

4.4

 

%

Sovos Brands Intermediate, Inc.(6)

 

First lien senior secured loan

 

L + 4.75%

 

11/20/2025

 

 

44,213

 

 

 

43,877

 

 

 

44,213

 

 

 

21.4

 

%

 

 

 

 

 

 

 

 

 

98,572

 

 

 

97,742

 

 

 

97,711

 

 

 

47.3

 

%

Healthcare equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cadence, Inc.(6)

 

First lien senior secured loan

 

L + 4.50%

 

5/21/2025

 

 

27,059

 

 

 

26,589

 

 

 

26,796

 

 

 

12.9

 

%

Cadence, Inc.(9)(11)(14)

 

First lien senior secured revolving loan

 

L + 3.50%

 

5/21/2023

 

 

2,936

 

 

 

2,839

 

 

 

2,864

 

 

 

1.4

 

%

 

 

 

 

 

 

 

 

 

29,995

 

 

 

29,428

 

 

 

29,660

 

 

 

14.3

 

%

81

 

Sebago Lake's Portfolio as of September 30, 2020

($ in thousands)

(Unaudited)

 

Company(1)(2)(4)(5)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)

 

 

Fair Value

 

 

Percentage of Members' Equity

 

 

Healthcare technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VVC Holdings Corp. (dba Athenahealth, Inc.)(7)(10)

 

First lien senior secured loan

 

L + 4.50%

 

2/11/2026

 

 

17,353

 

 

 

17,073

 

 

 

17,049

 

 

 

8.2

 

%

Infrastructure and environmental services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHA Holding, Inc.(7)

 

First lien senior secured loan

 

L + 4.50%

 

4/10/2025

 

 

41,250

 

 

 

40,951

 

 

 

41,002

 

 

 

19.8

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Integro Parent Inc.(6)

 

First lien senior secured loan

 

L + 5.75%

 

10/31/2022

 

 

30,165

 

 

 

30,088

 

 

 

29,958

 

 

 

14.5

 

%

Integro Parent Inc.(11)(12)(14)

 

First lien senior secured revolving loan

 

L + 4.50%

 

4/30/2022

 

 

-

 

 

 

(10

)

 

 

(58

)

 

 

—

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(7)

 

First lien senior secured loan

 

L + 4.25%

 

3/29/2025

 

 

40,252

 

 

 

39,568

 

 

 

38,669

 

 

 

18.7

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(8)(11)(14)

 

First lien senior secured revolving loan

 

L + 4.25%

 

3/29/2023

 

 

625

 

 

 

532

 

 

 

439

 

 

 

0.2

 

%

 

 

 

 

 

 

 

 

 

71,042

 

 

 

70,178

 

 

 

69,008

 

 

 

33.4

 

%

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DCert Buyer, Inc.(6)(10)

 

First lien senior secured loan

 

L + 4.00%

 

10/16/2026

 

 

49,750

 

 

 

49,584

 

 

 

49,049

 

 

 

23.7

 

%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Machinery Holdings(7)

 

First lien senior secured loan

 

L + 4.25%

 

7/19/2024

 

 

44,510

 

 

 

44,164

 

 

 

43,509

 

 

 

21.0

 

%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Uber Technologies, Inc.(6)(10)

 

First lien senior secured loan

 

L + 4.00%

 

4/4/2025

 

 

24,462

 

 

 

24,346

 

 

 

24,239

 

 

 

11.7

 

%

Total Debt Investments

 

 

 

 

 

 

 

 

556,984

 

 

 

552,448

 

 

 

543,691

 

 

 

262.7

 

%

Total Investments

 

 

 

 

 

 

 

$

556,984

 

 

$

552,448

 

 

$

543,691

 

 

 

262.7

 

%

________________

 

(1)

Certain portfolio company investments are subject to contractual restrictions on sales.

 

(2)

Unless otherwise indicated, Sebago Lake’s investments are pledged as collateral supporting the amounts outstanding under Sebago Lake’s credit facility.

 

(3)

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

 

(4)

Unless otherwise indicated, all investments are considered Level 3 investments.

 

(5)

Unless otherwise indicated, loan contains a variable rate structure, and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR) or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.

 

(6)

The interest rate on these loans is subject to 1 month LIBOR, which as of September 30, 2020 was 0.15%.

 

(7)

The interest rate on these loans is subject to 3 month LIBOR, which as of September 30, 2020 was 0.23%.

 

(8)

The interest rate on these loans is subject to 6 month LIBOR, which as of September 30, 2020 was 0.26%.

 

(9)

The interest rate on these loans is subject to Prime, which as of September 30, 2020 was 3.25%.

 

(10)

Level 2 investment.

 

(11)

Position or portion thereof is an unfunded loan commitment.

 

(12)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

 

(13)

The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.

 

(14)

Investment is not pledged as collateral under Sebago Lake’s credit facility.

 

82

 

Sebago Lake's Portfolio as of December 31, 2019

($ in thousands)

Company(1)(2)(4)(5)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)

 

 

Fair Value

 

 

Percentage of Members' Equity

 

 

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace and defense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(7)

 

First lien senior secured loan

 

L + 5.25%

 

12/21/2023

 

$

35,188

 

 

$

34,690

 

 

$

34,805

 

 

 

19.8

 

%

Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(9)(10)(12)

 

First lien senior secured revolving loan

 

L + 5.25%

 

12/21/2022

 

 

-

 

 

 

(36

)

 

 

(31

)

 

 

-

 

%

Bleriot US Bidco Inc.(7)

 

First lien senior secured term loan

 

L + 4.75%

 

10/31/2026

 

 

12,973

 

 

 

12,844

 

 

 

12,843

 

 

 

7.3

 

%

Bleriot US Bidco Inc.(9)(10)(11)(12)

 

First lien senior secured delayed draw term loan

 

L + 4.75%

 

10/31/2020

 

 

-

 

 

 

(20

)

 

 

(20

)

 

 

-

 

%

Dynasty Acquisition Co., Inc. (dba StandardAero Limited)(7)

 

First lien senior secured loan

 

L + 4.00%

 

4/4/2026

 

 

39,900

 

 

 

39,717

 

 

 

39,707

 

 

 

22.6

 

%

 

 

 

 

 

 

 

 

 

88,061

 

 

 

87,195

 

 

 

87,304

 

 

 

49.7

 

%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)(7)

 

First lien senior secured loan

 

L + 4.25%

 

7/30/2025

 

 

34,562

 

 

 

34,475

 

 

 

34,488

 

 

 

19.5

 

%

Food and beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DecoPac, Inc.(7)

 

First lien senior secured loan

 

L + 4.25%

 

9/30/2024

 

 

20,561

 

 

 

20,489

 

 

 

20,561

 

 

 

11.7

 

%

DecoPac, Inc.(9)(10)(12)

 

First lien senior secured revolving loan

 

L + 4.25%

 

9/29/2023

 

 

-

 

 

 

(11

)

 

 

-

 

 

 

-

 

%

FQSR, LLC (dba KBP Investments)(7)

 

First lien senior secured loan

 

L + 5.50%

 

5/14/2023

 

 

24,507

 

 

 

24,246

 

 

 

24,236

 

 

 

13.7

 

%

FQSR, LLC (dba KBP Investments)(7)(9)(11)

 

First lien senior secured delayed draw term loan

 

L + 5.50%

 

9/10/2021

 

 

8,373

 

 

 

8,075

 

 

 

8,115

 

 

 

4.6

 

%

Give & Go Prepared Foods Corp.(7)

 

First lien senior secured loan

 

L + 4.25%

 

7/29/2023

 

 

24,438

 

 

 

24,398

 

 

 

23,093

 

 

 

13.0

 

%

Sovos Brands Intermediate, Inc.(6)

 

First lien senior secured loan

 

L + 5.00%

 

11/20/2025

 

 

44,550

 

 

 

44,171

 

 

 

44,143

 

 

 

25.1

 

%

 

 

 

 

 

 

 

 

 

122,429

 

 

 

121,368

 

 

 

120,148

 

 

 

68.1

 

%

Healthcare equipment and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cadence, Inc.(6)

 

First lien senior secured loan

 

L + 4.50%

 

5/21/2025

 

 

27,266

 

 

 

26,727

 

 

 

26,749

 

 

 

15.2

 

%

Cadence, Inc.(9)(10)(12)

 

First lien senior secured revolving loan

 

L + 4.50%

 

5/21/2025

 

 

-

 

 

 

(124

)

 

 

(139

)

 

 

(0.1

)

%

 

 

 

 

 

 

 

 

 

27,266

 

 

 

26,603

 

 

 

26,610

 

 

 

15.1

 

%

Healthcare technology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VVC Holdings Corp. (dba Athenahealth, Inc.)(7)(8)

 

First lien senior secured loan

 

L + 4.50%

 

2/11/2026

 

 

19,850

 

 

 

19,491

 

 

 

19,925

 

 

 

11.3

 

%

Infrastructure and environmental services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHA Holding, Inc.(7)

 

First lien senior secured loan

 

L + 4.50%

 

4/10/2025

 

 

29,816

 

 

 

29,709

 

 

 

29,694

 

 

 

16.8

 

%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Integro Parent Inc.(6)

 

First lien senior secured loan

 

L + 5.75%

 

10/28/2022

 

 

30,520

 

 

 

30,416

 

 

 

30,224

 

 

 

17.2

 

%

Integro Parent Inc.(9)(10)(12)

 

First lien senior secured revolving loan

 

L + 4.50%

 

10/30/2021

 

 

-

 

 

 

(16

)

 

 

(54

)

 

 

-

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(7)

 

First lien senior secured loan

 

L + 4.25%

 

3/29/2025

 

 

34,475

 

 

 

33,800

 

 

 

33,406

 

 

 

19.0

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(7)(9)(12)

 

First lien senior secured revolving loan

 

L + 4.25%

 

3/29/2023

 

 

1,875

 

 

 

1,754

 

 

 

1,690

 

 

 

1.0

 

%

USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(7)(9)(11)

 

First lien senior secured delayed draw term loan

 

L + 4.25%

 

3/29/2020

 

 

6,085

 

 

 

5,923

 

 

 

5,817

 

 

 

3.3

 

%

 

 

 

 

 

 

 

 

 

72,955

 

 

 

71,877

 

 

 

71,083

 

 

 

40.5

 

%

83

 

Sebago Lake's Portfolio as of December 31, 2019

($ in thousands)

Company(1)(2)(4)(5)

 

Investment

 

Interest

 

Maturity Date

 

Par / Units

 

 

Amortized Cost(3)

 

 

Fair Value

 

 

Percentage of Members' Equity

 

 

Internet software and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DCert Buyer, Inc.(6)

 

First lien senior secured loan

 

L + 4.00%

 

10/16/2026

 

 

50,000

 

 

 

49,816

 

 

 

49,878

 

 

 

28.3

 

%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Machinery Holdings(7)(8)

 

First lien senior secured loan

 

L + 4.25%

 

7/19/2024

 

 

14,850

 

 

 

14,596

 

 

 

14,801

 

 

 

8.3

 

%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Uber Technologies, Inc.(6)(8)

 

First lien senior secured loan

 

L + 4.00%

 

4/4/2025

 

 

24,650

 

 

 

24,517

 

 

 

24,578

 

 

 

14.0

 

%

Total Debt Investments

 

 

 

 

 

 

 

 

484,439

 

 

 

479,647

 

 

 

478,509

 

 

 

271.6

 

%

Total Investments

 

 

 

 

 

 

 

$

484,439

 

 

$

479,647

 

 

$

478,509

 

 

 

271.6

 

%

________________

 

(1)

Certain portfolio company investments are subject to contractual restrictions on sales.

 

(2)

Unless otherwise indicated, Sebago Lake’s investments are pledged as collateral supporting the amounts outstanding under Sebago Lake’s credit facility.

 

(3)

The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

 

(4)

Unless otherwise indicated, all investments are considered Level 3 investments.

 

(5)

Unless otherwise indicated, loan contains a variable rate structure, and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR) or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.

 

(6)

The interest rate on these loans is subject to 1 month LIBOR, which as of December 31, 2019 was 1.8%.

 

(7)

The interest rate on these loans is subject to 3 month LIBOR, which as of December 31, 2019 was 1.9%.

 

(8)

Level 2 investment.

 

(9)

Position or portion thereof is an unfunded loan commitment.

 

(10)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

 

(11)

The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.

 

(12)

Investment is not pledged as collateral under Sebago Lake’s credit facility.

 

84

 

Below is selected balance sheet information for Sebago Lake as of September 30, 2020 and December 31, 2019:

 

($ in thousands)

 

September 30, 2020 (Unaudited)

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Investments at fair value (amortized cost of $552,448 and $479,647, respectively)

 

$

543,691

 

 

$

478,509

 

Cash

 

 

18,039

 

 

 

34,104

 

Interest receivable

 

 

608

 

 

 

1,281

 

Prepaid expenses and other assets

 

 

386

 

 

 

162

 

Total Assets

 

$

562,724

 

 

$

514,056

 

Liabilities

 

 

 

 

 

 

 

 

Debt (net of unamortized debt issuance costs of $2,787 and $3,895, respectively)

 

$

349,369

 

 

$

330,289

 

Distributions payable

 

 

4,534

 

 

 

4,950

 

Accrued expenses and other liabilities

 

 

1,840

 

 

 

2,663

 

Total Liabilities

 

$

355,743

 

 

$

337,902

 

Members' Equity

 

 

 

 

 

 

 

 

Members' Equity

 

 

206,981

 

 

 

176,154

 

Members' Equity

 

 

206,981

 

 

 

176,154

 

Total Liabilities and Members' Equity

 

$

562,724

 

 

$

514,056

 

 

 

Below is selected statement of operations information for Sebago Lake for the three and nine months ended September 30, 2020 and 2019:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

($ in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Investment Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

7,759

 

 

$

9,163

 

 

$

24,530

 

 

$

29,646

 

Other income

 

 

60

 

 

 

69

 

 

 

216

 

 

 

194

 

Total Investment Income

 

 

7,819

 

 

 

9,232

 

 

 

24,746

 

 

 

29,840

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

2,833

 

 

 

4,227

 

 

 

10,021

 

 

 

13,411

 

Professional fees

 

 

181

 

 

 

182

 

 

 

526

 

 

 

537

 

Total Expenses

 

 

3,014

 

 

 

4,409

 

 

 

10,547

 

 

 

13,948

 

Net Investment Income Before Taxes

 

 

4,805

 

 

 

4,823

 

 

 

14,199

 

 

 

15,892

 

Taxes

 

 

484

 

 

 

181

 

 

 

223

 

 

 

768

 

Net Investment Income After Taxes

 

$

4,321

 

 

$

4,642

 

 

$

13,976

 

 

$

15,124

 

Net Realized and Change in Unrealized Gain (Loss) on Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gain (loss) on investments

 

 

9,441

 

 

 

505

 

 

 

(7,619

)

 

 

6,710

 

Net realized gain (loss) on investments

 

 

4

 

 

 

—

 

 

 

4

 

 

 

—

 

Total Net Realized and Change in Unrealized Gain (Loss) on Investments

 

 

9,445

 

 

 

505

 

 

 

(7,615

)

 

 

6,710

 

Net Increase (Decrease) in Members' Equity Resulting from Operations

 

$

13,766

 

 

$

5,147

 

 

$

6,361

 

 

$

21,834

 

 

 

 

85

 

On August 9, 2017, Sebago Lake Financing LLC and SL Lending LLC, wholly-owned subsidiaries of Sebago Lake, entered into a credit facility with Goldman Sachs Bank USA. Goldman Sachs Bank USA serves as the sole lead arranger, syndication agent and administrative agent, and State Street Bank and Trust Company serves as the collateral administrator and agent. The credit facility includes a maximum borrowing capacity of $400 million. As of September 30, 2020, there was $352.2 million outstanding under the credit facility. For the three and nine months ended September 30, 2020 and 2019, the components of interest expense were as follows:

 

 

 

Three Months Ended September 30,

Nine Months Ended September 30,

($ in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Interest expense

 

$

2,418

 

 

$

3,813

 

 

$

8,786

 

 

$

12,181

 

 

Amortization of debt issuance costs

 

 

415

 

 

 

414

 

 

 

1,235

 

 

 

1,230

 

 

Total Interest Expense

 

$

2,833

 

 

$

4,227

 

 

$

10,021

 

 

$

13,411

 

 

Average interest rate

 

 

2.6

 

%

 

4.5

 

%

 

3.3

 

%

 

4.7

 

%

Average daily borrowings

 

$

359,359

 

 

$

328,293

 

 

$

353,044

 

 

$

338,917

 

 

 

Loan Origination and Structuring Fees

If the loan origination and structuring fees earned by Sebago Lake during a fiscal period exceed Sebago Lake’s expenses and other obligations (excluding financing costs), such excess is allocated to the Member(s) responsible for the origination of the loans pro rata in accordance with the total loan origination and structuring fees earned by Sebago Lake with respect to the loans originated by such Member; provided, that in no event will the amount allocated to a Member exceed 1% of the par value of the loans originated by such Member in any fiscal year. The loan origination and structuring fee is accrued quarterly and included in other income from controlled, affiliated investments on our Consolidated Statements of Operations and paid annually. On February 27, 2019, the Members agreed to amend the terms of Sebago Lake’s operating agreement to eliminate the allocation of excess loan origination and structuring fees to the Members. As such, for the three and nine months ended September 30, 2020 and 2019, we accrued no income based on loan origination and structuring fees.

 

Results of Operations

The following table represents the operating results for the three and nine months ended September 30, 2020 and 2019:

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

($ in millions)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Total Investment Income

 

$

187.1

 

 

$

188.1

 

 

$

582.0

 

 

$

515.8

 

 

Less: Net operating expenses

 

 

60.8

 

 

 

49.9

 

 

 

178.9

 

 

 

160.5

 

 

Net Investment Income (Loss) Before Taxes

 

$

126.3

 

 

$

138.2

 

 

$

403.1

 

 

$

355.3

 

 

Less: Income taxes (benefit), including excise taxes

 

 

(1.1

)

 

 

0.3

 

 

 

0.2

 

 

 

1.8

 

 

Net Investment Income (Loss) After Taxes

 

$

127.4

 

 

$

137.9

 

 

$

402.9

 

 

$

353.5

 

 

Net change in unrealized gain (loss)

 

 

88.3

 

 

 

(20.7

)

 

 

(196.3

)

 

 

2.8

 

 

Net realized gain (loss)

 

 

0.3

 

 

 

1.5

 

 

 

0.5

 

 

 

1.5

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

$

216.0

 

 

$

118.7

 

 

$

207.1

 

 

$

357.8

 

 

 

Net increase (decrease) in net assets resulting from operations can vary from period to period as a result of various factors, including the level of new investment commitments, expenses, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio.

86

 

Investment Income

Investment income for the three and nine months ended September 30, 2020 and 2019 were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

($ in millions)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Interest income from investments

 

$

179.6

 

 

$

180.9

 

 

$

561.2

 

 

$

498.8

 

 

Dividend income

 

 

5.0

 

 

 

2.3

 

 

 

10.3

 

 

 

7.6

 

 

Other income

 

 

2.5

 

 

 

4.9

 

 

 

10.5

 

 

 

9.4

 

 

Total investment income

 

$

187.1

 

 

$

188.1

 

 

$

582.0

 

 

$

515.8

 

 

For the three months ended September 30, 2020 and 2019

Investment income decreased to $187.1 million for the three months ended September 30, 2020 from $188.1 million for the same period in prior year primarily due to a decrease in our portfolio’s weighted average yield at amortized cost from 8.9% as of September 30, 2019 to 7.7% as of September 30, 2020, partially offset by an increase in our investment portfolio, which, at par, increased from $8.4 billion as of September 30, 2019, to $10.3 billion as of September 30, 2020. Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns. Period over period, income generated from these fees decreased, which is attributed to the decreased repayment activity in the current period, to $0.3 million, from $3.5 million, for the three months ended September 30, 2020 and 2019, respectively. For the three months ended September 30, 2020 payment-in-kind income represented approximately 5.2% of investment income. For the three months ended September 30, 2019, payment-in-kind income represented less than 5% of investment income. Other income decreased period-over-period due to a decrease in incremental fee income, which are fees that are generally available to us as a result of closing investments and normally paid at the time of closing. We expect that investment income will increase provided that our investment portfolio continues to increase.

For the nine months ended September 30, 2020 and 2019.

Investment income increased to $582.0 million for the nine months ended September 30, 2020 from $515.8 million for the same period in prior year primarily due to an increase in our investment portfolio, which, at par, increased from $8.4 billion as of September 30, 2019, to $10.3 billion as of September 30, 2020, partially offset by a decrease in our portfolio’s weighted average yield at amortized cost from 8.9% as of September 30, 2019 to 7.7% as of September 30, 2020. Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns. Period over period, income generated from these fees decreased, which is attributed to the decreased repayment activity in the current period, to $13.0 million, from $15.5 million, for the nine months ended September 30, 2020 and 2019, respectively. For both the nine months ended September 30, 2020 and 2019, payment-in-kind income represented less than 5% of investment income. Other income increased period-over-period due to an increase in incremental fee income, which are fees that are generally available to us as a result of closing investments and normally paid at the time of closing. We expect that investment income will continue to increase provided that our investment portfolio continues to increase.

 

Expenses

Expenses for the three and nine months ended September 30, 2020 and 2019 were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

($ in millions)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Interest expense

 

$

37.4

 

 

$

29.4

 

 

$

110.5

 

 

$

101.0

 

 

Management fee

 

 

36.5

 

 

 

26.8

 

 

 

104.9

 

 

 

57.4

 

 

Performance based incentive fees

 

 

22.3

 

 

 

19.7

 

 

 

70.5

 

 

 

19.7

 

 

Professional fees

 

 

3.3

 

 

 

2.9

 

 

 

9.8

 

 

 

7.4

 

 

Directors' fees

 

 

0.2

 

 

 

0.1

 

 

 

0.6

 

 

 

0.4

 

 

Other general and administrative

 

 

1.6

 

 

 

2.7

 

 

 

5.5

 

 

 

6.3

 

 

Total operating expenses

 

$

101.3

 

 

$

81.6

 

 

$

301.8

 

 

$

192.2

 

 

Management and incentive fees waived

 

 

(40.5

)

 

 

(31.7

)

 

 

(122.9

)

 

 

(31.7

)

 

Net operating expenses

 

$

60.8

 

 

$

49.9

 

 

$

178.9

 

 

$

160.5

 

 

 

87

 

Under the terms of the Administration Agreement, we reimburse the Adviser for services performed for us. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and we reimburse the Adviser for any services performed for us by such affiliate or third party.

For the three months ended September 30, 2020 and 2019

Total expenses, after the effect of management and incentive fee waivers, increased to $60.8 million for the three months ended September 30, 2020 from $49.9 million for the same period in the prior year primarily due to an increase in management fees, professional fees and interest expense. Management fees, net of the fee waiver increased $3.5 million period over period due to an increase in assets to $10.2 billion as of September 30, 2020 as compared to assets of $8.6 billion as of September 30, 2019. As a percentage of total assets, professional fees, directors’ fees and other general and administrative expenses remained relatively consistent period over period. The increase in interest expense of $8.0 million was primarily driven by an increase in average daily borrowings, partially offset by a decrease in the average interest rate from 5.1% to 3.3%.

For the nine months ended September 30, 2020 and 2019

Total expenses, after the effect of management and incentive fee waivers, increased to $178.9 million for the nine months ended September 30, 2020 from $160.5 million for the same period in the prior year primarily due to an increase in management fees, professional fees and interest expense. Management fees, net of the fee waiver increased $7.1 million period over period due to an increase in assets to $10.2 billion as of September 30, 2020 as compared to assets of $8.6 billion as of September 30, 2019. As a percentage of total assets, professional fees, directors’ fees and other general and administrative expenses remained relatively consistent period over period. The increase in interest expense of $9.5 million was primarily driven by an increase in average daily borrowings, partially offset by a decrease in the average interest rate from 4.9% to 3.7%.

Income Taxes, Including Excise Taxes

We have elected to be treated as a RIC under Subchapter M of the Code, and we intend to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, we must, among other things, distribute to our shareholders in each taxable year generally at least 90% of our investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the requisite distributions to our shareholders, which generally relieves us from corporate-level U.S. federal income taxes.

Depending on the level of taxable income earned in a tax year, we can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, we will accrue excise tax on estimated excess taxable income.

For the three and nine months ended September 30, 2020, we recorded expenses (benefit) of $(1.2) million and $0.2 million for U.S. federal excise tax, respectively. For the three and nine months ended September 30, 2019, we recorded expenses of $0.3 million and $1.8 million for U.S. federal excise tax, respectively.

Net Unrealized Gains (Losses)

We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses.  During the three and nine months ended September 30, 2020 and 2019, net unrealized gains (losses) were comprised of the following:

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

($ in millions)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net change in unrealized gain (loss) on investments

 

$

85.2

 

 

$

(20.6

)

 

$

(199.5

)

 

$

3.0

 

Net change in translation of assets and liabilities in

     foreign currencies

 

 

3.1

 

 

 

(0.1

)

 

 

3.2

 

 

 

(0.2

)

Net change in unrealized gain (loss)

 

$

88.3

 

 

$

(20.7

)

 

$

(196.3

)

 

$

2.8

 

 

88

 

For the three months ended September 30, 2020 and 2019

For the three months ended September 30, 2020, the net unrealized gain was primarily driven by an increase in the fair value of our debt investments as compared to June 30, 2020. As of September 30, 2020, the fair value of our debt investments as a percentage of principal was 96.0%, as compared to 95.1% as of June 30, 2020. The primary driver of our portfolio’s unrealized gains for the three months ended September 30, 2020 was due to improved market conditions and tightening of credit spreads as public health restrictions were lifted and business began to reopen and the government provided fiscal stimulus to support the economy. See “COVID-19 Developments” for additional information. The ten largest contributors to the change in net unrealized gain (loss) on investments during the three months ended September 30, 2020 consisted of the following:

 

Portfolio Company

($ in millions)

 

Net Change in Unrealized

Gain (Loss)

 

Geodigm Corporation (dba National Dentex)

 

$

18.7

 

Norvax, LLC (dba GoHealth)

 

 

10.2

 

Moore Holdings, LLC

 

 

6.2

 

Pregis Topco LLC

 

 

6.0

 

Mavis Tire Express Services Corp.

 

 

5.8

 

Innovative Water Care Global Corporation

 

 

5.6

 

H-Food Holdings, LLC

 

 

4.7

 

Sebago Lake LLC

 

 

4.6

 

Gerson Lehrman Group, Inc.

 

 

3.9

 

Remaining portfolio companies

 

 

49.2

 

Swipe Acquisition Corporation (dba PLI)

 

 

(29.7

)

Total

 

$

85.2

 

 

For the nine months ended September 30, 2020 and 2019

For the nine months ended September 30, 2020, the net unrealized loss was primarily driven by a decrease in the fair value of our debt investments as compared to December 31, 2019. As of September 30, 2020, the fair value of our debt investments as a percentage of principal was 96.0%, as compared to 98.0% as of December 31, 2019. The primary driver of our portfolio’s net unrealized loss was due to current market conditions and credit spreads widening, the impact of which was primarily seen in the first quarter of 2020, but which has subsequently improved in the second and third quarter as the average fair value of the portfolio has improved. See “COVID-19 Developments” for additional information. The ten largest contributors to the change in net unrealized gain (loss) on investments during the nine months ended September 30, 2020 consisted of the following:

 

Portfolio Company

($ in millions)

 

Net Change in Unrealized

Gain (Loss)

 

Swipe Acquisition Corporation (dba PLI)

 

$

(57.0

)

Aviation Solutions Midco, LLC (dba STS Aviation)

 

 

(28.5

)

CIBT Global, Inc.

 

 

(18.8

)

Valence Surface Technologies LLC

 

 

(11.0

)

LineStar Integrity Services LLC

 

 

(9.9

)

Entertainment Benefits Group, LLC

 

 

(9.8

)

FR Arsenal Holdings II Corp. (dba Applied-Cleveland Holdings, Inc.)

 

 

(7.7

)

Blackhawk Network Holdings, Inc.

 

 

(7.5

)

Remaining portfolio companies

 

 

(74.3

)

Norvax, LLC (dba GoHealth)

 

 

15.0

 

Geodigm Corporation (dba National Dentex)

 

 

10.0

 

Total

 

$

(199.5

)

 

89

 

Net Realized Gains (Losses)

The realized gains and losses on fully exited and partially exited portfolio companies during the three and nine months ended September 30, 2020 and 2019 were comprised of the following:

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

($ in millions)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net realized gain (loss) on investments

 

$

2.5

 

 

$

1.3

 

 

$

2.9

 

 

$

1.1

 

Net realized gain (loss) on foreign currency transactions

 

 

(2.2

)

 

 

0.2

 

 

 

(2.4

)

 

 

0.4

 

Net realized gain (loss)

 

$

0.3

 

 

$

1.5

 

 

$

0.5

 

 

$

1.5

 

 

Realized Gross Internal Rate of Return

Since we began investing in 2016 through September 30, 2020, our exited investments have resulted in an aggregate cash flow realized gross internal rate of return to us of over 11.7% (based on total capital invested of $2.6 billion and total proceeds from these exited investments of $2.9 billion). Over seventy percent of these exited investments resulted in an aggregate cash flow realized gross internal rate of return (“IRR”) to us of 10% or greater.

IRR, is a measure of our discounted cash flows (inflows and outflows). Specifically, IRR is the discount rate at which the net present value of all cash flows is equal to zero. That is, IRR is the discount rate at which the present value of total capital invested in each of our investments is equal to the present value of all realized returns from that investment. Our IRR calculations are unaudited.

Capital invested, with respect to an investment, represents the aggregate cost basis allocable to the realized or unrealized portion of the investment, net of any upfront fees paid at closing for the term loan portion of the investment.

Realized returns, with respect to an investment, represents the total cash received with respect to each investment, including all amortization payments, interest, dividends, prepayment fees, upfront fees (except upfront fees paid at closing for the term loan portion of an investment), administrative fees, agent fees, amendment fees, accrued interest, and other fees and proceeds.

Gross IRR, with respect to an investment, is calculated based on the dates that we invested capital and dates we received distributions, regardless of when we made distributions to our shareholders. Initial investments are assumed to occur at time zero.

Gross IRR reflects historical results relating to our past performance and is not necessarily indicative of our future results. In addition, gross IRR does not reflect the effect of management fees, expenses, incentive fees or taxes borne, or to be borne, by us or our shareholders, and would be lower if it did.

Aggregate cash flow realized gross IRR on our exited investments reflects only invested and realized cash amounts as described above, and does not reflect any unrealized gains or losses in our portfolio.

Financial Condition, Liquidity and Capital Resources

Our liquidity and capital resources are generated primarily from cash flows from interest, dividends and fees earned from our investments and principal repayments, our credit facilities, debt securitization transactions, and other secured and unsecured debt. We may also generate cash flow from operations, future borrowings and future offerings of securities including public and/or private issuances of debt and/or equity securities through both registered offerings off of our shelf registration statement and private offerings. The primary uses of our cash are (i) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements, (ii) the cost of operations (including paying or reimbursing our Adviser), (iii) debt service, repayment and other financing costs of any borrowings and (iv) cash distributions to the holders of our shares.

We may from time to time enter into additional debt facilities, increase the size of our existing credit facilities, enter into additional debt securitization transactions, or issue additional debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to incur borrowings, issue debt securities or issue preferred stock, if immediately after the borrowing or issuance, the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 200% (or 150% if certain conditions are met). Our asset coverage requirement applicable to senior securities was reduced from 200% to 150% and our current target ratio is 0.90x-1.25x.

As of September 30, 2020 and December 31, 2019, our asset coverage ratio was 229% and 293%, respectively. We seek to carefully consider our unfunded commitments for the purpose of planning our ongoing financial leverage. Further, we maintain sufficient borrowing capacity within the 150% asset coverage limitation to cover any outstanding unfunded commitments we are required to fund.

90

 

Cash and restricted cash as of September 30, 2020, taken together with our available debt, is expected to be sufficient for our investing activities and to conduct our operations in the near term. As of September 30, 2020, we had $1.4 billion available under our credit facilities.

As of September 30, 2020, we had $220.5 million in cash and restricted cash. During the nine months ended September 30, 2020, we used $0.9 billion in cash for operating activities, primarily as a result of funding portfolio investments of $2.3 billion, partially offset by sell downs and repayments of $1.0 billion and other operating activity of $0.4 billion. Lastly, cash provided by financing activities was $0.8 billion during the period, which was the result of net borrowings on our credit facilities of $1.3 billion, partially offset by repurchase of common stock under the Company 10b5-1 Plan of $0.2 billion and distributions paid of $0.3 billion.

Equity

IPO, Subscriptions and Drawdowns

We have the authority to issue 500,000,000 common shares at $0.01 per share par value.

On July 22, 2019, we closed our initial public offering ("IPO"), issuing 10 million shares of our common stock at a public offering price of $15.30 per share, and on August 2, 2019, the underwriters exercised their option to purchase an additional 1.5 million shares of common stock at a purchase price of $15.30 per share.  Net of underwriting fees and offering costs, we received total cash proceeds of $164.0 million. Our common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “ORCC” on July 18, 2019.

On July 7, 2019, our Board of Directors determined to eliminate any outstanding fractional shares of our common stock (the “Fractional Shares”), as permitted by the Maryland General Corporation Law and on July 8, 2019, we eliminated such Fractional Shares by rounding down the number of Fractional Shares held by each shareholder to the nearest whole share and paying each shareholder cash for such Fractional Shares based on a price of $15.27 per whole share.

Prior to March 2, 2018, we entered into subscription agreements (the “Subscription Agreements”) with investors providing for the private placement of our common shares. Under the terms of the Subscription Agreements, investors were required to fund drawdowns to purchase our common shares up to the amount of their respective Capital Commitment on an as-needed basis each time we delivered a drawdown notice to our investors. As of June 4, 2019, all Capital Commitments had been drawn.

On March 1, 2016, we issued 100 common shares for $1,500 to the Adviser.

       During the nine months ended September 30, 2019, we delivered the following capital call notices to our investors:

 

Capital Drawdown Notice Date

 

Common Share Issuance Date

 

Number of Common Shares Issued

 

 

Aggregate Offering Price

($ in millions)

 

June 4, 2019

 

June 17, 2019

 

 

103,504,284

 

 

 

1,580.5

 

March 8, 2019

 

March 21, 2019

 

 

19,267,823

 

 

$

300.0

 

January 30, 2019

 

February 12, 2019

 

 

29,220,780

 

 

 

450.0

 

Total

 

 

 

 

151,992,887

 

 

 

2,330.5

 

 

In connection with our IPO, the Adviser, our directors and Mr. Lipschultz have agreed for a period of 540 days after the IPO, (i) not to offer, sell, contract to sell, pledge, grant any option to purchase, lend or otherwise dispose of, or file with the SEC a registration statement under the Securities Act (other than a registration statement pursuant to Rule 415 of the Securities Act) relating to, any shares of our common stock, or any options or warrants to purchase any shares of our common stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of our common stock or (ii) engage in any hedging or other transaction or arrangement (including, without limitation, any short sale or the purchase or sale of, or entry into, any put or call option, or combination thereof, forward, swap or any other derivative transaction or instrument, however described or defined) which is designed to or which reasonably could be expected to lead to or result in a sale or disposition (whether by the undersigned or someone other than the undersigned), or transfer of any of the economic consequences of ownership, in whole or in part, directly or indirectly, of our common stock or any such other securities whether any such transaction or arrangement (or instrument provided for thereunder) would be settled by delivery of our common stock or other securities, in cash or otherwise, without the prior written consent of Goldman Sachs & Co. LLC and BofA Securities, Inc. on behalf of the underwriters, subject to certain exceptions; provided, however that, commencing 30 days after the IPO, the foregoing shall not prohibit a convertible notes issuance by us in an amount not to exceed $250 million.

 

91

 

Distributions

The following table reflects the distributions declared on shares of our common stock during the nine months ended September 30, 2020:

 

 

 

September 30, 2020

 

Date Declared

 

Record Date

 

Payment Date

 

Distribution per Share

 

August 4, 2020

 

September 30, 2020

 

November 13, 2020

 

$

0.31

 

May 28, 2019 (special dividend)

 

September 30, 2020

 

November 13, 2020

 

$

0.08

 

May 5, 2020

 

June 30, 2020

 

August 14, 2020

 

$

0.31

 

May 28, 2019 (special dividend)

 

June 30, 2020

 

August 14, 2020

 

$

0.08

 

February 19, 2020

 

March 31, 2020

 

May 15, 2020

 

$

0.31

 

May 28, 2019 (special dividend)

 

March 31, 2020

 

May 15, 2020

 

$

0.08

 

 

On November 3, 2020, the Board declared, in addition to the special dividend of $0.08 per share previously declared on May 28, 2019 for shareholders of record on December 31, 2020 payable on or before January 19, 2021, a distribution of $0.31 per share, for shareholders of record on December 31, 2020 payable on or before January 19, 2021.

 

During certain periods, our distributions may exceed our earnings. As a result, it is possible that a portion of the distributions we make may represent a return of capital. A return of capital generally is a return of a shareholder’s investment rather than a return of earnings or gains derived from our investment activities. Each year a statement on Form 1099-DIV identifying the sources of the distributions will be mailed to our shareholders. No portion of the distributions paid during the nine months ended September 30, 2020 or 2019 represented a return of capital.

 

The following table reflects the distributions declared on shares of our common stock during the nine months ended September 30, 2019:

 

 

 

September 30, 2019

 

Date Declared

 

Record Date

 

Payment Date

 

Distribution per Share

 

May 28, 2019

 

September 30, 2019

 

November 15, 2019

 

$

0.31

 

May 28, 2019 (special dividend)

 

September 30, 2019

 

November 15, 2019

 

$

0.02

 

June 4, 2019

 

June 14, 2019

 

August 15, 2019

 

$

0.44

 

February 27, 2019

 

March 31, 2019

 

May 14, 2019

 

$

0.33

 

Dividend Reinvestment

We have adopted a dividend reinvestment plan, pursuant to which we will reinvest all cash distributions declared by the Board on behalf of our shareholders who do not elect to receive their distribution in cash as provided below. As a result, if the Board authorizes, and we declare, a cash dividend or other distribution, then our shareholders who have not opted out of our dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of our common stock as described below, rather than receiving the cash dividend or other distribution. Any fractional share otherwise issuable to a participant in the dividend reinvestment plan will instead be paid in cash.

In connection with our IPO, we entered into our second amended and restated dividend reinvestment plan, pursuant to which, if newly issued shares are used to implement the dividend reinvestment plan, the number of shares to be issued to a shareholder will be determined by dividing the total dollar amount of the cash dividend or distribution payable to a shareholder by the market price per share of our common stock at the close of regular trading on the New York Stock Exchange on the payment date of a distribution, or if no sale is reported for such day, the average of the reported bid and ask prices. However, if the market price per share on the payment date of a cash dividend or distribution exceeds the most recently computed net asset value per share, we will issue shares at the greater of (i) the most recently computed net asset value per share and (ii) 95% of the current market price per share (or such lesser discount to the current market price per share that still exceeded the most recently computed net asset value per share). For example, if the most recently computed net asset value per share is $15.00 and the market price on the payment date of a cash dividend is $14.00 per share, we will issue shares at $14.00 per share. If the most recently computed net asset value per share is $15.00 and the market price on the payment date of a cash dividend is $16.00 per share, we will issue shares at $15.20 per share (95% of the current market price). If the most recently computed net asset value per share is $15.00 and the market price on the payment date of a cash dividend is $15.50 per share, we will issue shares at $15.00 per share, as net asset value is greater than 95% ($14.73 per share) of the current market price. Pursuant to our second amended and restated dividend reinvestment plan, if shares are purchased in the open market to implement the dividend reinvestment plan, the number of shares to be issued to a shareholder shall be determined by dividing the dollar amount of

92

 

the cash dividend payable to such shareholder by the weighted average price per share for all shares purchased by the plan administrator in the open market in connection with the dividend. Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the nine months ended September 30, 2020:

 

Date Declared

 

Record Date

 

Payment Date

 

Shares

 

May 5, 2020

 

June 30, 2020

 

August 14, 2020

 

 

3,541,285

 

Feburary 19, 2020

 

March 31, 2020

 

May 15, 2020

 

 

2,249,543

 

October 30, 2019

 

December 31, 2019

 

January 31, 2020

 

 

2,823,048

 

 

The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the nine months ended September 30, 2019:

 

Date Declared

 

Record Date

 

Payment Date

 

Shares

 

June 4, 2019

 

June 14, 2019

 

August 15, 2019

 

 

3,965,754

 

February 27, 2019

 

March 31, 2019

 

May 14, 2019

 

 

2,882,297

 

November 6, 2018

 

December 31, 2018

 

January 31, 2019

 

 

2,613,223

 

 

Stock Repurchase Plan (the “Company 10b5-1 Plan”)

 

On July 7, 2019, our Board approved the Company 10b5-1 Plan, to acquire up to $150 million in the aggregate of our common stock at prices below our net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Company 10b5-1 Plan commenced on August 19, 2019 and was exhausted on August 4, 2020.

The Company 10b5-1 Plan was intended to allow us to repurchase our common stock at times when we otherwise might be prevented from doing so under insider trading laws. The Company 10b5-1 Plan required Goldman Sachs & Co. LLC, as our agent, to repurchase shares of common stock on our behalf when the market price per share was below the most recently reported net asset value per share (including any updates, corrections or adjustments publicly announced by us to any previously announced net asset value per share). Under the Company 10b5-1 Plan, the agent would increase the volume of purchases made as the price of our common stock declined, subject to volume restrictions.

The purchase of shares pursuant to the Company 10b5-1 Plan was intended to satisfy the conditions of Rule 10b5-1 and Rule 10b-18 under the Exchange Act, and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases under certain circumstances.

The Company 10b5-1 Plan commenced on August 19, 2019 and will terminate upon the earliest to occur of (i) 18-months (tolled for periods during which the Company 10b5-1 Plan is suspended), (ii) the end of the trading day on which the aggregate purchase price for all shares purchased under the Company 10b5-1 Plan equals $150 million and (iii) the occurrence of certain other events described in the Company 10b5-1 Plan. The 10b5-1 Plan was exhausted on August 4, 2020.

93

 

The following table provides information regarding purchases of our common stock by Goldman, Sachs & Co., as agent, pursuant to the 10b5-1 plan for each month in the Period ended September 30, 2020:

 

Period

($ in millions, except share and per share amounts)

 

Total Number

of Shares

Repurchased

 

 

Average Price Paid per Share

 

 

Approximate

Dollar Value of

Shares that have been

Purchased Under

the Plans

 

 

Approximate

Dollar Value

of Shares that

May Yet Be

Purchased Under

the Plan

 

January 1, 2020 - January 31, 2020

 

 

-

 

 

$

-

 

 

$

-

 

 

$

150.0

 

February 1, 2020 - February 29, 2020

 

 

87,328

 

 

$

15.17

 

 

$

1.4

 

 

$

148.6

 

March 1, 2020 - March 31, 2020

 

 

4,009,218

 

 

$

12.46

 

 

$

46.6

 

 

$

102.0

 

April 1, 2020 - April 30, 2020

 

 

6,235,497

 

 

$

11.95

 

 

$

74.3

 

 

$

27.7

 

May 1, 2020 - May 31, 2020

 

 

2,183,581

 

 

$

12.76

 

 

$

27.7

 

 

$

-

 

June 1, 2020 - June 30, 2020

 

 

-

 

 

$

-

 

 

$

-

 

 

$

-

 

July 1, 2020 - July 31, 2020

 

 

-

 

 

$

-

 

 

$

-

 

 

$

-

 

August 1, 2020 - August 31, 2020

 

 

-

 

 

$

-

 

 

$

-

 

 

$

-

 

Total

 

 

12,515,624

 

 

 

 

 

 

$

150.0

 

 

 

 

 

 

On November 3, 2020, the Board approved a repurchase program under which we may repurchase up to $100 million of our outstanding common stock. Under the program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. Unless extended by the Board, the repurchase program will terminate 12-months from the date it was approved.

Debt

Aggregate Borrowings

Debt obligations consisted of the following as of September 30, 2020 and December 31, 2019:

 

 

 

September 30, 2020

 

($ in thousands)

 

Aggregate Principal Committed

 

 

Outstanding Principal

 

 

Amount Available(1)

 

 

Net Carrying Value(2)

 

Revolving Credit Facility(3)(5)

 

$

1,355,000

 

 

$

609,884

 

 

$

719,020

 

 

$

600,154

 

SPV Asset Facility II

 

 

350,000

 

 

 

100,000

 

 

 

250,000

 

 

 

95,439

 

SPV Asset Facility III

 

 

500,000

 

 

 

400,000

 

 

 

100,000

 

 

 

397,803

 

SPV Asset Facility IV

 

 

450,000

 

 

 

95,000

 

 

 

355,000

 

 

 

91,528

 

CLO I

 

 

390,000

 

 

 

390,000

 

 

 

—

 

 

 

386,602

 

CLO II

 

 

260,000

 

 

 

260,000

 

 

 

—

 

 

 

257,884

 

CLO III

 

 

260,000

 

 

 

260,000

 

 

 

—

 

 

 

257,935

 

CLO IV

 

 

252,000

 

 

 

252,000

 

 

 

—

 

 

 

247,828

 

2023 Notes(4)

 

 

150,000

 

 

 

150,000

 

 

 

—

 

 

 

152,477

 

2024 Notes(4)

 

 

400,000

 

 

 

400,000

 

 

 

—

 

 

 

419,678

 

2025 Notes

 

 

425,000

 

 

 

425,000

 

 

 

—

 

 

 

417,781

 

July 2025 Notes

 

 

500,000

 

 

 

500,000

 

 

 

—

 

 

 

491,694

 

2026 Notes

 

 

500,000

 

 

 

500,000

 

 

 

—

 

 

 

488,840

 

Total Debt

 

$

5,792,000

 

 

$

4,341,884

 

 

$

1,424,020

 

 

$

4,305,643

 

________________

 

(1)

The amount available reflects any limitations related to each credit facility’s borrowing base.

 

(2)

The carrying value of our Revolving Credit Facility, SPV Asset Facility II, SPV Asset Facility III, SPV Asset Facility IV, CLO I, CLO II, CLO III, CLO IV, 2023 Notes, 2024 Notes, 2025 Notes, July 2025 Notes, and 2026 Notes are presented net of deferred financing costs of $9.7 million, $4.5 million, $2.2 million, $3.5 million, $3.4 million, $2.1 million, $2.1 million, $4.2 million, $1.1 million, $7.5 million, $7.2 million, $8.3 million, and $11.2 million, respectively.

 

(3)

Includes the unrealized translation gain (loss) on borrowings denominated in foreign currencies.

 

(4)

Inclusive of change in fair value of effective hedge.  

 

(5)

The amount available is reduced by $26.1 million of outstanding letters of credit.  

94

 

 

 

 

December 31, 2019

 

($ in thousands)

 

Aggregate Principal Committed

 

 

Outstanding Principal

 

 

Amount Available(1)

 

 

Net Carrying Value(2)

 

Revolving Credit Facility(3)(5)

 

$

1,170,000

 

 

$

480,861

 

 

$

664,410

 

 

$

473,655

 

SPV Asset Facility I

 

 

400,000

 

 

 

300,000

 

 

 

100,000

 

 

 

297,246

 

SPV Asset Facility II

 

 

350,000

 

 

 

350,000

 

 

 

—

 

 

 

346,395

 

SPV Asset Facility III

 

 

500,000

 

 

 

255,000

 

 

 

245,000

 

 

 

251,548

 

SPV Asset Facility IV

 

 

300,000

 

 

 

60,250

 

 

 

239,750

 

 

 

57,201

 

CLO I

 

 

390,000

 

 

 

390,000

 

 

 

—

 

 

 

386,405

 

CLO II

 

 

260,000

 

 

 

260,000

 

 

 

—

 

 

 

258,028

 

2023 Notes(4)

 

 

150,000

 

 

 

150,000

 

 

 

—

 

 

 

150,113

 

2024 Notes(4)

 

 

400,000

 

 

 

400,000

 

 

 

—

 

 

 

400,955

 

2025 Notes

 

 

425,000

 

 

 

425,000

 

 

 

—

 

 

 

416,686

 

Total Debt

 

$

4,345,000

 

 

$

3,071,111

 

 

$

1,249,160

 

 

$

3,038,232

 

________________

 

(1)

The amount available reflects any limitations related to each credit facility’s borrowing base.

 

(2)

The carrying value of our Revolving Credit Facility, SPV Asset Facility I, SPV Asset Facility II, SPV Asset Facility III, SPV Asset Facility IV, CLO I, CLO II, 2023 Notes, 2024 Notes and 2025 Notes are presented net of deferred financing costs of $7.2 million, $2.8 million, $3.6 million, $3.5 million, $3.0 million, $3.6 million, $2.0 million, $1.4 million, $8.9 million and $8.3 million, respectively.

 

(3)

Includes the unrealized translation gain (loss) on borrowings denominated in foreign currencies.

 

(4)

Inclusive of change in fair value of effective hedge.  

 

(5)

The amount available is reduced by $24.7 million of outstanding letters of credit.  

 

For the three and nine months ended September 30, 2020 and 2019, the components of interest expense were as follows:

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

($ in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Interest expense

 

$

32,896

 

 

$

26,969

 

 

$

99,201

 

 

$

93,748

 

 

Amortization of debt issuance costs

 

 

3,973

 

 

 

2,465

 

 

 

13,095

 

 

 

7,273

 

 

Net change in unrealized gain (loss) on effective

     interest rate swaps and hedged items(1)

 

 

522

 

 

 

—

 

 

 

(1,763

)

 

 

—

 

 

Total Interest Expense

 

$

37,391

 

 

$

29,434

 

 

$

110,533

 

 

$

101,021

 

 

Average interest rate

 

 

3.3

 

%

 

5.1

 

%

 

3.7

 

%

 

4.9

 

%

Average daily borrowings

 

$

3,890,731

 

 

$

2,056,484

 

 

$

3,545,786

 

 

$

2,512,055

 

 

________________

 

(1)

Refer to “ITEM 1. – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA – Notes to Consolidated Financial Statements – Note 6. Debt - 2023 Notes and 2024 Notes” for details on each facility’s interest rate swap.

 

95

 

Senior Securities

 

Information about our senior securities is shown in the following table as of September 30, 2020 and the fiscal years ended December 31, 2019, 2018, 2017 and 2016.

 

Class and Period

 

Total Amount Outstanding Exclusive of Treasury Securities(1)

($ in millions)

 

 

Asset Coverage per Unit(2)

 

 

Involuntary Liquidating Preference per Unit(3)

 

 

Average Market Value per Unit(4)

 

Revolving Credit Facility

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

609.9

 

 

$

2,288

 

 

 

—

 

 

N/A

 

December 31, 2019

 

$

480.9

 

 

$

2,926

 

 

 

—

 

 

N/A

 

December 31, 2018

 

$

308.6

 

 

$

2,254

 

 

 

—

 

 

N/A

 

December 31, 2017

 

$

—

 

 

$

2,580

 

 

 

—

 

 

N/A

 

SPV Asset Facility I(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

—

 

 

$

—

 

 

 

—

 

 

 

 

 

December 31, 2019

 

$

300.0

 

 

$

2,926

 

 

 

—

 

 

N/A

 

December 31, 2018

 

$

400.0

 

 

$

2,254

 

 

 

—

 

 

N/A

 

December 31, 2017

 

$

400.0

 

 

$

2,580

 

 

 

—

 

 

N/A

 

SPV Asset Facility II

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

100.0

 

 

$

2,288

 

 

 

—

 

 

N/A

 

December 31, 2019

 

$

350.0

 

 

$

2,926

 

 

 

—

 

 

N/A

 

December 31, 2018

 

$

550.0

 

 

$

2,254

 

 

 

—

 

 

N/A

 

SPV Asset Facility III

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

400.0

 

 

$

2,288

 

 

 

—

 

 

N/A

 

December 31, 2019

 

$

255.0

 

 

$

2,926

 

 

 

—

 

 

N/A

 

December 31, 2018

 

$

300.0

 

 

$

2,254

 

 

 

—

 

 

N/A

 

SPV Asset Facility IV

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

95.0

 

 

$

2,288

 

 

 

—

 

 

N/A

 

December 31, 2019

 

$

60.3

 

 

$

2,926

 

 

 

—

 

 

N/A

 

CLO I

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

390.0

 

 

$

2,288

 

 

 

—

 

 

N/A

 

December 31, 2019

 

$

390.0

 

 

$

2,926

 

 

 

—

 

 

N/A

 

CLO II

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

260.0

 

 

$

2,288

 

 

 

—

 

 

N/A

 

December 31, 2019

 

$

260.0

 

 

$

2,926

 

 

 

—

 

 

N/A

 

CLO III

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

260.0

 

 

$

2,288

 

 

 

—

 

 

N/A

 

CLO IV

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

252.0

 

 

$

2,288

 

 

 

—

 

 

N/A

 

Subscription Credit Facility(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

$

—

 

 

$

—

 

 

 

—

 

 

N/A

 

December 31, 2018

 

$

883.0

 

 

$

2,254

 

 

 

—

 

 

N/A

 

December 31, 2017

 

$

393.5

 

 

$

2,580

 

 

 

—

 

 

N/A

 

December 31, 2016

 

$

495.0

 

 

$

2,375

 

 

 

—

 

 

N/A

 

96

 

Class and Period

 

Total Amount Outstanding Exclusive of Treasury Securities(1)

($ in millions)

 

 

Asset Coverage per Unit(2)

 

 

Involuntary Liquidating Preference per Unit(3)

 

 

Average Market Value per Unit(4)

 

2023 Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

150.0

 

 

$

2,288

 

 

 

—

 

 

N/A

 

December 31, 2019

 

$

150.0

 

 

$

2,926

 

 

 

—

 

 

N/A

 

December 31, 2018

 

$

150.0

 

 

$

2,254

 

 

 

—

 

 

N/A

 

December 31, 2017

 

$

138.5

 

 

$

2,580

 

 

 

—

 

 

N/A

 

2024 Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

400.0

 

 

$

2,288

 

 

 

—

 

 

$

1,028.8

 

December 31, 2019

 

$

400.0

 

 

$

2,926

 

 

 

—

 

 

$

1,039.3

 

2025 Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

425.0

 

 

$

2,288

 

 

 

—

 

 

$

972.0

 

December 31, 2019

 

$

425.0

 

 

$

2,926

 

 

 

—

 

 

$

997.9

 

July 2025 Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

500.0

 

 

$

2,288

 

 

 

—

 

 

$

956.4

 

2026 Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020 (unaudited)

 

$

500.0

 

 

$

2,288

 

 

 

—

 

 

$

1,007.8

 

________________

 

(1)

Total amount of each class of senior securities outstanding at the end of the period presented.

 

(2)

Asset coverage per unit is the ratio of the carrying value of our total assets, less all liabilities excluding indebtedness represented by senior securities in this table, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness and is calculated on a consolidated basis.

 

(3)

The amount to which such class of senior security would be entitled upon our involuntary liquidation in preference to any security junior to it. The "—" in this column indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.

 

(4)

Not applicable, except for with respect to the 2024 Notes, 2025 Notes, July 2025 Notes, and 2026 Notes as other senior securities are not registered for public trading on a stock exchange. The average market value per unit for each of the 2024 Notes, 2025 Notes, July 2025 Notes, and 2026 Notes is based on the average daily prices of such notes and is expressed per $1,000 of indebtedness.

 

(5)

Facility was terminated in 2019.

 

(6)

Facility was terminated in 2020.

 

 

Credit Facilities

Our credit facilities contain customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and customary events of default (with customary cure and notice provisions).

Revolving Credit Facility

On February 1, 2017, we entered into a senior secured revolving credit agreement (and as amended by that certain First Amendment to Senior Secured Revolving Credit Agreement, dated as of July 17, 2017, the First Omnibus Amendment to Senior Secured Revolving Credit Agreement and Guarantee and Security Agreement, dated as of March 29, 2018, the Third Amendment to Senior Secured Revolving Credit Agreement, dated as of June 21, 2018, the Fourth Amendment to Senior Secured Revolving Credit Agreement, dated as of April 2, 2019, the Fifth Amendment to Senior Secured Revolving Credit Agreement, dated as of May 7, 2020, and the Sixth Amendment to Senior Secured Revolving Credit Agreement, dated as of September 3, 2020, the “Revolving Credit Facility”). The parties to the Revolving Credit Facility include us, as Borrower, the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”) and Truist Securities, Inc. and ING Capital LLC as Joint Lead Arrangers and Joint Book Runners, Truist Bank (as successor by merger to SunTrust Bank) as Administrative Agent and ING Capital LLC as Syndication Agent.

The Revolving Credit Facility is guaranteed by OR Lending LLC, our subsidiary, and will be guaranteed by certain domestic subsidiaries of ours that are formed or acquired by us in the future (collectively, the “Guarantors”). Proceeds of the Revolving Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.

 

 The maximum principal amount of the Revolving Credit Facility is $1.355 billion (increased from $1.335 billion on September 3, 2020; increased from $1.295 billion on June 12, 2020; increased from $1.24 billion on May 27, 2020; increased from

97

 

$1.195 on May 7, 2020; increased from $1.17 billion on February 11, 2020; increased from $1.1 billion on August 27, 2019; increased from $1.0 billion on July 26, 2019), subject to availability under the borrowing base, which is based on our portfolio investments and other outstanding indebtedness. As amended on September 3, 2020, maximum capacity under the Revolving Credit Facility may be increased to $2.0 billion through our exercise of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility includes a $50 million limit for swingline loans and is secured by a perfected first-priority interest in substantially all of the portfolio investments held by us and each Guarantor, subject to certain exceptions.

The availability period under the Revolving Credit Facility will terminate on September 3, 2024, with respect to $1.295 billion of commitments, and on March 31, 2023, which respect to the remaining commitments (together, the “Revolving Credit Facility Commitment Termination Date”). The Revolving Credit Facility will mature on September 3, 2025, with respect to 1.295 billion of commitments, and on April 2, 2024, with respect to the remaining commitments (together, the “Revolving Credit Facility Maturity Date”). During the period from the earliest Revolving Credit Facility Commitment Termination Date to the final Revolving Credit Facility Maturity Date, we will be obligated to make mandatory prepayments under the Revolving Credit Facility out of the proceeds of certain asset sales and other recovery events and equity and debt issuances.

We may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Revolving Credit Facility will bear interest at either LIBOR plus 2.00%, or the prime rate plus 1.00%. We may elect either the LIBOR or prime rate at the time of drawdown, and loans may be converted from one rate to another at any time at our option, subject to certain conditions. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. We also pay a fee of 0.375% on undrawn amounts under the Revolving Credit Facility.

The Revolving Credit Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants related to asset coverage and liquidity and other maintenance covenants, as well as customary events of default. The agreement requires a minimum asset coverage ratio of 150% with respect to our consolidated assets and our subsidiaries, measured at the last day of any fiscal quarter and a minimum asset coverage ratio of no less than 200% with respect to our consolidated assets and our subsidiary guarantors (including certain limitations on the contribution of equity in financing subsidiaries as specified therein) to our secured debt and our subsidiary guarantors (the “Obligor Asset Coverage Ratio), measured at the last day of each fiscal quarter. The agreement concentration limits in connection with the calculation of the borrowing base, based upon the Obligor Asset Coverage Ratio.

Subscription Credit Facility

On August 1, 2016, we entered into a subscription credit facility (as amended, the “Subscription Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent (the “Subscription Credit Facility Administrative Agent”) and letter of credit issuer, and Wells Fargo, State Street Bank and Trust Company and the banks and financial institutions from time to time party thereto, as lenders.  

The Subscription Credit Facility permitted us to borrow up to $900 million, subject to availability under the borrowing base which is calculated based on the unused Capital Commitments of the investors meeting various eligibility requirements. Effective June 19, 2019, the outstanding balance of the Subscription Credit Facility was paid in full and the facility was terminated pursuant to its terms.

Borrowings under the Subscription Credit Facility bore interest, at our election at the time of drawdown, at a rate per annum equal to (i) in the case of LIBOR rate loans, an adjusted LIBOR rate for the applicable interest period plus 1.60% or (ii) in the case of reference rate loans, the greatest of (A) a prime rate plus 0.60%, (B) the federal funds rate plus 1.10%, and (C) one-month LIBOR plus 1.60%.  Loans may have been converted from one rate to another at any time at our election, subject to certain conditions.  We predominantly borrowed utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. We paid an unused commitment fee of 0.25% per annum on the unused commitments.

SPV Asset Facilities

Certain of our wholly owned subsidiaries are parties to credit facilities (the “SPV Asset Facilities”).  Pursuant to the SPV Asset Facilities, we sell and contribute certain investments to these wholly owned subsidiaries pursuant to sale and contribution agreements by and between us and the wholly owned subsidiaries. No gain or loss is recognized as a result of these contributions. Proceeds from the SPV Asset Facilities are used to finance the origination and acquisition of eligible assets by the wholly owned subsidiary, including the purchase of such assets from us. We retain a residual interest in assets contributed to or acquired to the wholly owned subsidiary through our ownership of the wholly owned subsidiary.

The SPV Asset Facilities are secured by a perfected first priority security interest in the assets of these wholly owned subsidiaries and on any payments received by such wholly owned subsidiaries in respect of those assets. Assets pledged to lenders under the SPV Asset Facilities will not be available to pay our debts.

98

 

The SPV Asset Facilities contain customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and customary events of default (with customary cure and notice provisions).

SPV Asset Facility I

On December 21, 2017 (the “SPV Asset Facility I Closing Date”), ORCC Financing LLC (“ORCC Financing”), a Delaware limited liability company and our subsidiary, entered into a Loan and Servicing Agreement (as amended, the “SPV Asset Facility I”), with ORCC Financing as Borrower, us as Transferor and Servicer, the lenders from time to time parties thereto (the “SPV Lenders”), Morgan Stanley Asset Funding Inc. as Administrative Agent, State Street Bank and Trust Company as Collateral Agent and Cortland Capital Market Services LLC as Collateral Custodian.

From time to time, we sold and contributed certain investments to ORCC Financing pursuant to a Sale and Contribution Agreement by and between us and ORCC Financing. No gain or loss was recognized as a result of the contribution. Proceeds from the SPV Asset Facility I were used to finance the origination and acquisition of eligible assets by ORCC Financing, including the purchase of such assets from us. We retained a residual interest in assets contributed to or acquired by ORCC Financing through its ownership of ORCC Financing. The maximum principal amount of the SPV Asset Facility I was $400 million; the availability of this amount was subject to a borrowing base test, which was based on the value of ORCC Financing’s assets from time to time, and satisfaction of certain conditions, including certain concentration limits.

The SPV Asset Facility I provided for the ability to draw and redraw amounts under the SPV Asset Facility I for a period of up to three years after the SPV Asset Facility I Closing Date (the “SPV Asset Facility I Commitment Termination Date”). The SPV Asset Facility I was terminated on June 2, 2020 (the “SPV Asset Facility I Termination Date”). Prior to the SPV Asset Facility I Termination Date, proceeds received by ORCC Financing from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions. On the SPV Asset Facility I Termination Date, ORCC Financing repaid in full all outstanding fees and expenses and all principal and interest on outstanding borrowings.

Amounts drawn bore interest at LIBOR plus a spread of 2.25% until the six-month anniversary of the SPV Asset Facility I Closing Date, increasing to 2.50% thereafter, until the SPV Asset Facility I Commitment Termination Date. We predominantly borrowed utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. After a ramp-up period, there was an unused fee of 0.75% per annum on the amount, if any, by which the undrawn amount under the SPV Asset Facility I exceeded 25% of the maximum principal amount of the SPV Asset Facility I. The SPV Asset Facility I contained customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility I was secured by a perfected first priority security interest in the assets of ORCC Financing and on any payments received by ORCC Financing in respect of those assets. Assets pledged to the SPV Lenders were not available to pay our debts.

SPV Asset Facility II

On May 22, 2018, our subsidiary, ORCC Financing II LLC (“ORCC Financing II”), a Delaware limited liability company and our subsidiary, entered into a Credit Agreement (as amended, the “SPV Asset Facility II”), with ORCC Financing II, as Borrower, the lenders from time to time parties thereto, Natixis, New York Branch, as Administrative Agent, State Street Bank and Trust Company, as Collateral Agent, and Cortland Capital Market Services LLC as Document Custodian. The parties to the SPV Asset Facility II have entered into various amendments, including to admit new lenders, increase or decrease the maximum principal amount available under the facility, extend the availability period and maturity date, change the interest rate and make various other changes.  The following describes the terms of SPV Asset Facility II amended through March 17, 2020 (the “SPV Asset Facility II Fifth Amendment Date”).

The maximum principal amount of the SPV Asset Facility II following the SPV Asset Facility II Fifth Amendment Date is $350 million (which includes terms loans of $100 million and revolving commitments of $250 million); the availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing II’s assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests.

The SPV Asset Facility II provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility II for a period of up to 18 months after SPV Asset Facility II Fifth Amendment Date unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility II (the “SPV Asset Facility II Commitment Termination Date”). Unless otherwise terminated, the SPV Asset Facility II will mature on May 22, 2028. Prior to the Stated Maturity, proceeds received by ORCC Financing II from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions. On October 10, 2026, ORCC Financing II must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to us.

With respect to revolving loans, amounts drawn bear interest at LIBOR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and LIBOR plus 0.25%) plus a spread that steps up from 2.20% to 2.50% during the

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period from the SPV Asset Facility II Fifth Amendment Date to the six month anniversary of the Reinvestment Period End Date. With respect to term loans, amounts drawn bear interest at LIBOR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and LIBOR plus 0.25%)  plus a spread that steps up from 2.25% to 2.55% during the same period. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. From the SPV Asset Facility II Fifth Amendment Date to the SPV Asset Facility II Commitment Termination Date, there is a commitment fee ranging from 0.50% to 0.75% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility II. For further details, see “ITEM 8. – Notes to Consolidated Financial Statements – Note 6. Debt.”

SPV Asset Facility III

On December 14, 2018, ORCC Financing III LLC (“ORCC Financing III”), a Delaware limited liability company and our subsidiary, entered into a Loan Financing and Servicing Agreement (the “SPV Asset Facility III”), with ORCC Financing III, as borrower, ourselves, as equity holder and services provider, the lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as Facility Agent, State Street Bank and Trust Company, as Collateral Agent and Cortland Capital Market Services LLC, as Collateral Custodian. On December 10, 2019, the parties to SPV Asset Facility III amended certain terms of the facility, including those relating to the undrawn fee and make-whole fee. The following describes the terms of SPV Asset Facility III as amended through December 10, 2019.

The maximum principal amount of the SPV Asset Facility III is $500 million; the availability of this amount is subject to a borrowing base test, which is based on the value of ORCC Financing III’s assets from time to time, and satisfaction of certain conditions, including interest spread and weighted average coupon tests, certain concentration limits and collateral quality tests.

The SPV Asset Facility III provides for the ability to borrow, reborrow, repay and prepay advances under the SPV Asset Facility III for a period of up to three years after December 14, 2018 unless such period is extended or accelerated under the terms of the SPV Asset Facility III (the “SPV Asset Facility III Revolving Period”).  Unless otherwise extended, accelerated or terminated under the terms of the SPV Asset Facility III, the SPV Asset Facility III will mature on the date that is two years after the last day of the SPV Asset Facility III Revolving Period (the “Stated Maturity”).  Prior to the Stated Maturity, proceeds received by ORCC Financing III from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding advances, and the excess may be returned to us, subject to certain conditions.  On the Stated Maturity, ORCC Financing III must pay in full all outstanding fees and expenses and all principal and interest on outstanding advances, and the excess may be returned to us.

Amounts drawn bear interest at LIBOR (or, in the case of certain SPV Lenders III that are commercial paper conduits, the lower of (a) their cost of funds and (b) LIBOR, such LIBOR not to be lower than zero) plus a spread equal to 2.20% per annum, which spread will increase (a) on and after the end of the SPV Asset Facility III Revolving Period by 0.15% per annum if no event of default has occurred and (b) by 2.00% per annum upon the occurrence of an event of default (such spread, the “Applicable Margin”).  LIBOR may be replaced as a base rate under certain circumstances. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. During the Revolving Period, ORCC Financing III will pay an undrawn fee ranging from 0.25% to 0.50% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility III.  During the Revolving Period, if the undrawn commitments are in excess of a certain portion (initially 20% and increasing in stages to 75%) of the total commitments under the SPV Asset Facility III, ORCC Financing III will also pay a make-whole fee equal to the Applicable Margin multiplied by such excess undrawn commitment amount, reduced by the undrawn fee payable on such excess.  For further details, see “ITEM 8. – Notes to Consolidated Financial Statements – Note 6. Debt. “Unsecured Notes.”.

SPV Asset Facility IV

On August 2, 2019 (the “SPV Asset Facility IV Closing Date”), ORCC Financing IV LLC (“ORCC Financing IV”), a Delaware limited liability company and newly formed subsidiary, entered into a Credit Agreement (the “SPV Asset Facility IV”), with ORCC Financing IV, as borrower, Société Générale, as initial Lender and as Administrative Agent, State Street Bank and Trust Company, as Collateral Agent, Collateral Administrator and Custodian, and Cortland Capital Market Services LLC as Document Custodian and the lenders from time to time party thereto pursuant to Assignment and Assumption Agreements. On November 22, 2019 (the “SPV Asset Facility IV Amendment Date”), the parties to the SPV Asset Facility IV amended the SPV Asset Facility IV to increase the maximum principal amount of the SPV Asset Facility IV to $450 million in periodic increments through March 22, 2020.

From time to time, we expect to sell and contribute certain investments to ORCC Financing IV pursuant to a Sale and Contribution Agreement by and between us and ORCC Financing IV.  No gain or loss will be recognized as a result of the contribution.  Proceeds from the SPV Asset Facility IV will be used to finance the origination and acquisition of eligible assets by ORCC Financing IV, including the purchase of such assets from us.  We retain a residual interest in assets contributed to or acquired by ORCC Financing IV through our ownership of ORCC Financing IV.  The maximum principal amount of the Credit Facility is currently $450 million, subject to a ramp period; the availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing IV’s assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests.

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The SPV Asset Facility IV provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility IV for a period of up to two years after the Closing Date unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility IV (the “Commitment Termination Date”).  Unless otherwise terminated, the SPV Asset Facility IV will mature on August 2, 2029 (the “Stated Maturity”).  Prior to the Stated Maturity, proceeds received by ORCC Financing IV from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions.  On the Stated Maturity, ORCC Financing IV must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to us.

Amounts drawn bear interest at LIBOR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and LIBOR plus 0.25%) plus a spread ranging from 2.15% to 2.50%. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. From the Closing Date to the Commitment Termination Date, there is a commitment fee ranging from 0.50% to 1.00% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility IV.  The SPV Asset Facility IV contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing IV, including limitations on incurrence of incremental indebtedness, and customary events of default.  The SPV Asset Facility IV is secured by a perfected first priority security interest in the assets of ORCC Financing IV and on any payments received by ORCC Financing IV in respect of those assets.  Assets pledged to the Lenders will not be available to pay our debts.

CLOs

CLO I

On May 28, 2019 (the “CLO I Closing Date”), we completed a $596 million term debt securitization transaction (the “CLO I Transaction”), also known as a collateralized loan obligation transaction.  The secured notes and preferred shares issued in the CLO I Transaction and the secured loan borrowed in the CLO I Transaction were issued and incurred, as applicable, by our consolidated subsidiaries Owl Rock CLO I, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO I Issuer”), and Owl Rock CLO I, LLC, a Delaware limited liability company (the “CLO I Co-Issuer” and together with the CLO I Issuer, the “CLO I Issuers”) ”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO I Issuer.

In the CLO I Transaction the CLO I Issuers (A) issued the following notes pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO I Indenture”), by and among the CLO I Issuers and State Street Bank and Trust Company:  (i) $242 million of AAA(sf) Class A Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $30 million of AAA(sf) Class A-F Notes, which bear interest at a fixed rate of 4.165%, and (iii) $68 million of AA(sf) Class B Notes, which bear interest at three-month LIBOR plus 2.70% (together, the “CLO I Notes”) and (B) borrowed $50 million under floating rate loans (the “Class A Loans” and together with the CLO I Notes, the “CLO I Debt”), which bear interest at three-month LIBOR plus 1.80%, under a credit agreement (the “CLO I Credit Agreement”), dated as of the CLO I Closing Date, by and among the CLO I Issuers, as borrowers, various financial institutions, as lenders, and State Street Bank and Trust Company, as collateral trustee and loan agent.  The Class A Loans may be exchanged by the lenders for Class A Notes at any time, subject to certain conditions under the CLO I Credit Agreement and the Indenture.  The CLO I Debt is scheduled to mature on May 20, 2031. The CLO I Notes were privately placed by Natixis Securities Americas, LLC and SG Americas Securities, LLC.

Concurrently with the issuance of the CLO I Notes and the borrowing under the Class A Loans, the CLO I Issuer issued approximately $206.1 million of subordinated securities in the form of 206,106 preferred shares at an issue price of U.S.$1,000 per share (the “CLO I Preferred Shares”).  The CLO I Preferred Shares were issued by the CLO I Issuer as part of its issued share capital and are not secured by the collateral securing the CLO I Debt. We own all of the CLO I Preferred Shares, and as such, are eliminated in consolidation. We act as retention holder in connection with the CLO I Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO I Preferred Shares.

The Adviser serves as collateral manager for the CLO I Issuer under a collateral management agreement dated as of the CLO I Closing Date.  The Adviser is entitled to receive fees for providing these services.  The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO I Issuers’ equity or notes that we own.

The CLO I Debt is secured by all of the assets of the CLO I Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO I Transaction, we and ORCC Financing II LLC sold and contributed approximately $575 million par amount of middle market loans to the CLO I Issuer on the CLO I Closing Date.  Such loans constituted the initial portfolio assets securing the CLO I Debt.  We and ORCC Financing II LLC each made customary representations, warranties, and covenants to the CLO I Issuer regarding such sales and contributions under a loan sale agreement.

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Through May 20, 2023, a portion of the proceeds received by the CLO I Issuer from the loans securing the CLO I Debt may be used by the CLO I Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager in the CLO I Transaction.

The CLO I Debt is the secured obligation of the CLO I Issuers, and the CLO I Indenture and the CLO I Credit Agreement include customary covenants and events of default.  Assets pledged to holders of the Secured Debt and the other secured parties under the Indenture will not be available to pay our debts.

The CLO I Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The CLO I Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable. For further details, see “ITEM 8. – Notes to Consolidated Financial Statements – Note 6. Debt.”

CLO II

On December 12, 2019 (the “CLO II Closing Date”), we completed a $396.6 million term debt securitization transaction (the “CLO II Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by us. The secured notes and preferred shares issued in the CLO II Transaction were issued by our consolidated subsidiaries Owl Rock CLO II, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO II Issuer”), and Owl Rock CLO II, LLC, a Delaware limited liability company (the “CLO II Co-Issuer” and together with the Issuer, the “CLO II Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the Issuer.  

The CLO II Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO II Indenture”), by and among the Issuers and State Street Bank and Trust Company: (i) $157 million of AAA(sf) Class A-1L Notes, which bear interest at three-month LIBOR plus 1.75%, (ii) $40 million of AAA(sf) Class A-1F Notes, which bear interest at a fixed rate of 3.44%, (iii) $20 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.20%, (iv) $40 million of AA(sf) Class B-L Notes, which bear interest at three-month LIBOR plus 2.75% and (v) $3 million of AA(sf) Class B-F Notes, which bear interest at a fixed rate of 4.46% (together, the “CLO II Debt”). The CLO II Debt is scheduled to mature on January 20, 2031. The CLO II Debt was privately placed by Deutsche Bank Securities Inc. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO II Debt.

 Concurrently with the issuance of the CLO II Debt, the CLO II Issuer issued approximately $136.6 million of subordinated securities in the form of 136,600 preferred shares at an issue price of U.S.$1,000 per share (the “CLO II Preferred Shares”). The CLO II Preferred Shares were issued by the CLO II Issuer as part of its issued share capital and are not secured by the collateral securing the CLO II Debt. We purchased all of the CLO II Preferred Shares. We act as retention holder in connection with the CLO II Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO II Preferred Shares.  

The Adviser serves as collateral manager for the CLO II Issuer under a collateral management agreement dated as of the CLO II Closing Date.  The Adviser is entitled to receive fees for providing these services.  The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO II Issuers’ equity or notes that we own.  

The CLO II Debt is secured by all of the assets of the CLO II Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO II Transaction, we and ORCC Financing III LLC sold and contributed approximately $400 million par amount of middle market loans to the CLO II Issuer on the CLO II Closing Date.  Such loans constituted the initial portfolio assets securing the CLO II Debt.  We and ORCC Financing III LLC each made customary representations, warranties, and covenants to the CLO II Issuer regarding such sales and contributions under a loan sale agreement.

Through January 20, 2022, a portion of the proceeds received by the CLO II Issuer from the loans securing the CLO II Debt may be used by the CLO II Issuer to purchase additional middle market loans under the direction of the Adviser as collateral manager for the CLO II Issuer and in accordance with the our investing strategy and ability to originate eligible middle market loans.  

The CLO II Debt is the secured obligation of the CLO II Issuers, and the CLO II Indenture includes customary covenants and events of default.  Assets pledged to holders of the Secured Debt and the other secured parties under the Indenture will not be available to pay our debts.

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The CLO II Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO II Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable. For further details, see “ITEM 8. – Notes to Consolidated Financial Statements – Note 6. Debt.”

CLO III

On March 26, 2020 (the “CLO III Closing Date”), we completed a $395.31 million term debt securitization transaction (the “CLO III Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by us.  The secured notes and preferred shares issued in the CLO III Transaction were issued by our consolidated subsidiaries Owl Rock CLO III, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO III Issuer”), and Owl Rock CLO III, LLC, a Delaware limited liability company (the “CLO III Co-Issuer” and together with the CLO III Issuer, the “CLO III Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO III Issuer.  

The CLO III Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the CLO III Closing Date (the “CLO III Indenture”), by and among the CLO III Issuers and State Street Bank and Trust Company:  (i) $166 million of AAA(sf) Class A-1L Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $40 million of AAA(sf) Class A-1F Notes, which bear interest at a fixed rate of 2.75%, (iii) $20 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.00%,  and (iv) $34 million of AA(sf) Class B Notes, which bear interest at three-month LIBOR plus 2.45% (together, the “CLO III Debt”).  The CLO III Debt is scheduled to mature on April 20, 2032.  The CLO III Debt was privately placed by SG Americas Securities, LLC. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO III Debt.

Concurrently with the issuance of the CLO III Debt, the CLO III Issuer issued approximately $135.31 million of subordinated securities in the form of 135,310 preferred shares at an issue price of U.S.$1,000 per share (the “CLO III Preferred Shares”).  The CLO III Preferred Shares were issued by the CLO III Issuer as part of its issued share capital and are not secured by the collateral securing the CLO III Debt. We own all of the CLO III Preferred Shares, and as such, these securities are eliminated in consolidation.  We act as retention holder in connection with the CLO III Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO III Preferred Shares.

The Adviser serves as collateral manager for the  CLO III  Issuer under a collateral management agreement dated as of the CLO III Closing Date.  The Adviser  is entitled to receive fees for providing these services.  The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO III Issuers’ equity or notes that we own.  

The CLO III Debt is secured by all of the assets of the CLO III Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO III Transaction, we and ORCC Financing IV LLC sold and contributed approximately $400 million par amount of middle market loans to the CLO III Issuer on the CLO III Closing Date.  Such loans constituted the initial portfolio assets securing the CLO III Debt.  Us and ORCC Financing IV LLC each made customary representations, warranties, and covenants to the CLO III Issuer regarding such sales and contributions under a loan sale agreement.

Through April 20, 2024, a portion of the proceeds received by the CLO III Issuer from the loans securing the CLO III Debt may be used by the CLO III Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager for the CLO III Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans.  

The CLO III Debt is the secured obligation of the CLO III Issuers, and the CLO III Indenture includes customary covenants and events of default.  Assets pledged to holders of the CLO III Debt and the other secured parties under the CLO III Indenture will not be available to pay our debts.

The CLO III Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO III Debt has not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.

CLO IV

On May 28, 2020 (the “CLO IV Closing Date”), we completed a $438.9 million term debt securitization transaction (the “CLO IV Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing. The secured notes

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and preferred shares issued in the CLO IV Transaction were issued by our consolidated subsidiaries Owl Rock CLO IV, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO IV Issuer”), and Owl Rock CLO IV, LLC, a Delaware limited liability company (the “CLO IV Co-Issuer” and together with the CLO IV Issuer, the “CLO IV Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO IV Issuer.

The CLO IV Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO IV Indenture”), by and among the CLO IV Issuers and State Street Bank and Trust Company: (i) $236.5 million of AAA(sf) Class A-1 Notes, which bear interest at three-month LIBOR plus 2.62% and (ii) $15.5 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 3.40% (together, the “CLO IV Secured Notes”). The CLO IV Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the CLO IV Issuer. The CLO IV Secured Notes are scheduled to mature on May 20, 2029. The CLO IV Secured Notes were privately placed by Natixis Securities Americas LLC. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO IV Secured Notes.

Concurrently with the issuance of the CLO IV Secured Notes, the CLO IV Issuer issued approximately $186.9 million of subordinated securities in the form of 186,900 preferred shares at an issue price of U.S.$1,000 per share (the “CLO IV Preferred Shares”). The CLO IV Preferred Shares were issued by the CLO IV Issuer as part of its issued share capital and are not secured by the collateral securing the CLO IV Secured Notes. We purchased all of the CLO IV Preferred Shares. We act as retention holder in connection with the CLO IV Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO IV Preferred Shares.

As part of the CLO IV Transaction, we entered into a loan sale agreement with the CLO IV Issuer dated as of the CLO IV Closing Date, which provided for the sale and contribution of approximately $275.07 million par amount of middle market loans to the CLO IV Issuer on the CLO IV Closing Date and for future sales to the CLO IV Issuer on an ongoing basis. Such loans constituted part of the initial portfolio of assets securing the CLO IV Secured Notes. The remainder of the initial portfolio assets securing the CLO IV Secured Notes consisted of approximately $174.92 million par amount of middle market loans purchased by the CLO IV Issuer from ORCC Financing II LLC, our wholly-owned subsidiary, under an additional loan sale agreement executed on the CLO IV Closing Date between the Issuer and ORCC Financing II LLC. We and ORCC Financing II LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement.

Through November 20, 2021, a portion of the proceeds received by the CLO IV Issuer from the loans securing the CLO IV Secured Notes may be used by the CLO IV Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO IV Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans.

The Secured Notes are the secured obligation of the CLO IV Issuers, and the CLO IV Indenture includes customary covenants and events of default. The CLO IV Secured Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration.

The Adviser will serve as collateral manager for the CLO IV Issuer under a collateral management agreement dated as of the CLO IV Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO IV Issuers’ equity or notes that we own.

Unsecured Notes

2023 Notes

On December 21, 2017, we entered into a Note Purchase Agreement governing the issuance of $150 million in aggregate principal amount of unsecured notes (the “2023 Notes”) to institutional investors in a private placement. The 2023 Notes have a fixed interest rate of 4.75% and are due on June 21, 2023. Interest on the 2023 Notes will be due semiannually. This interest rate is subject to increase (up to a maximum interest rate of 5.50%) in the event that, subject to certain exceptions, the 2023 Notes cease to have an investment grade rating. We are obligated to offer to repay the 2023 Notes at par if certain change in control events occur. The 2023 Notes are general unsecured obligations of us that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.

The Note Purchase Agreement for the 2023 Notes contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act and a RIC under the Code, minimum shareholders equity, minimum asset coverage ratio

104

 

and prohibitions on certain fundamental changes at us or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of us or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy.

The 2023 Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The 2023 Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.

In connection with the offering of the 2023 Notes, on December 21, 2017 we entered into a centrally cleared interest rate swap to continue to align the interest rates of our liabilities with our investment portfolio, which consists predominately of floating rate loans. The notional amount of the interest rate swap is $150 million. We will receive fixed rate interest semi-annually at 4.75% and pay variable rate interest monthly based on 1-month LIBOR plus 2.545%. The interest rate swap matures on December 21, 2021. For the three and nine months ended September 30, 2020, we made periodic payments of $1.0 million and $3.8 million, respectively. For the three and nine months ended September 30, 2019, we made periodic payments of $1.9 million and $5.7 million, respectively. The interest expense related to the 2023 Notes is equally offset by proceeds received from the interest rate swap. The swap adjusted interest expense is included as a component of interest expense in our Consolidated Statements of Operations. As of September 30, 2020 and December 31, 2019, the interest rate swap had a fair value of $3.7 million and $1.7 million, respectively. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on our Consolidated Statements of Assets and Liabilities. The change in fair value of the interest rate swap is offset by the change in fair value of the 2023 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations. For further details, see “ITEM 8. – Notes to Consolidated Financial Statements – Note 6. Debt.”

2024 Notes

On April 10, 2019, we issued $400 million aggregate principal amount of notes that mature on April 15, 2024 (the “2024 Notes”). The 2024 Notes bear interest at a rate of 5.250% per year, payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2019. We may redeem some or all of the 2024 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2024 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2024 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2024 Notes on or after March 15, 2024 (the date falling one month prior to the maturity date of the 2024 Notes), the redemption price for the 2024 Notes will be equal to 100% of the principal amount of the 2024 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

In connection with the issuance of the 2024 Notes, on April 10, 2019 we entered into centrally cleared interest rate swaps to continue to align interest rates of its liabilities with the investment portfolio, which consists of predominantly floating rate loans. The notional amount of the interest rate swaps is $400 million. We will receive fixed rate interest at 5.25% and pay variable rate interest based on one-month LIBOR plus 2.937%. The interest rate swaps mature on April 10, 2024. For the three and nine months ended September 30, 2020, we made periodic payments of $0 million and $9.3 million, respectively. For the three and nine months ended September 30, 2019, we did not make periodic payments. The interest expense related to the 2024 Notes is equally offset by the proceeds received from the interest rate swaps. The swap adjusted interest expense is included as a component of interest expense on our Consolidated Statements of Operations. As of September 30, 2020 and December 31, 2019, the interest rate swap had a fair value of $29.8 million and $10.8 million, respectively. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on our Consolidated Statements of Assets and Liabilities.  The change in fair value of the interest rate swap is offset by the change in fair value of the 2024 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations. For further details, see “ITEM 8. – Notes to Consolidated Financial Statements – Note 6. Debt.”

2025 Notes

On October 8, 2019, we issued $425 million aggregate principal amount of notes that mature on March 30, 2025 (the “2025 Notes”). The 2025 Notes bear interest at a rate of 4.00% per year, payable semi-annually on March 30 and September 30 of each year, commencing on March 30, 2020. We may redeem some or all of the 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 40 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2025 Notes on or after February 28, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the 2025 Notes will be equal to 100% of the principal amount of the

105

 

2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. “ITEM 8. – Notes to Consolidated Financial Statements – Note 6. Debt.”

July 2025 Notes

On January 22, 2020, we issued $500 million aggregate principal amount of notes that mature on July 22, 2025 (the “July 2025 Notes”). The July 2025 Notes bear interest at a rate of 3.75% per year, payable semi-annually on January 22 and July 22, of each year, commencing on July 22, 2020. We may redeem some or all of the July 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the July 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the July 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 35 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any July 2025 Notes on or after June 22, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the July 2025 Notes will be equal to 100% of the principal amount of the July 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

2026 Notes

On July 23, 2020, we issued $500 million aggregate principal amount of notes that mature on January 15, 2026 (the “2026 Notes”). The 2026 Notes bear interest at a rate of 4.25% per year, payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2021. We may redeem some or all of the 2026 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2026 Notes on or after December, 15 2025 (the date falling one month prior to the maturity date of the 2026 Notes), the redemption price for the 2026 Notes will be equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

Off-Balance Sheet Arrangements

Portfolio Company Commitments

From time to time, we may enter into commitments to fund investments. As of September 30, 2020 and December 31, 2019, we had the following outstanding commitments to fund investments in current portfolio companies:

 

Portfolio Company

 

Investment

 

 

 

September 30, 2020

 

 

December 31, 2019

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

11849573 Canada Inc. (dba Intelerad Medical Systems Incorporated)

 

First lien senior secured delayed draw term loan

 

$

1,332

 

 

$

—

 

11849573 Canada Inc. (dba Intelerad Medical Systems Incorporated)

 

First lien senior secured revolving loan

 

 

4,530

 

 

 

—

 

3ES Innovation Inc. (dba Aucerna)

 

First lien senior secured revolving loan

 

 

3,893

 

 

 

3,893

 

Accela, Inc.

 

First lien senior secured revolving loan

 

 

3,000

 

 

 

—

 

Amspec Services Inc.

 

First lien senior secured revolving loan

 

 

3,962

 

 

 

9,038

 

Apptio, Inc.

 

First lien senior secured revolving loan

 

 

2,779

 

 

 

2,779

 

Aramsco, Inc.

 

First lien senior secured revolving loan

 

 

3,910

 

 

 

6,842

 

Ardonagh Midco 3 PLC

 

First lien senior secured delayed draw term loan

 

 

19,237

 

 

 

—

 

Associations, Inc.

 

First lien senior secured delayed draw term loan

 

 

866

 

 

 

17,949

 

Associations, Inc.

 

First lien senior secured revolving loan

 

 

—

 

 

 

11,543

 

BIG Buyer, LLC

 

First lien senior secured delayed draw term loan

 

 

5,625

 

 

 

11,250

 

BIG Buyer, LLC

 

First lien senior secured revolving loan

 

 

2,500

 

 

 

3,750

 

106

 

Portfolio Company

 

Investment

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Caiman Merger Sub LLC (dba City Brewing)

 

First lien senior secured revolving loan

 

 

12,881

 

 

 

12,881

 

ConnectWise, LLC

 

First lien senior secured revolving loan

 

 

20,005

 

 

 

20,005

 

Covenant Surgical Partners, Inc.

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

2,800

 

Definitive Healthcare Holdings, LLC

 

First lien senior secured delayed draw term loan

 

 

43,478

 

 

 

43,478

 

Definitive Healthcare Holdings, LLC

 

First lien senior secured revolving loan

 

 

—

 

 

 

10,870

 

Douglas Products and Packaging Company LLC

 

First lien senior secured revolving loan

 

 

2,422

 

 

 

7,872

 

Endries Acquisition, Inc.

 

First lien senior secured delayed draw term loan

 

 

36,923

 

 

 

51,638

 

Endries Acquisition, Inc.

 

First lien senior secured revolving loan

 

 

27,000

 

 

 

27,000

 

Entertainment Benefits Group, LLC

 

First lien senior secured revolving loan

 

 

1,104

 

 

 

9,600

 

Forescout Technologies, Inc.

 

First lien senior secured revolving loan

 

 

5,345

 

 

 

—

 

Galls, LLC

 

First lien senior secured revolving loan

 

 

9,977

 

 

 

3,719

 

Galls, LLC

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

29,181

 

GC Agile Holdings Limited (dba Apex Fund Services)

 

First lien senior secured revolving loan

 

 

—

 

 

 

10,386

 

Genesis Acquisition Co. (dba Procare Software)

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

4,745

 

Genesis Acquisition Co. (dba Procare Software)

 

First lien senior secured revolving loan

 

 

—

 

 

 

1,714

 

Gerson Lehrman Group, Inc.

 

First lien senior secured revolving loan

 

 

21,563

 

 

 

21,563

 

Granicus, Inc.

 

First lien senior secured revolving loan

 

 

2,636

 

 

 

—

 

H&F Opportunities LUX III S.À R.L (dba Checkmarx)

 

First lien senior secured revolving loan

 

 

16,250

 

 

 

—

 

HGH Purchaser, Inc. (dba Horizon Services)

 

First lien senior secured delayed draw term loan

 

 

17,690

 

 

 

32,400

 

HGH Purchaser, Inc. (dba Horizon Services)

 

First lien senior secured revolving loan

 

 

7,938

 

 

 

7,938

 

Hometown Food Company

 

First lien senior secured revolving loan

 

 

3,106

 

 

 

4,235

 

Ideal Tridon Holdings, Inc.

 

First lien senior secured revolving loan

 

 

3,437

 

 

 

5,400

 

Ideal Tridon Holdings, Inc.

 

First lien senior secured delayed draw term loan

 

 

381

 

 

 

381

 

Individual Foodservice Holdings, LLC

 

First lien senior secured delayed draw term loan

 

 

23,027

 

 

 

42,500

 

Individual Foodservice Holdings, LLC

 

First lien senior secured revolving loan

 

 

14,280

 

 

 

24,225

 

Instructure, Inc.

 

First lien senior secured revolving loan

 

 

5,554

 

 

 

—

 

Integrity Marketing Acquisition, LLC

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

16,587

 

Integrity Marketing Acquisition, LLC

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

32,573

 

Integrity Marketing Acquisition, LLC

 

First lien senior secured revolving loan

 

 

14,832

 

 

 

14,832

 

Interoperability Bidco, Inc.

 

First lien senior secured delayed draw term loan

 

 

8,000

 

 

 

8,000

 

Interoperability Bidco, Inc.

 

First lien senior secured revolving loan

 

 

—

 

 

 

4,000

 

IQN Holding Corp. (dba Beeline)

 

First lien senior secured revolving loan

 

 

22,672

 

 

 

15,532

 

KWOR Acquisition, Inc. (dba Worley Claims Services)

 

First lien senior secured delayed draw term loan

 

 

2,063

 

 

 

2,428

 

KWOR Acquisition, Inc. (dba Worley Claims Services)

 

First lien senior secured revolving loan

 

 

5,200

 

 

 

5,200

 

Lazer Spot G B Holdings, Inc.

 

First lien senior secured delayed draw term loan

 

 

1,556

 

 

 

13,417

 

Lazer Spot G B Holdings, Inc.

 

First lien senior secured revolving loan

 

 

26,833

 

 

 

24,687

 

107

 

Portfolio Company

 

Investment

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Lightning Midco, LLC (dba Vector Solutions)

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

1,764

 

Lightning Midco, LLC (dba Vector Solutions)

 

First lien senior secured revolving loan

 

 

935

 

 

 

5,318

 

Litera Bidco LLC

 

First lien senior secured revolving loan

 

 

4,303

 

 

 

5,738

 

Lytx, Inc.

 

First lien senior secured revolving loan

 

 

—

 

 

 

2,033

 

Lytx, Inc.

 

First lien senior secured delayed draw term loan

 

 

14,092

 

 

 

—

 

Manna Development Group, LLC

 

First lien senior secured revolving loan

 

 

—

 

 

 

3,469

 

Mavis Tire Express Services Corp.

 

Second lien senior secured delayed draw term loan

 

 

11,376

 

 

 

34,831

 

MINDBODY, Inc.

 

First lien senior secured revolving loan

 

 

6,071

 

 

 

6,071

 

Nelipak Holding Company

 

First lien senior secured revolving loan

 

 

2,948

 

 

 

4,690

 

Nelipak Holding Company

 

First lien senior secured revolving loan

 

 

4,609

 

 

 

6,970

 

NMI Acquisitionco, Inc. (dba Network Merchants)

 

First lien senior secured revolving loan

 

 

646

 

 

 

646

 

Norvax, LLC (dba GoHealth)

 

First lien senior secured revolving loan

 

 

12,273

 

 

 

12,273

 

Nutraceutical International Corporation

 

First lien senior secured delayed draw term loan

 

 

28,515

 

 

 

—

 

Nutraceutical International Corporation

 

First lien senior secured revolving loan

 

 

13,578

 

 

 

—

 

Offen, Inc.

 

First lien senior secured delayed draw term loan

 

 

5,310

 

 

 

5,310

 

Peter C. Foy & Associated Insurance Services, LLC

 

First lien senior secured delayed draw term loan

 

 

40,412

 

 

 

—

 

Peter C. Foy & Associated Insurance Services, LLC

 

First lien senior secured revolving loan

 

 

7,336

 

 

 

—

 

Project Power Buyer, LLC (dba PEC-Veriforce)

 

First lien senior secured revolving loan

 

 

3,188

 

 

 

3,188

 

Professional Plumbing Group, Inc.

 

First lien senior secured revolving loan

 

 

1,329

 

 

 

5,757

 

QC Supply, LLC

 

First lien senior secured revolving loan

 

 

603

 

 

 

—

 

Reef Global, Inc. (fka Cheese Acquisition, LLC)

 

First lien senior secured revolving loan

 

 

5,377

 

 

 

16,364

 

RSC Acquisition, Inc (dba Risk Strategies)

 

First lien senior secured delayed draw term loan

 

 

2,255

 

 

 

10,894

 

RSC Acquisition, Inc (dba Risk Strategies)

 

First lien senior secured revolving loan

 

 

1,702

 

 

 

1,702

 

RxSense Holdings, LLC

 

First lien senior secured revolving loan

 

 

—

 

 

 

4,047

 

Safety Products/JHC Acquisition Corp. (dba Justrite Safety Group)

 

First lien senior secured delayed draw term loan

 

 

924

 

 

 

924

 

Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)

 

First lien senior secured revolving loan

 

 

4,680

 

 

 

3,480

 

Sonny's Enterprises LLC

 

First lien senior secured delayed draw term loan

 

 

24,531

 

 

 

—

 

Sonny's Enterprises LLC

 

First lien senior secured revolving loan

 

 

17,969

 

 

 

—

 

Swipe Acquisition Corporation (dba PLI)

 

First lien senior secured delayed draw term loan

 

 

3,781

 

 

 

—

 

TC Holdings, LLC (dba TrialCard)

 

First lien senior secured revolving loan

 

 

7,685

 

 

 

7,685

 

THG Acquisition, LLC (dba Hilb)

 

First lien senior secured delayed draw term loan

 

 

12,575

 

 

 

16,841

 

THG Acquisition, LLC (dba Hilb)

 

First lien senior secured revolving loan

 

 

1,796

 

 

 

5,614

 

Trader Interactive, LLC (fka Dominion Web Solutions, LLC)

 

First lien senior secured revolving loan

 

 

6,387

 

 

 

6,387

 

Troon Golf, L.L.C.

 

First lien senior secured revolving loan

 

 

14,426

 

 

 

14,426

 

TSB Purchaser, Inc. (dba Teaching Strategies, Inc.)

 

First lien senior secured revolving loan

 

 

3,010

 

 

 

3,010

 

Ultimate Baked Goods Midco, LLC

 

First lien senior secured revolving loan

 

 

4,702

 

 

 

4,066

 

108

 

Portfolio Company

 

Investment

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Valence Surface Technologies LLC

 

First lien senior secured delayed draw term loan

 

 

6,000

 

 

 

30,000

 

Valence Surface Technologies LLC

 

First lien senior secured revolving loan

 

 

10,000

 

 

 

10,000

 

Wingspire Capital Holdings LLC

 

LLC Interest

 

 

46,879

 

 

 

48,552

 

WU Holdco, Inc. (dba Weiman Products, LLC)

 

First lien senior secured revolving loan

 

 

13,920

 

 

 

13,920

 

WU Holdco, Inc. (dba Weiman Products, LLC)

 

First lien senior secured delayed draw term loan

 

 

—

 

 

 

16,943

 

Zenith Energy U.S. Logistics Holdings, LLC

 

First lien senior secured delayed draw term loan

 

 

10,000

 

 

 

—

 

Total Unfunded Portfolio Company Commitments

 

 

 

$

763,910

 

 

$

891,744

 

 

We maintain sufficient borrowing capacity to cover outstanding unfunded portfolio company commitments that we may be required to fund. We seek to carefully consider our unfunded portfolio company commitments for the purpose of planning our ongoing financial leverage. Further, we maintain sufficient borrowing capacity within the 150% asset coverage limitation to cover any outstanding portfolio company unfunded commitments we are required to fund.

Other Commitments and Contingencies

We had raised $5.5 billion in total Capital Commitments from investors, of which $112.4 million was from executives of Owl Rock. As of June 17, 2019, all outstanding Capital Commitments had been drawn.

In connection with the IPO, on July 22, 2019, we entered into the Company 10b5-1 Plan, to acquire up to $150 million in the aggregate of our common stock at prices below its net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Company 10b5-1 Plan commenced on August 19, 2019. Goldman, Sachs & Co., as agent has repurchased an aggregate of 12,515,624 shares of our common stock pursuant to the Company 10b5-1 Plan for an aggregate of approximately $150 million. The 10b5-1 Plan was exhausted on August 4, 2020.

From time to time, we may become a party to certain legal proceedings incidental to the normal course of its business. At September 30, 2020, we were not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

Contractual Obligations

A summary of our contractual payment obligations under our credit facilities as of September 30, 2020, is as follows:

 

 

 

Payments Due by Period

 

($ in millions)

 

Total

 

 

Less than 1 year

 

 

1-3 years

 

 

3-5 years

 

 

After 5 years

 

Revolving Credit Facility

 

$

609.9

 

 

$

—

 

 

$

—

 

 

 

609.9

 

 

 

—

 

SPV Asset Facility II

 

 

100.0

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

100.0

 

SPV Asset Facility III

 

 

400.0

 

 

 

—

 

 

 

—

 

 

 

400.0

 

 

 

—

 

SPV Asset Facility IV

 

 

95.0

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

95.0

 

CLO I

 

 

390.0

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

390.0

 

CLO II

 

 

260.0

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

260.0

 

CLO III

 

 

260.0

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

260.0

 

CLO IV

 

 

252.0

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

252.0

 

2023 Notes

 

 

150.0

 

 

 

—

 

 

 

150.0

 

 

 

—

 

 

 

—

 

2024 Notes

 

 

400.0

 

 

 

—

 

 

 

—

 

 

 

400.0

 

 

 

—

 

2025 Notes

 

 

425.0

 

 

 

—

 

 

 

—

 

 

 

425.0

 

 

 

—

 

July 2025 Notes

 

 

500.0

 

 

 

—

 

 

 

—

 

 

 

500.0

 

 

 

—

 

2026 Notes

 

 

500.0

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

500.0

 

Total Contractual Obligations

 

$

4,341.9

 

 

$

—

 

 

$

150.0

 

 

$

2,334.9

 

 

$

1,857.0

 

 

109

 

Related-Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

 

•

the Investment Advisory Agreement;

 

•

the Administration Agreement; and

 

•

the License Agreement.

In addition to the aforementioned agreements, we, our Adviser and certain of our Adviser’s affiliates have been granted exemptive relief by the SEC to co-invest with other funds managed by our Adviser or its affiliates, including Owl Rock Capital Corporation II, Owl Rock Capital Corporation III and Owl Rock Technology Finance Corp., in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. See “ITEM 1. – Notes to Consolidated Financial Statements – Note 3. Agreements and Related Party Transactions” for further details.

 

We invest through Wingspire and, together with Regents, through Sebago Lake, controlled affiliated investments as defined in the 1940 Act. See “ITEM 1. – Notes to Consolidated Financial Statements – Note 3. Agreements and Related Party Transactions” for further details.

 

Critical Accounting Policies

The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ.  Our critical accounting policies should be read in connection with our risk factors as described in “ITEM 1A. RISK FACTORS.”

 

Investments at Fair Value

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of our investments, are valued at fair value as determined in good faith by our Board, based on, among other things, the input of the Adviser, our audit committee and independent third-party valuation firm(s) engaged at the direction of the Board.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.

The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:

 

•

With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;

 

•

With respect to investments for which market quotations are not readily available, the valuation process begins with the independent valuation firm(s) providing a preliminary valuation of each investment to the Adviser’s valuation committee;

 

•

Preliminary valuation conclusions are documented and discussed with the Adviser’s valuation committee. Agreed upon valuation recommendations are presented to the Audit Committee;

 

•

The Audit Committee reviews the valuation recommendations and recommends values for each investment to the Board; and

 

•

The Board reviews the recommended valuations and determines the fair value of each investment.

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We conduct this valuation process on a quarterly basis.

We apply Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date.  Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact.  In accordance with ASC 820, we consider its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value.  In accordance with ASC 820, these levels are summarized below:

 

•

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access.

 

•

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

 

•

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfer occurred. In addition to using the above inputs in investment valuations, we apply the valuation policy approved by our Board that is consistent with ASC 820.  Consistent with the valuation policy, we evaluate the source of the inputs, including any markets in which our investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), we subject those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, we, or the independent valuation firm(s), review pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein.

Interest and Dividend Income Recognition

Interest income is recorded on the accrual basis and includes amortization of discounts or premiums. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK interest represents accrued interest that is added to the principal amount of the investment on the respective interest payment dates rather than being paid in cash and generally becomes due at maturity. Discounts and premiums to par value on securities purchased are amortized into interest income over the contractual life of the respective security using the effective yield method.  The amortized cost of investments represents the original cost adjusted for the amortization of discounts or premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. If at any point we believe PIK interest is not expected to be realized, the investment generating PIK interest will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest income. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

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Distributions

We have elected to be treated for U.S. federal income tax purposes, and qualify annually thereafter, as a RIC under Subchapter M of the Code. To obtain and maintain our tax treatment as a RIC, we must distribute (or be deemed to distribute) in each taxable year distributions for tax purposes equal to at least 90 percent of the sum of our:

 

•

investment company taxable income (which is generally our ordinary income plus the excess of realized short-term capital gains over realized net long-term capital losses), determined without regard to the deduction for dividends paid, for such taxable year; and

 

•

net tax-exempt interest income (which is the excess of our gross tax-exempt interest income over certain disallowed deductions) for such taxable year.

As a RIC, we (but not our shareholders) generally will not be subject to U.S. federal tax on investment company taxable income and net capital gains that we distribute to our shareholders.

We intend to distribute annually all or substantially all of such income. To the extent that we retain our net capital gains or any investment company taxable income, we generally will be subject to corporate-level U.S. federal income tax. We can be expected to carry forward our net capital gains or any investment company taxable income in excess of current year dividend distributions, and pay the U.S. federal excise tax as described below.

Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% U.S. federal excise tax payable by us. We may be subject to a nondeductible 4% U.S. federal excise tax if we do not distribute (or are treated as distributing) during each calendar year an amount at least equal to the sum of:

 

•

98% of our net ordinary income excluding certain ordinary gains or losses for that calendar year;

 

•

98.2% of our capital gain net income, adjusted for certain ordinary gains and losses, recognized for the twelve-month period ending on October 31 of that calendar year; and

 

•

100% of any income or gains recognized, but not distributed, in preceding years.

While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed and as a result, in such cases, the excise tax will be imposed. In such an event, we will be liable for this tax only on the amount by which we do not meet the foregoing distribution requirement.

We intend to pay quarterly distributions to our shareholders out of assets legally available for distribution. All distributions will be paid at the discretion of our Board and will depend on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as our Board may deem relevant from time to time.

To the extent our current taxable earnings for a year fall below the total amount of our distributions for that year, a portion of those distributions may be deemed a return of capital to our shareholders for U.S. federal income tax purposes. Thus, the source of a distribution to our shareholders may be the original capital invested by the shareholder rather than our income or gains. Shareholders should read written disclosure carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan for our common shareholders. As a result, if we declare a cash dividend or other distribution, each shareholder that has not “opted out” of our dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of our common stock rather than receiving cash distributions. Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

Income Taxes

We have elected to be treated as a BDC under the 1940 Act. We have also elected to be treated as a RIC under the Code beginning with the taxable year ending December 31, 2016 and intend to continue to qualify as a RIC. So long as we maintain our tax treatment as a RIC, we generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute at least annually to our shareholders as distributions. Rather, any tax liability related to income earned and distributed by us represents obligations of our investors and will not be reflected in our consolidated financial statements.

To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, we must distribute to our shareholders, for each taxable year, at least 90% of our “investment company taxable income” for that year, which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses. In order for us to not be subject to U.S. federal excise taxes, we must distribute annually an amount at least equal to the sum of (i) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31

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of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. We, at our discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. excise tax on this income.

We evaluate tax positions taken or expected to be taken in the course of preparing our consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. There were no material uncertain tax positions through December 31, 2019. The 2017 through 2019 tax years remain subject to examination by U.S. federal, state and local tax authorities.

Recent Developments

The Company priced a secured financing in October for $196 million, which we expect to close in November. There can be no assurance that this financing will close.

 

 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Uncertainty with respect to the economic effects of the COVID-19 outbreak has introduced significant volatility in the financial markets, and the effect of the volatility could materially impact our market risks, including those listed below. We are subject to financial market risks, including valuation risk and interest rate risk.

Valuation Risk

We have invested, and plan to continue to invest, primarily in illiquid debt and equity securities of private companies. Most of our investments will not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board, based on, among other things, the input of the Adviser, our Audit Committee and independent third-party valuation firm(s) engaged at the direction of the Board, and in accordance with our valuation policy. There is no single standard for determining fair value. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.

Interest Rate Risk

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. We intend to fund portions of our investments with borrowings, and at such time, our net investment income will be affected by the difference between the rate at which we invest and the rate at which we borrow. Accordingly, we cannot assure you that a significant change in market interest rates will not have a material adverse effect on our net investment income.

As of September 30, 2020, 98.8% of our debt investments based on fair value were floating rates. Additionally, the weighted average LIBOR floor, based on fair value, of our debt investments was 0.85%.

Based on our Consolidated Statements of Assets and Liabilities as of September 30, 2020, the following table shows the annualized impact on net income of hypothetical base rate changes in interest rates on our debt investments (considering interest rate floors for floating rate instruments) assuming each floating rate investment is subject to 3-month LIBOR and there are no changes in our investment and borrowing structure:

 

($ in millions)

 

Interest Income

 

 

Interest Expense

 

 

Net Income

 

Up 300 basis points

 

$

226.2

 

 

$

84.1

 

 

$

142.1

 

Up 200 basis points

 

$

129.4

 

 

$

56.1

 

 

$

73.3

 

Up 100 basis points

 

$

32.9

 

 

$

28.0

 

 

$

4.9

 

Up 50 basis points

 

$

7.1

 

 

$

14.0

 

 

$

(6.9

)

Down 25 basis points

 

$

(3.3

)

 

$

(7.0

)

 

$

3.7

 

We may in the future hedge against interest rate fluctuations by using hedging instruments such as additional interest rate swaps, futures, options, and forward contracts. While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio investments.

Currency Risk

From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at each balance sheet date, exposing us to movements in foreign exchange rates. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us. We may seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates. We also have the ability to borrow in certain foreign currencies under our credit facilities. Instead of entering into a foreign currency forward contract in connection with loans or other investments we have made that are denominated in a foreign currency, we may borrow in that currency to establish a natural hedge against our loan or investment. To the extent the loan or investment is based on a floating rate other than a rate under which we can borrow under our credit facilities, we may seek to utilize interest rate derivatives to hedge our exposure to changes in the associated rate.

 

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Item 4. Controls and Procedures

 

(a)

Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective as of the end of the period covered by the Quarterly Report on Form 10-Q.

 

(b)

Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any such future legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “ITEM 1A. RISK FACTORS” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and Part II, “Item 1A. RISK FACTORS” in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.

 

Political, social and economic uncertainty, including uncertainty related to the COVID-19 pandemic, creates and exacerbates risks.

Social, political, economic and other conditions and events (such as natural disasters, epidemics and pandemics, terrorism, conflicts and social unrest) will occur that create uncertainty and have significant impacts on issuers, industries, governments and other systems, including the financial markets, to which companies and their investments are exposed. As global systems, economies and financial markets are increasingly interconnected, events that once had only local impact are now more likely to have regional or even global effects. Events that occur in one country, region or financial market will, more frequently, adversely impact issuers in other countries, regions or markets, including in established markets such as the U.S. These impacts can be exacerbated by failures of governments and societies to adequately respond to an emerging event or threat.

Uncertainty can result in or coincide with, among other things: increased volatility in the financial markets for securities, derivatives, loans, credit and currency; a decrease in the reliability of market prices and difficulty in valuing assets (including portfolio company assets); greater fluctuations in spreads on debt investments and currency exchange rates; increased risk of default (by both government and private obligors and issuers); further social, economic, and political instability; nationalization of private enterprise; greater governmental involvement in the economy or in social factors that impact the economy; changes to governmental regulation and supervision of the loan, securities, derivatives and currency markets and market participants and decreased or revised monitoring of such markets by governments or self-regulatory organizations and reduced enforcement of regulations; limitations on the activities of investors in such markets; controls or restrictions on foreign investment, capital controls and limitations on repatriation of invested capital; the significant loss of liquidity and the inability to purchase, sell and otherwise fund investments or settle transactions (including, but not limited to, a market freeze); unavailability of currency hedging techniques; substantial, and in some periods extremely high, rates of inflation, which can last many years and have substantial negative effects on credit and securities markets as well as the economy as a whole; recessions; and difficulties in obtaining and/or enforcing legal judgments.

For example, in December 2019, COVID-19 emerged in China and has since spread rapidly to other countries, including the United States. This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby. With respect to the U.S. credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things: (i) government imposition of various forms of shelter in place orders and the closing of "non-essential" businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses. This outbreak is having, and any future outbreaks could have, an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things.

While several countries, as well as certain states in the United States, have relaxed public health restrictions with a view to partially or fully reopening their economies, recurring COVID-19 outbreaks have led to the re-introduction of such restrictions in

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certain states in the United States and globally and could continue to lead to the re-introduction of such restrictions elsewhere. Additionally, as of late September 2020, travelers from the United States are not allowed to visit Canada, Australia or the majority of countries in Europe, Asia, Africa and South America. These continued travel restrictions may prolong the global economic downturn. The absence or delay of viable treatment options or a vaccine could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time. Even after the COVID-19 pandemic subsides the U.S. economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the U.S. and other major markets. Some economists and major investment banks have expressed concerns that the continued spread of the virus globally could lead to a world-wide economic downturn. As of the date of this Quarterly Report, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on us and our portfolio companies.

Although it is impossible to predict the precise nature and consequences of these events, or of any political or policy decisions and regulatory changes occasioned by emerging events or uncertainty on applicable laws or regulations that impact us, our portfolio companies and our investments, it is clear that these types of events are impacting and will, for at least some time, continue to impact us and our portfolio companies and, in many instances, the impact will be adverse and profound. For example, middle market companies in which we may invest are being significantly impacted by these emerging events and the uncertainty caused by these events. The effects of a public health emergency may materially and adversely impact (i) the value and performance of us and our portfolio companies, (ii) the ability of our borrowers to continue to meet loan covenants or repay loans provided by us on a timely basis or at all, which may require us to restructure our investments or write down the value of our investments, (iii) our ability to repay debt obligations, on a timely basis or at all, or (iv) our ability to source, manage and divest investments and achieve our investment objectives, all of which could result in significant losses to us.

If the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase. In addition, collateral for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity of loan guarantors could decline, impairing their ability to honor commitments to us. An increase in loan delinquencies and non-accruals or a decrease in loan collateral and guarantor net worth could result in increased costs and reduced income which would have a material adverse effect on our business, financial condition or results of operations

We will also be negatively affected if the operations and effectiveness of us or a portfolio company (or any of the key personnel or service providers of the foregoing) are compromised or if necessary or beneficial systems and processes are disrupted.

 

The COVID-19 pandemic has caused severe disruptions in the U.S. economy and has disrupted financial activity in the areas in which we or our portfolio companies operate.

The COVID-19 pandemic has resulted in widespread outbreaks of illness and numerous deaths, adversely impacted global and U.S. commercial activity and contributed to significant volatility in certain equity and debt markets. The global impact of the outbreak is rapidly evolving, and many countries including the U.S. and states in which our portfolio companies operate, have reacted by instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools, retail stores and other public venues. Businesses are also implementing similar precautionary measures. Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, have created significant disruption in supply chains and economic activity and are having a particularly adverse impact on transportation, hospitality, tourism, entertainment and other industries, including industries in which certain of our portfolio companies operate. The impact of COVID-19 has led to significant volatility and declines in the global public equity markets and it is uncertain how long this volatility will continue. As COVID-19 continues to spread, the potential impacts, including a global, regional or other economic recession, are increasingly uncertain and difficult to assess.  Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn, the impacts of which could last for some period after the pandemic is controlled and/or abated.

The COVID-19 pandemic (including the preventative measures taken in response thereto) has to date (i) created significant business disruption issues for certain of our portfolio companies, and (ii) materially and adversely impacted the value and performance of certain of our portfolio companies. The COVID-19 pandemic is having a particularly adverse impact on industries in which certain of our portfolio companies operate. Certain of our portfolio companies in other industries have also been significantly impacted. The COVID-19 pandemic is continuing as of the filing date of this Quarterly Report, and its extended duration may have further adverse impacts on our portfolio companies after September 30, 2020, including for the reasons described herein. Although on March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which contains provisions intended to mitigate the adverse economic effects of the COVID-19 pandemic, it is uncertain whether, or how much, our portfolio companies have benefited or may benefit from the CARES Act or any other subsequent legislation intended to provide financial relief or assistance.

Further disruptions in the capital markets caused by the COVID-19 pandemic have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market

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disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our and our portfolio companies’ operating results and the fair values of our debt and equity investments.

 

Any public health emergency, including the COVID-19 pandemic or any outbreak of other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments and our portfolio companies.

The extent of the impact of any public health emergency, including the COVID-19 pandemic, on our and our portfolio companies’ operational and financial performance will depend on many factors, including the duration and scope of such public health emergency, the actions taken by governmental authorities to contain its financial and economic impact, the extent of any related travel advisories and restrictions implemented, the impact of such public health emergency on overall supply and demand, goods and services, investor liquidity, consumer confidence and levels of economic activity and the extent of its disruption to important global, regional and local supply chains and economic markets, all of which are highly uncertain and cannot be predicted. In addition, our and our portfolio companies’ operations may be significantly impacted, or even temporarily or permanently halted, as a result of government quarantine measures, voluntary and precautionary restrictions on travel or meetings and other factors related to a public health emergency, including its potential adverse impact on the health of any of our or our portfolio companies’ personnel. This could create widespread business continuity issues for us and our portfolio companies.

These factors may also cause the valuation of our investments to differ materially from the values that we may ultimately realize. Our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information.

As a result, our valuations may not show the completed or continuing impact of the COVID-19 pandemic and the resulting measures taken in response thereto. Any public health emergency, including the COVID-19 pandemic or any outbreak of other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments and our portfolio companies.

 

The capital markets are currently in a period of disruption and economic uncertainty. Such market conditions have materially and adversely affected debt and equity capital markets, which have had, and may continue to have, a negative impact on our business and operations.

The U.S. capital markets have experienced extreme volatility and disruption following the global outbreak of COVID-19 that began in December 2019, as evidenced by the volatility in global stock markets as a result of, among other things, uncertainty surrounding the COVID-19 pandemic and the fluctuating price of commodities such as oil. Despite actions of the U.S. federal government and foreign governments, these events have contributed to worsening general economic conditions that are materially and adversely impacting the broader financial and credit markets and reducing the availability of debt and equity capital for the market as a whole. These conditions could continue for a prolonged period of time or worsen in the future.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

 

 

•

Current market conditions may make it difficult to raise equity capital because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than the NAV per share without first obtaining approval for such issuance from our stockholders and our independent directors.   In addition, these market conditions may make it difficult to access or obtain new indebtedness with similar terms to our existing indebtedness.

 

 

•

Significant changes or volatility in the capital markets may also have a negative effect on the valuations of our investments. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity).

 

 

•

Significant changes in the capital markets, such as the recent disruption in economic activity caused by the COVID-19 pandemic, have adversely affected, and may continue to adversely affect, the pace of our investment activity and economic activity generally. Additionally, the recent disruption in economic activity caused by the COVID-19 pandemic has had, and may continue to have, a negative effect on the potential for liquidity events involving our investments. The illiquidity of our

118

 

 

investments may make it difficult for us to sell such investments to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes. An inability to raise or access capital, and any required sale of all or a portion of our investments as a result, could have a material adverse effect on our business, financial condition or results of operations.

 

The current period of capital markets disruption and economic uncertainty may make it difficult to extend the maturity of, or refinance, our existing indebtedness or obtain new indebtedness and any failure to do so could have a material adverse effect on our business, financial condition or results of operations.

Current market conditions may make it difficult to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we currently experience, including being at a higher cost in rising rate environments. If we are unable to raise or refinance debt, then our equity investors may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies. An inability to extend the maturity of, or refinance, our existing indebtedness or obtain new indebtedness could have a material adverse effect on our business, financial condition or results of operations.

 

Global economic, political and market conditions may adversely affect our business, financial condition and results of operations, including our revenue growth and profitability.

The current worldwide financial markets situation, as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide. For example, the outbreak in December 2019 of COVID-19, continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so. See “—Political, social and economic uncertainty, including uncertainty related to the COVID-19 pandemic, creates and exacerbates risks.”

 

Economic recessions or downturns could impair our portfolio companies and harm our operating results.

Many of our portfolio companies may be susceptible to economic slowdowns or recessions and may be unable to repay our debt investments during these periods. The recent global outbreak of COVID-19 has disrupted economic markets, and the prolonged economic impact is uncertain. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. Many manufacturers of goods in China and other countries in Asia have seen a downturn in production due to the suspension of business and temporary closure of factories in an attempt to curb the spread of the illness. As the impact of COVID-19 spreads to other parts of the world, similar impacts may occur with respect to affected countries. In the past, instability in the global capital markets resulted in disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major domestic and international financial institutions. In particular, in past periods of instability, the financial services sector was negatively impacted by significant write-offs as the value of the assets held by financial firms declined, impairing their capital positions and abilities to lend and invest. In addition, continued uncertainty surrounding the negotiation of trade deals between Britain and the European Union following the United Kingdom’s exit from the European Union and uncertainty between the United States and other countries, including China, with respect to trade policies, treaties, and tariffs, among other factors, have caused disruption in the global markets. There can be no assurance that market conditions will not worsen in the future.

In an economic downturn, we may have non-performing assets or non-performing assets may increase, and the value of our portfolio is likely to decrease during these periods. Adverse economic conditions may also decrease the value of any collateral securing our loans. A severe recession may further decrease the value of such collateral and result in losses of value in our portfolio and a decrease in our revenues, net income, assets and net worth. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us on terms we deem acceptable. These events could prevent us from increasing investments and harm our operating results.

The occurrence of recessionary conditions and/or negative developments in the domestic and international credit markets may significantly affect the markets in which we do business, the value of our investments, and our ongoing operations, costs and profitability. Any such unfavorable economic conditions, including rising interest rates, may also increase our funding costs, limit our access to capital markets or negatively impact our ability to obtain financing, particularly from the debt markets. In addition, any future financial market uncertainty could lead to financial market disruptions and could further impact our ability to obtain financing.

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These events could limit our investment originations, limit our ability to grow and negatively impact our operating results and financial condition.

Terrorist attacks, acts of war, global health emergencies or natural disasters may impact the businesses in which we invest and harm our business, operating results and financial condition.

Terrorist acts, acts of war, global health emergencies or natural disasters may disrupt our operations, as well as the operations of the businesses in which we invest. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities, military or security operations, global health emergencies or natural disasters could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact the businesses in which we invest directly or indirectly and, in turn, could have a material adverse impact on our business, operating results and financial condition. Losses from terrorist attacks, global health emergencies and natural disasters are generally uninsurable.

Internal and external cyber threats, as well as other disasters, could impair our ability to conduct business effectively.

The occurrence of a disaster, such as a cyber-attack against us or against a third-party that has access to our data or networks, a natural catastrophe, an industrial accident, failure of our disaster recovery systems, or consequential employee error, could have an adverse effect on our ability to communicate or conduct business, negatively impacting our operations and financial condition. This adverse effect can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our data.

We depend heavily upon computer systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computer systems, networks, and data, like those of other companies, could be subject to cyber-attacks and unauthorized access, use, alteration, or destruction, such as from physical and electronic break-ins or unauthorized tampering. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary, and other information processed, stored in, and transmitted through our computer systems and networks. Such an attack could cause interruptions or malfunctions in our operations, which could result in financial losses, litigation, regulatory penalties, client dissatisfaction or loss, reputational damage, and increased costs associated with mitigation of damages and remediation.

Third parties with which we do business may also be sources of cybersecurity or other technological risk. We outsource certain functions and these relationships allow for the storage and processing of our information, as well as client, counterparty, employee, and borrower information. While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result in unauthorized access, loss, exposure, destruction, or other cybersecurity incidents that adversely affects our data, resulting in increased costs and other consequences as described above.

We and our service providers are currently impacted by quarantines and similar measures being enacted by governments in response to COVID-19, which are obstructing the regular functioning of business workforces (including requiring employees to work from external locations and their homes).  In response to the outbreak, our Adviser instituted a work from home policy until it is deemed safe to return to the office. Policies of extended periods of remote working, whether by us or our service providers, could strain technology resources, introduce operational risks and otherwise heighten the risks described above.  Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic. Accordingly, the risks described above, are heightened under the current conditions.

The market value of our common stock may fluctuate significantly.

The market value and liquidity, if any, of the market for shares of our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

 

•

changes in the value of our portfolio of investments and derivative instruments as a result of changes in market factors, such as interest rate shifts, and also portfolio specific performance, such as portfolio company defaults, among other reasons;

 

•

changes in regulatory policies or tax guidelines, particularly with respect to RICs or business development companies;

 

•

loss of RIC tax treatment or business development company status;

 

•

distributions that exceed our net investment income and net income as reported according to U.S. GAAP;

 

•

changes in earnings or variations in operating results;

 

•

changes in accounting guidelines governing valuation of our investments;

 

•

any shortfall in revenue or net income or any increase in losses from levels expected by investors;

 

•

departure of our Adviser or certain of its key personnel;

 

•

general economic trends and other external factors;

 

•

loss of a major funding source; and

 

•

the length and duration of the COVID-19 outbreak in the U.S. as well as worldwide and the magnitude of the economic impact of that outbreak.

120

 

The interest rates of our term loans to our portfolio companies that extend beyond 2021 might be subject to change based on recent regulatory changes.

LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in term loans we extend to portfolio companies such that the interest due to us pursuant to a term loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR.

The United Kingdom's Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it will not compel panel banks to contribute to LIBOR after 2021. It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. Central banks and regulators in a number of major jurisdictions (for example, United States, United Kingdom, European Union, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements for interbank offered rates (“IBORs”). To identify a successor rate for U.S. dollar LIBOR, the Alternative Reference Rates Committee (“ARRC”), a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, was formed. The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. In addition, on March 25, 2020, the FCA stated that although the central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed, the outbreak of COVID-19 has impacted the timing of many firms’ transition planning, and the FCA will continue to assess the impact of the COVID-19 outbreak on transition timelines and update the marketplace as soon as possible. Although SOFR appears to be the preferred replacement rate for U.S. dollar LIBOR, at this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or other reforms to LIBOR that may be enacted in the United States, United Kingdom or elsewhere or, whether the COVID-19 outbreak will have further effect on LIBOR transition plans,. The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. In addition, if LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate, in order to replace LIBOR with the new standard that is established, which may have an adverse effect on our overall financial condition or results of operations. Following the replacement of LIBOR, some or all of these credit agreements may bear interest at a lower interest rate, which could have an adverse impact on our results of operations. Moreover, if LIBOR ceases to exist, we may need to renegotiate certain terms of our credit facilities. If we are unable to do so, amounts drawn under our credit facilities may bear interest at a higher rate, which would increase the cost of our borrowings and, in turn, affect our results of operations.

To the extent that we borrow money, the potential for gain or loss on amounts invested in us will be magnified and may increase the risk of investing in us. Borrowed money may also adversely affect the return on our assets, reduce cash available to service our debt or for distribution to our shareholders, and result in losses.

The use of borrowings, also known as leverage, increases the volatility of investments by magnifying the potential for gain or loss on invested equity capital. To the extent that we use leverage to partially finance our investments through borrowing from banks and other lenders, you will experience increased risks of investing in our securities. If the value of our assets decreases, leverage would cause our net asset value to decline more sharply than it otherwise would if we had not borrowed and employed leverage. Similarly, any decrease in our income would cause net income to decline more sharply than it would have if we had not borrowed and employed leverage. Such a decline could negatively affect our ability to service our debt or make distributions to our shareholders. In addition, our shareholders will bear the burden of any increase in our expenses as a result of our use of leverage, including interest expenses and any increase in the base management or incentive fees payable to our Adviser attributable to the increase in assets purchased using leverage.

The amount of leverage that we employ will depend on the Adviser’s and the Board’s assessment of market and other factors at the time of any proposed borrowing. There can be no assurance that leveraged financing will be available to us on favorable terms or at all. However, to the extent that we use leverage to finance our assets, our financing costs will reduce cash available for distributions to shareholders. Moreover, we may not be able to meet our financing obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to liquidation or sale to satisfy the obligations. In such an event, we may be forced to sell assets at significantly depressed prices due to market conditions or otherwise, which may result in losses.

As a BDC, generally, the ratio of our total assets (less total liabilities other than indebtedness represented by senior securities) to our total indebtedness represented by senior securities plus any preferred stock, if any, must be at least 200%; however, legislation enacted in March 2018 has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset coverage  ratio of 150%, if certain requirements are met. On June 8, 2020, our shareholders, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Small Business Credit Availability Act. As a result, effective June 9, 2020, our asset coverage ratio applicable to

121

 

senior securities  was reduced from 200% to 150%, and the risks associated with an investment in us may increase. If this ratio declines below 150%, we cannot incur additional debt and could be required to sell a portion of our investments to repay some indebtedness when it may be disadvantageous to do so. This could have a material adverse effect on our operations, and we may not be able to service our debt or make distributions.

There is uncertainty surrounding potential legal, regulatory and policy changes by new presidential administrations in the United States that may directly affect financial institutions and the global economy.

The presidential election will occur on November 3, 2020.  Changes in federal policy, including tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which lead to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities. The nature, timing and economic and political effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain. Uncertainty surrounding future changes may adversely affect our operating environment and therefore our business, financial condition, results of operations and growth prospects.

Certain historical data regarding our business properties, results of operations, financial condition and liquidity does not reflect the impact of the COVID-19 pandemic and related containment measures and therefore does not purport to be representative of our future performance.

The information included in this quarterly report and our other reports filed with the SEC includes information regarding our business, properties, results of operations, financial condition and liquidity as of dates and for periods before the impact of COVID-19 and related containment measures (including quarantines and government orders requiring the closure of certain businesses, limiting travel, requiring that individuals stay at home or shelter in place and closing borders. This historical information therefore does not reflect the adverse impacts of the COVID-19 pandemic and the related containment measures. Accordingly, investors are cautioned not to unduly rely on historical information regarding our businesses, properties, results of operations, financial condition or liquidity, as that data does not reflect the adverse impact of COVID-19 and therefore does not purport to be representative of the future results of operations, financial condition, liquidity or other financial or operating results of us, our properties or our business.

122

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Other than the shares issued pursuant to our dividend reinvestment plan, we did not sell any unregistered equity securities, except as previously disclosed in certain 8-Ks filed with the SEC.

On August 14, 2020, pursuant to our dividend reinvestment plan, we issued 3,541,285 shares of our common stock, at a price of $12.41 per share, to stockholders of record as of June 30, 2020 that did not opt out of our dividend reinvestment plan in order to satisfy the reinvestment portion of our dividends. This issuance was not subject to the registration requirements of the Securities Act of 1933, as amended.

 

Item 3. Defaults Upon Senior Securities.

None.

 

Item 4. Mine Safety Disclosures.

Not applicable.

 

Item 5. Other Information.

None.

123

 

Item 6. Exhibits

 

 

 

 

Exhibit

Number

 

Description of Exhibits

 

 

 

3.1

 

Articles of Amendment and Restatement, dated March 1, 2016 (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form 10 filed on April 11, 2016).


3.3

 


Bylaws, dated January 11, 2016 (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed on April 11, 2016).

 

 

 

4.1

 

Fourth Supplemental Indenture, dated as of July 23, 2020, between Owl Rock Capital Corporation and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on July 23, 2020).

 

4.2

 

 

Form of 4.250% Note Due 2026 (incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K filed on July 23, 2020).

 

10.1

 

 

Sixth Amendment to Senior Secured Revolving Credit Agreement, dated September 3, 2020, among Owl Rock Capital Corporation, the Lenders party hereto and Truist Bank (as successor by merger to SunTrust Bank), as Administrative Agent.*

 

31.1*

 

 

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

31.2*

 

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

32.1**

 

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.2**

 

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

________________

*Filed herein.

**Furnished herein.

 

 

 

 

 

 

 

124

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

Owl Rock Capital Corporation

 

 

 

Date: November 4, 2020

By:

/s/ Craig W. Packer

 

 

Craig W. Packer

 

 

Chief Executive Officer

 

 

 

 

 

Owl Rock Capital Corporation

 

 

 

 

Date: November 4, 2020

 

By:

/s/ Alan Kirshenbaum

 

 

 

Alan Kirshenbaum

 

 

 

Chief Operating Officer and Chief Financial Officer

 

 

 

 

125

 EX-10.1 2 owl-ex101_20.htm EX-10.1 owl-ex101_20.htm

Exhibit 10.1

SIXTH AMENDMENT
TO SENIOR SECURED REVOLVING CREDIT AGREEMENT

THIS SIXTH AMENDMENT TO SENIOR SECURED REVOLVING CREDIT AGREEMENT, dated as of September 3, 2020 (this “Amendment”), to the Existing Credit Agreement (capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in Article I) is among Owl Rock Capital Corporation, a Maryland corporation (the “Borrower”), the LENDERS party hereto and TRUIST BANK (as successor by merger to SunTrust Bank), as Administrative Agent (the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent are parties to the Senior Secured Revolving Credit Agreement, dated as of February 1, 2017 (as amended by that certain First Amendment to Senior Secured Revolving Credit Agreement, dated as of July 17, 2017, by that certain First Omnibus Amendment to Senior Secured Revolving Credit Agreement and Guarantee and Security Agreement, dated as of March 29, 2018, by that certain Third Amendment to Senior Secured Revolving Credit Agreement, dated as of June 21, 2018, by that certain Fourth Amendment to Senior Secured Revolving Credit Agreement, dated as of April 2, 2019, and by that certain Fifth Amendment to Senior Secured Revolving Credit Agreement, dated as of May 7, 2020 (the “Existing Credit Agreement”), and as amended by this Amendment and as the same may be further amended, supplemented, amended and restated or otherwise modified from time to time, the “Credit Agreement”);

WHEREAS, the Borrower has requested that the Lenders and the Administrative Agent agree to amend the Existing Credit Agreement, and the Lenders party hereto and the Administrative Agent are willing, on the terms and subject to the conditions hereinafter set forth, to agree to the amendment set forth below and the other terms hereof; and

NOW, THEREFORE, the parties hereto hereby covenant and agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1.  Certain Definitions.  The following terms when used in this Amendment shall have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

“Administrative Agent” is defined in the preamble.

“Amendment” is defined in the preamble.

“Borrower” is defined in the preamble.

“Credit Agreement” is defined in the first recital.

“Existing Credit Agreement” is defined in the first recital.

“Sixth Amendment Effective Date” is defined in Section 4.1.

SECTION 1.2.  Other Definitions.  Capitalized terms for which meanings are provided in the Existing Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used in this Amendment with such meanings.

 

 

ARTICLE II

JOINDER OF STIFEL BANK & TRUST TO CREDIT AGREEMENT

SECTION 2.1.  Stifel Bank & Trust as a Lender. Subject to the occurrence of the Sixth Amendment Effective Date (as hereinafter defined), each of the parties hereto hereby agrees that Stifel Bank & Trust will (and does hereby) become a “Lender” under and for all purposes of the Credit Agreement with a Dollar Commitment equal to $20,000,000 and Stifel Bank & Trust hereby agrees to be bound by and comply with all of the terms and provisions of the Credit Agreement applicable to it as a “Lender” thereunder and that it will perform all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.  Stifel Bank & Trust represents and warrants that it has full power and authority, and has taken all action necessary, to execute this Amendment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement.

ARTICLE III

AMENDMENT TO EXISTING CREDIT AGREEMENT

SECTION 3.1.  Subject to the occurrence of the Sixth Amendment Effective Date (as hereinafter defined), the Existing Credit Agreement (including the Exhibits and Schedules thereto) is hereby amended in its entirety in the form of Exhibit A attached hereto.

ARTICLE IV

CONDITIONS TO EFFECTIVENESS

SECTION 4.1.  Effective Date.  This Amendment shall become effective on the date (the “Sixth Amendment Effective Date”) when the Administrative Agent shall have received the following: (a) counterparts of this Amendment duly executed and delivered on behalf of the Borrower and each of the Lenders party hereto, (b) a favorable written opinion (addressed to the Administrative Agent and the Lenders party hereto and dated as of the date hereof) of (i) Cleary Gottlieb Steen & Hamilton LLP, New York counsel for the Borrower and (ii) Eversheds Sutherland (US) LLP, counsel for the Borrower, in each case, in form and substance reasonably acceptable to the Administrative Agent (and the Borrower hereby instructs such counsel to deliver such opinions to the Lenders party hereto and the Administrative Agent), (c) such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, the authorization of this Amendment and any other legal matters relating to the Borrower, this Amendment, all in form and substance satisfactory to the Administrative Agent and its counsel and (d) for the benefit of Administrative Agent and each of the Lenders party hereto, as applicable, fees and expenses owing by the Borrower in connection with this Amendment as of the date hereof.

ARTICLE V

MISCELLANEOUS

SECTION 5.1.  Representations.  The Borrower hereby represents and warrants that (i) this Amendment constitutes a legal, valid and binding obligation of it, enforceable against it in accordance with its terms, (ii) no Default or Event of Default has occurred and is continuing on the Sixth Amendment Effective Date or after giving effect to this Amendment and (iii) its representations and warranties as set forth in the Loan Documents, as applicable, are true and correct in all material respects (except those representations and warranties qualified by materiality or by reference to a material adverse effect, which are complete and correct in all respects) on and as of the date hereof as though made on and as of the date hereof (unless such representations and warranties specifically refer to a specific day, in which case, they shall be complete and correct in all material respects (or, with respect to such representations or warranties qualified by materiality or by reference to a material adverse effect, complete and correct in all respects) on and as of such specific day).

SECTION 5.2.  Cross-References.  References in this Amendment to any Article or Section are, unless otherwise specified, to such Article or Section of this Amendment.

2

 

SECTION 5.3.  Loan Document Pursuant to Existing Credit Agreement.  This Amendment is a Loan Document executed pursuant to the Existing Credit Agreement and shall (unless otherwise expressly indicated therein) be construed, administered and applied in accordance with all of the terms and provisions of the Existing Credit Agreement, as amended hereby, including Article IX thereof.

SECTION 5.4.  Successors and Assigns.  The provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

SECTION 5.5.  Counterparts.  This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Amendment by telecopy or electronically (e.g. pdf) shall be effective as delivery of a manually executed counterpart of this Amendment.

SECTION 5.6.  Governing Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

SECTION 5.7.  Full Force and Effect; Limited Amendment.  Except as expressly amended hereby, all of the representations, warranties, terms, covenants, conditions and other provisions of the Existing Credit Agreement and the other Loan Documents shall remain unchanged and shall continue to be, and shall remain, in full force and effect in accordance with their respective terms.  The amendment set forth herein shall be limited precisely as provided for herein to the provisions expressly amended herein and shall not be deemed to be an amendment to, waiver of, consent to or modification of any other terms or provisions of the Existing Credit Agreement or any other Loan Document or of any transaction or further or future action on the part of the Borrower.  Upon and after the execution of this Amendment by each of the parties hereto, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified hereby.

SECTION 5.8.  Reaffirmation.  OR Lending LLC hereby consents to the terms of this Amendment, confirms that its Guarantee under the Guarantee and Security Agreement remains unaltered and in full force and effect and hereby reaffirms, ratifies and confirms the terms and conditions of the Guarantee and Security Agreement.

 

 

3

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written.

 

BORROWER:

OWL ROCK CAPITAL CORPORATION

By:
Name:
Title:

 


 

SIGNATURE PAGE TO SIXTH  AMENDMENT –  Owl Rock

 

 

LENDERS:

TRUIST BANK (as successor by merger to SunTrust Bank),

as Administrative Agent, a Swingline Lender, an Issuing Bank and as a Lender

By:
Name:
Title:

 

 

SIGNATURE PAGE TO SIXTH  AMENDMENT –  Owl Rock

 

ING Capital LLC, as a Swingline Lender, an Issuing Bank and as a Lender

By:
Name:
Title:

 

SIGNATURE PAGE TO SIXTH  AMENDMENT –  Owl Rock

 

 

___________________________, as a Lender

By:
Name:
Title:

 

 

SIGNATURE PAGE TO SIXTH  AMENDMENT –  Owl Rock

 

Agreed and acknowledged solely with respect to  Section 5.8

OR LENDING LLC

By:
Name:
Title:

 

 

 

 

EXHIBIT A

[See attached]


 

 

 

 

SENIOR SECURED
REVOLVING CREDIT AGREEMENT

dated as of

 

February 1, 2017

and

as amended by the First Amendment to Senior Secured Revolving Credit Agreement, dated as of July 17, 2017, and the First Omnibus Amendment to Senior Secured Revolving Credit Agreement and Guarantee and Security Agreement, dated as of March 29, 2018, as amended by the Third Amendment to Senior Secured Revolving Credit Agreement, dated as of June 21, 2018, the Fourth Amendment to Senior Secured Revolving Credit Agreement, dated as of April 2, 2019, the Fifth Amendment to Senior Secured Revolving Credit Agreement, dated as of May 7, 2020, and the Sixth Amendment to Senior Secured Revolving Credit Agreement, dated as of September 3, 2020

among

OWL ROCK CAPITAL CORPORATION

as Borrower

The LENDERS Party Hereto

and

TRUIST BANK (as successor by merger to SunTrust Bank)
as Administrative Agent

ING Capital LLC
as Syndication Agent

$1,355,000,000
__________________

TRUIST SECURITIES, INC.

and

ING Capital LLC
as Joint Lead Arrangers and Joint Book Runners

MUFG UNION BANK, N.A.

and

SUMITOMO MITSUI BANKING CORPORATION

as Documentation Agents

 

 

 

 

Table of Contents

 

Page

 

ARTICLE I

DEFINITIONS1

 

 

SECTION 1.01.

Defined Terms1

 

 

SECTION 1.02.

Classification of Loans and Borrowings40

 

 

SECTION 1.03.

Terms Generally40

 

 

SECTION 1.04.

Accounting Terms; GAAP41

 

 

SECTION 1.05.

Currencies; Currency Equivalents41

 

 

SECTION 1.06.

Divisions42

 

ARTICLE II

THE CREDITS43

 

 

SECTION 2.01.

The Commitments43

 

 

SECTION 2.02.

Loans and Borrowings43

 

 

SECTION 2.03.

Requests for Syndicated Borrowings44

 

 

SECTION 2.04.

Swingline Loans45

 

 

SECTION 2.05.

Letters of Credit47

 

 

SECTION 2.06.

Funding of Borrowings53

 

 

SECTION 2.07.

Interest Elections53

 

 

SECTION 2.08.

Termination, Reduction or Increase of the Commitments55

 

 

SECTION 2.09.

Repayment of Loans; Evidence of Debt58

 

 

SECTION 2.10.

Prepayment of Loans60

 

 

SECTION 2.11.

Fees63

 

 

SECTION 2.12.

Interest64

 

 

SECTION 2.13.

Inability to Determine Interest Rates65

 

 

SECTION 2.14.

Increased Costs66

 

 

SECTION 2.15.

Break Funding Payments67

 

 

SECTION 2.16.

Taxes68

 

 

SECTION 2.17.

Payments Generally; Pro Rata Treatment: Sharing of Set-offs72

 

 

SECTION 2.18.

Mitigation Obligations; Replacement of Lenders75

 

 

SECTION 2.19.

Defaulting Lenders75

 

 

SECTION 2.20.

Assignment and Reallocation of Existing Commitments and Existing Loans79

 

 

SECTION 2.21.

Effect of Benchmark Transition Event80

 

 

SECTION 2.22.

Reallocation Following a Non-Extended Commitment Termination Date81

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES83

 

 

SECTION 3.01.

Organization; Powers83

 

 

SECTION 3.02.

Authorization; Enforceability83

 

 

SECTION 3.03.

Governmental Approvals; No Conflicts83

 

 

SECTION 3.04.

Financial Condition; No Material Adverse Change83

 

 

SECTION 3.05.

Litigation84

 

 

SECTION 3.06.

Compliance with Laws and Agreements84

 

 

SECTION 3.07.

Taxes84

 

 

SECTION 3.08.

ERISA84

 

 

SECTION 3.09.

Disclosure84

 

 

SECTION 3.10.

Investment Company Act; Margin Regulations85

 

 

SECTION 3.11.

Material Agreements and Liens85

 

 

SECTION 3.12.

Subsidiaries and Investments86

 

 

SECTION 3.13.

Properties86

 

 

SECTION 3.14.

Affiliate Agreements86

 

 

SECTION 3.15.

Sanctions86

 

 

SECTION 3.16.

Patriot Act87

 

i

 

Table of Contents

(continued)

Page

 

 

SECTION 3.17.

Collateral Documents87

 

 

SECTION 3.18.

EEA Financial Institutions87

 

ARTICLE IV

CONDITIONS87

 

 

SECTION 4.01.

Effective Date87

 

 

SECTION 4.02.

Each Credit Event89

 

ARTICLE V

AFFIRMATIVE COVENANTS90

 

 

SECTION 5.01.

Financial Statements and Other Information90

 

 

SECTION 5.02.

Notices of Material Events92

 

 

SECTION 5.03.

Existence: Conduct of Business92

 

 

SECTION 5.04.

Payment of Obligations92

 

 

SECTION 5.05.

Maintenance of Properties; Insurance93

 

 

SECTION 5.06.

Books and Records; Inspection and Audit Rights93

 

 

SECTION 5.07.

Compliance with Laws93

 

 

SECTION 5.08.

Certain Obligations Respecting Subsidiaries; Further Assurances93

 

 

SECTION 5.09.

Use of Proceeds94

 

 

SECTION 5.10.

Status of RIC and BDC95

 

 

SECTION 5.11.

Investment Policies95

 

 

SECTION 5.12.

Portfolio Valuation and Diversification Etc95

 

 

SECTION 5.13.

Calculation of Borrowing Base98

 

ARTICLE VI

NEGATIVE COVENANTS104

 

 

SECTION 6.01.

Indebtedness104

 

 

SECTION 6.02.

Liens106

 

 

SECTION 6.03.

Fundamental Changes107

 

 

SECTION 6.04.

Investments108

 

 

SECTION 6.05.

Restricted Payments109

 

 

SECTION 6.06.

Certain Restrictions on Subsidiaries110

 

 

SECTION 6.07.

Certain Financial Covenants111

 

 

SECTION 6.08.

Transactions with Affiliates111

 

 

SECTION 6.09.

Lines of Business112

 

 

SECTION 6.10.

No Further Negative Pledge112

 

 

SECTION 6.11.

Modifications of Longer-Term Indebtedness Documents112

 

 

SECTION 6.12.

Payments of Longer-Term Indebtedness and the 2023 Notes,the 2024 Notes, the 2025 March Notes, the 2025 July Notes and the 2026 Notes113

 

 

SECTION 6.13.

Accounting Changes114

 

 

SECTION 6.14.

SBIC Guarantee114

 

ARTICLE VII

EVENTS OF DEFAULT114

 

ARTICLE VIII

THE ADMINISTRATIVE AGENT118

 

 

SECTION 8.01.

Appointment of the Administrative Agent118

 

 

SECTION 8.02.

Capacity as Lender118

 

 

SECTION 8.03.

Limitation of Duties; Exculpation118

 

 

SECTION 8.04.

Reliance119

 

 

SECTION 8.05.

Sub-Agents119

 

 

SECTION 8.06.

Resignation; Successor Administrative Agent119

 

 

SECTION 8.07.

Reliance by Lenders120

 

 

SECTION 8.08.

Modifications to Loan Documents121

 

ARTICLE IX

MISCELLANEOUS121

 

ii

 

 

Table of Contents

(continued)

Page

 

 

SECTION 9.01.

Notices; Electronic Communications121

 

 

SECTION 9.02.

Waivers; Amendments124

 

 

SECTION 9.03.

Expenses; Indemnity; Damage Waiver127

 

 

SECTION 9.04.

Successors and Assigns129

 

 

SECTION 9.05.

Survival134

 

 

SECTION 9.06.

Counterparts; Integration; Effectiveness; Electronic Execution135

 

 

SECTION 9.07.

Severability135

 

 

SECTION 9.08.

Right of Setoff135

 

 

SECTION 9.09.

Governing Law; Jurisdiction; Etc136

 

 

SECTION 9.10.

WAIVER OF JURY TRIAL136

 

 

SECTION 9.11.

Judgment Currency137

 

 

SECTION 9.12.

Headings137

 

 

SECTION 9.13.

Treatment of Certain Information; No Fiduciary Duty; Confidentiality137

 

 

SECTION 9.14.

USA PATRIOT Act139

 

 

SECTION 9.15.

Acknowledgement and Consent to Bail-In of EEA Financial Institutions139

 

 

SECTION 9.16.

German Bank Separation Act140

 

 

SECTION 9.17.

Certain ERISA Matters141

 

 

SECTION 9.18.

Acknowledgement Regarding Any Supported QFCs143

 

 

 

iii

 

 

 

 

 

SCHEDULE 1.01(a)-Approved Dealers and Approved Pricing Services

SCHEDULE 1.01(b)-Commitments

SCHEDULE 1.01(c)-Industry Classification Group List

SCHEDULE 2.05Issuing Bank LC Exposure

SCHEDULE 3.11-Material Agreements and Liens

SCHEDULE 3.12(a)-Subsidiaries

SCHEDULE 3.12(b)-Investments

SCHEDULE 6.08-Transactions with Affiliates

 

 

 

EXHIBIT A-Form of Assignment and Assumption

EXHIBIT B-Form of Borrowing Base Certificate

EXHIBIT C-Form of Borrowing Request

 

 

iv

 

 

 

SENIOR SECURED REVOLVING CREDIT AGREEMENT dated as of February 1, 2017, as amended as of July 17, 2017, as of March 29, 2018, as of June 21, 2018, as of April 2, 2019, as of May 7, 2020 and as of September 3, 2020 (this “Agreement”), among OWL ROCK CAPITAL CORPORATION, a Maryland corporation (the “Borrower”), the LENDERS party hereto, and TRUIST BANK (as successor by merger to SunTrust Bank), as Administrative Agent.

ARTICLE I

DEFINITIONS

SECTION 1.01.  Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

“2023 Notes” means the Borrower’s $150,000,000 aggregate principal amount notes due June 21, 2023 issued in December 2017.

“2024 Notes” means the Borrower’s $400,000,000 aggregate principal amount notes due April 15, 2024 issued in April 2019.

“2025 July Notes” means the Borrower’s $500,000,000 aggregate principal amount notes due July 22, 2025 issued in January 2020.

“2025 March Notes” means the Borrower’s $425,000,000 aggregate principal amount notes due March 30, 2025 issued in October 2019.

“2026 Notes” means the Borrowers $500,000,000 aggregate principal amount notes due January 15, 2026 issued in July 2020.

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, are denominated in Dollars and bearing interest at a rate determined by reference to the Alternate Base Rate.

“Adjusted Borrowing Base” means the Borrowing Base minus the aggregate amount of Cash and Cash Equivalents included in the Portfolio Investments held by the Obligors (provided that Cash Collateral for outstanding Letters of Credit shall not be treated as a portion of the Portfolio Investments).

“Adjusted Covered Debt Balance” means, on any date, the aggregate Covered Debt Amount on such date minus the aggregate amount of Cash and Cash Equivalents included in the Portfolio Investments held by the Obligors (provided that Cash Collateral for outstanding Letters of Credit shall not be treated as a portion of the Portfolio Investments).

“Adjusted LIBO Rate” means (a) for the Interest Period for any Eurocurrency Borrowing denominated in a LIBO Quoted Currency, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (i) the LIBO Rate for such Interest Period multiplied by (ii) the Statutory Reserve Rate for such Interest Period and (b) for the Interest Period for any Eurocurrency Borrowing denominated in a Non-LIBO Quoted Currency an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the LIBO Rate for such Interest Period.

“Administrative Agent” means Truist, in its capacity as administrative agent for the Lenders hereunder.

“Administrative Agent Appraisal Testing Period” has the meaning assigned to such term in Section 5.12(b)(ii)(E)(y).

Revolving Credit Agreement

 

 

“Administrative Agent’s Account” means, for each Currency, an account in respect of such Currency designated by the Administrative Agent in a notice to the Borrower and the Lenders.

“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.

“Advance Rate” has the meaning assigned to such term in Section 5.13.

“Affected Currency” has the meaning assigned to such term in Section 2.13.

“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.  Anything herein to the contrary notwithstanding, the term “Affiliate” shall not include any Person that constitutes an Investment held by any Obligor or Financing Subsidiary in the ordinary course of business; provided that the term “Affiliate” shall include any Financing Subsidiary.

“Affiliate Agreements” means collectively, (a) the Administration Agreement dated as of March 1, 2016 between the Borrower and the External Manager, (b) Investment Advisory and Management Agreement dated as of March 1, 2016  between the Borrower and the External Manager and (c) the License Agreement dated as of March 1, 2016 between the Borrower and Owl Rock Capital Partners LP.

“Agreed Foreign Currency” means, at any time, (i) any of Canadian Dollars, English Pounds Sterling, Euros, Japanese Yen, Australian Dollars, Swiss Franc, Swedish Krona and New Zealand Dollars, and (ii) with the agreement of each Multicurrency Lender, any other Foreign Currency, so long as, in respect of any such specified Foreign Currency or other Foreign Currency, at such time (a) such Foreign Currency is dealt with in the London interbank deposit market, (b) such Foreign Currency is freely transferable and convertible into Dollars in the London foreign exchange market or the relevant local market, if applicable, and (c) no central bank or other governmental authorization in the country of issue of such Foreign Currency (including, in the case of the Euro, any authorization by the European Central Bank) is required to permit use of such Foreign Currency by any Multicurrency Lender for making any Loan hereunder and/or to permit the Borrower to borrow and repay the principal thereof and to pay the interest thereon, unless such authorization has been obtained and is in full force and effect.

“Agreement” has the meaning assigned to such term in the preamble to this Agreement

“Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a) zero and (b) the highest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate for such day plus 1/2 of 1% and (iii) the rate per annum equal to 1% plus the rate as displayed in the Bloomberg Financial Markets System (or on any successor or substitute page of such service, or any successor to such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent in its reasonable discretion from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, on such day (or, if such day is not a Business Day, the immediately preceding Business Day), for Dollar deposits with a term of one month.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the rate as displayed in the Bloomberg Financial Markets System (or successor therefor) as set forth above shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or such rate as displayed in the Bloomberg Financial Markets System (or successor therefor), respectively.  

“Applicable Dollar Percentage” means, with respect to any Dollar Lender, the percentage of the total Dollar Commitments represented by such Dollar Lender’s Dollar Commitment.  If the Dollar Commitments have terminated or expired, the Applicable Dollar Percentages shall be determined based upon the Dollar Commitments most recently in effect, giving effect to any assignments; provided that, for the avoidance of doubt, on and after the

2Revolving Credit Agreement

 

 

Non-Extended Commitment Termination Date for any Non-Extending Lender, the Applicable Dollar Percentage of such Non-Extending Lender that is a Dollar Lender shall be 0%.

“Applicable Financial Statements” means, as at any date (a) from the Closing Date to the date on which audited financial statements of the Borrower for the Borrower’s fiscal year ending on December 31, 2016 are delivered to the Lenders, the unaudited financial statements of the Borrower for the nine month period ending on September 30, 2016 and (b) otherwise, the most-recent audited financial statements of the Borrower delivered to the Lenders; provided that if immediately prior to the delivery to the Lenders of new audited financial statements of the Borrower a Material Adverse Change (the “Pre-existing MAC”) shall exist (regardless of when it occurred), then the “Applicable Financial Statements” as at said date means the Applicable Financial Statements in effect immediately prior to such delivery until such time as the Pre-existing MAC shall no longer exist.

“Applicable Margin” means: (a) with respect to any ABR Loan, 1.00% per annum; and (b) with respect to any Eurocurrency Loan, 2.00% per annum.  

“Applicable Multicurrency Percentage” means, with respect to any Multicurrency Lender, the percentage of the total Multicurrency Commitments represented by such Multicurrency Lender’s Multicurrency Commitment.  If the Multicurrency Commitments have terminated or expired, the Applicable Multicurrency Percentages shall be determined based upon the Multicurrency Commitments most recently in effect, giving effect to any assignments; provided that, for the avoidance of doubt, on and after the Non-Extended Commitment Termination Date for any Non-Extending Lender, the Applicable Multicurrency Percentage of such Non-Extending Lender that is a Multicurrency Lender shall be 0%.

“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment.  If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments; provided that, for the avoidance of doubt, on and after the Non-Extended Commitment Termination Date for any Non-Extending Lender, the Applicable Percentage of such Non-Extending Lender shall be 0%.

“Approved Dealer” means (a) in the case of any Investment that is not a U.S. Government Security, a bank or a broker-dealer registered under the Securities Exchange Act of 1934, as amended, of nationally recognized standing or an Affiliate thereof, (b) in the case of a U.S.  Government Security, any primary dealer in U.S. Government Securities, and (c) in the case of any foreign Investment, any foreign bank or broker-dealer of internationally recognized standing or an Affiliate thereof, in the case of each of clauses (a), (b) and (c) above, either as set forth on Schedule 1.01(a) or any other bank or broker-dealer or Affiliate thereof acceptable to the Administrative Agent in its reasonable determination.

“Approved Pricing Service” means a pricing or quotation service either: (a) as set forth in Schedule 1.01(a) or (b) any other pricing or quotation service approved by the Board of Directors of the Borrower and designated in writing by the Borrower to the Administrative Agent (which designation shall be accompanied by a copy of a resolution of the Board of Directors of the Borrower that such pricing or quotation service has been approved by the Borrower).

“Approved Third-Party Appraiser” means any Independent nationally recognized third-party appraisal firm (a) designated by the Borrower in writing to the Administrative Agent (which designation shall be accompanied by a copy of a resolution of the Board of Directors of the Borrower that such firm has been approved by the Borrower for purposes of assisting the Board of Directors of the Borrower in making valuations of portfolio assets to determine the Borrower’s compliance with the applicable provisions of the Investment Company Act) and (b) acceptable to the Administrative Agent.  It is understood and agreed that Houlihan Lokey Howard & Zukin Capital, Inc., Duff & Phelps LLC, Murray, Devine and Company, Lincoln International LLC (formerly known as Lincoln Partners LLC), Valuation Research Corporation and Alvarez & Marsal are acceptable to the Administrative Agent.  As used in Section 5.12 hereof, an “Approved Third-Party Appraiser selected by the Administrative Agent” shall mean any of the firms identified in the preceding sentence and any other Independent nationally recognized third-party appraisal firm identified by the Administrative Agent and consented to by the Borrower (such consent not to be unreasonably withheld or delayed).

3Revolving Credit Agreement

 

 

“Assignment and Assumption” means an Assignment and Assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A (with adjustments thereto to reflect the Classes of Commitments and/or Loans being assigned or outstanding at the time of the respective assignment) or any other form approved by the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower.

“Assuming Lender” has the meaning assigned to such term in Section 2.08(e)(i).

“Availability Period” means (a) in the case of any Extending Lender (with respect to such Extending Lender’s Extended Loans), the Extended Availability Period or (b) in the case of any Non-Extending Lender (with respect to such Non-Extending Lender’s Non-Extended Loans), the Non-Extended Availability Period for such Non-Extending Lender.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom,  Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

“Basel III” means the agreements on capital requirements, leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision on December 16, 2010, each as amended, supplemented or restated.

“Benchmark Replacement” means the sum of: (a) the alternate benchmark rate (which may include Term SOFR) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the LIBO Rate for LIBO Quoted Currency-denominated syndicated credit facilities and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement.

“Benchmark Replacement Adjustment” means, with respect to any replacement of the LIBO Rate with an Unadjusted Benchmark Replacement for each applicable Interest Period, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the LIBO Rate with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the LIBO Rate with the applicable Unadjusted Benchmark Replacement for LIBO Quoted Currency-denominated syndicated credit facilities at such time.

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Administrative Agent (after consultation with the Borrower) decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible

4Revolving Credit Agreement

 

 

or if the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent (after consultation with the Borrower) decides is reasonably necessary in connection with the administration of this Agreement).

“Benchmark Replacement Date” means the earlier to occur of the following events with respect to the LIBO Rate: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the LIBO Rate permanently or indefinitely ceases to provide the LIBO Rate; or (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.

“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the LIBO Rate: (1) a public statement or publication of information by or on behalf of the administrator of the LIBO Rate announcing that such administrator has ceased or will cease to provide the LIBO Rate, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the LIBO Rate; (2) a public statement or publication of information by the regulatory supervisor for the administrator of the LIBO Rate, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for the LIBO Rate, a resolution authority with jurisdiction over the administrator for the LIBO Rate or a court or an entity with similar insolvency or resolution authority over the administrator for the LIBO Rate, which states that the administrator of the LIBO Rate has ceased or will cease to provide the LIBO Rate permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the LIBO Rate; or (3) a public statement or publication of information by the regulatory supervisor for the administrator of the LIBO Rate announcing that the LIBO Rate is no longer representative.

“Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified by the Administrative Agent or the Required Lenders, as applicable, by notice to the Borrower, the Administrative Agent (in the case of such notice by the Required Lenders) and the Lenders.

“Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the LIBO Rate and solely to the extent that the LIBO Rate has not been replaced with a Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the LIBO Rate for all purposes hereunder in accordance with Section 2.21 and (y) ending at the time that a Benchmark Replacement has replaced the LIBO Rate for all purposes hereunder pursuant to Section 2.21.

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Borrower” has the meaning assigned to such term in the preamble to this Agreement.

“Borrower Asset Coverage Ratio” means the ratio, determined on a consolidated basis for the Obligors, without duplication, of (a) (i) Total Assets minus (ii) Total Assets Concentration Limitation to (b) Total Secured Debt.

5Revolving Credit Agreement

 

 

“Borrower Net Worth” means, as of any date of determination, (a) Total Assets as of such date minus (b) the sum of (i) Total Assets Concentration Limitation as of such date plus (ii) Total Secured Debt as of such date.

“Borrowing” means (a) all Syndicated ABR Loans of the same Class made, converted or continued on the same date, (b) all Eurocurrency Loans of the same Class denominated in the same Currency that have the same Interest Period or (c) a Swingline Loan.

“Borrowing Base” has the meaning assigned to such term in Section 5.13.

“Borrowing Base Certificate” means a certificate of a Financial Officer of the Borrower, substantially in the form of Exhibit B and appropriately completed.

“Borrowing Base Deficiency” means, at any date on which the same is determined, the amount, if any, that (a) the aggregate Covered Debt Amount as of such date exceeds (b) the Borrowing Base as of such date.

“Borrowing Request” means a request by the Borrower for a Syndicated Borrowing in accordance with Section 2.03, which, if in writing, shall be substantially in the form of Exhibit C.

“Business Day” means any day (a) that is not a Saturday, Sunday or other day on which commercial banks in Atlanta, Georgia are authorized or required by law to remain closed, (b) if such day relates to a borrowing of, a payment or prepayment of principal of or interest on, a continuation or conversion of or into, or the Interest Period for, a Eurocurrency Borrowing denominated in Dollars, or to a notice by the Borrower with respect to any such borrowing, payment, prepayment, continuation, conversion, or Interest Period, that is also a day on which dealings in deposits denominated in Dollars are carried out in the London interbank market and (c) if such day relates to a borrowing or continuation of, a payment or prepayment of principal of or interest on, or the Interest Period for, any Borrowing denominated in any Foreign Currency, or to a notice by the Borrower with respect to any such borrowing, continuation, payment, prepayment or Interest Period, that is also a day on which commercial banks and the London foreign exchange market settle payments in the Principal Financial Center for such Foreign Currency.

“Calculation Amount” shall mean, as of the end of any Testing Period, an amount equal to the greater of: (a) (i) 125% of the Adjusted Covered Debt Balance (as of the end of such Testing Period) minus (ii) the aggregate Value of all Quoted Investments included in the Borrowing Base (as of the end of such Testing Period) and (b) 10% of the aggregate Value of all Unquoted Investments included in the Borrowing Base (as of the end of such Testing Period); provided that in no event shall more than 25% (or, if clause (b) applies, 10%, or as near thereto as reasonably practicable) of the aggregate Value of the Unquoted Investments in the Borrowing Base be tested in respect of any applicable Testing Period.

“CAM Exchange” means the exchange of the Lenders’ interests provided for in Article VII.

“CAM Exchange Date” means the date on which any Event of Default referred to in clause (j) of Article VII shall occur or the date on which the Borrower receives written notice from the Administrative Agent that any Event of Default referred to in clause (i) of Article VII has occurred.

“CAM Percentage” means, as to each Lender, a fraction, expressed as a decimal, of which (a) the numerator shall be the aggregate Dollar Equivalent of the Designated Obligations owed to such Lender (whether or not at the time due and payable) immediately prior to the CAM Exchange Date and (b) the denominator shall be the aggregate Dollar Equivalent amount of the Designated Obligations owed to all the Lenders (whether or not at the time due and payable) immediately prior to the CAM Exchange Date.

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

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“Cash” means any immediately available funds in Dollars or in any currency other than Dollars (measured in terms of the Dollar Equivalent thereof) which is a freely convertible currency.

“Cash Collateralize” means, in respect of a Letter of Credit or any obligation hereunder, to provide and pledge cash collateral pursuant to Section 2.05(k), at a location and pursuant to documentation in form and substance reasonably satisfactory to Administrative Agent and each Issuing Bank. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“Cash Equivalents” means investments (other than Cash) that are one or more of the following obligations:

(a)

U.S. Government Securities, in each case maturing within one year from the date of acquisition thereof;

(b)

investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, a credit rating of at least A‑1 from S&P and at least P‑1 from Moody’s (or if only one of S&P or Moody’s provides such rating, such investment shall also have an equivalent credit rating from any other rating agency);

(c)

investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof (i) issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof or under the laws of the jurisdiction or any constituent jurisdiction thereof of any Agreed Foreign Currency; provided that such certificates of deposit, banker’s acceptances and time deposits are held in a securities account (as defined in the Uniform Commercial Code) through which the Collateral Agent can perfect a security interest therein and (ii) having, at such date of acquisition, a credit rating of at least A‑1 from S&P and at least P‑1 from Moody’s (or if only one of S&P or Moody’s provides such rating, such investment shall also have an equivalent credit rating from any other rating agency);

(d)

fully collateralized repurchase agreements with a term of not more than 30 days from the date of acquisition thereof for U.S. Government Securities and entered into with (i) a financial institution satisfying the criteria described in clause (c) of this definition or (ii) an Approved Dealer having (or being a member of a consolidated group having) at such date of acquisition, a credit rating of at least A‑1 from S&P and at least P‑1 from Moody’s (or if only one of S&P or Moody’s provides such rating, such investment shall also have an equivalent credit rating from any other rating agency); and

(e)

investments in money market funds that invest solely, and which are restricted by their respective charters to invest solely, in investments of the type described in the immediately preceding clauses (a) through (d) above (including as to credit quality and maturity);

provided that (i) in no event shall Cash Equivalents include any obligation that provides for the payment of interest alone (for example, interest-only securities or “IOs”); (ii) if any of Moody’s or S&P changes its rating system, then any ratings included in this definition shall be deemed to be an equivalent rating in a successor rating category of Moody’s or S&P, as the case may be; (iii) Cash Equivalents (other than U.S. Government Securities, repurchase agreements or the money market funds described in clause (e) of this definition of Cash Equivalents) shall not include any such investment of more than 10% of total assets of the Borrower and its Subsidiaries in any single issuer; and (iv) in no event shall Cash Equivalents include any obligation that is not denominated in Dollars or an Agreed Foreign Currency.

“CDOR Rate” means, the rate per annum, equal to the average of the annual yield rates applicable to Canadian Dollar banker’s acceptances at or about 10:00 a.m. (Toronto, Ontario time) on the first day of such Interest Period (or if such day is not a Business Day, then on the immediately preceding Business Day) as reported on the “CDOR Page” (or any display substituted therefor) of Reuters Monitor Money Rates Service (or such other page or commercially available source displaying Canadian interbank bid rates for Canadian Dollar bankers’ acceptances as

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may be designated by the Administrative Agent from time to time) for a term equivalent to such Interest Period (or if such Interest Period is not equal to a number of months, for a term equivalent to the number of months closest to such Interest Period).

“Change in Control” means the External Manager (or an Affiliate thereof) ceases to be the external manager of the Borrower.

“Change in Law” means the occurrence, after the date of this Agreement (or with respect to a Person becoming a Lender by assignment or joinder after the date of this Agreement, the effective date thereof), of (a) the adoption of any law, treaty or governmental rule or regulation or any change in any law, treaty or governmental rule or regulation or in the interpretation, administration or application thereof (regardless of whether the underlying law, treaty or governmental rule or regulation was issued or enacted prior to the date hereof (or with respect to a Person becoming a Lender by assignment or joinder after the date of this Agreement, the effective date thereof)), but excluding proposals thereof, or any determination of a court or Governmental Authority, (b) any guideline, request or directive by any Governmental Authority (whether or not having the force of law) or any implementation rules or interpretations of previously issued guidelines, requests or directives, in each case that is issued or made after the date hereof (or with respect to a Person becoming a Lender by assignment or joinder after the date of this Agreement, the effective date thereof) or (c) compliance by any Lender (or its applicable lending office) or any company controlling such Lender with any guideline, request or directive regarding capital adequacy or liquidity (whether or not having the force of law) of any such Governmental Authority, in each case adopted after the date hereof (or with respect to a Person becoming a Lender by assignment or joinder after the date of this Agreement, the effective date thereof). For the avoidance of doubt, all requests, rules, guidelines or directives concerning liquidity and capital adequacy issued (i) by any United States regulatory authority under or in connection with the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and (ii) by any Governmental Authority in connection with the implementation of the recommendations of the Bank for International Settlements or the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority), in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date adopted, issued, promulgated or implemented.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, are Syndicated Dollar Loans, Syndicated Multicurrency Loans or Swingline Loans; when used in reference to any Lender’s (i) Class of Commitment, refers to whether such Lender is a Dollar Lender or a Multicurrency Lender and (ii) Class of Final Maturity Date, refers to whether such Lender is an Extending Lender or a Non-Extending Lender; and, when used in reference to any Commitment, refers to whether such Commitment is a Dollar Commitment or a Multicurrency Commitment.  The “Class” of a Letter of Credit refers to whether such Letter of Credit is a Dollar Letter of Credit or a Multicurrency Letter of Credit.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” has the meaning assigned to such term in the Guarantee and Security Agreement.

“Collateral Agent” means Truist in its capacity as Collateral Agent under the Guarantee and Security Agreement, and includes any successor Collateral Agent thereunder.

“Commitment Increase” has the meaning assigned to such term in Section 2.08(e)(i).

“Commitment Increase Date” has the meaning assigned to such term in Section 2.08(e)(i).

“Commitment Termination Date” means the Extended Commitment Termination Date or the relevant Non-Extended Commitment Termination Date, as applicable.

“Commitments” means, collectively, the Dollar Commitments and the Multicurrency Commitments.

“Consolidated Asset Coverage Ratio” means the ratio, determined on a consolidated basis for Borrower and its Subsidiaries, without duplication, (a) the value of total assets of the Borrower and its Subsidiaries,

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less all liabilities and indebtedness not represented by senior securities to (b) the aggregate amount of senior securities representing indebtedness of Borrower and its Subsidiaries (including this Agreement), in each case as determined pursuant to the Investment Company Act and any orders of the Securities and Exchange Commission issued to or with respect to Borrower thereunder (in each case, as in effect on the Sixth Amendment Effective Date but excluding the effects of Release No. 33837/April 8, 2020), including any exemptive relief granted by the Securities and Exchange Commission with respect to the indebtedness of any SBIC Subsidiary.

“Consolidated Group” has the meaning assigned to such term in Section 5.13(a).

“Consultation Notice” has the meaning assigned to such term in Section 9.16.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto; provided, however, “Control” shall not include “negative” control or “blocking” rights whereby action cannot be taken without the vote or consent of any Person.

“Controlled Foreign Corporation” means any Subsidiary which is (i) a “controlled foreign corporation” (within the meaning of Section 957 of the Code), (ii) a Subsidiary substantially all the assets of which consist (directly or indirectly through one or more flow-through entities) of Equity Interests and/or indebtedness of one or more Subsidiaries described in clause (i) of this definition, or (iii) an entity treated as disregarded for U.S. federal income tax purposes and substantially all of the assets of which consist (directly or indirectly through one or more flow-through entities) of the Equity Interests and/or indebtedness of one or more Subsidiaries described in clause (i) or (ii) of this definition.

“Covered Debt Amount” means, on any date, the sum of (x) all of the Revolving Credit Exposures of all Lenders on such date plus (y) the aggregate amount of Other Covered Indebtedness, the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes, the 2026 Notes, Special Unsecured Indebtedness and Unsecured Longer Term Indebtedness on such date minus (z) the LC Exposures fully Cash Collateralized on such date pursuant to Section 2.05(k) and the last paragraph of Section 2.09(a); provided that the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes, the 2026 Notes, Special Unsecured Indebtedness and Unsecured Longer-Term Indebtedness shall be excluded from the calculation of the Covered Debt Amount, in each case, until the date that is nine (9) months prior to the scheduled maturity date of the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes, the 2026 Notes, such Special Unsecured Indebtedness or such Unsecured Longer-Term Indebtedness, as applicable (provided that, to the extent, but only to the extent, any portion of the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes, the 2026 Notes, such Special Unsecured Indebtedness or Unsecured Longer-Term Indebtedness is subject to a contractually scheduled amortization payment or other principal payment or mandatory redemption (other than in common stock of the Borrower) earlier than six (6) months after the Extended Final Maturity Date (in the case of the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes, the 2026 Notes, and Unsecured Longer-Term Indebtedness) or earlier than the original final maturity date of such Indebtedness (in the case of Special Unsecured Indebtedness), such portion of such Indebtedness, to the extent then outstanding, shall be included in the calculation of the Covered Debt Amount beginning upon the date that is the later of (i) nine (9) months prior to such scheduled amortization payment or other principal payment or mandatory redemption and (ii) the date the Borrower becomes aware that such Indebtedness is required to be paid or redeemed). For the avoidance of doubt, for purposes of calculating the Covered Debt Amount, any convertible securities will be included at the then outstanding principal balance thereof.

“Currency” means Dollars or any Foreign Currency.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Defaulting Lender” means, subject to Section 2.19(b), any Lender that, during such Lender’s Availability Period, as determined by the Administrative Agent, (a) has failed to (i) fund all or any portion of its Loans or participations in Letters of Credit within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the

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result of such Lender’s reasonable determination that one or more conditions precedent to funding (each of which conditions precedent, together with the applicable default, if any, shall be specifically identified in detail in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, any Issuing Bank or any Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s reasonable determination that a condition precedent to funding (which condition precedent, together with the applicable default, if any, shall be specifically identified in detail in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Administrative Agent and Borrower), or (d) Administrative Agent has received notification that such Lender has become, or has a direct or indirect parent company that is, (i) insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, (ii) other than via an Undisclosed Administration, the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or the like has been appointed for such Lender or its direct or indirect parent company, or such Lender or its direct or indirect parent company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment or (iii) the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority or instrumentality so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.19(b)) upon such determination (and the Administrative Agent shall deliver written notice of such determination to the Borrower, each Issuing Bank and each Lender and each Swingline Lender).

“Designated Obligations” means all obligations of the Borrower with respect to (a) principal of and interest on the Loans and (b) accrued and unpaid fees under the Loan Documents.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith; provided that the term “Disposition” or “Dispose” shall not include the disposition of Investments originated by the Borrower and immediately transferred to a Financing Subsidiary pursuant to a transaction not prohibited hereunder.

“Dollar Commitment” means, with respect to each Dollar Lender, the commitment of such Dollar Lender to make Syndicated Loans, and to acquire participations in Letters of Credit and Swingline Loans, denominated in Dollars hereunder, during such Lender’s Availability Period, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Dollar Credit Exposure hereunder, as such commitment may be (a) reduced or increased from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The amount of each Lender’s Dollar Commitment as of the Sixth Amendment Effective Date is set forth on Schedule 1.01(b), or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Dollar Commitment, as applicable.  The aggregate amount of the Lenders’ Dollar Commitments as of the Sixth Amendment Effective Date is $460,000,000.

“Dollar Equivalent” means, on any date of determination, with respect to an amount denominated in any Foreign Currency, the amount of Dollars that would be required to purchase such amount of such Foreign Currency on the date two Business Days prior to such date, based upon the spot selling rate at which the Administrative

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Agent offers to sell such Foreign Currency for Dollars in the London foreign exchange market at approximately 11:00 a.m., London time, for delivery two Business Days later.

“Dollar LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Dollar Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements in respect of such Letters of Credit that have not yet been reimbursed by or on behalf of the Borrower at such time.  The Dollar LC Exposure of any Lender at any time shall be its Applicable Dollar Percentage of the total Dollar LC Exposure at such time.

“Dollar Lender” means the Persons listed on Schedule 1.01(b) as having Dollar Commitments and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption that provides for it to assume a Dollar Commitment or to acquire Revolving Dollar Credit Exposure, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“Dollar Letters of Credit” means Letters of Credit that utilize the Dollar Commitments.

“Dollar Loan” means a Loan denominated in Dollars.

“Dollars” or “$” refers to lawful money of the United States of America.

“Early Opt-in Election” means the occurrence of: (a) (i) a determination by the Administrative Agent or (ii) a notification by the Required Lenders to the Administrative Agent (with a copy to the Borrower) that the Required Lenders have determined that Dollar-denominated syndicated credit facilities being executed at such time, or that include language similar to that contained in Section 2.21, are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace the LIBO Rate, and (b) (i) the election by the Administrative Agent or (ii) the election by the Required Lenders to declare that an Early Opt-in Election has occurred and the provision, as applicable, by the Administrative Agent of written notice of such election to the Borrower and the Lenders or by the Required Lenders of written notice of such election to the Administrative Agent.

“EBITDA” means the consolidated net income of the applicable Person (excluding extraordinary, unusual or non-recurring gains and extraordinary losses (to the extent excluded in the definition of “EBITDA” (or similar defined term used for the purposes contemplated herein) in the relevant agreement relating to the applicable Portfolio Investment)) for the relevant period plus, without duplication, the following to the extent deducted in calculating such consolidated net income in the relevant agreement relating to the applicable Portfolio Investment for such period: (i) consolidated interest charges for such period, (ii) the provision for federal, state, local and foreign income taxes payable for such period, (iii) depreciation and amortization expense for such period, and (iv) such other adjustments included in the definition of “EBITDA” (or similar defined term used for the purposes contemplated herein) in the relevant agreement relating to the applicable Portfolio Investment, provided that such adjustments are usual and customary and substantially comparable to market terms for substantially similar debt of other similarly situated borrowers at the time such relevant agreements are entered into as reasonably determined in good faith by the Borrower.  Notwithstanding the foregoing, EBITDA may be calculated by the Borrower in good faith using information from and calculations consistent with the relevant financial models, pro forma financial statements, compliance statements and financial reporting packages provided by the relevant issuer as per the requirements of the relevant agreement governing a Portfolio Investment.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein and Norway.

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“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02), which date is February 1, 2017.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests or equivalents (however designated, including any instrument treated as equity for U.S. federal income tax purposes) in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, and the rules and regulations promulgated thereunder, each as amended or modified from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(m) or (o) of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan, other than for the payment of plan contributions or PBGC premiums due but not delinquent under Section 4007 of ERISA; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; or (f) the imposition of Withdrawal Liability on the Borrower or any ERISA Affiliate or the receipt of any notice by Borrower or any ERISA Affiliate of the insolvency, within the meaning of Title IV of ERISA, of any Multiemployer Plan to which Borrower or any ERISA Affiliate is obligated to contribute.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

“Euro” means a single currency of the Participating Member States.

“Eurocurrency”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) Taxes imposed on (or measured by) its net income (however denominated), net profits, franchise Taxes and branch profits or any similar Taxes, in each case, (i) imposed by the United States of America (or any state or political subdivision thereof), or by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or (ii) Other Connection Taxes, (b)  in the case of a Lender, any Taxes that are U.S. withholding taxes imposed on amounts payable to such Lender (i) at the time such Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)) becomes a party to this Agreement or designates a new lending office, except to the extent that such Lender’s assignor or such Lender was entitled to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16, at the time of such assignment or designation (other than to the extent such withholding is as a result of a CAM Exchange), or (ii) that is attributable to such Lender’s

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failure or inability (other than as a result of a Change in Law occurring after the date such Lender becomes a party to this Agreement) to comply with Section 2.16(f), (c) any U.S. federal, state or local backup withholding Taxes imposed on payments made under any Loan Document, and (d) any U.S. federal withholding Taxes that are imposed under FATCA.

“Extended Availability Period” means, with respect to any Extending Lender, the period from and including the Effective Date to but excluding the earlier of the Extended Commitment Termination Date and the date of termination of the Commitments.

“Extended Commitment Termination Date” means, with respect to each Extending Lender, September 3, 2024.

“Extended Final Maturity Date” means, with respect to each Extending Lender, September 3, 2025.

“Extended Loans” means Loans or Borrowings of any Extending Lender maturing on the Extended Final Maturity Date.

“Extending Lender” means each Lender designated as an “Extending Lender” on Schedule 1.01(b).

“External Manager” means Owl Rock Capital Advisors LLC.

“Extraordinary Receipts” means any cash received by or paid to any Obligor on account of any foreign, United States, state or local tax refunds, pension plan reversions, judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, condemnation awards (and payments in lieu thereof), indemnity payments received not in the ordinary course of business and any purchase price adjustment received not in the ordinary course of business in connection with any purchase agreement and proceeds of insurance (excluding, however, for the avoidance of doubt, proceeds of any issuance of Equity Interests and issuances of Indebtedness by any Obligor); provided that Extraordinary Receipts shall not include any (x) amounts that the Borrower receives from the Administrative Agent or any Lender pursuant to Section 2.16(f), or (y) cash receipts to the extent received from proceeds of insurance, condemnation awards (or payments in lieu thereof), indemnity payments or payments in respect of judgments or settlements of claims, litigation or proceedings to the extent that such proceeds, awards or payments  are received by any Person in respect of any unaffiliated third party claim against or loss by such Person and promptly applied to pay (or to reimburse such Person for its prior payment of) such claim or loss and the costs and expenses of such Person with respect thereto.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations promulgated thereunder and official interpretations thereof and any foreign legislation implemented to give effect to any intergovernmental agreements entered into thereunder and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

“Federal Funds Effective Rate” means, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

“Fee Letter” means that certain Fee Letter dated as of December 29, 2016 among the Borrower, the Administrative Agent, Truist Securities, Inc., BANA and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

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“Final Maturity Date” means (i) in the case of any Extending Lender (with respect to such Extending Lender’s Extended Loans), the Extended Final Maturity Date or (ii) in the case of any Non-Extending Lender (with respect to such Non-Extending Lender’s Non-Extended Loans), such Non-Extending Lender’s applicable Non-Extended Final Maturity Date.

“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.

“Financing Subsidiary” means an SPE Subsidiary or an SBIC Subsidiary.

“First Omnibus Amendment Effective Date” means March 29, 2018.

“Foreign Currency” means at any time any currency other than Dollars.

“Foreign Currency Equivalent” means, with respect to any amount in Dollars, the amount of any Foreign Currency that could be purchased with such amount of Dollars using the reciprocal of the foreign exchange rate(s) specified in the definition of the term “Dollar Equivalent”, as determined by the Administrative Agent.

“Foreign Lender” means any Lender that is not a United States Person.

“Foreign Subsidiary” means any Subsidiary of the Borrower that is a Controlled Foreign Corporation.

“Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to any Issuing Bank, such Defaulting Lender’s (a) Applicable Dollar Percentage of the outstanding Dollar LC Exposure and (b) Applicable Multicurrency Percentage of the outstanding Multicurrency LC Exposure, in each case with respect to Letters of Credit issued by such Issuing Bank other than Dollar LC Exposure or Multicurrency LC Exposure, as the case may be, as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“GAAP” means generally accepted accounting principles in the United States of America.

“GBSA” has the meaning assigned to such term in Section 9.16.

“GBSA Consultation Period” has the meaning assigned to such term in Section 9.16.

“GBSA Lender” has the meaning assigned to such term in Section 9.16.

“GBSA Notice” has the meaning assigned to such term in Section 9.16.

“Governmental Authority” means the government of the United States of America, or of any other nation, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including any supra-national bodies (such as the European Union or the European Central Bank).

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued

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to support such Indebtedness or obligation; provided that the term Guarantee shall not include (i) endorsements for collection or deposit in the ordinary course of business or (ii) customary indemnification agreements entered into in the ordinary course of business, provided that such indemnification obligations are unsecured, such Person has determined that any liability thereunder is remote and such indemnification obligations are not the functional equivalent of the guaranty of a payment obligation of the primary obligor.

“Guarantee and Security Agreement” means that certain Guarantee and Security Agreement dated as of the date hereof among the Borrower, the Administrative Agent, each Subsidiary of the Borrower from time to time party thereto, each holder (or a representative or trustee therefor) from time to time of any Secured Longer-Term Indebtedness or Secured Shorter-Term Indebtedness, and the Collateral Agent, as the same shall be amended, modified, restated and supplemented and in effect from time to time.

“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement substantially in the form of Exhibit B to the Guarantee and Security Agreement between the Collateral Agent and an entity that pursuant to Section 5.08(a) is required to become a “Subsidiary Guarantor” under the Guarantee and Security Agreement (with such changes as the Administrative Agent shall request consistent with the requirements of Section 5.08).

“Hedging Agreement” means any interest rate protection agreement, foreign currency exchange protection agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

“Immaterial Subsidiaries” means those Subsidiaries of the Borrower that are “designated” as Immaterial Subsidiaries by the Borrower from time to time (it being understood that the Borrower may at any time change any such designation); provided that such designated Immaterial Subsidiaries shall collectively meet all of the following criteria as of the date of the most recent balance sheet required to be delivered pursuant to Section 5.01: (a) the aggregate assets of such Subsidiaries and their Subsidiaries (on a consolidated basis) as of such date do not exceed an amount equal to 3% of the consolidated assets of the Borrower and its Subsidiaries as of such date; and (b) the aggregate revenues of such Subsidiaries and their Subsidiaries (on a consolidated basis) for the fiscal quarter ending on such date do not exceed an amount equal to 3% of the consolidated revenues of the Borrower and its Subsidiaries for such period.

“Increasing Lender” has the meaning assigned to such term in Section 2.08(e)(i).

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable and accrued expenses incurred in the ordinary course of business), (e) all Indebtedness of others secured by any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed (with the value of such Indebtedness being the lower of the outstanding amount of such Indebtedness and the fair market value of the property subject to such Lien), (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.  Notwithstanding the foregoing, “Indebtedness” shall not include (x) escrows or purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset or Investment to satisfy unperformed obligations of the seller of such asset or Investment, (y) a commitment arising in the ordinary course of business to make a future Portfolio Investment or (z) uncalled capital or other commitments of an Obligor in Joint Venture Investments, as well as any letter or agreement requiring any Obligor to provide capital to a Joint Venture Investment or a lender to a Joint Venture Investment.

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“Indemnified Taxes” means Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under this Agreement.

“Independent” when used with respect to any specified Person means that such Person (a) does not have any direct financial interest or any material indirect financial interest in the Borrower or any of its Subsidiaries or Affiliates (including its investment advisor or any Affiliate thereof) and (b) is not connected with the Borrower or of its Subsidiaries or Affiliates (including its investment advisor or any Affiliate thereof) as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions.

“Industry Classification Group” means (a) any of the classification groups set forth in Schedule 1.01(c) hereto, together with any such classification groups that may be subsequently established by Moody’s and provided by the Borrower to the Lenders, and (b) up to three additional industry group classifications established by the Borrower pursuant to Section 5.12.

“ING” means ING Capital LLC.

“Initial Termination Date” has the meaning assigned to such term in Section 9.16.

“Interest Election Request” means a request by the Borrower to convert or continue a Syndicated Borrowing in accordance with Section 2.07.

“Interest Payment Date” means (a) with respect to any Syndicated ABR Loan, each Quarterly Date, (b) with respect to any Eurocurrency Loan, the last day of each Interest Period therefor and, in the case of any Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at three-month intervals after the first day of such Interest Period and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

“Interest Period” means, for any Eurocurrency Loan or Borrowing, the period commencing on the date of such Loan or Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter or, with respect to such portion of any Eurocurrency Loan or Borrowing denominated in a Foreign Currency that is scheduled to be repaid on the applicable Final Maturity Date, a period of less than one month’s duration commencing on the date of such Loan or Borrowing and ending on the applicable Final Maturity Date, as specified in the applicable Borrowing Request or Interest Election Request; provided that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (ii) any Interest Period (other than an Interest Period pertaining to a Eurocurrency Borrowing denominated in a Foreign Currency that ends on the applicable Final Maturity Date that is permitted to be of less than one month’s duration as provided in this definition) that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Loan initially shall be the date on which such Loan is made and thereafter shall be the effective date of the most recent conversion or continuation of such Loan, and the date of a Syndicated Borrowing comprising Loans that have been converted or continued shall be the effective date of the most recent conversion or continuation of such Loans.

“Investment” means, for any Person: (a) Equity Interests, bonds, notes, debentures or other securities of any other Person or any agreement to acquire any Equity Interests, bonds, notes, debentures or other securities of any other Person (and any rights or proceeds in respect of (x) any “short sale” of securities or (y) any sale of any securities at a time when such securities are not owned by such Person); (b) deposits, advances, loans or other extensions of credit made to any other Person (including purchases of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person); or (c) Hedging Agreements.

“Investment Company Act” means the Investment Company Act of 1940, as amended from time to time.

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“Investment Policies” means the investment objectives, policies, restrictions and limitations set forth in the “BUSINESS” section of its Registration Statement, and as the same may be changed, altered, expanded, amended, modified, terminated or restated from time to time in accordance with this Agreement.

“Issuing Bank” means Truist, ING, State Street Bank and Trust Company and any other Issuing Bank designated pursuant to Section 2.05(l), in their capacity as the issuers of Letters of Credit hereunder, and their respective successors in such capacity as provided in Section 2.05(j).  In the case of any Letter of Credit to be issued in an Agreed Foreign Currency, Truist and ING may designate any of their respective affiliates as the “Issuing Bank” for purposes of such Letter of Credit.

“Joint Lead Arrangers” means Truist Securities, Inc. and ING.

“Joint Venture Investment” means, with respect to any Obligor, any Investment by such Obligor in a joint venture or other investment vehicle in the form of a capital investment, loan or other commitment in or to such joint venture or other investment vehicle pursuant to which such Obligor may be required to provide contributions, investments, or financing to such joint venture or other investment vehicle and which Investment the Borrower has designated as a “Joint Venture Investment”.

“LC Disbursement” means a payment made by any Issuing Bank pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of the Dollar LC Exposure and the Multicurrency LC Exposure.

“Lenders” means, collectively, the Dollar Lenders and the Multicurrency Lenders.  Unless the context otherwise requires, the term “Lenders” includes each Swingline Lender.

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

“Letter of Credit Collateral Account” has the meaning assigned to such term in Section 2.05(k).

“Letter of Credit Documents” means, with respect to any Letter of Credit, collectively, any application therefor and any other agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b) any collateral security for any of such obligations, each as the same may be modified and supplemented and in effect from time to time.

“LIBO Quoted Currency” means each of the following currencies: Dollars; Euro; English Pounds Sterling; Japanese Yen; and Swiss Franc; in each case as long as there is a published LIBO rate with respect thereto.

“LIBO Rate” means, for any Interest Period:

(a)

in the case of Eurocurrency Borrowings denominated in a LIBO Quoted Currency, the ICE Benchmark Administration Limited London interbank offered rate per annum for deposits in the relevant Currency for a period equal to the Interest Period as displayed in the Bloomberg Financial Markets System (or such other page on that service or such other service designated by the ICE Benchmark Administration Limited for the display of such Administration’s London interbank offered rate for deposits in the relevant Currency) as of 11:00 a.m., London time on the day that is two Business Days prior to the first day of the Interest Period (or, solely with respect to Eurocurrency Borrowings in Pounds Sterling, on the first day of the Interest Period) (the “Screen Rate”); provided that if the Administrative Agent determines that the relevant foregoing sources are unavailable for the relevant Interest Period, LIBO Rate shall mean for any LIBO Quoted Currency, the rate of interest determined by the Administrative Agent to be the average (rounded upward, if necessary, to the nearest 1/100th of 1%) of the rate per annum at which the Administrative Agent could borrow funds if it were to do so by asking for and then accepting interbank offers two business days preceding the first day of such Interest Period (or, solely with respect to Eurocurrency Borrowings denominated in Pounds Sterling, on the first day of such Interest Period) in the

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London interbank market for the relevant Currency as of 11:00 a.m. for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount comparable to the amount of the Administrative Agent’s portion of the relevant Eurocurrency Borrowing;

(b)

in the case of Eurocurrency Borrowings denominated in Canadian Dollars, the CDOR Rate per annum;

(c)

in the case of Eurocurrency Borrowings denominated in Australian Dollars, the rate per annum equal to the Bank Bill Swap Reference Bid rate or a successor thereto approved by the Administrative Agent (“BBSY”) as published by Reuters (or such other page or commercially available source providing BBSY (Bid) quotations as may be designated by the Administrative Agent from time to time) at or about 10:30 a.m. (Melbourne, Australia time) on the day that is two Business Days prior to the first day of the Interest Period (or if such day is not a Business Day, then on the immediately preceding Business Day) with a term equivalent to such Interest Period;

(d)

in the case of Eurocurrency Borrowings denominated in New Zealand Dollars, the rate per annum equal to the Bank Bill Reference Bid Rate or a successor thereto approved by the Administrative Agent (“BKBM”) as published by Reuters (or such other page or commercially available source providing BKBM (Bid) quotations as may be designated by the Administrative Agent from time to time) at or about 10:45 a.m. (Auckland, New Zealand time) on the day that is two Business Days prior to the first day of the Interest Period (or if such day is not a Business Day, then on the immediately preceding Business Day) with a term equivalent to such Interest Period;

(e)

in the case of Eurocurrency Borrowings denominated in Swedish Krona, the rate per annum equal to the Stockholm Interbank Offered Rate or a successor thereto approved by the Administrative Agent (“STIBOR”) as published by Reuters (or such other page or commercially available source providing STIBOR quotations as may be designated by the Administrative Agent from time to time) at or about 11:00 a.m. (Stockholm, Sweden time) on the day that is two Business Days prior to the first day of the Interest Period (or if such day is not a Business Day, then on the immediately preceding Business Day) with a term equivalent to such Interest Period; and

(f)

for all Non-LIBO Quoted Currencies (other than Canadian Dollars, Australian Dollars, New Zealand Dollars or Swedish Krona), the calculation of the applicable reference rate shall be determined in accordance with market practice;

provided in each case, if such rate is less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities, except in favor of the issuer thereof (and in the case of Investments that are securities, excluding customary drag-along, tag-along, right of first refusal and other similar rights in favor of the equity holders of the same issuer).

“Loan Documents” means, collectively, this Agreement, the Letter of Credit Documents, the Security Documents and the First Amendment to this Agreement, dated as of July 17, 2017, and the First Omnibus Amendment to this Agreement and the Guarantee and Security Agreement, dated as of March 29, 2018, the Third Amendment to this Agreement, dated as of June 21, 2018, the Fourth Amendment to this Agreement, dated as of April 2, 2019, the Fifth Amendment to this Agreement, dated as of May 7, 2020, and the Sixth Amendment to this Agreement, dated as of September 3, 2020.

“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

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“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X.

“Material Adverse Change” has the meaning assigned to such term in Section 3.04(b).

“Material Adverse Effect” means a material adverse effect on (a) the business, Portfolio Investments and other assets, liabilities and financial condition of the Borrower or the Borrower and its Subsidiaries (other than Financing Subsidiaries) taken as a whole (excluding in any case a decline in the net asset value of the Borrower or a change in general market conditions or values of the Portfolio Investments), or (b) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent and the Lenders thereunder.

“Material Indebtedness” means (a) Indebtedness (other than the Loans, Letters of Credit and Hedging Agreements), of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $25,000,000 and (b) obligations in respect of one or more Hedging Agreements under which the maximum aggregate amount (giving effect to any netting agreements) that the Borrower and its Subsidiaries would be required to pay if such Hedging Agreement(s) were terminated at such time would exceed $25,000,000.

“Minimum Collateral Amount” means, at any time, with respect to Cash Collateral consisting of Cash or deposit account balances, an amount equal to 100% of the Fronting Exposure of each Issuing Bank with respect to Letters of Credit issued and outstanding at such time.

“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.

“Multicurrency Commitment” means, with respect to each Multicurrency Lender, the commitment of such Multicurrency Lender to make Syndicated Loans, and to acquire participations in Letters of Credit and Swingline Loans, denominated in Dollars and in Agreed Foreign Currencies hereunder, during such Multicurrency Lender’s Availability Period, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Multicurrency Credit Exposure hereunder, as such commitment may be (a) reduced or increased from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The amount of each Lender’s Multicurrency Commitment as of the Sixth Amendment Effective Date  is set forth on Schedule 1.01(b), or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Multicurrency commitment, as applicable.  The aggregate amount of the Lenders’ Multicurrency Commitments as of the Sixth Amendment Effective Date is $895,000,000.

“Multicurrency LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Multicurrency Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements in respect of such Letters of Credit that have not yet been reimbursed by or on behalf of the Borrower at such time.  The Multicurrency LC Exposure of any Lender at any time shall be its Applicable Multicurrency Percentage of the total Multicurrency LC Exposure at such time.

“Multicurrency Lender” means the Persons listed on Schedule 1.01(b) as having Multicurrency Commitments and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption that provides for it to assume a Multicurrency Commitment or to acquire Revolving Multicurrency Credit Exposure, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“Multicurrency Letters of Credit” means Letters of Credit that utilize the Multicurrency Commitments.

“Multicurrency Loan” means a Loan denominated in Dollars or an Agreed Foreign Currency.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“National Currency” means the currency, other than the Euro, of a Participating Member State.

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“Net Cash Proceeds” means:

(a)

with respect to any Disposition by the Borrower or any of its Subsidiaries (other than Financing Subsidiaries), or any Extraordinary Receipt received or paid to the account of the Borrower or any of its Subsidiaries (other than Financing Subsidiaries) (in each case, which requires a payment of the Loans under Section 2.10(d)), an amount equal to (a) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) minus (b) the sum of (i) the principal amount of any Indebtedness that is secured by the applicable asset and that is required to be repaid in connection with such transaction (other than Indebtedness under the Loan Documents), (ii) the reasonable out-of-pocket fees, costs and expenses incurred by the Borrower or such Subsidiary in connection with such transaction, (iii) the taxes paid or reasonably estimated to be actually payable within two years of the date of the relevant transaction in connection with such transaction; provided that, if the amount of any estimated taxes pursuant to clause (iii) exceeds the amount of taxes actually required to be paid in cash in respect of such Disposition, the aggregate amount of such excess shall constitute Net Cash Proceeds (as of the date the Borrower determines such excess exists) and (iv) any reasonable costs, fees, commissions, premiums and expenses incurred by the Borrower or any of its Subsidiaries in connection with such Disposition; and

(b)

with respect to the sale or issuance of any Equity Interest by the Borrower or any of its Subsidiaries (other than any Financing Subsidiary) (including, for the avoidance of doubt, cash received by the Borrower or any of its Subsidiaries (other than any Financing Subsidiaries) for the sale by the Borrower or such Subsidiary of any Equity Interest of a Financing Subsidiary but specifically excluding any sale of any Equity Interest by a Financing Subsidiary or cash received by a Financing Subsidiary in connection with the sale of any Equity Interest), or the incurrence or issuance of any Indebtedness by the Borrower or any of its Subsidiaries (other than Financing Subsidiaries) (in each case, which requires a payment of the Loans under Section 2.10(d)), an amount equal to (i) the sum of the cash and Cash Equivalents received in connection with such transaction minus (ii) the sum of (1) reasonable out-of-pocket fees, costs and expenses, incurred by the Borrower or such Subsidiary in connection therewith plus (2) any reasonable costs, fees, commissions, premiums, expenses, or underwriting discounts or commissions incurred by the Borrower or any of its Subsidiaries in connection with such sale or issuance.

“Non-Defaulting Lender” means, at any time, a Lender that is not a Defaulting Lender at such time.

“Non-Extended Availability Period” means, with respect to any Non-Extending Lender, the period from and including the Effective Date to but excluding the earlier of the Non-Extended Commitment Termination Date for such Non-Extending Lender and the date of termination of the Commitments.

“Non-Extended Commitment Termination Date” means, with respect to each Non-Extending Lender, the “Non-Extended Commitment Termination Date” set forth next to such Non-Extending Lender’s name on Schedule 1.01(b).

“Non-Extended Final Maturity Date” means, with respect to each Non-Extending Lender, the “Non-Extended Final Maturity Date” set forth next to such Non-Extending Lender’s name on Schedule 1.01(b).

“Non-Extended Loans” means Loans or Borrowings of any Non-Extending Lender maturing on the Non-Extended Final Maturity Date for such Non-Extending Lender.

“Non-Extending Lender” means each Lender designated as a “Non-Extending Lender” on Schedule 1.01(b).

“Non-LIBO Quoted Currency” means any Currency other than a LIBO Quoted Currency.

“Non-Performing Joint Venture Investment” means a Joint Venture Investment that is not a Performing Joint Venture Investment.

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“Non-Public Information” means material non-public information (within the meaning of United States federal, state or other applicable securities laws) with respect to Borrower or its Affiliates or their Securities.

“Obligor” means, collectively, the Borrower and the Subsidiary Guarantors.

“Original Currency” has the meaning assigned to such term in Section 2.17.

“Other Connection Taxes” means with respect to the Administrative Agent, any  Lender or any Issuing Bank, Taxes imposed by any jurisdiction by reason of the recipient having any present or former connection with such jurisdiction (other than a connection arising solely from entering into, receiving any payment under or enforcing its rights under this Agreement or  any other Loan Document or selling or assigning an interest in any Loan or Loan Document).

“Other Covered Indebtedness” means, collectively, Secured Longer-Term Indebtedness, Secured Shorter-Term Indebtedness and Unsecured Shorter-Term Indebtedness; provided that “Other Covered Indebtedness” shall not include any Indebtedness secured by a Lien on Portfolio Investments permitted under Section 6.02(e).

“Other Permitted Indebtedness” means (a) accrued expenses and current trade accounts payable incurred in the ordinary course of the Borrower’s business which are not overdue for a period of more than 90 days or which are being contested in good faith by appropriate proceedings, (b) Indebtedness (other than Indebtedness for borrowed money) arising in connection with transactions in the ordinary course of the Borrower’s business in connection with its securities transactions, derivatives transactions, reverse repurchase agreements or dollar rolls to the extent such transactions are permitted under the Investment Company Act and the Borrower’s Investment Policies (after giving effect to any Permitted Policy Amendments), provided that such Indebtedness does not arise in connection with the purchase of Portfolio Investments other than Cash Equivalents and U.S. Government Securities and (c) Indebtedness in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as such judgments or awards do not constitute an Event of Default under clause (l) of Article VII.

“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document, excluding any such Taxes that are Other Connection Taxes resulting from an assignment by any Lender in accordance with Section 9.04 hereof (unless such assignment is made pursuant to Section 2.18(b)).

“Participant” has the meaning assigned to such term in Section 9.04(f).

“Participant Register” has the meaning assigned to such term in Section 9.04(f).

“Participating Member State” means any member state of the European Community that adopts or has adopted the Euro as its lawful currency in accordance with the legislation of the European Union relating to the European Monetary Union.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“Performing Joint Venture Investments” means Joint Venture Investments which are Performing.

“Permitted Equity Interests” means common stock of the Borrower that after its issuance is not subject to any agreement between the holder of such common stock and the Borrower where the Borrower is required to purchase, redeem, retire, acquire, cancel or terminate any such common stock.

“Permitted Liens” means (a) Liens imposed by any Governmental Authority for taxes, assessments or charges not yet due or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower in accordance with GAAP; (b) Liens of clearing

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agencies, broker-dealers and similar Liens incurred in the ordinary course of business; provided that such Liens (i) attach only to the securities (or proceeds) being purchased or sold and (ii) secure only obligations incurred in connection with such purchase or sale, and not any obligation in connection with margin financing; (c) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmens’, storage and repairmen’s Liens and other similar Liens arising in the ordinary course of business and securing obligations (other than Indebtedness for borrowed money) not yet due or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower in accordance with GAAP; (d) Liens incurred or pledges or deposits made to secure obligations incurred in the ordinary course of business under workers’ compensation laws, unemployment insurance or other similar social security legislation (other than Liens imposed by the PBGC in respect of employee benefit plans subject to Title IV of ERISA) or to secure public or statutory obligations; (e) Liens securing the performance of, or payment in respect of, bids, insurance premiums, deductibles or co-insured amounts, tenders, government or utility contracts (other than for the repayment of borrowed money), surety, stay, customs and appeal bonds and other obligations of a similar nature incurred in the ordinary course of business; (f) Liens arising out of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as such judgments or awards do not constitute an Event of Default under clause (l) of Article VII; (g) customary rights of setoff and liens upon (i) deposits of cash in favor of banks or other depository institutions in which such cash is maintained in the ordinary course of business, (ii) cash and financial assets held in securities accounts in favor of banks and other financial institutions with which such accounts are maintained in the ordinary course of business and (iii) assets held by a custodian in favor of such custodian in the ordinary course of business securing payment of fees, indemnities and other similar obligations; (h) Liens arising solely from precautionary filings of financing statements under the Uniform Commercial Code of the applicable jurisdictions in respect of operating leases entered into by the Borrower or any of its Subsidiaries in the ordinary course of business; (i) deposits of money securing leases to which Borrower is a party as lessee made in the ordinary course of business; (j) easements, rights of way, zoning restrictions and similar encumbrances on real property and minor irregularities in the title thereto that do not (i) secure obligations for the payment of money or (ii) materially impair the value of such property or its use by any Obligor or any of its Subsidiaries in the normal conduct of such Person’s business; and (k) Liens in favor of any escrow agent solely on and in respect of any cash earnest money deposits made by any Obligor in connection with any letter of intent or purchase agreement (to the extent that the acquisition or disposition with respect thereto is otherwise permitted hereunder).

“Permitted Policy Amendment” means any change, alteration, expansion, amendment, modification, termination or restatement of the Investment Policies that is either (a) approved in writing by the Administrative Agent (with the consent of the Required Lenders), (b) required by applicable law, rule, regulation  or Governmental Authority, or (c) not materially adverse to the rights, remedies or interests of the Lenders in the reasonable discretion of the Administrative Agent (for the avoidance of doubt, no change, alteration, expansion, amendment, modification, termination or restatement of the Investment Policies shall be deemed “material” if investment size proportionately increases as the size of the Borrower’s capital base changes).

“Permitted SBIC Guarantee” means a guarantee by the Borrower of Indebtedness of an SBIC Subsidiary on the SBA’s then applicable form; provided that the recourse to the Borrower thereunder is expressly limited only to periods after the occurrence of an event or condition that is an impermissible change in the control of such SBIC Subsidiary (it being understood that, as provided in clause (s) of Article VII, it shall be an Event of Default hereunder if any such event or condition giving rise to such recourse occurs).

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Platform” means has the meaning set forth in Section 5.01(i).

“Portfolio Investment” means any Investment held by the Obligors in their asset portfolio (and solely for purposes of determining the Borrowing Base, Cash).  Without limiting the generality of the foregoing, the

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following Investments shall not be considered Portfolio Investments under this Agreement or any other Loan Document: (a) any Investment by an Obligor in any Subsidiary, Affiliate or joint venture of such Obligor (including, for the avoidance of doubt, any Joint Venture Investment or any Investment by an Obligor in an entity constituting a portfolio investment of such Obligor or an Affiliate of such Obligor); (b) any Investment that provides in favor of the obligor in respect of such Portfolio Investment an express right of rescission, set-off, counterclaim or any other defenses; (c) any Investment, which if debt, is an obligation (other than a revolving loan or delayed draw term loan) pursuant to which any future advances or payments to the Obligor may be required to be made by the Borrower; (d) any Investment which is made to a bankrupt entity (other than a debtor-in-possession financing and current pay obligations); and (e) any Investment, Cash or account in which a Financing Subsidiary has an interest.

“PPM” means the private placement memorandum, dated as of October 5, 2016, relating to the common stock offering of the Borrower.

“Prime Rate” means the rate which is quoted as the “prime rate” in the print edition of The Wall Street Journal, Money Rates Section.

“Principal Financial Center” means, in the case of any Currency, the principal financial center where such Currency is cleared and settled, as determined by the Administrative Agent.

“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

“Public Lender” means Lenders that do not wish to receive Non-Public Information with respect to the Borrower or any of its Subsidiaries or their Securities.

“Quarterly Dates” means the last Business Day of March, June, September and December in each year, commencing on March 31, 2017.

“Quoted Investments” has the meaning set forth in Section 5.12(b)(ii)(A).

“Register” has the meaning set forth in Section 9.04(c).

“Registration Statement” means the Registration Statement filed by the Borrower with the Securities and Exchange Commission on April 11, 2016.

“Regulations D, T, U and X” means, respectively, Regulations D, T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective partners, directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Relevant Available Funds” means the sum (without duplication) of (a) the aggregate amount available to be drawn under any committed facilities (excluding this Agreement and any committed facility of a Financing Subsidiary), for which all applicable conditions to availability could be satisfied at such time, plus (b) the aggregate amount available to be (x) drawn under any committed facility for a Financing Subsidiary and (y) distributed by such Financing Subsidiary to an Obligor in accordance with the terms of the definitive documentation for such committed facility, for which all applicable conditions to availability and distribution could be satisfied at such time.

“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.

“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused

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Commitments at such time; provided that the Revolving Credit Exposures and unused Commitments of any Defaulting Lender shall be disregarded in the determination of Required Lenders.  The Required Lenders of a Class (which shall include the terms “Required Dollar Lenders” and “Required Multicurrency Lenders”) means Lenders having Revolving Credit Exposures and unused Commitments of such Class representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments of such Class at such time.  Notwithstanding the foregoing, the Revolving Credit Exposure and unused Commitments of any Defaulting Lender shall be disregarded in the determination of Required Lenders or Required Lenders of a Class.

“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of an Obligor.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any shares of any class of capital stock of the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of the Borrower or any option, warrant or other right to acquire any such shares of capital stock of the Borrower (it being understood that none of: (w) the conversion features under convertible notes; (x) the triggering and/or settlement thereof; or (y) any cash payment made by the Borrower in respect thereof, shall constitute a Restricted Payment hereunder).

“Return of Capital” means (a) any net cash amount received by any Obligor in respect of the outstanding principal of any Portfolio Investment (whether at stated maturity, by acceleration or otherwise), (b) without duplication of amounts received under clause (a), any net cash proceeds received by any Obligor from the sale of any property or assets pledged as collateral in respect of any Portfolio Investment to the extent such net cash proceeds are less than or equal to the outstanding principal balance of such Portfolio Investment, (c) any net cash amount received by any Obligor in respect of any Portfolio Investment that is an Equity Interest (x) upon the liquidation or dissolution of the issuer of such Portfolio Investment, (y) as a distribution of capital made on or in respect of such Portfolio Investment, or (z) pursuant to the recapitalization or reclassification of the capital of the issuer of such Portfolio Investment or pursuant to the reorganization of such issuer or (d) any similar return of capital received by any Obligor in cash in respect of any Portfolio Investment (in the case of clauses (a), (b), (c) and (d), net of any fees, costs, expenses and taxes payable with respect thereto).

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Dollar Credit Exposure and Revolving Multicurrency Credit Exposure at such time.

“Revolving Dollar Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Syndicated Loans, and its LC Exposure and Swingline Exposure, at such time made or incurred under the Dollar Commitments.

“Revolving Multicurrency Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Syndicated Loans, and its LC Exposure and Swingline Exposure, at such time made or incurred under the Multicurrency Commitments.

“Revolving Percentage” means, as of any date of determination, the result, expressed as a percentage, of the Revolving Credit Exposure on such date divided by the aggregate outstanding Covered Debt Amount on such date.

“RIC” means a person qualifying for treatment as a “regulated investment company” under the Code.

“S&P” means S&P Global Ratings or any successor thereto.

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“Sanctioned Country” means, at any time, a country, territory or region that is the subject or the target of country-wide or territory-wide Sanctions broadly prohibiting dealings with such country, territory or region (currently, Cuba, Crimea, Iran, North Korea and Syria).

“Sanctions” has the meaning assigned to such term in Section 3.15(a).

“SBA” means the United States Small Business Administration.

“SBIC Equity Commitment” means a commitment by the Borrower to make one or more capital contributions to an SBIC Subsidiary.

“SBIC Subsidiary” means any direct or indirect Subsidiary (including such Subsidiary’s general partner or managing entity to the extent that  the only material asset of such general partner or managing entity is its equity interest in the SBIC Subsidiary) of the Borrower licensed as a small business investment company under the Small Business Investment Act of 1958, as amended, (or that has applied for such a license and is actively pursuing the granting thereof by appropriate proceedings promptly instituted and diligently conducted) and which is designated by the Borrower (as provided below) as an SBIC Subsidiary, so long as (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of such Subsidiary: (i) is Guaranteed by any Obligor (other than a Permitted SBIC Guarantee), (ii) is recourse to or obligates any Obligor in any way (other than in respect of any SBIC Equity Commitment or Permitted SBIC Guarantee), or (iii) subjects any property of any Obligor, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than Equity Interests in any SBIC Subsidiary pledged to secure such Indebtedness, and (b) no Obligor has any obligation to maintain or preserve such Subsidiary’s financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Borrower shall be effected pursuant to a certificate of a Financial Officer delivered to the Administrative Agent, which certificate shall include a statement to the effect that, to the best of such officer’s knowledge, such designation complied with the foregoing conditions.

“Secured Longer-Term Indebtedness” means, as at any date, Indebtedness (other than Indebtedness hereunder) of an Obligor (which may be Guaranteed by Subsidiary Guarantors) that (a) has no scheduled amortization prior to, and a final maturity date not earlier than, six months after the Extended Final Maturity Date (it being understood that none of: (w) the conversion features under convertible notes; (x) the triggering and/or settlement thereof; or (y) any cash payment made in respect thereof, shall constitute “amortization” for purposes of this clause (a)), (b) is incurred pursuant to documentation containing (i) financial covenants, covenants governing the borrowing base, if any, portfolio valuations and events of default (other than events of default customary in indentures or similar instruments that have no analogous provisions in this Agreement or credit agreements generally) that are no more restrictive on the Borrower and its Subsidiaries than those set forth in this Agreement and (ii) other terms (other than pricing terms) that are no more restrictive in any material respect upon the Borrower and its Subsidiaries, prior to the Termination Date, than those set forth in this Agreement (it being understood that put rights or repurchase or redemption obligations (x) in the case of convertible securities, in connection with the suspension or delisting of the capital stock of the Borrower or the failure of the Borrower to satisfy a continued listing rule with respect to its capital stock or (y) arising out of circumstances that would constitute a “fundamental change” (as such term is customarily defined in convertible note offerings) or an Event of Default under this Agreement shall not be deemed to be more restrictive for purposes of this definition)); provided that, upon the Borrower’s written request in connection with the incurrence of any Secured Longer-Term Indebtedness that otherwise would not meet the requirements of this clause (b), the Borrower and the Administrative Agent (on behalf of the Lenders) shall promptly enter into a written amendment to this Agreement making changes necessary such that the financial covenants, covenants governing the borrowing base, if any, portfolio valuations, events of default (other than events of default customary in indentures or similar instruments that have no analogous provisions in this Agreement or credit agreements generally) or other terms, as applicable, in this Agreement shall be as restrictive as such covenants in the Secured Longer-Term Indebtedness (or in the case of such other terms, as restrictive in all material respects), and (c) is not secured by any assets of any Obligor other than pursuant to this Agreement or the Security Documents and the holders of which (or an authorized agent, representative or trustee of such holders) have either executed (i) a joinder agreement to the Guarantee and Security Agreement or (ii) such other document or agreement, in a form reasonably satisfactory to the Administrative Agent and the Collateral Agent, pursuant to which the holders (or an authorized agent, representative or trustee of such holders) of such Secured Longer-Term Indebtedness shall have become a party to the Guarantee and

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Security Agreement and assumed the obligations of a Financing Agent or Designated Indebtedness Holder (in each case, as defined in the Guarantee and Security Agreement).

“Secured Shorter-Term Indebtedness” means, collectively, (a) any Indebtedness of an Obligor that is secured by any assets of any Obligor and that does not constitute Secured Longer-Term Indebtedness, (b) any Indebtedness of an Obligor that is not secured by any assets of any Obligor other than pursuant to this Agreement or the Security Documents and the holders of which (or an authorized agent, representative or trustee of such holders) have either executed (i) a joinder agreement to the Guarantee and Security Agreement or (ii) such other document or agreement, in a form reasonably satisfactory to the Administrative Agent and the Collateral Agent, pursuant to which the holders (or an authorized agent, representative or trustee of such holders) of such Secured Shorter-Term Indebtedness shall have become a party to the Guarantee and Security Agreement and assumed the obligations of a Financing Agent or Designated Indebtedness Holder (in each case, as defined in the Guarantee and Security Agreement) and (c) any Indebtedness that is designated as “Secured Shorter-Term Indebtedness” pursuant to Section 6.11(a).

“Security Documents” means, collectively, the Guarantee and Security Agreement, all Uniform Commercial Code financing statements filed with respect to the security interests in personal property created pursuant to the Guarantee and Security Agreement and all other assignments, pledge agreements, security agreements, control agreements and other instruments executed and delivered on or after the date hereof by any of the Obligors pursuant to the Guarantee and Security Agreement or otherwise providing or relating to any collateral security for any of the Secured Obligations under and as defined in the Guarantee and Security Agreement.

“Shareholders’ Equity” means, at any date, the amount determined on a consolidated basis, without duplication, in accordance with GAAP, of shareholders equity for the Borrower and its Subsidiaries at such date.

“Sixth Amendment Effective Date” means September 3, 2020.

“SOFR” with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website.

“SPE Subsidiary” means:

(a)

a direct or indirect Subsidiary of the Borrower to which any Obligor sells, conveys or otherwise transfers (whether directly or indirectly) Portfolio Investments, which engages in no material activities other than in connection with the purchase, holding, disposition or financing of such assets and which is designated by the Borrower (as provided below) as an SPE Subsidiary, so long as:

(i)

no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is Guaranteed by any Obligor (other than Guarantees in respect of Standard Securitization Undertakings), (ii) is recourse to or obligates any Obligor in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property of any Obligor, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings or any Guarantee thereof,

(ii)

no Obligor has any material contract, agreement, arrangement or understanding with such Subsidiary other than on terms, taken as a whole, not materially less favorable to such Obligor than those that might be obtained at the time from Persons that are not Affiliates of any Obligor, other than fees payable in the ordinary course of business in connection with servicing receivables, and

(iii)

to which no Obligor has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results; and

(b) any passive holding company that is designated by the Borrower (as provided below) as a SPE Subsidiary, so long as:

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(i)

such passive holding company is the direct parent of a SPE Subsidiary referred to in clause (a);

(ii)

such passive holding company engages in no activities and has no assets (other than in connection with the transfer of assets to and from a SPE Subsidiary referred to in clause (a), and its ownership of all of the Equity Interests of a SPE Subsidiary referred to in clause (a)) or liabilities;

(iii)

no Obligor has any contract, agreement, arrangement or understanding with such passive holding company; and

(iv) no Obligor has any obligation to maintain or preserve such passive holding company’s financial condition or cause such entity to achieve certain levels of operating results.

Any such designation of a SPE Subsidiary by the Borrower shall be effected pursuant to a certificate of a Financial Officer delivered to the Administrative Agent, which certificate shall include a statement to the effect that, to the best of such officer’s knowledge, such designation complied with the conditions set forth in clause (a) or (b) above, as applicable. Each Subsidiary of an SPE Subsidiary shall be deemed to be an SPE Subsidiary and shall comply with the foregoing requirements of this definition.

As of the Sixth Amendment Effective Date, each of the following entities is an SPE Subsidiary: ORCC Financing LLC, ORCC Financing II LLC, ORCC Financing III LLC, ORCC Financing IV LLC, Owl Rock CLO I, Ltd., Owl Rock CLO I, LLC, Owl Rock CLO II, Ltd., Owl Rock CLO II, LLC, Owl Rock CLO III, Ltd., Owl Rock CLO III, LLC, Owl Rock CLO IV, Ltd., and Owl Rock CLO IV, LLC.

“Special Equity Interest” means any Equity Interest that is subject to a Lien in favor of creditors of the issuer of such Equity Interest provided that (a) such Lien was created to secure Indebtedness owing by such issuer to such creditors, (b) such Indebtedness was (i) in existence at the time the Obligors acquired such Equity Interest, (ii) incurred or assumed by such issuer substantially contemporaneously with such acquisition or (iii) already subject to a Lien granted to such creditors and (c) unless such Equity Interest is not intended to be included in the Collateral, the documentation creating or governing such Lien does not prohibit the inclusion of such Equity Interest in the Collateral.

“Special Unsecured Indebtedness” means Indebtedness of an Obligor issued after the First Omnibus Amendment Effective Date (which may be Guaranteed by Subsidiary Guarantors) that (a) has no amortization prior to, and a final maturity date not earlier than, the Extended Final Maturity Date (it being understood that (A) none of: (w) the conversion features under convertible notes; (x) the triggering and/or settlement thereof or (y) any cash payment made in respect thereof, shall constitute “amortization” for purposes of this clause (a); and (B) any mandatory amoritization that is contingent upon the happening of an event that is not certain to occur (including a change of control or bankruptcy) shall not in and of itself be deemed to disquality such Indetedness under this clause (a)), (b) is incurred pursuant to terms that are substantially comparable to market terms for substantially similar debt of other similarly situated borrowers as reasonably determined in good faith by the Borrower or, if such transaction is not one in which there are market terms for substantially similar debt of other similarly situated borrowers, on terms that are negotiated in good faith on an arm’s length basis (except, in each case, other than financial covenants and events of default (other than events of default customary in indentures or similar instruments that have no analogous provisions in this Agreement or credit agreements generally), which shall be no more restrictive on the Borrower and its Subsidiaries, while any Loans or the Commitments are outstanding, than those set forth in the Loan Documents; provided that, upon the Borrower’s written request in connection with the incurrence of any Special Unsecured Indebtedness that otherwise would not meet the requirements set forth in this parenthetical of this clause (b), the Borrower and the Administrative Agent (on behalf of the Lenders) shall promptly enter into a written amendment to this Agreement making changes necessary such that the financial covenants and events of default, as applicable, in this Agreement shall be as restrictive as such provisions in the Special Unsecured Indebtedness (it being understood that put rights or repurchase or redemption obligations (x) in the case of convertible securities, in connection with the suspension or delisting of the capital stock of the Borrower or the failure of the Borrower to satisfy a continued listing rule with respect to its capital stock or (y) arising out of circumstances that would constitute a “fundamental change” (as such term is customarily defined in convertible note offerings) or be Events of Default under this Agreement shall not be deemed to be more restrictive for purposes of this definition) and (c) is not secured by any assets of any Obligor;

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provided that Special Unsecured Indebtedness shall not include any Indebtedness permitted pursuant to Section 6.01(o).

“Standard Securitization Undertakings” means, collectively, (a) customary arms-length servicing obligations (together with any related performance guarantees), (b) obligations (together with any related performance guarantees) to refund the purchase price or grant purchase price credits for dilutive events or misrepresentations (in each case unrelated to the collectability of the assets sold or the creditworthiness of the associated account debtors) and (c) representations, warranties, covenants and indemnities (together with any related performance guarantees) of a type that are reasonably customary in accounts receivable securitizations or collateralized loan obligations.

“Statutory Reserve Rate” means, for the Interest Period for any Eurocurrency Borrowing, a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the arithmetic mean, taken over each day in such Interest Period, of the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D).  Such reserve percentages shall include those imposed pursuant to Regulation D.  Eurocurrency Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.  Anything herein to the contrary notwithstanding, the term “Subsidiary” shall not include any (x) Joint Venture Investment or (y) Person that constitutes an Investment held by the Borrower in the ordinary course of business and that is not, under GAAP, consolidated on the financial statements of the Borrower and its Subsidiaries.  Unless otherwise specified, “Subsidiary” means a Subsidiary of the Borrower.

“Subsidiary Guarantor” means any Subsidiary that is a Guarantor under the Guarantee and Security Agreement.  It is understood and agreed that no Financing Subsidiary, Immaterial Subsidiary, Foreign Subsidiary or a Subsidiary of a Foreign Subsidiary shall be a Subsidiary Guarantor.

“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time.  The Swingline Exposure of any Lender at any time shall be the sum of (i) its Applicable Dollar Percentage of the total Swingline Exposure at such time incurred under the Dollar Commitments and (ii) its Applicable Multicurrency Percentage of the total Swingline Exposure at such time incurred under the Multicurrency Commitments.

“Swingline Lender” means any of Truist, ING or State Street Bank and Trust Company, in its capacity as lender of Swingline Loans hereunder, and its successors in such capacity as provided in Section 2.04(d).

“Swingline Loan” means a Loan made pursuant to Section 2.04.

“Syndicated”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, are made pursuant to Section 2.01.

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings (including backup withholding), assessments, fees, or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

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“Term SOFR” means the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

“Termination Date” means the earliest to occur of (i) the Extended Final Maturity Date, (ii) the date of the termination of the Commitments in full pursuant to Section 2.08(c), or (iii) the date on which the Commitments are terminated pursuant to Article VII.

“Testing Period” has the meaning assigned to such term in Section 5.12(b)(ii)(E)(x).

“Testing Quarter” has the meaning assigned to such term in Section 5.12(b)(ii)(B).

“Total Assets” means, as of any date of determination, the value of the total assets of the Obligors on a consolidated basis, less all liabilities and indebtedness not represented by senior securities, in each case, as of such date of determination; provided that, for purposes of calculating the Borrower Asset Coverage Ratio, if the value of the Obligors’ interest in any Financing Subsidiary would be less than zero, it shall be deemed to be zero.

“Total Assets Concentration Limitation” means, as of any date of determination, the amount by which the aggregate value of Equity Interests in Financing Subsidiaries held by the Obligors as of such date of determination exceeds 15% of the Total Assets as of such date of determination.

“Total Secured Debt” means, as of any date of determination, the aggregate amount of senior securities representing secured indebtedness of the Obligors as of such date of determination.

“Transactions” means the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

“Truist” means Truist Bank (as successor by merger to SunTrust Bank).

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans constituting such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

“Undisclosed Administration” means, in relation to a Lender, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.

“Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of New York.

“United States Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

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“Unsecured Longer-Term Indebtedness” means any Indebtedness of an Obligor (which may be Guaranteed by Subsidiary Guarantors) that (a) has no amortization prior to, and a final maturity date not earlier than, six months after the Extended Final Maturity Date (it being understood that (A) none of: (w) the conversion features under convertible notes; (x) the triggering and/or settlement thereof or (y) any cash payment made in respect thereof, shall constitute “amortization” for purposes of this clause (a); and (B) any mandatory amortization that is contingent upon the happening of an event that is not certain to occur (including a change of control or bankruptcy) shall not in and of itself be deemed to disqualify such Indebtedness under this clause (a)), (b) is incurred pursuant to terms that are substantially comparable to market terms for substantially similar debt of other similarly situated borrowers as reasonably determined in good faith by the Borrower or, if such transaction is not one in which there are market terms for substantially similar debt of other similarly situated borrowers, on terms that are negotiated in good faith on an arm’s length basis (except, in each case, other than financial covenants and events of default (other than events of default customary in indentures or similar instruments that have no analogous provisions in this Agreement or credit agreements generally), which shall be no more restrictive upon the Borrower and its Subsidiaries, while any Loans or the Commitments are outstanding, than those set forth in the Loan Documents; provided that, upon the Borrower’s written request in connection with the incurrence of any Unsecured Longer-Term Indebtedness that otherwise would not meet the requirements set forth in this parenthetical of this clause (b), the Borrower and the Administrative Agent (on behalf of the Lenders) shall promptly enter into a written amendment to this Agreement making changes necessary such that the financial covenants and events of default, as applicable, in this Agreement shall be as restrictive as such provisions in the Unsecured Longer-Term Indebtedness (it being understood that put rights or repurchase or redemption obligations (x) in the case of convertible securities, in connection with the suspension or delisting of the capital stock of the Borrower or the failure of the Borrower to satisfy a continued listing rule with respect to its capital stock or (y) arising out of circumstances that would constitute a “fundamental change” (as such term is customarily defined in convertible note offerings) or be Events of Default under this Agreement shall not be deemed to be more restrictive for purposes of this definition) and (c) is not secured by any assets of any Obligor.  For the avoidance of doubt the conversion of all or any portion of any Permitted Convertible Indebtedness constituting Unsecured Longer-Term Indebtedness into Permitted Equity Interests in accordance with Section 6.12(a), shall not cause such Indebtedness to be designated as Unsecured Shorter-Term Indebtedness hereunder.

“Unsecured Shorter-Term Indebtedness” means, collectively, (a) any Indebtedness of an Obligor that is not secured by any assets of any Obligor and that does not constitute Unsecured Longer-Term Indebtedness and (b) any Indebtedness that is designated as “Unsecured Shorter-Term Indebtedness” pursuant to Section 6.11(a); provided that Unsecured Shorter-Term Indebtedness shall not include any Indebtedness permitted pursuant to Section 6.01(o).

“Unquoted Investments” has the meaning set forth in Section 5.12(b)(ii)(B).

“U.S. Government Securities” means securities that are direct obligations of, and obligations the timely payment of principal and interest on which is fully guaranteed by, the United States or any agency or instrumentality of the United States the obligations of which are backed by the full faith and credit of the United States and in the form of conventional bills, bonds, and notes.

“Value” has the meaning assigned to such term in Section 5.13.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom,  any powers of the applicable Resolution Authority  under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution  or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

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SECTION 1.02.  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Syndicated Dollar Loan” or “Syndicated Multicurrency Loan”), by Type (e.g., an “ABR Loan”) or by Class and Type (e.g., a “Syndicated Multicurrency Eurocurrency Loan”).  Borrowings also may be classified and referred to by Class (e.g., a “Dollar Borrowing”, “Multicurrency Borrowing” or “Syndicated Borrowing”), by Type (e.g., an “ABR Borrowing”) or by Class and Type (e.g., a “Syndicated ABR Borrowing” or “Syndicated Multicurrency Eurocurrency Borrowing”).  Loans and Borrowings may also be identified by Currency.

SECTION 1.03.  Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof’ and “hereunder”, and words of similar import, shall be construed to refer to this Agreement  in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.04.  Accounting Terms; GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, (a) if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith and (b) all leases that are or would have been treated as operating leases for purposes of GAAP prior to the issuance on February 25, 2016 of the Accounting Standards Update (the “ASU”) shall continue to be accounted for as operating leases for purposes of all financial definitions and calculations for the purposes of the Loan Documents hereunder  (whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that such obligations are required in accordance with the ASU (on a prospective or retroactive basis or otherwise) to be treated as capitalized lease obligations in the financial statements to be delivered pursuant to the Loan Documents.  Whether or not the Borrower may at any time adopt Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Subtopic 825-10 (or successor standard solely as it relates to fair valuing liabilities) or accounts for liabilities acquired in an acquisition on a fair value basis pursuant to FASB Statement of Financial Accounting Standard No. 141(R) (or successor standard solely as it relates to fair valuing liabilities), all determinations of compliance with the terms and conditions of this Agreement shall be made on the basis that the Borrower has not adopted FASB Accounting Standards Codification Subtopic 825-10 (or such successor standard solely as it relates to fair valuing liabilities) or, in the case of liabilities acquired in an acquisition, FASB Statement of Financial Accounting Standard No. 141(R) (or such successor standard solely as it relates to fair valuing liabilities).

SECTION 1.05.  Currencies; Currency Equivalents.

(a)Currencies Generally.  At any time, any reference in the definition of the term “Agreed Foreign Currency” or in any other provision of this Agreement to the Currency of any particular nation means the lawful currency of such nation at such time whether or not the name of such Currency is the same as it was on the date hereof.  Except as provided in Section 2.10(b) and the last sentence of Section 2.17(a), for purposes of determining (i) whether the amount of any Borrowing or Letter of Credit under the Multicurrency Commitments, together with all other Borrowings and Letters of Credit under the Multicurrency Commitments then outstanding or to be borrowed at the same time as such Borrowing, would exceed the aggregate amount of the Multicurrency Commitments, (ii) the

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aggregate unutilized amount of the Multicurrency Commitments, (iii) the Revolving Credit Exposure, (iv) the Multicurrency LC Exposure, (v) the Covered Debt Amount and (vi) the Borrowing Base or the Value or the fair market value of any Portfolio Investment, the outstanding principal amount of any Borrowing or Letter of Credit that is denominated in any Foreign Currency or the Value or the fair market value of any Portfolio Investment that is denominated in any Foreign Currency shall be deemed to be the Dollar Equivalent of the amount of the Foreign Currency of such Borrowing, Letter of Credit or Portfolio Investment, as the case may be, determined as of the date of such Borrowing or Letter of Credit (determined in accordance with the last sentence of the definition of the term “Interest Period”) or the date of valuation of such Portfolio Investment, as the case may be.  Wherever in this Agreement in connection with a Borrowing or Loan an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Borrowing or Loan is denominated in a Foreign Currency, such amount shall be the relevant Foreign Currency Equivalent of such Dollar amount (rounded to the nearest 1,000 units of such Foreign Currency).  Without limiting the generality of the foregoing, for purposes of determining compliance with any basket in Sections 6.03(g) or 6.04(f), in no event shall the Borrower or any of its Subsidiaries be deemed not to be in compliance with any such basket solely as a result of a change in exchange rates.

(b)Special Provisions Relating to Euro.  Each obligation hereunder of any party hereto that is denominated in the National Currency of a state that is not a Participating Member State on the date hereof shall, effective from the date on which such state becomes a Participating Member State, be redenominated in Euro in accordance with the legislation of the European Union applicable to the European Monetary Union; provided that, if and to the extent that any such legislation provides that any such obligation of any such party payable within such Participating Member State by crediting an account of the creditor can be paid by the debtor either in Euros or such National Currency, such party shall be entitled to pay or repay such amount either in Euros or in such National Currency.  If the basis of accrual of interest or fees expressed in this Agreement with respect to an Agreed Foreign Currency of any country that becomes a Participating Member State after the date on which such currency becomes an Agreed Foreign Currency shall be inconsistent with any convention or practice in the interbank market for the basis of accrual of interest or fees in respect of the Euro, such convention or practice shall replace such expressed basis effective as of and from the date on which such state becomes a Participating Member State; provided that, with respect to any Borrowing denominated in such currency that is outstanding immediately prior to such date, such replacement shall take effect at the end of the Interest Period therefor.

Without prejudice to the respective liabilities of the Borrower to the Lenders and the Lenders to the Borrower under or pursuant to this Agreement, each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time, in consultation with the Borrower, reasonably specify to be necessary or appropriate to reflect the introduction or changeover to the Euro in any country that becomes a Participating Member State after the date hereof; provided that the Administrative Agent shall provide the Borrower and the Lenders with prior notice of the proposed change with an explanation of such change in sufficient time to permit the Borrower and the Lenders an opportunity to respond to such proposed change.

SECTION 1.06.  Divisions.  For all purposes under the Loan Documents, if, as a result of any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) any new Person comes into existence, such new Person shall be deemed to have been organized or acquired on the first date of its existence by the holders of its Equity Interests at such time.

ARTICLE II

THE CREDITS

SECTION 2.01.  The Commitments.  Subject to the terms and conditions set forth herein:

(a)each Dollar Lender severally agrees to make Syndicated Loans in Dollars to the Borrower from time to time during such Dollar Lender’s Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Dollar Credit Exposure exceeding such Lender’s Dollar Commitment, (ii) the aggregate Revolving Dollar Credit Exposure of all of the Dollar Lenders with Dollar Commitments then in effect exceeding the

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aggregate Dollar Commitments at such time or (iii) the total Covered Debt Amount exceeding the Borrowing Base then in effect; and

(b)each Multicurrency Lender severally agrees to make Syndicated Loans in Dollars and in Agreed Foreign Currencies to the Borrower from time to time during such Multicurrency Lender’s Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Multicurrency Credit Exposure exceeding such Lender’s Multicurrency Commitment, (ii) the aggregate Revolving Multicurrency Credit Exposure of all of the Multicurrency Lenders with Multicurrency Commitments then in effect exceeding the aggregate Multicurrency Commitments at such time or (iii) the total Covered Debt Amount exceeding the Borrowing Base then in effect.

Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Syndicated Loans.

SECTION 2.02.  Loans and Borrowings.

(a)Obligations of Lenders.  Each Syndicated Loan shall be made as part of a Borrowing consisting of Loans of the same Class of Commitments (other than with respect to any Syndicated Loan requested pursuant to Section 2.22), Currency and Type made by the applicable Lenders ratably in accordance with their respective Commitments of the applicable Class.  The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b)Type of Loans.  Subject to Section 2.13, each Syndicated Borrowing of a Class shall be constituted entirely of ABR Loans or of Eurocurrency Loans of such Class denominated in a single Currency as the Borrower may request in accordance herewith.  Each ABR Loan shall be denominated in Dollars.  Each Lender at its option may make any Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c)Minimum Amounts.  Each Eurocurrency Borrowing shall be in an aggregate amount of $1,000,000 or a larger multiple of $1,000,000, and each ABR Borrowing (whether Syndicated or Swingline) shall be in an aggregate amount of $1,000,000 or a larger multiple of $100,000; provided that a Syndicated ABR Borrowing of a Class may be in an aggregate amount that is equal to the entire unused balance of the total Commitments of such Class or that is required to finance the reimbursement of an LC Disbursement of such Class as contemplated by Section 2.05(f).  Borrowings of more than one Class, Currency and Type may be outstanding at the same time.

(d)Limitations on Interest Periods.  Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request (or to elect to convert to or continue as a Eurocurrency Borrowing) any Borrowing if the Interest Period requested therefor would end after the Extended Final Maturity Date; provided that any request (or election to convert or continue as a Eurocurrency Borrowing) that would extend past an applicable Non-Extended Final Maturity Date may only be made with respect to the portion of the Eurocurrency Borrowing held by the Extending Lenders and Non-Extending Lenders for which the Non-Extended Final Maturity Date shall not have occurred.

(e)Treatment of Classes.  Notwithstanding anything to the contrary contained herein, with respect to each Syndicated Loan, Swingline Loan or Letter of Credit designated in Dollars (including any Loan requested pursuant to Section 2.22), the Administrative Agent shall deem the Borrower to have requested that such Syndicated Loan, Swingline Loan or Letter of Credit be applied ratably to each of the Dollar Commitments and the Multicurrency Commitments, based upon the percentage of the aggregate Commitments represented by the Dollar Commitments and the Multicurrency Commitments, respectively.

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SECTION 2.03.  Requests for Syndicated Borrowings.

(a)Notice by the Borrower.  To request a Syndicated Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (i) in the case of a Eurocurrency Borrowing denominated in Dollars, not later than 11:00 a.m., Atlanta, Georgia time, three Business Days before the date of the proposed Borrowing, (ii) in the case of a Eurocurrency Borrowing denominated in a Foreign Currency, not later than 11:00 a.m., Atlanta, Georgia time, four Business Days before the date of the proposed Borrowing or (iii) in the case of a Syndicated ABR Borrowing, not later than 11:00 a.m., Atlanta, Georgia time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower.  

(b)Content of Borrowing Requests.  Each telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i)whether such Borrowing is to be made under the Dollar Commitments or the Multicurrency Commitments;

(ii)the aggregate amount and Currency of the requested Borrowing;

(iii)the date of such Borrowing, which shall be a Business Day;

(iv)in the case of a Syndicated Borrowing denominated in Dollars, whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;

(v)in the case of a Eurocurrency Borrowing, the Interest Period therefor, which shall be a period contemplated by the definition of the term “Interest Period” and permitted under Section 2.02(d); and

(vi)the location and number of the Borrower’s account to which funds are to be disbursed, which will comply with the requirements of Section 2.06.

(c)Notice by the Administrative Agent to the Lenders.  Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each applicable Lender of the details thereof and of the amounts of such Lender’s Loan to be made as part of the requested Borrowing.

(d)Failure to Elect.  If no election as to the Currency of a Syndicated Borrowing is specified, then the requested Syndicated Borrowing shall be denominated in Dollars.  If no election as to the Type of a Syndicated Borrowing is specified, then the requested Borrowing shall be a Eurocurrency Borrowing having an Interest Period of one month and, if an Agreed Foreign Currency has been specified, the requested Syndicated Borrowing shall be a Eurocurrency Borrowing denominated in such Agreed Foreign Currency and having an Interest Period of one month.  If a Eurocurrency Borrowing is requested but no Interest Period is specified, (i) if the Currency specified for such Borrowing is Dollars (or if no Currency has been so specified), the requested Borrowing shall be a Eurocurrency Borrowing denominated in Dollars having an Interest Period of one month’s duration, and (ii) if the Currency specified for such Borrowing is an Agreed Foreign Currency, the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

SECTION 2.04.  Swingline Loans.

(a)Agreement to Make Swingline Loans.  Subject to the terms and conditions set forth herein, each Swingline Lender severally agrees to make Swingline Loans under each Commitment to the Borrower from time to time during the Extended Availability Period in Dollars, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans of both Classes of Commitments exceeding $50,000,000  or the aggregate principal amount of outstanding Swingline Loans of any Swingline Lender exceeding $25,000,000, (ii) the sum of any Swingline Lender’s outstanding Multicurrency Loans, its LC Exposure, its outstanding Swingline Loans and (without duplication) its other Swingline Exposure exceeding

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its Multicurrency Commitment; (iii) the total Revolving Dollar Credit Exposures of Dollar Lenders with Dollar Commitments then in effect exceeding the aggregate Dollar Commitments at such time, (iv) the total Revolving Multicurrency Credit Exposures of Multicurrency Lenders with Multicurrency Commitments then in effect exceeding the aggregate Multicurrency Commitments at such time or (v) the total Covered Debt Amount exceeding the Borrowing Base then in effect; provided that no Swingline Lender shall be required to make a Swingline Loan to refinance an outstanding Swingline Loan.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.

(b)Notice of Swingline Loans by the Borrower.  To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy) not later than 2:00 p.m., Atlanta, Georgia time, on the day of such proposed Swingline Loan.  Each such notice shall be irrevocable and shall specify the Swingline Lender from which such Swingline Loan shall be made, the requested date (which shall be a Business Day) and the amount of the requested Swingline Loan.  The Administrative Agent will promptly advise the applicable Swingline Lender of any such notice received from the Borrower.  Each Swingline Lender shall make each applicable Swingline Loan available to the Borrower by means of a credit to the general deposit account of the Borrower with such Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(f), by remittance to the applicable Issuing Bank) by 3:00 p.m., Atlanta, Georgia time, on the requested date of such Swingline Loan.

(c)Participations by Lenders in Swingline Loans.  Any Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., Atlanta, Georgia time on any Business Day, require the Lenders of the applicable Class (other than Non-Extending Lenders for which such Non-Extending Lender’s applicable Non-Extending Commitment Termination Date shall have occurred) to acquire participations on such Business Day in all or a portion of the outstanding Swingline Loans of such Class made by such Swingline Lender.  Such notice to the Administrative Agent shall specify the aggregate amount of Swingline Loans in which the applicable Lenders will participate.  Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each applicable Lender, specifying in such notice such Lender’s Applicable Percentage of such Swingline Loan or Loans.  Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above in this paragraph, to pay to the Administrative Agent, for account of the applicable Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans; provided that no Lender shall be required to purchase a participation in a Swingline Loan pursuant to this Section 2.04(c) if (x) the conditions set forth in Section 4.02 would not be satisfied in respect of a Borrowing at the time such Swingline Loan was made and (y) the Required Lenders of the respective Class shall have so notified the applicable Swingline Lender in writing and shall not have subsequently determined that the circumstances giving rise to such conditions not being satisfied no longer exist.  Unless a Swingline Lender has received the written notice referred to in the previous sentence prior to the time such Swingline Loan was made, then, subject to the terms and conditions hereof, such Swingline Lender shall be entitled to assume all such conditions are satisfied.

Subject to the foregoing, each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph (c) is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments of the respective Class, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the applicable Swingline Lender the amounts so received by it from the Lenders.  The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the relevant Swingline Lender.  Any amounts received by a Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by such Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the applicable Swingline Lender, as their interests may appear.  The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

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(d)Resignation and Replacement of Swingline Lender.  Any Swingline Lender may resign and be replaced at any time by written agreement among the Borrower, the Administrative Agent, the resigning Swingline Lender and a successor Swingline Lender. The Administrative Agent shall notify the Lenders of any such resignation and replacement of any Swingline Lender. In addition to the foregoing, if a Lender becomes, and during the period it remains, a Defaulting Lender, and if any Default has arisen from a failure of the Borrower to comply with Section 2.19(a), then each Swingline Lender may, upon prior written notice to the Borrower and the Administrative Agent, resign as a Swingline Lender, effective at the close of business Atlanta, Georgia time on a date specified in such notice (which date may not be less than five Business Days after the date of such notice). On or after the effective date of any such resignation, the Borrower and the Administrative Agent may, by written agreement, appoint one or more successor Swingline Lenders. The Administrative Agent shall notify the Lenders of any such appointment of a successor Swingline Lender. Upon the effectiveness of any resignation of any Swingline Lender, the Borrower shall repay in full all outstanding Swingline Loans made by such Swingline Lender together with all accrued interest thereon. From and after the effective date of the appointment of a successor Swingline Lender, (i) such successor Swingline Lender shall have all the rights and obligations of the replaced Swingline Lender under this Agreement with respect to Swingline Loans to be made by such successor Swingline Lender thereafter and (ii) references herein to the term “Swingline Lender” and/or “Swingline Lenders” shall be deemed to refer to such successor or successors (and the other current Swingline Lenders, if applicable) or to any previous Swingline Lender, or to such successor or successors (and all current Swingline Lenders) and all previous Swingline Lenders, as the context shall require. After the replacement of the Swingline Lender hereunder, the replaced Swingline Lender shall have no obligation to make additional Swingline Loans.

SECTION 2.05.  Letters of Credit.

(a)General.  Subject to the terms and conditions set forth herein, in addition to the Loans provided for in Section 2.01, the Borrower may request each Issuing Bank to issue, at any time and from time to time during the Extended Availability Period and under either the Dollar Commitments or Multicurrency Commitments, Letters of Credit denominated in Dollars or (in the case of Letters of Credit under the Multicurrency Commitments) in any Agreed Foreign Currency for its own account or the account of its designee (provided that the Obligors shall remain primarily liable to the Lenders hereunder for payment and reimbursement of all amounts payable in respect of the Letters of Credit hereunder) in such form as is acceptable to such Issuing Bank in its reasonable determination.  Letters of Credit issued hereunder shall constitute utilization of the Commitments up to the aggregate amount available to be drawn thereunder.  Notwithstanding anything to the contrary in this Agreement, no Issuing Bank shall be under any obligation to issue, amend, renew or extend any Letter of Credit and each Letter of Credit issued, amended, renewed or extended hereunder shall be issued, amended, renewed or extended in the sole discretion of the applicable Issuing Bank on an uncommitted basis.

(b)Notice of Issuance, Amendment, Renewal or Extension.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by such Issuing Bank) to any Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (d) of this Section), the amount and Currency of such Letter of Credit, whether such Letter of Credit is to be issued under the Dollar Commitments or the Multicurrency Commitments, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the applicable Issuing Bank, the Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, any Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(c)Limitations on Amounts.  A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the aggregate LC Exposure of the applicable Issuing Bank requested to issue such Letter of Credit (determined for these purposes

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without giving effect to the participations therein of the Lenders pursuant to paragraph (e) of this Section)  shall not exceed the amount set forth opposite the name of such Issuing Bank on Schedule 2.05 (or such greater amount as such Issuing Bank may agree in its sole discretion); (ii) the total Revolving Dollar Credit Exposures of Dollar Lenders with Dollar Commitments then in effect shall not exceed the aggregate Dollar Commitments at such time; (iii) the total Revolving Multicurrency Credit Exposures of Multicurrency Lenders with Multicurrency Commitments then in effect shall not exceed the aggregate Multicurrency Commitments at such time; (iv) with respect to each Issuing Bank that is a Swingline Lender, the sum of such Swingline Lender’s outstanding Multicurrency Loans, its LC Exposure, its outstanding Swingline Loans and (without duplication) its other Swingline Exposure shall not exceed its Multicurrency Commitment then in effect; and (v) the total Covered Debt Amount shall not exceed the Borrowing Base then in effect.

(d)Expiration Date.  Each Letter of Credit shall expire at or prior to the close of business on the date twelve months after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, twelve months after the then-current expiration date of such Letter of Credit, so long as such renewal or extension occurs within three months of such then-current expiration date); provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods.  No Letter of Credit may be renewed following the earlier to occur of the Extended Commitment Termination Date and the Termination Date, except to the extent that the relevant Letter of Credit is Cash Collateralized no later than five Business Days prior to the Extended Commitment Termination Date or Termination Date, as applicable, and the Borrower pays the applicable Issuing Bank all fronting fees scheduled to be due and payable during the term of the relevant Letter of Credit or supported by another letter of credit, in each case pursuant to arrangements reasonably satisfactory to the applicable Issuing Bank and the Administrative Agent.

(e)Participations.  By the issuance of a Letter of Credit of a Class (or an amendment to a Letter of Credit increasing the amount thereof) by an Issuing Bank, and without any further action on the part of such Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender (other than any Non-Extending Lender for which such Non-Extending Lender’s applicable Non-Extending Commitment Termination Date has occurred) of such Class, and each Lender of such Class hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Dollar Percentage or Applicable Multicurrency Percentage, as the case may be, of the aggregate amount available to be drawn under such Letter of Credit.  Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the applicable Commitments; provided that no Lender shall be required to purchase a participation in a Letter of Credit pursuant to this Section 2.05(e) if (x) the conditions set forth in Section 4.02 would not be satisfied in respect of a Borrowing at the time such Letter of Credit was issued and (y) the Administrative Agent or any Lender shall have so notified such Issuing Bank in writing at least two Business Days prior to the requested date of issuance of such Letter of Credit and shall not have subsequently determined that the circumstances giving rise to such conditions not being satisfied no longer exist.  Unless an Issuing Bank has received written notice from any Lender, the Administrative Agent or the Borrower, at least two Business Days prior to the requested date of issuance of the applicable Letter of Credit, that one or more applicable conditions contained in Section 4.02 shall not then be satisfied, then, subject to the terms and conditions hereof, such Issuing Bank shall be entitled to assume all such conditions are satisfied.

In consideration and in furtherance of the foregoing, each Lender of a Class (other than any Non-Extending Lender for which such Non-Extending Lender’s applicable Non-Extending Commitment Termination Date has occurred) hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for account of each Issuing Bank, such Lender’s Applicable Dollar Percentage or Applicable Multicurrency Percentage, as the case may be, of each LC Disbursement made by such Issuing Bank in respect of Letters of Credit of such Class promptly upon the request of such Issuing Bank at any time from the time of such LC Disbursement until such LC Disbursement is reimbursed by the Borrower or at any time after any reimbursement payment is required to be refunded to the Borrower for any reason.  Such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each such payment shall be made in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Lenders.  Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to the next following paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or,

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to the extent that the Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear.  Any payment made by a Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f)Reimbursement.  If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such Issuing Bank in respect of such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 11:00 a.m., Atlanta, Georgia time, on (i) the Business Day that the Borrower receives notice of such LC Disbursement, if such notice is received prior to 10:00 a.m., Atlanta, Georgia time, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time; provided that, if such LC Disbursement is not less than $1,000,000 and is denominated in Dollars, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with a Syndicated ABR Borrowing or a Swingline Loan of the respective Class in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Syndicated ABR Borrowing or Swingline Loan.

If the Borrower fails to make such payment when due, the Administrative Agent shall notify each applicable Lender with a Commitment then in effect of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Dollar Percentage or Applicable Multicurrency Percentage, as the case may be, thereof.

(g)Obligations Absolute.  The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (f) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply strictly with the terms of such Letter of Credit, and (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower’s obligations hereunder.

Neither the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit by such Issuing Bank or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of such Issuing Bank; provided that the foregoing shall not be construed to excuse any Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s gross negligence or willful misconduct when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that:

(i)the Issuing Banks may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit;

(ii)the Issuing Banks shall have the right, in their sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and

(iii)this sentence shall establish the standard of care to be exercised by the Issuing Banks when determining whether drafts and other documents presented under a Letter of Credit comply with the terms

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thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).

(h)Disbursement Procedures.  Each Issuing Bank shall, within a reasonable time following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit issued by such Issuing Bank.  The applicable Issuing Bank shall promptly after such examination notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse such Issuing Bank and the applicable Lenders with respect to any such LC Disbursement.

(i)Interim Interest.  If any Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to Syndicated ABR Loans; provided that, if the Borrower fails to reimburse such LC Disbursement within two Business Days following the date when due pursuant to paragraph (f) of this Section, then the provisions of Section 2.12(c) shall apply.  Interest accrued pursuant to this paragraph shall be for account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (f) of this Section to reimburse such Issuing Bank shall be for account of such Lender to the extent of such payment.

(j)Resignation and/or Replacement of an Issuing Bank.  An Issuing Bank may resign and be replaced at any time by written agreement among the Borrower, the Administrative Agent, the resigning Issuing Bank and the successor Issuing Bank.  In addition, if any Issuing Bank, in its capacity as a Lender, assigns all of its Loans and Commitments in accordance with the terms of this Agreement, such Issuing Bank may, with the prior written consent of the Borrower (such consent not to be unreasonably withheld or delayed; provided that no consent of the Borrower shall be required if an Event of Default has occurred and is continuing), resign as an Issuing Bank hereunder upon not less than three Business Days prior written notice to the Administrative Agent and the Borrower; provided, further, in determining whether to give any such consent, the Borrower may consider, among other factors, the sufficiency of availability of Letters of Credit hereunder.  The Administrative Agent shall notify the Lenders of any such resignation and replacement of an Issuing Bank.  Upon the effectiveness of any resignation or replacement of an Issuing Bank, the Borrower shall pay all unpaid fees accrued for account of the resigning or replaced Issuing Bank pursuant to Section 2.11(b). From and after the effective date of the appointment of a successor Issuing Bank, (i) the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” and/or “Issuing Banks” shall be deemed to refer to such successor or successors (and other current Issuing Banks, if applicable) or to any previous Issuing Bank, or to such successor or successors (and all other current Issuing Banks) and all previous Issuing Banks, as the context shall require. After the effective replacement or resignation of the Issuing Bank hereunder, the replaced or resigning Issuing Bank, as the case may be, shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit.

(k)Cash Collateralization.  If the Borrower shall be required to provide Cash Collateral for LC Exposure pursuant to Section 2.05(d), Section 2.09(a), Section 2.10(b) or (c), Section 2.22(b) the penultimate paragraph of Article VII or Section 9.16, the Borrower shall immediately deposit into a segregated collateral account or accounts (herein, collectively, the “Letter of Credit Collateral Account”) in the name and under the dominion and control of the Administrative Agent, for the benefit of the Lenders, Cash denominated in the Currency of the Letter of Credit under which such LC Exposure arises in an amount equal to the amount required under Section 2.05(d), Section 2.09(a), Section 2.10(b) or (c), Section 2.22(b) or the penultimate paragraph of Article VII, as applicable.  Such deposit shall be held by the Administrative Agent as collateral in the first instance for the LC Exposure under this Agreement and thereafter for the payment of the “Secured Obligations” under and as defined in the Guarantee and Security Agreement, and for these purposes the Borrower hereby grants a security interest to the Administrative Agent for the benefit of the Lenders in the Letter of Credit Collateral Account and in any financial assets (as defined in the Uniform Commercial Code) or other property held therein.

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(l)Additional Issuing Banks.  From time to time, the Borrower may, by notice to the Administrative Agent, designate one or more additional Lenders as an Issuing Bank, so long as each such Lender agrees (in its sole discretion) to act in such capacity and is reasonably satisfactory to the Administrative Agent; provided that each such notice shall include an updated Schedule 2.05; provided, further, that the Borrower shall not update Schedule 2.05 to increase any Issuing Bank’s maximum LC Exposure without such Issuing Bank’s consent. Each such additional Issuing Bank shall execute a counterpart of this Agreement upon the approval of the Administrative Agent (which approval shall not be unreasonably withheld or delayed) and shall thereafter be an Issuing Bank hereunder for all purposes.

SECTION 2.06.  Funding of Borrowings.

(a)Funding by Lenders.  Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by (i) in the case of any Loan (other than a Syndicated ABR Borrowing), 11:00 a.m. Atlanta, Georgia time, and (ii) in the case of any Loan that is a Syndicated ABR Borrowing, 1:00 p.m. Atlanta, Georgia time, in each case, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04.  The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Borrower in the applicable Borrowing Request; provided that Syndicated ABR Borrowings made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(f) shall be remitted by the Administrative Agent to the applicable Issuing Bank.

(b)Presumption by the Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed funding deadline of any Borrowing set forth in clause (a) above that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.  Nothing in this paragraph shall relieve any Lender of its obligation to fulfill its commitments hereunder, and this paragraph shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

SECTION 2.07.  Interest Elections.

(a)Elections by the Borrower for Syndicated Borrowings.  Subject to Section 2.03(d), the Loans constituting each Syndicated Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Borrowing, shall have the Interest Period specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a Borrowing of a different Type or to continue such Borrowing as a Borrowing of the same Type and, in the case of a Eurocurrency Borrowing, may elect the Interest Period therefor, all as provided in this Section; provided, however, that (i) a Syndicated Borrowing of a Class may only be continued or converted into a Syndicated Borrowing of the same Class, (ii) a Syndicated Borrowing denominated in one Currency may not be continued as, or converted to, a Syndicated Borrowing in a different Currency, (iii) no Eurocurrency Borrowing denominated in a Foreign Currency may be continued if, after giving effect thereto, the aggregate Revolving Multicurrency Credit Exposures would exceed the aggregate Multicurrency Commitments, and (iv) a Eurocurrency Borrowing denominated in a Foreign Currency may not be converted to a Borrowing of a different Type.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders of the respective Class holding the Loans constituting such Borrowing, and the Loans constituting each such portion shall be considered a separate Borrowing.  This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

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(b)Notice of Elections.  To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Syndicated Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly (but no later than the close of business on the date of such request) by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

(c)Content of Interest Election Requests.  Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i)the Borrowing (including the Class of Commitment) to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) of this paragraph shall be specified for each resulting Borrowing);

(ii)the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii)whether, in the case of a Borrowing denominated in Dollars, the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; and

(iv)if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period therefor after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period” and permitted under Section 2.02(d).

(d)Notice by the Administrative Agent to the Lenders.  Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each applicable Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e)Failure to Elect; Events of Default.  If the Borrower fails to deliver a timely and complete Interest Election Request with respect to a Eurocurrency Borrowing prior to the end of the Interest Period therefor, then, unless such Borrowing is repaid as provided herein, (i) if such Borrowing is denominated in Dollars, at the end of such Interest Period such Borrowing shall be converted to a Syndicated Eurocurrency Borrowing of the same Class having an Interest Period of one month, and (ii) if such Borrowing is denominated in a Foreign Currency, the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Notwithstanding any contrary provision hereof (other than the last paragraph of Article VII), if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, (i) any Eurocurrency Borrowing denominated in Dollars shall, at the end of the applicable Interest Period for such Eurocurrency Borrowing, be automatically converted to an ABR Borrowing and (ii) any Eurocurrency Borrowing denominated in a Foreign Currency shall not have an Interest Period of more than one month’s duration.

SECTION 2.08.  Termination, Reduction or Increase of the Commitments.

(a)Scheduled Termination.  Unless previously terminated, the Commitments of each Extending Lender with respect to such Extending Lender’s Extended Loans shall terminate on the Extended Commitment Termination Date and the Commitments of each Non-Extending Lender with respect to such Non-Extending Lender’s Non-Extended Loans shall terminate on the Non-Extended Commitment Termination Date for such Non-Extending Lender.

(b)Voluntary Termination or Reduction.  The Borrower may at any time terminate, or from time to time reduce, the Commitments of either Class of Commitment; provided that (i) each reduction of the Commitments of a Class shall be in an amount that is $10,000,000 (or, if less, the entire amount of the Commitments of such Class) or a larger multiple of $5,000,000 in excess thereof (or, if less, the entire amount of the Commitments of such Class) and (ii) the Borrower shall not terminate or reduce the Commitments of either Class of Commitment

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if, after giving effect to any concurrent prepayment of the Syndicated Loans of such Class in accordance with Section 2.10, the total Revolving Credit Exposures of such Class would exceed the total Commitments of such Class.  Any such reduction of the Commitments below the principal amount of the Swingline Loans permitted under Section 2.04(a)(i) and the Letters of Credit permitted under Section 2.05(c)(i) shall result in a dollar-for-dollar reduction of such amounts as applicable.

(c)Notice of Voluntary Termination or Reduction.  The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments of a Class delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(d)Effect of Termination or Reduction.  Any termination or reduction of the Commitments of a Class pursuant to clause (b) shall be permanent.  Each reduction of the Commitments of a Class pursuant to clause (b) shall be made ratably among the Lenders of such Class (including with respect to Extending Lenders and Non-Extending Lenders) in accordance with their respective Commitments.

(e)Increase of the Commitments.

(i)Requests for Increase by Borrower.  The Borrower may, at any time, request that the Commitments hereunder of a Class be increased (each such proposed increase being a “Commitment Increase”) (provided that in no event shall the Commitments of a Non-Extending Lender be increased hereunder) upon notice to the Administrative Agent (who shall promptly notify the Lenders), which notice shall specify each existing Lender (each an “Increasing Lender”) and/or each additional lender (each an “Assuming Lender”) that shall have agreed to an additional Commitment and the date on which such increase is to be effective (the “Commitment Increase Date”), which shall be a Business Day at least three Business Days (or such lesser period as the Administrative Agent may reasonably agree) after delivery of such notice and 30 days prior to the Extended Commitment Termination Date; provided that:

(A)the minimum amount of the Commitment of any Assuming Lender, and the minimum amount of the increase of the Commitment of any Increasing Lender, as part of such Commitment Increase shall be $10,000,000 or a larger multiple of $5,000,000 in excess thereof (or such lesser amount as the Administrative Agent may reasonably agree); provided that this clause (A) shall not be a condition to a Commitment Increase following any Lender’s delivery of a GBSA Notice;

(B)immediately after giving effect to such Commitment Increase (including, if applicable, the substantially concurrent reduction of the Commitments of a Non-Extending Lender in accordance with Section 2.08(f)), the total Commitments of all of the Lenders hereunder shall not exceed $2,000,000,000;

(C)each Assuming Lender shall be consented to by the Administrative Agent and each Issuing Bank (such consent not to be unreasonably withheld or delayed);

(D)no Default shall have occurred and be continuing on such Commitment Increase Date or shall result from the proposed Commitment Increase; and

(E)the representations and warranties contained in this Agreement shall be true and correct in all material respects (or, in the case of any portion of the representations and warranties already subject to a materiality qualifier, true and correct in all respects) on and as of the

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Commitment Increase Date as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

(ii)Effectiveness of Commitment Increase by Borrower.  An Assuming Lender, if any, shall become a Lender hereunder as of such Commitment Increase Date and the Commitment of the respective Class of any Increasing Lender and such Assuming Lender shall be increased as of such Commitment Increase Date; provided that:

 

(x)

the Administrative Agent shall have received on or prior to 11:00 a.m., Atlanta, Georgia time, on such Commitment Increase Date (or on or prior to a time on an earlier date specified by the Administrative Agent) a certificate of a duly authorized officer of the Borrower stating that each of the applicable conditions to such Commitment Increase set forth in the foregoing paragraph (i) has been satisfied; and

 

(y)

each Assuming Lender or Increasing Lender shall have delivered to the Administrative Agent, on or prior to 11:00 a.m., Atlanta, Georgia time on such Commitment Increase Date (or on or prior to a time on an earlier date specified by the Administrative Agent), an agreement, in form and substance satisfactory to the Borrower and the Administrative Agent, pursuant to which such Lender shall, effective as of such Commitment Increase Date, undertake a Commitment or an increase of Commitment in each case of the respective Class, duly executed by such Assuming Lender or Increasing Lender, as applicable, and the Borrower and acknowledged by the Administrative Agent.

Promptly following satisfaction of such conditions, the Administrative Agent shall notify the Lenders of such Class (including any Assuming Lenders) thereof and of the occurrence of the Commitment Increase Date by facsimile transmission or electronic messaging system.

(iii)Recordation into Register.  Upon its receipt of an agreement referred to in clause (ii)(y) above executed by an Assuming Lender or any Increasing Lender, together with the certificate referred to in clause (ii)(x) above, the Administrative Agent shall, if such agreement has been completed, (x) accept such agreement, (y) record the information contained therein in the Register and (z) give prompt notice thereof to the Borrower.

(iv)Adjustments of Borrowings upon Effectiveness of Increase.  On the Commitment Increase Date, the Borrower shall (A) prepay the outstanding Loans (if any) of the affected Class in full, (B) simultaneously borrow new Loans of such Class hereunder in an amount equal to such prepayment; provided that with respect to subclauses (A) and (B), (x) the prepayment to, and borrowing from, any existing Lender shall be effected by book entry to the extent that any portion of the amount prepaid to such Lender will be subsequently borrowed from such Lender and (y) the existing Lenders, the Increasing Lenders and the Assuming Lenders shall make and receive payments among themselves, in a manner acceptable to the Administrative Agent, so that, after giving effect thereto, the Loans of such Class are held ratably by the Lenders of such Class in accordance with the respective Commitments of such Class of such Lenders (after giving effect to such Commitment Increase) and (C) pay to the Lenders of such Class the amounts, if any, payable under Section 2.15 as a result of any such prepayment.  Concurrently therewith, the Lenders of such Class shall be deemed to have adjusted their participation interests in any outstanding Letters of Credit of such Class so that such interests are held ratably in accordance with their commitments of such Class as so increased.

(f)Reduction of Non-Extending Lenders’ Commitment.  Notwithstanding anything to the contrary herein (including Section 2.08(d)):

(i)The Borrower may at any time (x) terminate, or from time to time reduce, the Commitment of any Non-Extending Lender without reducing the Commitments of any other Lender of the same Class of Commitments of such Non-Extending Lender or (y) at any time after a Non-Extending Lender’s Non-Extended Commitment Termination Date, prepay the Loans of such Non-Extending Lender without prepaying the Loans of any other Lender of the same Class of Commitments of such Non-Extending Lender;

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provided that each reduction of the Commitment or prepayment of Loans of a Non-Extending Lender hereunder shall be in an amount that is $10,000,000 or a larger multiple of $5,000,000 in excess thereof (or, in each case, the entire Commitment or outstanding Loans of such Non-Extending Lender, as applicable).

(ii)The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitment or prepay the Loans of any Non-Extending Lender under this clause (f) at least three Business Days prior to (x) the related Commitment Increase Date in the case of any termination or reduction or (y) the effective date of such prepayment, in each case, specifying such election and the related Commitment Increase Date or effective date thereof, as applicable.  Promptly following receipt of any notice, the Administrative Agent shall advise each Lender of the contents thereof.  Each notice delivered by the Borrower pursuant to this clause (f) shall be irrevocable; provided that a notice of termination may state that such notice is conditioned upon the effectiveness of the related Commitment Increase, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(iii)Any termination or reduction of the Commitment or prepayment of Loans of any Non-Extending Lender pursuant to this clause (f) shall be permanent and, if applicable in connection with any termination or reduction of Commitments, shall be made concurrently with all required reallocation prepayments and cash collateralizations required under Section 2.22.

SECTION 2.09.  Repayment of Loans; Evidence of Debt.

(a)Repayment.  The Borrower hereby unconditionally promises to pay the Loans of each Class of Final Maturity Date or Commitments, as applicable, as follows:

(i)to the Administrative Agent for account of the Lenders of such Class of Final Maturity Date the outstanding principal amount of the Syndicated Loans of the Lenders of such Class of Final Maturity Date on the applicable Final Maturity Date; and

(ii)to the applicable Swingline Lender the then unpaid principal amount of each Swingline Loan of each Class of Commitment denominated in Dollars made by such Swingline Lender, on the earlier of the Extended Commitment Termination Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least ten Business Days after such Swingline Loan is made; provided that on each date that a Syndicated Borrowing of such Class of Commitment is made, the Borrower shall repay all Swingline Loans of such Class of Commitment then outstanding.

In addition, on the Extended Commitment Termination Date, the Borrower shall deposit Cash into the Letter of Credit Collateral Account (denominated in the Currency of the Letter of Credit under which such LC Exposure arises) in an amount equal to 100% of the undrawn face amount of all Letters of Credit outstanding on the close of business on the Extended Commitment Termination Date, such deposit to be held by the Administrative Agent as collateral security for the LC Exposure under this Agreement in respect of the undrawn portion of such Letters of Credit.

(b)Manner of Payment.  Prior to any repayment or prepayment of any Borrowings to any Lenders of any Class of Commitment hereunder, the Borrower shall select the Borrowing or Borrowings of such Class to be paid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than the time set forth in Section 2.10(e) prior to the scheduled date of such repayment; provided that each repayment of Borrowings to any Lenders of a Class shall be applied to repay any outstanding ABR Borrowings of such Class before any other Borrowings of such Class.  If the Borrower fails to make a timely selection of the Borrowing or Borrowings to be repaid or prepaid, such payment shall be applied, first, to pay any outstanding ABR Borrowings of the applicable Class and, second, to other Borrowings of such Class in the order of the remaining duration of their respective Interest Periods (the Borrowing with the shortest remaining Interest Period to be repaid first).  Other than in connection with a reduction or termination of commitments pursuant to Section 2.08(b) or (f), the occurrence of the Final Maturity Date with respect to any Lender pursuant to Section 2.09(a) or a mandatory prepayment pursuant to Section 2.10(e), each payment of a Syndicated Borrowing to Lenders of a Class shall be applied ratably (both with

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respect to (x) Dollar Loans and Multicurrency Loans and (y) Extended Loans and Non-Extended Loans) to the Loans included in such Borrowing.

(c)Maintenance of Records by Lenders.  Each Lender shall maintain in accordance with its usual practice records evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts and Currency of principal and interest payable and paid to such Lender from time to time hereunder.

(d)Maintenance of Records by the Administrative Agent.  The Administrative Agent shall maintain records in which it shall record (i) the amount and Currency of each Loan made hereunder, the Class and Type thereof and each Interest Period therefor, (ii) the amount and Currency of any principal or interest due and payable or to become due and payable from the Borrower to each Lender of such Class of Commitment or Final Maturity Date hereunder and (iii) the amount and Currency of any sum received by the Administrative Agent hereunder for account of the Lenders and each Lender’s share thereof.

(e)Effect of Entries.  The entries made in the records maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence, absent obvious error, of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such records or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(f)Promissory Notes.  Any Lender may request that Loans of any Class made by it be evidenced by a promissory note; in such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.10.  Prepayment of Loans.

(a)Optional Prepayments.  The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty except for payments under Section 2.15, subject to the requirements of this Section.  Any prepayment of a Borrowing made in accordance with this clause (a) shall be applied ratably among the Lenders of a Class of Commitment unless such prepayment is made in connection with the reduction of Commitments in accordance with Section 2.08(b) or (f) in which case such prepayment shall be applied in accordance with Section 2.08(d) or (f), as applicable.

(b)Mandatory Prepayments due to Changes in Exchange Rates.

(i)Determination of Amount Outstanding.  On each Quarterly Date and, in addition, promptly upon the receipt by the Administrative Agent of a Currency Valuation Notice (as defined below), the Administrative Agent shall determine the aggregate Revolving Multicurrency Credit Exposure.  For the purpose of this determination, the outstanding principal amount of any Loan that is denominated in any Foreign Currency shall be deemed to be the Dollar Equivalent of the amount in the Foreign Currency of such Loan, determined as of such Quarterly Date or, in the case of a Currency Valuation Notice received by the Administrative Agent prior to 11:00 a.m., Atlanta, Georgia time, on a Business Day, on such Business Day or, in the case of a Currency Valuation Notice otherwise received, on the first Business Day after such Currency Valuation Notice is received.  Upon making such determination, the Administrative Agent shall promptly notify the Multicurrency Lenders and the Borrower thereof.

(ii)Prepayment.  If on the date of such determination the aggregate Revolving Multicurrency Credit Exposure minus the Multicurrency LC Exposure fully Cash Collateralized on such date exceeds 105% of the aggregate amount of the Multicurrency Commitments as then in effect, the Borrower shall prepay the Syndicated Multicurrency Loans and Swingline Multicurrency Loans (and/or provide Cash Collateral for

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Multicurrency LC Exposure as specified in Section 2.05(k)) within 15 Business Days following the Borrower’s receipt of notice from the Administrative Agent pursuant to clause (b)(i) above in such amounts as shall be necessary so that after giving effect thereto the aggregate Revolving Multicurrency Credit Exposure does not exceed the Multicurrency Commitments.

For purposes hereof “Currency Valuation Notice” means a notice given by the Required Multicurrency Lenders to the Administrative Agent stating that such notice is a “Currency Valuation Notice” and requesting that the Administrative Agent determine the aggregate Revolving Multicurrency Credit Exposure.  The Administrative Agent shall not be required to make more than one valuation determination pursuant to Currency Valuation Notices within any rolling three month period.

Any prepayment pursuant to this paragraph shall be applied, first to Swingline Multicurrency Loans outstanding, second, to Syndicated Multicurrency Loans outstanding and third, as cover for Multicurrency LC Exposure.

(c)Mandatory Prepayments due to Borrowing Base Deficiency.  In the event that at any time any Borrowing Base Deficiency shall exist, the Borrower shall, within five Business Days after delivery of the applicable Borrowing Base Certificate, prepay the Loans (or provide Cash Collateral for Letters of Credit as contemplated by Section 2.05(k)) or reduce Other Covered Indebtedness or any other Indebtedness that is included in the Covered Debt Amount at such time in such amounts as shall be necessary so that such Borrowing Base Deficiency is cured; provided that (i) the aggregate amount of such prepayment of Loans (and Cash Collateral for Letters of Credit) shall be at least equal to the Revolving Percentage times the aggregate prepayment of the Covered Debt Amount, and (ii) if, within five Business Days after delivery of a Borrowing Base Certificate demonstrating such Borrowing Base Deficiency, the Borrower shall present the Lenders with a reasonably feasible plan acceptable to the Required Lenders in their sole discretion to enable such Borrowing Base Deficiency to be cured within 30 Business Days (which 30-Business Day period shall include the five Business Days permitted for delivery of such plan), then such prepayment or reduction shall not be required to be effected immediately but may be effected in accordance with such plan (with such modifications as the Borrower may reasonably determine), so long as such Borrowing Base Deficiency is cured within such 30-Business Day period.

(d)Mandatory Prepayments During Amortization Period.  During the period commencing on the date immediately following the Commitment Termination Date with respect to any Loans of any Lender or Lenders and ending on the Final Maturity Date with respect to the Loans of such Lender or Lenders:

(i)Asset Disposition.  If the Borrower or any of its Subsidiaries (other than a Financing Subsidiary) Disposes of any property which results in the receipt by such Person of Net Cash Proceeds in excess of $2,000,000 in the aggregate since the applicable Commitment Termination Date, the Borrower shall prepay an aggregate principal amount of such Loans owed to such Lender or Lenders equal to 100% of such Net Cash Proceeds no later than the fifth Business Day following the receipt of such Net Cash Proceeds (such prepayments to be applied as set forth in Section 2.09(b)).

(ii)Equity Issuance.  Upon the sale or issuance by the Borrower or any of its Subsidiaries (other than a Financing Subsidiary) of any of its Equity Interests (other than any sales or issuances of Equity Interests to the Borrower or any Subsidiary Guarantor), the Borrower shall prepay an aggregate principal amount of such Loans owed to such Lender or Lenders equal to 75% of all Net Cash Proceeds received therefrom no later than the fifth Business Day following the receipt of such Net Cash Proceeds (such prepayments to be applied as set forth in Section 2.09(b)).

(iii)Indebtedness.  Upon the incurrence or issuance by the Borrower or any of its Subsidiaries (other than a Financing Subsidiary) of any Indebtedness (other than the making of any Loans or issuance of any Letters of Credit hereunder), the Borrower shall prepay an aggregate principal amount of such Loans owed to such Lender or Lenders equal to 100% of all Net Cash Proceeds received therefrom no later than the fifth Business Day following the receipt of such Net Cash Proceeds (such prepayments to be applied as set forth in Section 2.09(b)).

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(iv)Extraordinary Receipt.  Upon any Extraordinary Receipt (which, when taken with all other Extraordinary Receipts received after the applicable Commitment Termination Date, exceeds $5,000,000 in the aggregate) received by or paid to or for the account of the Borrower or any of its Subsidiaries (other than a Financing Subsidiary), and not otherwise included in clauses (i), (ii) or (iii) of this Section 2.10(d), the Borrower shall prepay an aggregate principal amount of such Loans owed to such Lender or Lenders equal to 100% of all Net Cash Proceeds received therefrom no later than the fifth Business Day following the receipt of such Net Cash Proceeds (such prepayments to be applied as set forth in Section 2.09(b)).

(v)Return of Capital.  If any Obligor shall receive any Return of Capital (other than from any Financing Subsidiary), the Borrower shall prepay an aggregate principal amount of such Loans owed to such Lender or Lenders equal to 90% of such Return of Capital (excluding amounts payable by the Borrower pursuant to Section 2.15) no later than the fifth Business Day following the receipt of such Return of Capital (such prepayments to be applied as set forth in Section 2.09(b)).

Notwithstanding the foregoing, (I) Net Cash Proceeds and Return of Capital required to be applied to the prepayment of the Loans pursuant to this Section 2.10(d) shall (A) (I) from the period commencing on any Non-Extended Commitment Termination Date and ending on the Extended Commitment Termination Date, be applied ratably among the Non-Extending Lenders for which the Non-Extending Lender Commitment Termination Date shall have occurred and (II) from the Extended Commitment Termination Date to the Extended Final Maturity Date, be applied in accordance with the Guarantee and Security Agreement and (B) exclude the amount necessary for the Borrower to make all required distributions (which shall be no less than the amount estimated in good faith by Borrower under Section 6.05(b) herein) to maintain the status of a RIC under the Code and a “business development company” under the Investment Company Act for so long as the Borrower retains such status and (II) if the Loans to be prepaid pursuant to this Section 2.10(d) are Eurocurrency Loans, the Borrower may defer such prepayment until the last day of the Interest Period applicable to such Loans, so long as the Borrower deposits an amount equal to such Net Cash Proceeds, no later than the fifth Business Day following the receipt of such Net Cash Proceeds, into a segregated collateral account in the name and under the dominion and control of the Administrative Agent, pending application of such amount to the prepayment of the Loans on the last day of such Interest Period; provided, further, that the Administrative Agent may direct the application of such deposits as set forth in Section 2.09(b) at any time and if the Administrative Agent does so, no amounts will be payable by the Borrower pursuant to Section 2.15.

(e)Notices, Etc.  The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan made by a Swingline Lender, such Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurocurrency Borrowing denominated in Dollars (other than in the case of a prepayment pursuant to Section 2.10(d)), not later than 11:00 a.m., Atlanta, Georgia time, three Business Days before the date of prepayment, (ii) in the case of prepayment of a Eurocurrency Borrowing denominated in  a Foreign Currency (other than in the case of a prepayment pursuant to Section 2.10(d)), not later than 11:00 a.m., London time, four Business Days before the date of prepayment, (iii) in the case of prepayment of a Syndicated ABR Borrowing (other than in the case of a prepayment pursuant to Section 2.10(d)), not later than 11:00 a.m., Atlanta, Georgia time, on the date of prepayment, (iv) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., Atlanta, Georgia time, on the date of prepayment, or (v) in the case of any prepayment pursuant to Section 2.10(d), not later than 11:00 a.m., Atlanta, Georgia time, one Business Day before the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, if (i) a notice of prepayment is given in connection with a conditional notice of termination of the Commitments of a Class as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08 and (ii) any notice given in connection with Section 2.10(d) may be conditioned on the consummation of the applicable transaction contemplated by such Section and the receipt by the Borrower or any such Subsidiary (other than a Financing Subsidiary) of Net Cash Proceeds.  Promptly following receipt of any such notice relating to a Syndicated Borrowing, the Administrative Agent shall advise the affected Lenders of the contents thereof.  Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of a Borrowing of the same Type as provided in Section 2.02 or in the case of a Swingline Loan, as provided in Section 2.04, except as necessary to apply fully the required amount of a mandatory prepayment.  Each prepayment of a Syndicated Borrowing of a Class of Commitments or Final Maturity Date shall be applied ratably to the Loans held by the Lenders of such Class included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12 and shall be made in the

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manner specified in Section 2.09(b) unless such prepayment is made in connection with the reduction of Commitments in accordance with Section 2.08(b) or (f) or a mandatory prepayment pursuant to Section 2.10(e) in which case such prepayment shall be applied in accordance with Section 2.08(d), 2.08(f) or 2.10(e), as applicable.

SECTION 2.11.  Fees.

(a)Commitment Fee.  The Borrower agrees to pay to the Administrative Agent for account of each Lender a commitment fee, which shall accrue at a rate per annum equal to 0.375% on the average daily unused amount of the Dollar Commitment and Multicurrency Commitment, as applicable, of such Lender during the period from and including the date hereof to but excluding the earlier of the date such commitment terminates and such Lender’s Commitment Termination Date.  Accrued commitment fees shall be payable within one Business Day after each Quarterly Date and on the earlier of the date the Commitments of the respective Class terminate and the Commitment Termination Date of such Class, commencing on the first such date to occur after the date hereof.  All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  For purposes of computing commitment fees, (i) the daily unused amount of the applicable Commitment shall be determined as of the end of each day and (ii) the Commitment of any Class of a Lender shall be deemed to be used to the extent of the outstanding Syndicated Loans and LC Exposure of such Class of such Lender (and the Swingline Exposure of such Class of such Lender shall be disregarded for such purpose).

(b)Letter of Credit Fees.  The Borrower agrees to pay (i) to the Administrative Agent for account of each Lender a participation fee with respect to its participations in Letters of Credit of each Class of Commitments, which shall accrue at a rate per annum equal to the Applicable Margin applicable to interest on Eurocurrency Loans on the average daily amount of such Lender’s LC Exposure of such Class (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Commitment of such Class terminates and the date on which such Lender ceases to have any LC Exposure of such Class, and (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate of 0.25% per annum on the average daily amount of such Issuing Bank’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as well as each Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued through and including each Quarterly Date shall be payable on the third Business Day following such Quarterly Date, commencing on the first such date to occur after the Effective Date; provided that all such fees with respect to the Letters of Credit shall be payable (i) with respect to the Issuing Bank, on the Termination Date and (ii) with respect to any Lender, on the earlier to occur of such Lender’s Final Maturity Date and the Termination Date and the Borrower shall pay any such fees that have accrued and that are unpaid on such date and, in the event any Letters of Credit shall be outstanding that have expiration dates after the Termination Date, the Borrower shall prepay on the Termination Date the full amount of the participation and fronting fees that will accrue on such Letters of Credit subsequent to the Termination Date through but not including the date such outstanding Letters of Credit are scheduled to expire (and, in that connection, the Lenders agree not later than the date two Business Days after the date upon which the last such Letter of Credit shall expire or be terminated to rebate to the Borrower the excess, if any, of the aggregate participation and fronting fees that have been prepaid by the Borrower over the sum of the amount of such fees that ultimately accrue through the date of such expiration or termination and the aggregate amount of all other unpaid obligations hereunder at such time).  Any other fees payable to an Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c)Administrative Agent Fees.  The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(d)Payment of Fees.  All fees payable hereunder shall be paid on the dates due, in Dollars (or, at the election of the Borrower with respect to any fees payable to an Issuing Bank on account of Letters of Credit issued by such Issuing Bank in any Foreign Currency, in such Foreign Currency) and immediately available funds, to

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the Administrative Agent (or to the applicable Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders entitled thereto.  Fees paid shall not be refundable under any circumstances absent obvious error.

SECTION 2.12.  Interest.

(a)ABR Loans.  The Loans constituting each ABR Borrowing (including each Swingline Loan) shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin.

(b)Eurocurrency Loans.  The Loans constituting each Eurocurrency Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO Rate for the related Interest Period for such Borrowing plus the Applicable Margin.

(c)Default Interest.  Notwithstanding the foregoing, if any Event of Default has occurred and is continuing and the Required Lenders have elected to increase pricing, the interest rates applicable to Loans and any fee or other amount payable by the Borrower hereunder shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided above, (ii) in the case of any Letter of Credit, 2% plus the fee otherwise applicable to such Letter of Credit as provided in Section 2.11(b)(i), or (iii) in the case of any fee or other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(d)Payment of Interest.  Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan in the Currency in which such Loan is denominated and, in the case of Syndicated Loans, with respect to any Lender, upon the earlier of such Lender’s Final Maturity Date and the Termination Date; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of a Syndicated ABR Loan prior to such Lender’s Final Maturity Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Borrowing denominated in Dollars prior to the end of the Interest Period therefor, accrued interest on such Borrowing shall be payable on the effective date of such conversion.

(e)Computation.  All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed (i) by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate and (ii) on Multicurrency Loans denominated in Pounds Sterling or Canadian Dollars shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent and such determination shall be conclusive absent manifest error.

SECTION 2.13.  Inability to Determine Interest Rates.  (a) If prior to the commencement of any Interest Period for any Eurocurrency Borrowing of a Class (the Currency of such Borrowing herein called the “Affected Currency”):

(i)the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower absent manifest error) that, by reason of circumstances affecting the relevant interbank market, adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for the Affected Currency (including, without limitation, because the Screen Rate is not available or published on a current basis) for such Interest Period; or

(ii)the Administrative Agent shall have received notice from the Required Lenders of such Class of Commitments that the Adjusted LIBO Rate for the Affected Currency for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their respective Loans included in such Borrowing for such Interest Period;

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then the Administrative Agent shall give written notice thereof (or telephonic notice, promptly confirmed in writing) to the Borrower and the affected Lenders as promptly as practicable thereafter.  Until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Syndicated Borrowing to, or the continuation of any Syndicated Borrowing as, a Eurocurrency Borrowing denominated in the Affected Currency shall be ineffective and, if the Affected Currency is Dollars, such Syndicated Borrowing (unless prepaid) shall be continued as, or converted to, a Syndicated ABR Borrowing, (ii) if the Affected Currency is Dollars and any Borrowing Request requests a Eurocurrency Borrowing denominated in Dollars, such Borrowing shall be made as a Syndicated ABR Borrowing and (iii) if the Affected Currency is a Foreign Currency, then either, at the Borrower’s election, (A) any Borrowing Request that requests a Eurocurrency Borrowing denominated in the Affected Currency shall be ineffective, or (B) the LIBO Rate for such Eurocurrency Borrowing shall be a rate quoted as being representative of the cost to each Lender to fund its pro rata share of such Eurocurrency Borrowing (from whatever source and using whatever representative methodologies as such Lender may select in its reasonable discretion), which each Lender shall provide to the Administrative Agent, and the Administrative Agent shall provide to the Borrower, within five (5) Business Days of the Borrower’s request to the Administrative Agent therefor; provided that any rate provided under this clause (B) shall expire, to the extent the Borrower has not elected to use such rate, on the date that is five (5) Business Days after the delivery by the Administrative Agent thereof.

SECTION 2.14.  Increased Costs.

(a)Increased Costs Generally.  If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank; or

(ii)impose on any Lender or any Issuing Bank or the London interbank market any other condition, cost or expense (other than (A) Indemnified  Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes  and (C) Other Connection Taxes that are imposed on or measured by net income  (however denominated) or that are franchise Taxes or branch profits Taxes) affecting this Agreement or Eurocurrency Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lenders of making, converting to, continuing or maintaining any Eurocurrency Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or such Issuing Bank, as the case may be, in Dollars, such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

(b)Capital and Liquidity Requirements.  If any Lender or any Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Swingline Loans and Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy and liquidity requirements), by an amount deemed to be material by such Lender or such Issuing Bank, then from time to time the Borrower will pay to such Lender or such Issuing Bank, as the case may be, in Dollars, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered.

(c)Certificates from Lenders.  A certificate of a Lender or an Issuing Bank setting forth in reasonable detail the basis for and the calculation of the amount or amounts, in Dollars, necessary to compensate such

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Lender or such Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be promptly delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or such Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d)Delay in Requests.  Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than six months prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such Issuing Bank’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.15.  Break Funding Payments.  In the event of (a) the payment of any principal of any Eurocurrency Loan other than on the last day of an Interest Period therefor (including as a result of the occurrence of any Commitment Increase Date or an Event of Default), (b) the conversion of any Eurocurrency Loan other than on the last day of an Interest Period therefor, (c) the failure to borrow, convert, continue or prepay any Syndicated Loan on the date specified in any notice delivered pursuant hereto (including, in connection with any Commitment Increase Date, and regardless of whether such notice is permitted to be revocable under Section 2.10(e) and is revoked in accordance herewith), or (d) the assignment as a result of a request by the Borrower pursuant to Section 2.18(b) of any Eurocurrency Loan other than on the last day of an Interest Period therefor, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and reasonable expense attributable to such event (excluding loss of anticipated profits).  In the case of a Eurocurrency Loan, the loss to any Lender attributable to any such event shall be deemed to include an amount determined by such Lender to be equal to the excess, if any, of

(i)the amount of interest that such Lender would pay for a deposit equal to the principal amount of such Loan denominated in the Currency of such Loan for the period from the date of such payment, conversion, failure or assignment to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, convert or continue, the duration of the Interest Period that would have resulted from such borrowing, conversion or continuation) if the interest rate payable on such deposit were equal to the Adjusted LIBO Rate for such Currency for such Interest Period, over

(ii)the amount of interest that such Lender would earn on such principal amount for such period if such Lender were to invest such principal amount for such period at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for deposits denominated in such Currency from other banks in the Eurocurrency market at the commencement of such period.

Payment under this Section shall be made upon request of a Lender delivered not later than five Business Days following the payment, conversion, or failure to borrow, convert, continue or prepay that gives rise to a claim under this Section accompanied by a certificate of such Lender setting forth in reasonable detail the basis for and the calculation of the amount or amounts that such Lender is entitled to receive pursuant to this Section, which certificate shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

SECTION 2.16.  Taxes.

(a)Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable law; provided that if the Borrower shall be required to deduct any Taxes from such payments, then (i) if such Taxes are Indemnified Taxes, the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, applicable Lender or applicable Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

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(b)Payment of Other Taxes by the Borrower.  In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent, each Lender and each Issuing Bank for and, within 10 Business Days after written demand therefor, pay the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent, such Lender or such Issuing Bank, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority, except to the extent that any such Indemnified Taxes or Other Taxes arise as the result of the gross negligence or willful misconduct of the Administrative Agent, such Lender or such Issuing Bank.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or an Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive absent manifest error.

(d)Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 Business Days after written demand therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(f) relating to the maintenance of a Participant Register, and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (d).

(e)Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(f)Tax Documentation.  (i) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.  In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.16(f)(ii) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii)Without limiting the generality of the foregoing:

(A)any Lender that is a United States Person shall deliver to the Borrower and the Administrative Agent (and such additional copies as shall be reasonably requested by the recipient) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent),

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duly completed and executed copies of Internal Revenue Service Form W-9 or any successor form certifying that such Lender is exempt from U.S. federal backup withholding tax; and

(B)each Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

 

(w)

duly completed and executed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E or any successor form claiming eligibility for benefits of an income tax treaty to which the United States is a party,

 

(x)

duly completed copies of Internal Revenue Service Form W-8ECI or any successor form certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States,

 

(y)

in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (1) a certificate to the effect that such Foreign Lender is not (1) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (3) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (2) duly completed and executed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E (or any successor form) certifying that the Foreign Lender is not a United States Person, or

 

(z)

any other form including Internal Revenue Service Form W-8IMY as applicable prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.

(iii)In addition, each Lender shall deliver such forms promptly upon the obsolescence, expiration or invalidity of any form previously delivered by such Lender; provided it is legally able to do so at the time.  Each Lender shall promptly notify the Borrower and the Administrative Agent at any time the chief tax officer of such Lender becomes aware that it no longer satisfies the legal requirements to provide any previously delivered form or certificate to the Borrower (or any other form of certification adopted by the U.S. or other taxing authorities for such purpose).

(g)Documentation Required by FATCA.  If a payment made to a Lender under this Agreement would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such document prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their respective obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this Section 2.16(g), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(h)Treatment of Certain Refunds.  If the Administrative Agent, any Lender or an Issuing Bank determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses of the Administrative Agent, any Lender or an Issuing

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Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent, any Lender or an Issuing Bank, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, any Lender or an Issuing Bank in the event the Administrative Agent, any Lender or an Issuing Bank is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this clause (h), in no event will the Administrative Agent, any Lender or an Issuing Bank be required to pay any amount to Borrower pursuant to this clause (h), the payment of which would place such Person in a less favorable net after-Tax position than such Person would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This subsection shall not be construed to require the Administrative Agent, any Lender or an Issuing Bank to make available its tax returns or its books or records (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

SECTION 2.17.  Payments Generally; Pro Rata Treatment: Sharing of Set-offs.

(a)Payments by the Borrower.  The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or under Section 2.14, 2.15 or 2.16, or otherwise) or under any other Loan Document (except to the extent otherwise provided therein) prior to 2:00 p.m., Atlanta, Georgia time, on the date when due, in immediately available funds, without set-off or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at the Administrative Agent’s Account, except as otherwise expressly provided in the relevant Loan Document and except payments to be made directly to any Issuing Bank or any Swingline Lender as expressly provided herein and payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03, which shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.

All amounts owing under this Agreement  (including commitment fees, payments required under Section 2.14, and payments required under Section 2.15 relating to any Loan denominated in Dollars, but not including principal of and interest on any Loan denominated in any Foreign Currency or payments relating to any such Loan required under Section 2.15, which are payable in such Foreign Currency) or under any other Loan Document (except to the extent otherwise provided therein) are payable in Dollars.  Notwithstanding the foregoing, if the Borrower shall fail to pay any principal of any Loan when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise), the unpaid portion of such Loan shall, if such Loan is not denominated in Dollars, automatically be redenominated in Dollars on the due date thereof (or, if such due date is a day other than the last day of the Interest Period therefor, on the last day of such Interest Period) in an amount equal to the Dollar Equivalent thereof on the date of such redenomination and such principal shall be payable on demand; and if the Borrower shall fail to pay any interest on any Loan that is not denominated in Dollars, such interest shall automatically be redenominated in Dollars on the due date therefor (or, if such due date is a day other than the last day of the Interest Period therefor, on the last day of such Interest Period) in an amount equal to the Dollar Equivalent thereof on the date of such redenomination and such interest shall be payable on demand.

Notwithstanding the foregoing provisions of this Section, if, after the making of any Borrowing in any Foreign Currency, currency control or exchange regulations are imposed in the country which issues such currency with the result that the type of currency in which the Borrowing was made (the “Original Currency”) no longer exists or the Borrower is not able to make payment to the Administrative Agent for the account of the Lenders in such Original Currency, then all payments to be made by the Borrower hereunder in such currency shall instead be made when due in Dollars in an amount equal to the Dollar Equivalent (as of the date of repayment) of such payment due, it being the intention of the parties hereto that the Borrower takes all risks of the imposition of any such currency control or exchange regulations.

(b)Application of Insufficient Payments.  If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest

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and fees of a Class of Commitments or Final Maturity Date then due hereunder, such funds shall be applied (i) first, to pay interest and fees of such Class then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees of such Class then due to such parties, and (ii) second, to pay principal and unreimbursed LC Disbursements of such Class then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements of such Class then due to such parties.

(c)Pro Rata Treatment.  Except to the extent otherwise provided herein: (i) other than with respect to any Syndicated Borrowing requested pursuant to Section 2.22, each Syndicated Borrowing of a Class shall be made from the Lenders of such Class of Commitments and each Syndicated Borrowing of a Class requested pursuant to Section 2.22 shall be made from each Extending Lender and each Non-Extending Lender for which the Non-Extended Commitment Termination Date shall not have occurred, each payment of commitment fee under Section 2.11 shall be made for account of the Lenders of the applicable Class, and each termination or reduction of the amount of the Commitments of a Class of Commitments or Final Maturity Date under Section 2.08 shall be applied to the respective Commitments of the Lenders of such Class of Commitments or Final Maturity Date, pro rata according to the amounts of their respective Commitments of such Class of Commitments or Final Maturity Date; (ii) each Syndicated Borrowing of a Class of Commitments shall be allocated pro rata among the Lenders of such Class according to the amounts of their respective Commitments of such Class (in the case of the making of Syndicated Loans) or their respective Loans of such Class that are to be included in such Borrowing (in the case of conversions and continuations of Loans); (iii) each payment or prepayment of principal of Syndicated Loans of a Class of Commitments or Final Maturity Date by the Borrower shall be made for account of the Lenders of such Class of Commitments or Final Maturity Date pro rata in accordance with the respective unpaid principal amounts of the Syndicated Loans of such Class of Commitments or Final Maturity Date held by them; and (iv) each payment of interest on Syndicated Loans of a Class of Commitments or Final Maturity Date by the Borrower shall be made for account of the Lenders of such Class of Commitments or Final Maturity Date pro rata in accordance with the amounts of interest on such Loans of such Class of Commitments or Final Maturity Date then due and payable to the respective Lenders. For the avoidance of doubt, no payments shall be allocated solely to Non-Extending Lenders following the occurrence and during the continuance of a Default or Event of Default.

(d)Sharing of Payments by Lenders.  If any Lender of any Class of Commitment or Final Maturity Date shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Syndicated Loans, or participations in LC Disbursements or Swingline Loans, of such Class resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Syndicated Loans, and participations in LC Disbursements and Swingline Loans, and accrued interest thereon of such Class then due than the proportion received by any other Lender of such Class, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Syndicated Loans, and participations in LC Disbursements and Swingline Loans, of other Lenders of such Class to the extent necessary so that the benefit of all such payments shall be shared by the Lenders of such Class ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Syndicated Loans, and participations in LC Disbursements and Swingline Loans, of such Class; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(e)Presumptions of Payment.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for account of the Lenders or the Issuing Banks hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Banks, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Banks, as the case may be,

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severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent at the Federal Funds Effective Rate.

(f)Certain Deductions by the Administrative Agent.  If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(e), 2.06(a) or (b) or 2.17(e), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.18.  Mitigation Obligations; Replacement of Lenders.

(a)Designation of a Different Lending Office.  If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any cost or expense not required to be reimbursed by the Borrower and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)Replacement of Lenders.  If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for account of any Lender pursuant to Section 2.16, or if any Lender becomes a Defaulting Lender or is a Non-Consenting Lender (as provided in Section 9.02(d)), then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Commitment is being assigned, each Issuing Bank and each Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments.  A Lender shall not be required to make any such assignment and delegation if prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.19.  Defaulting Lenders.

(a)Defaulting Lender Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

(i)Defaulting Lender Waterfall.  Any payment of principal, interest, fees or other amounts received by Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise) or received by Administrative Agent from a Defaulting Lender pursuant to Section 9.08 shall be applied at such time or times as may be determined by Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Issuing Bank or any Swingline Lender hereunder; third, to Cash Collateralize each Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender in the manner described in Section 2.09(a); fourth, as Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as

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determined by Administrative Agent; fifth, if so determined by Administrative Agent and Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize each Issuing Bank’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in the manner described in Section 2.09(a); sixth, to the payment of any amounts owing to the Lenders, Issuing Banks or Swingline Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender, any Issuing Bank or any Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default exists, to the payment of any amounts owing to Borrower as a result of any judgment of a court of competent jurisdiction obtained by Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or reimbursement obligations in respect of any LC Disbursement for which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied and waived, such payment shall be applied solely to pay the Loans of, and reimbursement obligations in respect of any LC Disbursement that is owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or reimbursement obligations in respect of any LC Disbursement that is owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in Letters of Credit and Swingline Loans are held by the Lenders pro rata in accordance with the applicable Commitments without giving effect to Section 2.19(a)(iii). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.19(a)(i) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(ii)Certain Fees.

(A)No Defaulting Lender shall be entitled to receive any fee pursuant to Sections 2.11(a) and (b) for any period during which that Lender is a Defaulting Lender (and Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender); provided that such Defaulting Lender shall be entitled to receive fees pursuant to Section 2.11(b) for any period during which that Lender is a Defaulting Lender only to extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.19(d).

(B)With respect to any Section 2.11(b) fees not required to be paid to any Defaulting Lender pursuant to clause (A) above, Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in Letters of Credit or Swingline Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iii) below, (y) pay to each Issuing Bank the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(iii)Reallocation of Participations to Reduce Fronting Exposure.  All or any part of such Defaulting Lender’s participation in Letters of Credit and Swingline Loans shall be reallocated (effective no later than one Business Day after the Administrative Agent has actual knowledge that such Lender has become a Defaulting Lender) among the Non-Defaulting Lenders in accordance with their respective Applicable Dollar Percentages and Applicable Multicurrency Percentages, as the case may be (in each case calculated without regard to such Defaulting Lender’s Commitment), but only to the extent that (x) the conditions set forth in Section 4.02 are satisfied at the time of such reallocation (and, unless Borrower shall have otherwise notified Administrative Agent at such time, Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. Subject to Section 9.15, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a

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Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(iv)Cash Collateral; Repayment of Swingline Loans.  If the reallocation described in clause (iii) above cannot, or can only partially, be effected, the Borrower shall not later than two Business Days after demand by the Administrative Agent (at the direction of any Issuing Bank and/or any Swingline Lender), without prejudice to any right or remedy available to it hereunder or under law, (x) first, prepay Swingline Loans in an amount equal to the Swingline Lenders’ Swingline Exposure (which exposure shall be deemed equal to the applicable Defaulting Lender’s Applicable Percentage of the total outstanding Swingline Exposure (other than Swingline Exposure as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof)) and (y) second, Cash Collateralize each Issuing Bank’s Fronting Exposure in accordance with the procedures set forth in Section 2.19(d) or (z) make other arrangements reasonably satisfactory to the Administrative Agent, the Issuing Banks and the Swingline Lenders in their sole discretion to protect them against the risk of non-payment by such Defaulting Lender.

(b)Defaulting Lender Cure.  If the Borrower, the Administrative Agent, the Swingline Lenders and the Issuing Banks agree in writing that a Lender is no longer a Defaulting Lender, Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that such former Defaulting Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro rata by the Lenders in accordance with the applicable Commitments (without giving effect to Section 2.19(a)(iii)), and if Cash Collateral has been posted with respect to such Defaulting Lender, the Administrative Agent will promptly return or release such Cash Collateral to the Borrower, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender.

(c)New Swingline Loans/Letters of Credit.  So long as any Lender is a Defaulting Lender, (i) no Swingline Lender shall be required to fund any Swingline Loans unless it is satisfied that the participations therein will be fully allocated among Non-Defaulting Lenders in a manner consistent with clause (a)(iii) above and the Defaulting Lender shall not participate therein and (ii) no Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that the participations in any existing Letters of Credit as well as the new, extended, renewed or increased Letter of Credit has been or will be fully allocated among the Non-Defaulting Lenders in a manner consistent with clause (a)(iii) above and such Defaulting Lender shall not participate therein except to the extent such Defaulting Lender’s participation has been or will be fully Cash Collateralized in accordance with Section 2.19(d).

(d)Cash Collateral.  At any time that there shall exist a Defaulting Lender, promptly following the written request of Administrative Agent or any Issuing Bank (with a copy to Administrative Agent) Borrower shall Cash Collateralize each Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 2.19(a)(iii) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.

(i)Grant of Security Interest.  Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) Administrative Agent, for the benefit of the Issuing Banks, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of Letters of Credit, to be applied pursuant to clause (ii) below. If at any time Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than Administrative Agent and the Issuing Banks as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, Borrower will, promptly upon demand by Administrative Agent, pay or provide to Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any

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Cash Collateral provided by the Defaulting Lender).  All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Truist. Borrower shall pay on demand therefor from time to time all reasonable and customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.

(ii)Application.  Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.19 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of Letters of Credit (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

(iii)Termination of Requirement.  Cash Collateral (or the appropriate portion thereof) provided to reduce Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 2.19 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender) or (ii) the determination by Administrative Agent and the Issuing Banks that there exists excess Cash Collateral; provided that, subject to the other provisions of this Section 2.19, the Person providing Cash Collateral and each Issuing Bank may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure; provided, further, that to the extent that such Cash Collateral was provided by Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Loan Documents.

SECTION 2.20.  Assignment and Reallocation of Existing Commitments and Existing Loans.

(a)On the Sixth Amendment Effective Date, the Borrower shall (A) prepay the outstanding Loans and (B) simultaneously borrow new Loans in an amount equal to such prepayment; provided that with respect to subclauses (A) and (B), (x) the prepayment to, and borrowing from, any Lender with a Commitment under this Agreement prior to the Sixth Amendment Effective Date (each, an “Existing Lender”) shall be effected by book entry to the extent that any portion of the amount prepaid to such Lender will be subsequently borrowed from such Lender and (y) the Lenders shall make and receive payments among themselves, in a manner acceptable to the Administrative Agent, so that, after giving effect thereto, the Loans of each Class are held ratably by the Lenders of such Class in accordance with each Lender’s Applicable Percentage of Commitments and portion of Loans, which, for the purposes of this Agreement and each other Loan Document, will be as set forth opposite such Person’s name on Schedule 1.01(b).  Concurrently therewith, the Existing Lenders of each Class shall be deemed to have adjusted their participation interests in any outstanding Letters of Credit of such Class so that such interests are held ratably in accordance with their Applicable Percentage of Commitments of such Class.  Notwithstanding anything to the contrary contained in this Agreement, the Borrower shall have no liability to any Lender for any amounts that would otherwise be payable pursuant to Section 2.15 as a result of the prepayment and borrowing on the Sixth Amendment Effective Date contemplated by this Section 2.20(a).

(b)Each of the Lenders hereby acknowledges and agrees that (i) no Lender nor the Administrative Agent has made any representations or warranties or assumed any responsibility with respect to (A) any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness or sufficiency of this Agreement, the Existing Credit Agreement or any other Loan Document or (B) the financial condition of any Obligor or the performance by any Obligor of its obligations hereunder or under any other Loan Document; (ii) it has received such information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; and (iii) it has made and continues to make its own credit decisions in taking or not taking action under this Agreement, independently and without reliance upon the Administrative Agent or any other Lender.  

SECTION 2.21.  Effect of Benchmark Transition Event.

(a)Benchmark Replacement.  Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, the Administrative Agent and the Borrower may amend this Agreement to replace the LIBO Rate with a Benchmark

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Replacement.  Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after the Administrative Agent has posted such proposed amendment to all Lenders and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders.  Any such amendment with respect to an Early Opt-in Election will become effective on the date that Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders accept such amendment.  No replacement of the LIBO Rate with a Benchmark Replacement pursuant to this Section 2.21 will occur prior to the applicable Benchmark Transition Start Date.

(b)Benchmark Replacement Conforming Changes.  In connection with the implementation of a Benchmark Replacement, the Administrative Agent (after consulting with the Borrower) will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.

(c)Notices; Standards for Decisions and Determinations.  The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date and Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period.  Any determination, decision or election that may be made by the Administrative Agent or Lenders pursuant to this Section 2.21, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 2.21.

(d)Benchmark Unavailability Period.  Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Eurocurrency Borrowing of, conversion to or continuation of Eurocurrency Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, (i) in the case of a request for a Dollar Borrowing, the Borrower will be deemed to have converted such request into a request for a Borrowing of or conversion to an ABR Loan, and (ii) in the case of a request for a Eurocurrency Borrowing other than in Dollars, the LIBO Rate for such Eurocurrency Borrowing shall be a rate quoted as being representative of the cost to each Lender to fund its pro rata share of such Eurocurrency Borrowing (from whatever source and using whatever representative methodologies as such Lender may select in its reasonable discretion), which each Lender shall provide to the Administrative Agent, and the Administrative Agent shall provide to the Borrower, within five (5) Business Days of the Borrower’s request to the Administrative Agent therefor.  During any Benchmark Unavailability Period, the component of the Alternate Base Rate based upon the LIBO Rate will not be used in any determination of the Alternate Base Rate.

SECTION 2.22. Reallocation Following a Non-Extended Commitment Termination Date.

(a)Reallocation of Participations and Loans.

(i)Notwithstanding anything to the contrary herein, (a) in connection with the reduction or termination of any Non-Extending Lender’s Commitments in accordance with Section 2.08(f) on any date prior to the Non-Extended Commitment Termination Date for such Non-Extending Lender, the Borrower shall be permitted to request a Dollar Loan be made ratably among the Extending Lenders and Non-Extending Lenders for which the Non-Extended Commitment Termination Date shall not have occurred in accordance with the provisions of Sections 2.02, 2.03 and 2.17(c) in an amount up to the amount by which such Non-Extending Lender’s Revolving Credit Exposure exceeds such Non-Extending Lender’s Commitments after giving effect to such Commitment reduction and (b) on any date following the Non-Extended Commitment Termination Date for any Non-Extending Lender until the Extended Commitment Termination Date, the Borrower shall be permitted to request a Dollar Loan to be made ratably among the Extending Lenders and Non-Extending Lenders for which the Non-Extended Commitment Termination Date shall not have occurred in accordance with Sections 2.02, 2.03 and 2.17(c) in an amount up to the Revolving Credit Exposure of each Non-Extending Lender for which the Non-Extended Commitment Termination shall have occurred, in each

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case, so long as (x) the conditions set forth in Section 4.02 are satisfied (and, unless Borrower shall have otherwise notified the Administrative Agent at such time, Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), (y) such Borrowing does not cause (I) the aggregate Revolving Credit Exposure of any Extending Lender to exceed such Extending Lender’s Commitment, (II) the aggregate Revolving Dollar Credit Exposure of all of the Dollar Lenders with Dollar Commitments then in effect to exceed the aggregate Dollar Commitments at such time or (III) the aggregate Revolving Multicurrency Credit Exposure of all of the Multicurrency Lenders with Multicurrency Commitments then in effect to exceed the aggregate Multicurrency Commitments at such time and (z) the proceeds of any such Loan are applied solely to reduce the Revolving Credit Exposure of the applicable Non-Extending Lender or Non-Extending Lenders, as applicable.

(ii)All or any part of each Non-Extending Lender’s participation in Letters of Credit and Swingline Loans shall be reallocated on (A) any date on which the Commitment of such Non-Extending Lender is reduced or terminated pursuant to Section 2.08(f) and (B) on the Non-Extended Commitment Termination Date for such Non-Extending Lender, in each case, among the Extending Lenders and Non-Extending Lenders for which the Non-Extended Commitment Termination Date shall not have occurred in accordance with their respective Applicable Dollar Percentages and Applicable Multicurrency Percentages after giving effect to the reduction of the aggregate Commitments, but only to the extent that (x) the conditions set forth in Section 4.02 are satisfied at the time of such reallocation (and, unless Borrower shall have otherwise notified Administrative Agent at such time, Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause (I) the aggregate Revolving Credit Exposure of any Extending Lender or Non-Extending Lender for which the Commitment Termination Date shall not have occurred to exceed such Lender’s Commitment, (II) the total Revolving Dollar Credit Exposures of Dollar Lenders with Dollar Commitments then in effect to exceed the aggregate Dollar Commitments at such time, or (III) the total Revolving Multicurrency Credit Exposures of Multicurrency Lenders with Multicurrency Commitments then in effect to exceed the aggregate Multicurrency Commitments at such time.

(b)Cash Collateral; Repayment of Swingline Loans. If any Loan related to the reduction or termination of a Non-Extending Lender’s Commitment prior to the Non-Extended Commitment Termination Date described in clause (a)(i) above or any reallocation described in clause (a)(ii) above cannot, or can only partially, be effected, the Borrower shall, not later than (i) with respect to any reduction or termination of a Non-Extending Lender’s Commitment pursuant to Section 2.08(f), the date of such Commitment reduction or termination or, (ii) with respect to any reallocation of participations in Letters of Credit and Swingline Loans on the Non-Extended Commitment Termination Date for any Non-Extending Lender, on the Non-Extended Commitment Termination Date applicable to such Non-Extending Lender, as the case may be, without prejudice to any right or remedy available to it hereunder or under law, (x) prepay Swingline Loans in an amount equal to the amount by which the participation obligations of the Non-Extending Lenders for which the Non-Extended Commitment Termination Date shall have occurred which have not been reallocated to the Extending Lenders and Non-Extending Lenders for which the Non-Extended Commitment Termination Date shall not have occurred pursuant to clause (a)(ii) above, (y) provide Cash Collateral in an amount equal to the amount by which the participation obligations of such Non-Extending Lenders in Letters of Credit have not been reallocated pursuant to clause (a)(ii) above and/or (z) prepay any other Loans of a Non-Extending Lender for which the Non-Extended Commitment Termination Date shall have occurred in an amount equal to the amount by which the Revolving Credit Exposure of such Non-Extending Lender after giving effect to any prepayment described in clause (a)(i)(z) above exceeds such Non-Extending Lender’s Commitment after giving effect to any reduction in such Non-Extending Lender’s Commitment, as applicable.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

SECTION 3.01.  Organization; Powers.  Each of the Borrower and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the

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aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required of the Borrower or such Subsidiary, as applicable.

SECTION 3.02.  Authorization; Enforceability.  The Transactions are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate and, if required, by all necessary shareholder action.  This Agreement has been duly executed and delivered by the Borrower and constitutes, and each of the other Loan Documents when executed and delivered by each Obligor party thereto will constitute, a legal, valid and binding obligation of such Obligor, enforceable in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except for (i) such as have been or will be obtained or made and are in full force and effect and (ii) filings and recordings in respect of the Liens created pursuant to this Agreement or the Security Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default in any material respect under any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries or assets, or give rise to a right thereunder to require any payment to be made by any such Person, and (d) except for the Liens created pursuant to this Agreement or the Security Documents, will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.

SECTION 3.04.  Financial Condition; No Material Adverse Change.

(a)Financial Statements.  The Borrower has heretofore delivered to the Lenders the consolidated balance sheet and statement of operations, changes in net assets and cash flows of the Borrower and its Subsidiaries as of and for the nine month period ending September 30, 2016, certified by a Financial Officer of the Borrower.  Such financial statements present fairly, in all material respects, the consolidated financial position and results of operations and cash flows of the Borrower and its Subsidiaries as of such date and for such period in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes.

(b)No Material Adverse Change.  Since the date of the most recent Applicable Financial Statements, there has not been any event, development or circumstance (herein, a “Material Adverse Change”) that has had or could reasonably be expected to have a material adverse effect on (i) the business, Portfolio Investments and other assets, liabilities or financial condition of the Borrower and its Subsidiaries (other than any Financing Subsidiary) taken as a whole (excluding in any case a decline in the net asset value of the Borrower or a change in general market conditions or values of the Borrower’s Portfolio Investments), or (ii) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent and the Lenders thereunder.

SECTION 3.05.  Litigation.  There are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority now pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve this Agreement or the Transactions.

SECTION 3.06.  Compliance with Laws and Agreements.  Each of the Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  Neither the Borrower nor any of its Subsidiaries is subject to any contract or other arrangement, the performance of which by the Borrower or its Subsidiaries could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.07.  Taxes.  Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all material Tax returns and reports required to have been filed and has paid or caused to be paid all material

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Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Person has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.08.  ERISA.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a Material Adverse Effect.

SECTION 3.09.  Disclosure.  As of the Effective Date, the Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  As of the Effective Date, none of the reports, financial statements, certificates or other written information (other than projected financial information, other forward looking information relating to third parties and information of a general economic or general industry nature) furnished by or on behalf of the Borrower to the Administrative Agent in connection with the negotiation of this Agreement and the other Loan Documents or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) when taken as a whole (and after giving effect to all updates, modifications and supplements) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

SECTION 3.10.  Investment Company Act; Margin Regulations.

(a)Status as Business Development Company.  The Borrower has elected to be regulated as a “business development company” within the meaning of the Investment Company Act and qualifies as a RIC.

(b)Compliance with Investment Company Act.  The business and other activities of the Borrower and its Subsidiaries, including the making of the Loans hereunder, the application of the proceeds and repayment thereof by the Borrower and the consummation of the Transactions contemplated by the Loan Documents do not result in a violation or breach in any material respect of the provisions of the Investment Company Act or any rules, regulations or orders issued by the Securities and Exchange Commission thereunder, in each case that are applicable to the Borrower and its Subsidiaries.

(c)Investment Policies.  The Borrower is in compliance in all respects with the Investment Policies (after giving effect to any Permitted Policy Amendments), except to the extent that the failure to so comply could not reasonably be expected to have a Material Adverse Effect.

(d)Use of Credit.  Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any Margin Stock.

SECTION 3.11.  Material Agreements and Liens.

(a)Material Agreements.  Part A of Schedule 3.11 is a complete and correct list, as of the Effective Date, of each credit agreement, loan agreement, indenture, purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or guarantee by, the Borrower or any of its Subsidiaries outstanding as of the Effective Date, and the aggregate principal or face amount outstanding or that is, or may become, outstanding under each such arrangement is correctly described in Part A of Schedule 3.11.

(b)Liens.  Part B of Schedule 3.11 is a complete and correct list, as of the Effective Date, of each Lien securing Indebtedness of any Person outstanding on the Effective Date covering any property of the Borrower or any of the Subsidiary Guarantors, and the aggregate Indebtedness secured (or that may be secured) by each such Lien and the property covered by each such Lien is correctly described in Part B of Schedule 3.11.

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SECTION 3.12.  Subsidiaries and Investments.

(a)Subsidiaries.  Set forth on Schedule 3.12(a) is a list of the Borrower’s Subsidiaries as of the Effective Date.

(b)Investments.  Set forth on Schedule 3.12(b) is a complete and correct list, as of the Effective Date, of all Investments (other than Investments of the types referred to in clauses (b), (c) and (d) of Section 6.04) held by the Borrower or any of the Subsidiary Guarantors in any Person on the Effective Date and, for each such Investment, (x) the identity of the Person or Persons holding such Investment and (y) the nature of such Investment.  Except as disclosed in Schedule 3.12, each of the Borrower and any of the Subsidiary Guarantors owned, free and clear of all Liens (other than Liens created pursuant to this Agreement or the Security Documents and Permitted Liens), all such Investments as of such date.

SECTION 3.13.  Properties.

(a)Title Generally.  Each of the Borrower and the Subsidiary Guarantors has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

(b)Intellectual Property.  Each of the Borrower and its Subsidiaries (other than any Financing Subsidiary) owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries (other than any Financing Subsidiary) does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.14.  Affiliate Agreements.  As of the Effective Date, the Borrower has heretofore delivered to the Administrative Agent true and complete copies of each of the Affiliate Agreements (including and schedules and exhibits thereto, and any amendments, supplements or waivers executed and delivered thereunder).  As of the Effective Date, each of the Affiliate Agreements was in full force and effect.

SECTION 3.15.  Sanctions.  

(a)None of the Borrower or any of its Subsidiaries nor, to the knowledge of the Borrower, any of their respective directors, officers or authorized signors, (i) is a person on the list of Specially Designated Nationals and Blocked Persons or subject to, or the subject or target of, the limitations or prohibitions (collectively “Sanctions”) under (A) any U.S. Department of Treasury’s Office of Foreign Assets Control or U.S. Department of State regulation or executive order or (B) any international economic sanction administered or enforced by the United Nations Security Council, Her Majesty’s Treasury or the European Union or (ii) is located, organized or resident in a Sanctioned Country.

(b)The Borrower has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and investment advisors with Anti-Corruption Laws and applicable Sanctions in all material respects. The Borrower, its Subsidiaries and to the knowledge of the Borrower, their respective employees, officers, directors and agents (acting on their behalf), are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.

SECTION 3.16.  Patriot Act.  Each of the Borrower and its Subsidiaries is in compliance, to the extent applicable with (a) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001).  No part of the proceeds of the Loans will be used, directly or, to the knowledge of a Responsible Officer of the Borrower, indirectly, for any payments to (i) any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any

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improper advantage, all in violation by the Borrower or its Subsidiaries of the United States Foreign Corrupt Practices Act of 1977, as amended, or in material violation of US or UK regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (collectively, the “Anti-Corruption Laws”) or (ii) any Person for the purpose of financing the activities of any Person, at the time of such financing (A) subject to, or the subject of, any Sanctions or (B) located, organized or resident in a Sanctioned Country, in each case as would result in a violation of Sanctions.

SECTION 3.17.  Collateral Documents.  The provisions of the Security Documents are effective to create in favor of the Collateral Agent a legal, valid and enforceable first priority Lien (subject to Liens permitted by Section 6.02) on all right, title and interest of the Borrower and each Subsidiary Guarantor in the Collateral described therein.  Except for filings completed on or prior to the Effective Date or as contemplated hereby and by the Security Documents, no filing or other action will be necessary to perfect such Liens.

SECTION 3.18.  EEA Financial Institutions.  Neither the Borrower nor any Subsidiary is an EEA Financial Institution.

ARTICLE IV

CONDITIONS

SECTION 4.01.  Effective Date.  The effectiveness of this Agreement and of the obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not become effective until completion of each of the following conditions precedent (unless a condition shall have been waived in accordance with Section 9.02):

(a)Documents.  Administrative Agent shall have received each of the following documents, each of which shall be satisfactory to the Administrative Agent (and to the extent specified below to each Lender) in form and substance:

(i)Executed Counterparts.  From each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page to this Agreement) that such party has signed a counterpart of this Agreement.

(ii)Opinion of Counsel to the Borrower.  A favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of (A) Cleary Gottlieb Steen & Hamilton LLP, New York counsel for the Borrower and the Subsidiary Guarantors and (B) Miles & Stockbridge P.C., Maryland counsel for the Borrower and the Subsidiary Guarantors, in each case, in form and substance reasonably acceptable to the Administrative Agent (and the Borrower hereby instructs such counsel to deliver such opinion to the Lenders and the Administrative Agent).

(iii)Corporate Documents.  Such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.

(iv)Officer’s Certificate.  A certificate, dated the Effective Date and signed by the President, the Chief Executive Officer, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in the lettered clauses of the first sentence of Section 4.02.

(v)Guarantee and Security Agreement.  The Guarantee and Security Agreement, duly executed and delivered by each of the parties to the Guarantee and Security Agreement.

(vi)Control Agreement.  A Collateral Account Control Agreement, duly executed and delivered by the Borrower, the Administrative Agent and State Street Bank and Trust Company.

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(vii)Borrowing Base Certificate.  A Borrowing Base Certificate showing a calculation of the Borrowing Base as of February 1, 2017 with the Value of each Portfolio Investment determined as of December 31, 2016.

(b)Liens.  The Administrative Agent shall have received results of a recent lien search in each relevant jurisdiction with respect to the Borrower and the Subsidiary Guarantors, confirming that each financing statement in respect of the Liens in favor of the Collateral Agent created pursuant to the Security Documents is otherwise prior to all other financing statements or other interests reflected therein (other than any financing statement or interest in respect of liens permitted under Section 6.02 or liens to be discharged on or prior to the Effective Date pursuant to documentation satisfactory to the Administrative Agent and revealing no liens on any of the assets of the Borrower or the Subsidiary Guarantors except for liens permitted under Section 6.02 or liens to be discharged on or prior to the Effective Date pursuant to documentation satisfactory to the Administrative Agent).  All UCC financing statements and similar documents required to be filed in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a first priority perfected security interest in the Collateral (to the extent that such a security interest may be perfected by a filing under the Uniform Commercial Code) shall have been properly filed in each jurisdiction required (or arrangements for such filings acceptable to the Administrative Agent shall have been made).

(c)Consents.  The Borrower shall have obtained and delivered to the Administrative Agent certified copies of all consents, approvals, authorizations, registrations, or filings required to be made or obtained by the Borrower and all Subsidiary Guarantors in connection with the Transactions and any transaction being financed with the proceeds of the Loans, and such consents, approvals, authorizations, registrations, filings and orders shall be in full force and effect and all applicable waiting periods shall have expired and no investigation or inquiry by any Governmental Authority regarding the Transactions or any transaction being financed with the proceeds of the Loans shall be ongoing.

(d)Fees and Expenses.  The Borrower shall have paid in full to the Administrative Agent all fees and expenses related to the Loan Documents and the Fee Letter owing on the Effective Date.

(e)Patriot Act.  The Administrative Agent and the Lenders shall have received, sufficiently in advance of the Effective Date, all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act (Title III of Pub. L. 107‑56 (signed into law October 26, 2001)).

(f)Other Documents.  The Administrative Agent shall have received such other documents as the Administrative Agent or any Lender may reasonably request in form and substance reasonably satisfactory to the Administrative Agent.

SECTION 4.02.  Each Credit Event.  The obligation of each Lender to make any Loan, and of each Issuing Bank to issue, amend, renew or extend any Letter of Credit, is additionally subject to the satisfaction of the following conditions:

(a)the representations and warranties of the Borrower set forth in this Agreement and in the other Loan Documents shall be true and correct in all material respects (or, in the case of any portion of any representations and warranties already subject to a materiality qualifier, true and correct in all respects) on and as of the date of such Loan or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, or, as to any such representation or warranty that refers to a specific date, as of such specific date;

(b)at the time of and immediately after giving effect to such Loan or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing; and

(c)either (i) the aggregate Covered Debt Amount (after giving effect to such extension of credit) shall not exceed the Borrowing Base reflected on the Borrowing Base Certificate most recently delivered to the Administrative Agent or (ii) the Borrower shall have delivered an updated Borrowing Base Certificate demonstrating that the Covered Debt Amount (after giving effect to such extension of credit) shall not exceed the Borrowing Base after giving effect to such extension of credit as well as any concurrent acquisitions of Portfolio

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Investments or payment of outstanding Loans or Other Covered Indebtedness or any other Indebtedness that is included in the Covered Debt Amount at such time.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in the preceding sentence.

ARTICLE V

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired, been terminated, Cash Collateralized or backstopped and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 5.01.  Financial Statements and Other Information.  The Borrower will furnish to the Administrative Agent and each Lender:

(a)within 90 days after the end of each fiscal year of the Borrower, the audited consolidated balance sheet and statement of operations, changes in net assets and cash flows of the Borrower and its Subsidiaries as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by independent public accountants of recognized national standing to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; provided that the requirements set forth in this clause (a) may be fulfilled by providing to the Administrative Agent and the Lenders the report of the Borrower to the SEC on Form 10-K for the applicable fiscal year;

(b)within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, the consolidated balance sheet and statement of operations, changes in net assets and cash flows of the Borrower and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for (or, in the case of the statements of assets and liabilities, operations, changes in net assets and cash flows, as of the end of) the corresponding period or periods of the previous fiscal year, all certified by a Financial Officer of the Borrower as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; provided that the requirements set forth in this clause (b) may be fulfilled by providing to the Lenders the report of the Borrower to the SEC on Form 10-Q for the applicable quarterly period;

(c)concurrently with any delivery of financial statements under clause (a) or (b) of this Section, a certificate of a Financial Officer of the Borrower (i) certifying that such statements are consistent with the financial statements filed by the Borrower with the Securities and Exchange Commission, (ii) certifying as to whether the Borrower has knowledge that a Default has occurred during the applicable period and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.01, 6.02, 6.04 and 6.07 and (iv) stating whether any change in GAAP as applied by (or in the application of GAAP by) the Borrower has occurred since the Effective Date and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(d)as soon as available and in any event not later than 20 days after the end of each monthly accounting period (ending on the last day of each calendar month) of the Borrower and its Subsidiaries, a Borrowing Base Certificate as at the last day of such accounting period;

(e)promptly but no later than five Business Days after any Responsible Officer of the Borrower shall at any time have knowledge that there is a Borrowing Base Deficiency, a Borrowing Base Certificate

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as at the date such Responsible Officer of the Borrower has knowledge of such Borrowing Base Deficiency indicating the amount of the Borrowing Base Deficiency as at the date such Responsible Officer of the Borrower obtained knowledge of such deficiency and the amount of the Borrowing Base Deficiency as of the date not earlier than one Business Day prior to the date the Borrowing Base Certificate is delivered pursuant to this paragraph;

(f)promptly upon receipt thereof copies of all significant reports submitted by the Borrower’s independent public accountants in connection with each annual, interim or special audit or review of any type of the financial statements or related internal control systems of the Borrower or any of its Subsidiaries delivered by such accountants to the management or board of directors of the Borrower;

(g)promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any of the Subsidiary Guarantors with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, as the case may be; and

(h)promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any of its Subsidiaries, or compliance with the terms of this Agreement and the other Loan Documents, as the Administrative Agent or any Lender may reasonably request, including such documents and information requested by the Administrative Agent or any Lender that are reasonably required in order to comply with “know-your-customer” and other anti-terrorism, anti-money laundering and similar rules and regulations and related policies.

(i)Borrower and each Lender acknowledge that certain of the Lenders may be Public Lenders and, if documents or notices required to be delivered pursuant to this Section 5.01 or otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak or another relevant website or other information platform (the “Platform”), any document or notice that Borrower has indicated contains Non-Public Information shall not be posted by Administrative Agent on that portion of the Platform designated for such Public Lenders. Borrower agrees to clearly designate all information provided to Administrative Agent by or on behalf of Borrower or any of its Subsidiaries which is suitable to make available to Public Lenders. If Borrower has not indicated whether a document or notice delivered pursuant to this Section 5.01 contains Non-Public Information, the Administrative Agent reserves the right to post such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material Non-Public Information with respect to Borrower, its Subsidiaries and their Securities (as such term is defined in Section 5.13 of this Agreement).

(j)Notwithstanding anything to the contrary herein, the requirements to deliver documents set forth in Section 5.01(a), (b) and (g) will be fulfilled by filing by the Borrower of the applicable documents for public availability on the SEC’s Electronic Data Gathering and Retrieval system; provided, that the Borrower shall notify the Administrative Agent (by telecopier or electronic mail) of the posting of any such documents.

SECTION 5.02.  Notices of Material Events.  The Borrower will furnish to the Administrative Agent and each Lender prompt written notice upon any Responsible Officer obtaining knowledge of the following:

(a)the occurrence of any Default;

(b)the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any of its Affiliates that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; and

(c)any other development (excluding matters of a general economic, financial or political nature to the extent that they could not reasonably be expected to have a disproportionate effect on the Borrower) that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

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SECTION 5.03.  Existence: Conduct of Business.  The Borrower will, and will cause each of its Subsidiaries (other than Immaterial Subsidiaries) to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

SECTION 5.04.  Payment of Obligations.  The Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including income tax and other material tax liabilities and material contractual obligations, that, if not paid, could reasonably be expected to result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.05.  Maintenance of Properties; Insurance.  The Borrower will, and will cause each of its Subsidiaries (other than Immaterial Subsidiaries) to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.

SECTION 5.06.  Books and Records; Inspection and Audit Rights.  The Borrower will, and will cause each of its Subsidiaries to, keep books of record and account in accordance with GAAP.  The Borrower will, and will cause each other Obligor to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties during business hours, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested, in each case, to the extent such inspection or requests for such information are reasonable and such information can be provided or discussed without violation of law, rule, regulation or contract; provided that (i) the Borrower or such Obligor shall be entitled to have its representatives and advisors present during any inspection of its books and records and (ii) unless an Event of Default shall have occurred and be continuing, the Borrower’s obligation to reimburse any costs and expenses incurred by the Administrative Agent and the Lenders in connection with any such inspection shall be limited to one inspection per calendar year.

SECTION 5.07.  Compliance with Laws.  The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations, including the Investment Company Act, and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  Without limiting the generality of the foregoing, the Borrower will, and will cause its Subsidiaries to, conduct its business and other activities in compliance in all material respects with the provisions of the Investment Company Act and any applicable rules, regulations or orders issued by the Securities and Exchange Commission thereunder.

SECTION 5.08.  Certain Obligations Respecting Subsidiaries; Further Assurances.

(a)Subsidiary Guarantors.  In the event that the Borrower or any the Subsidiary Guarantors shall form or acquire any new Subsidiary (other than a Financing Subsidiary, a Foreign Subsidiary, an Immaterial Subsidiary or a Subsidiary of a Foreign Subsidiary) the Borrower will cause such new Subsidiary to become a “Subsidiary Guarantor” (and, thereby, an “Obligor”) under the Guarantee and Security Agreement pursuant to a Guarantee Assumption Agreement and to deliver such proof of corporate or other action, incumbency of officers, opinions of counsel and other documents as is consistent with those delivered by the Borrower pursuant to Section 4.01 upon the Effective Date or as the Administrative Agent shall have reasonably requested.

(b)Ownership of Subsidiaries.  The Borrower will, and will cause each of its Subsidiaries to, take such action from time to time as shall be necessary to ensure that each of its Subsidiaries is a wholly owned Subsidiary.

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(c)Further Assurances.  The Borrower will, and will cause each of the Subsidiary Guarantors to, take such action from time to time as shall reasonably be requested by the Administrative Agent to effectuate the purposes and objectives of this Agreement.  Without limiting the generality of the foregoing, the Borrower will, and will cause each of the Subsidiary Guarantors to, take such action from time to time (including filing appropriate Uniform Commercial Code financing statements and executing and delivering such assignments, security agreements and other instruments) as shall be reasonably requested by the Administrative Agent: (i) to create, in favor of the Collateral Agent for the benefit of the Lenders (and any affiliate thereof that is a party to any Hedging Agreement entered into with the Borrower) and the holders of any Secured Longer-Term Indebtedness or Secured Shorter-Term Indebtedness, perfected security interests and Liens in the Collateral; provided that any such security interest or Lien shall be subject to the relevant requirements of the Security Documents, (ii) in the case of any Portfolio Investment consisting of a Bank Loan (as defined in Section 5.13) that does not constitute all of the credit extended to the underlying borrower under the relevant underlying loan documents and a Financing Subsidiary holds any interest in the loans or other extensions of credit under such loan documents, (x) to cause such Financing Subsidiary to be party to such underlying loan documents as a “lender” having a direct interest (or a participation not acquired from an Obligor) in such underlying loan documents and the extensions of credit thereunder and (y) to ensure that all amounts owing to such Obligor or Financing Subsidiary by the underlying borrower or other obligated party are remitted by such borrower or obligated party directly to separate accounts of such Obligor and such Financing Subsidiary, (iii) in the event that any Obligor is acting as an agent or administrative agent under any loan documents with respect to any Bank Loan that does not constitute all of the credit extended to the underlying borrower under the relevant underlying loan documents, to ensure that all funds held by such Obligor in such capacity as agent or administrative agent is segregated from all other funds of such Obligor and clearly identified as being held in an agency capacity and (iv) to cause the closing sets and all executed amendments, consents, forbearances and other modifications and assignment agreements relating to any Portfolio Investment and any other documents relating to any Portfolio Investment requested by the Collateral Agent, in each case, to be held by the Collateral Agent or a custodian pursuant to the terms of a custodian agreement reasonably satisfactory to the Collateral Agent.

SECTION 5.09.  Use of Proceeds.  The Borrower will use the proceeds of the Loans only for general corporate purposes of the Borrower, including the acquisition and funding (either directly or through one or more wholly-owned Subsidiaries) of leveraged loans, mezzanine loans, high-yield securities, convertible securities, preferred stock, common stock and other Portfolio Investments; provided that neither the Administrative Agent nor any Lender shall have any responsibility as to the use of any of such proceeds.  No part of the proceeds of any Loan will be used in violation of (a) applicable law or, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock or (b) Section 3.16.  Margin Stock shall be purchased by the Obligors only with the proceeds of Indebtedness not directly or indirectly secured by Margin Stock, or with the proceeds of equity capital of the Borrower.

SECTION 5.10.  Status of RIC and BDC.  The Borrower shall at all times, subject to applicable grace periods set forth in the Code, maintain its status as a RIC under the Code, and as a “business development company” under the Investment Company Act.

SECTION 5.11.  Investment Policies.  The Borrower shall at all times be in compliance in all material respects with its Investment Policies (after giving effect to any Permitted Policy Amendments).

SECTION 5.12.  Portfolio Valuation and Diversification Etc.

(a)Industry Classification Groups.  For purposes of this Agreement, the Borrower shall assign each Portfolio Investment to an Industry Classification Group.  To the extent that any Portfolio Investment is not correlated with the risks of other Portfolio Investments in an Industry Classification Group, such Portfolio Investment may be assigned by the Borrower to an Industry Classification Group that is more closely correlated to such Portfolio Investment.  In the absence of any correlation, the Borrower shall be permitted, upon prior notice to the Administrative Agent and each Lender, to create up to three additional industry classification groups for purposes of this Agreement.

(b)Portfolio Valuation Etc.

(i)Settlement Date Basis.  For purposes of this Agreement, all determinations of whether an investment is to be included as a Portfolio Investment shall be determined on a settlement-date basis (meaning

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that any investment that has been purchased will not be treated as a Portfolio Investment until such purchase has settled, and any Portfolio Investment which has been sold will not be excluded as a Portfolio Investment until such sale has settled); provided that no such investment shall be included as a Portfolio Investment to the extent it has not been paid for in full.

(ii)Determination of Values.  The Borrower will conduct reviews of the value to be assigned to each of its Portfolio Investments as follows:

(A)Quoted Investments - External Review.  With respect to Portfolio Investments (including Cash Equivalents) for which market quotations are readily available (each, a “Quoted Investment”), the Borrower shall, not less frequently than once each calendar week, determine the market value of such Quoted Investments which shall, in each case, be determined in accordance with one of the following methodologies (as selected by the Borrower):

 

(w)

in the case of public and 144A securities, the average of the bid prices as determined by two Approved Dealers selected by the Borrower,

 

(x)

in the case of bank loans, the bid price as determined by one Approved Dealer selected by the Borrower,

 

(y)

in the case of any Quoted Investment traded on an exchange, the closing price for such Quoted Investment most recently posted on such exchange, and

 

(z)

in the case of any other Quoted Investment, the fair market value thereof as determined by an Approved Pricing Service selected by the Borrower; and

(B)Unquoted Investments- External Review.  With respect to each Portfolio Investment for which market quotations are not readily available (each, an “Unquoted Investment”), the Borrower shall request an Approved Third-Party Appraiser to assist the Board of Directors of the Borrower in determining the fair market value of such Unquoted Investment, as at the last day of two non-consecutive fiscal quarters each calendar year in each case, and with respect to each calendar year, as selected by the Borrower in its sole discretion (with respect to such Portfolio Investment) (each, a “Testing Quarter”); provided that

 

(x)

the Value of any such Unquoted Investment acquired shall be deemed to be equal to the cost of such Unquoted Investment until such time as the fair market value of such Unquoted Investment is determined in accordance with the foregoing provisions of this sub-clause (B) as at the last day of the next succeeding Testing Quarter with respect to such Portfolio Investment;

 

(y)

notwithstanding the foregoing, the Board of Directors of the Borrower may, without the assistance of an Approved Third-Party Appraiser, determine the fair market value of such Unquoted Investment so long as the aggregate Value thereof of all such Unquoted Investments so determined does not at any time exceed 10% of the aggregate Borrowing Base, except that the fair market value of any Unquoted Investment that has been determined without the assistance of an Approved Third-Party Appraiser as at the last day of any Testing Quarter with respect to such Unquoted Investment shall be deemed to be zero as at the last day of the immediately succeeding Testing Quarter with respect to such Unquoted Investment (but effective upon the date upon which the Borrowing Base Certificate for such last day is required to be delivered hereunder) if an Approved Third-Party Appraiser has not assisted the Board of Directors of the Borrower in determining the fair market value of such Unquoted Investments, as at such date; and

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(z) no Testing Quarter with respect to any Unquoted Investment shall end more than six months following the end of the immediately preceding Testing Quarter for such Portfolio Investment.

(C)Internal Review.  The Borrower shall conduct internal reviews of all Portfolio Investments at least once each calendar week which shall take into account any events of which any Responsible Officer of the Borrower has knowledge that adversely affect the value of the Portfolio Investments.  If the value of any Portfolio Investment as most recently determined by the Borrower pursuant to this Section 5.12(b)(ii)(C) is lower than the value of such Portfolio Investment as most recently determined pursuant to Section 5.12(b)(ii)(A) and (B), such lower value shall be deemed to be the “Value” of such Portfolio Investment for purposes hereof; provided that the Value of any Portfolio Investment of the Borrower and its Subsidiaries shall be increased by the net unrealized gain as at the date such Value is determined of any Hedging Agreement entered into to hedge risks associated with such Portfolio Investment and reduced by the net unrealized loss as at such date of any such Hedging Agreement (such net unrealized gain or net unrealized loss, on any date, to be equal to the aggregate amount receivable or payable under the related Hedging Agreement if the same were terminated on such date).

(D)Failure to Determine Values.  If the Borrower shall fail to determine the value of any Portfolio Investment as at any date pursuant to the requirements of the foregoing sub-clauses (A), (B) or (C), then the “Value” of such Portfolio Investment as at such date shall be deemed to be zero.

(E)Testing of Values.  

 

(x)

For the second calendar month immediately following the end of each fiscal quarter (the last such fiscal quarter is referred to herein as, the “Testing Period”), the Administrative Agent shall cause an Approved Third-Party Appraiser selected by the Administrative Agent to value such number of Unquoted Investments (selected by the Administrative Agent) that collectively have an aggregate Value approximately equal to the Calculation Amount.  The Administrative Agent agrees to notify the Borrower of the Unquoted Investments selected by the Administrative Agent to be tested in each Testing Period.  If there is a difference between the Borrower’s valuation and the Approved Third-Party Appraiser’s valuation of any Unquoted Investment, the Value of such Unquoted Investment for Borrowing Base purposes shall be established as set forth in sub-clause (F) below.

 

(y)

For the avoidance of doubt, the valuation of any Approved Third-Party Appraiser selected by the Administrative Agent would not be as of, or delivered at, the end of any fiscal quarter.  Any such valuation would be as of the end of the second month immediately following any fiscal quarter (the “Administrative Agent Appraisal Testing Period”) and would be reflected in the Borrowing Base Certificate for such month (provided that such Approved Third-Party Appraiser delivers such valuation at least seven Business Days before the 20th day after the end of the applicable monthly accounting period and, if such valuation is delivered after such time, it shall be included in the Borrowing Base Certificate for the following monthly period and applied to the then applicable balance of the related Portfolio Investment).  For illustrative purposes, if the given fiscal quarter is the fourth quarter ending on December 31, 2017, then (A) the Administrative Agent would initiate the testing of Values (using the December 31, 2017 Values for purposes of determining the scope of the testing under clauses (E)(x) during the month of February with the anticipation of receiving the valuations from the applicable Approved Third-Party Appraiser(s) on or after February 28, 2018 and (B)(xx) if such valuations were received before the seventh Business Day before March 20, 2018, such valuations would be included in the March 20, 2018 Borrowing Base Certificate covering the month of February, or (yy) if such valuations were received after such time,

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they would be included in the April 20, 2018 Borrowing Base Certificate for the month of March.

For the avoidance of doubt, all calculations of value pursuant to this Section 5.12(b)(ii)(E) shall be determined without application of the Advance Rates.

(F)Valuation Dispute Resolution.  Notwithstanding the foregoing, the Administrative Agent shall at any time have the right to request, in its reasonable discretion, any Unquoted Investment be independently valued by an Approved Third-Party Appraiser selected by the Administrative Agent.  There shall be no limit on the number of such appraisals requested by the Administrative Agent and the costs of any such valuation shall be at the expense of the Borrower.  If the difference between the Borrower’s valuation pursuant to Section 5.12(b)(ii)(B) and the valuation of any Approved Third-Party Appraiser selected by the Administrative Agent pursuant to Section 5.12(b)(ii)(E) or (F) is (1) less than 5% of the value thereof, then the Borrower’s valuation shall be used, (2) between 5% and 20% of the value thereof, then the valuation of such Portfolio Investment shall be the average of the value determined by the Borrower and the value determined by the Approved Third-Party Appraiser retained by the Administrative Agent and (3) greater than 20% of the value thereof, then the Borrower and the Administrative Agent shall select an additional Approved Third-Party Appraiser and the valuation of such Portfolio Investment shall be the average of the three valuations (with the Administrative Agent’s Approved Third-Party Appraiser’s valuation to be used until the third valuation is obtained).

(c)RIC Diversification Requirements.  The Borrower will, and will cause its Subsidiaries (other than Financing Subsidiaries that are exempt from the Investment Company Act) at all times to, subject to applicable grace periods set forth in the Code, comply with the portfolio diversification requirements set forth in the Code applicable to RICs, to the extent applicable.

SECTION 5.13.  Calculation of Borrowing Base.  For purposes of this Agreement, the “Borrowing Base” shall be determined, as at any date of determination, as the sum of the Advance Rates of the Value of each Portfolio Investment (excluding any Cash Collateral held by the Administrative Agent pursuant to Section 2.05(k) or the last paragraph of Section 2.09(a)); provided that:

(a)the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments in a consolidated group of corporations or other entities (collectively, a “Consolidated Group”), in accordance with GAAP, that exceeds 7.5% of Shareholders’ Equity of the Borrower (which, for purposes of this calculation shall exclude the aggregate amount of investments in, and advances to, Financing Subsidiaries) shall be 50% of the Advance Rate otherwise applicable; provided that, with respect to the Portfolio Investments in a single Consolidated Group designated by the Borrower to the Administrative Agent such 7.5% figure shall be increased to 10%;

(b)the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments of all issuers in a Consolidated Group exceeding 15% of Shareholders’ Equity of the Borrower (which, for purposes of this calculation shall exclude the aggregate amount of investments in, and advances to, Financing Subsidiaries) shall be 0%;

(c)the Advance Rate applicable to that portion of the aggregate Value of the Portfolio Investments in any single Industry Classification Group that exceeds 25% of Shareholders’ Equity of the Borrower (which for purposes of this calculation shall exclude the aggregate amount of investments in, and advances to, Financing Subsidiaries) shall be 0%; provided that, with respect to the Portfolio Investments in a single Industry Classification Group from time to time designated by the Borrower to the Administrative Agent such 25% figure shall be increased to 30% and, accordingly, only to the extent that the Value for such single Industry Classification Group exceeds 30% of the Shareholders’ Equity shall the Advance Rate applicable to such excess Value be 0%;

(d)no Portfolio Investment may be included in the Borrowing Base unless the Collateral Agent maintains a first priority, perfected Lien (subject to Permitted Liens) on such Portfolio Investment and such Portfolio

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Investment has been Delivered (as defined in the Guarantee and Security Agreement) to the Collateral Agent, and then only for so long as such Portfolio Investment continues to be Delivered as contemplated therein;

(e)the portion of the Borrowing Base attributable to Performing Non-Cash Pay High Yield Securities, Performing Non-Cash Pay Mezzanine Investments, Equity Interests and Non-Performing Portfolio Investments shall not exceed 20%;

(f)the portion of the Borrowing Base attributable to Equity Interests shall not exceed 10% (it being understood that in no event shall Equity Interests of Financing Subsidiaries be included in the Borrowing Base);

(g)the portion of the Borrowing Base attributable to Non-Performing Portfolio Investments shall not exceed 10% and the portion of the Borrowing Base attributable to Portfolio Investments that were Non-Performing Portfolio Investments at the time such Portfolio Investments were acquired shall not exceed 5%;

(h)the portion of the Borrowing Base attributable to Portfolio Investments invested outside the United States, Canada, the United Kingdom, Australia, Germany, France, Belgium, the Netherlands, Luxembourg, Switzerland, Denmark, Finland, Norway and Sweden shall not exceed 5% without the consent of the Administrative Agent and ING;

(i)at any time the Borrower Asset Coverage Ratio as of the end of the most recent fiscal quarter is greater than or equal to 200%, but less than 225%, the portion of the Borrowing Base attributable to Portfolio Investments other than Performing First Lien Bank Loans shall not exceed 62.5%; and

(j)at any time the Borrower Asset Coverage Ratio as of the end of the most recent fiscal quarter is greater than or equal to 225%, the portion of the Borrowing Base attributable to Portfolio Investments other than Performing First Lien Bank Loans shall not exceed 67.5%.

As used herein, the following terms have the following meanings:

“Advance Rate” means, as to any Portfolio Investment and subject to adjustment as provided in Section 5.13(a), (b) and (c), the following percentages with respect to such Portfolio Investment:

Portfolio Investment

Quoted

Unquoted

Cash, Cash Equivalents and

   Short-Term U.S. Government Securities


100%


N/A

Long-Term U.S. Government Securities

95%

N/A

Performing First Lien Bank Loans

85%

75%

Performing Unitranche Loans

80%

70%

Performing Second Lien Bank Loans

75%

65%

Performing Cash Pay High Yield Securities

70%

60%

Performing Cash Pay Mezzanine Investments

65%

55%

Performing Non-Cash Pay High Yield Securities

60%

50%

Performing Non-Cash Pay Mezzanine Investments

55%

45%

Non-Performing First Lien Bank Loans

45%

45%

Non-Performing Unitranche Loans

40%

40%

Non-Performing Second Lien Bank Loans

40%

30%

Non-Performing High Yield Securities

30%

30%

Non-Performing Mezzanine Investments

30%

25%

Performing Common Equity (and zero cost or

   penny warrants with performing debt)

30%

20%

Non-Performing Common Equity

0%

0%

Structured Finance Obligations and Finance Leases

0%

0%

 

“Bank Loans” means debt obligations (including term loans, notes, revolving loans, debtor-in-possession financings, the funded and unfunded portion of revolving credit lines and letter of credit facilities and other

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similar loans and investments including interim loans and senior subordinated loans) which are generally under a loan or credit facility (whether or not syndicated) or note purchase agreement.

“Capital Stock” of any Person means any and all shares of corporate stock (however designated) of and any and all other Equity Interests and participations representing ownership interests (including membership interests and limited liability company interests) in, such Person.

“Cash” has the meaning assigned to such term in Section 1.01 of the Credit Agreement.

“Cash Equivalents” has the meaning assigned to such term in Section 1.01 of the Credit Agreement.

“Finance Lease” means any transaction representing the obligation of a lessee to pay rent or other amounts under a lease which is required to be classified and accounted for as a capital lease on the balance sheet of such lessee under GAAP.

“First Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a first lien and first priority perfected security interest (subject to Liens for “ABL” revolvers and customary encumbrances) on a substantial portion of the assets of the respective borrower and guarantors obligated in respect thereof; provided that any First Lien Bank Loan that is also a First Lien First Out Bank Loan shall be treated for purposes of determining the applicable Advance Rate as a Unitranche Loan; provided, further, that the Advance Rate of any First Lien Bank Loan that is also a Unitranche Loan shall be determined in accordance with the definition of Unitranche Loan.

“First Lien First Out Bank Loan” means a First Lien Bank Loan with a ratio of first lien debt to EBITDA that exceeds 5.25 to 1.00, and where the underlying borrower does not also have a Second Lien Bank Loan outstanding.

“High Yield Securities” means debt Securities and Preferred Stock, in each case (a) issued by public or private issuers, (b) issued pursuant to an effective registration statement or pursuant to Rule 144A under the Securities Act (or any successor provision thereunder) or other exemption to the Securities Act and (c) that are not Cash Equivalents, Mezzanine Investments or Bank Loans.

“Long-Term U.S. Government Securities” means U.S. Government Securities maturing more than one year from the applicable date of determination.

“Mezzanine Investments” means debt Securities (including convertible debt Securities (other than the “in-the-money” equity component thereof)) and Preferred Stock, in each case (a) issued by public or private issuers, (b) issued without registration under the Securities Act, (c) not issued pursuant to Rule 144A under the Securities Act (or any successor provision thereunder), (d) that are not Cash Equivalents and (e) contractually subordinated in right of payment to other debt of the same issuer.

“Non-Performing Common Equity” means Capital Stock (other than Preferred Stock) and warrants of an issuer having any debt outstanding that is non-Performing.

“Non-Performing First Lien Bank Loans” means First Lien Bank Loans other than Performing First Lien Bank Loans.

“Non-Performing High Yield Securities” means High Yield Securities other than Performing High Yield Securities.

“Non-Performing Mezzanine Investments” means Mezzanine Investments other than Performing Mezzanine Investments.

“Non-Performing Portfolio Investment” means Portfolio Investments for which the issuer is in default of any payment obligations of principal or interest in respect thereof after the expiration of any applicable grace period.

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“Non-Performing Second Lien Bank Loans” means Second Lien Bank Loans other than Performing Second Lien Bank Loans.

“Non-Performing Unitranche Loans” means Unitranche Loans other than Performing Unitranche Loans.

“Performing” means (a) with respect to any Portfolio Investment that is debt, the issuer of such Portfolio Investment is not in default of any payment obligations in respect thereof after the expiration of any applicable grace period and (b) with respect to any Portfolio Investment that is Preferred Stock, the issuer of such Portfolio Investment has not failed to meet any scheduled redemption obligations or to pay its latest declared cash dividend, after the expiration of any applicable grace period.

“Performing Cash Pay High Yield Securities” means High Yield Securities (a) as to which, at the time of determination, not less than 2/3rds of the interest (including accretions and “pay-in-kind” interest) for the current monthly, quarterly, semiannual or annual period (as applicable) is payable in cash and (b) which are Performing.

“Performing Cash Pay Mezzanine Investments” means Mezzanine Investments (a) as to which, at the time of determination, not less than 2/3rds of the interest (including accretions and “pay-in-kind” interest) for the current monthly, quarterly, semi-annual or annual period (as applicable) is payable in cash and (b) which are Performing.

“Performing Common Equity” means Capital Stock (other than Preferred Stock) and warrants of an issuer all of whose outstanding debt is Performing.

“Performing First Lien Bank Loans” means First Lien Bank Loans which are Performing.

“Performing Non-Cash Pay High Yield Securities” means Performing High Yield Securities other than Performing Cash Pay High Yield Securities.

“Performing Non-Cash Pay Mezzanine Investments” means Performing Mezzanine Investments other than Performing Cash Pay Mezzanine Investments.

“Performing Second Lien Bank Loans” means Second Lien Bank Loans which are Performing.

“Performing Unitranche Loans” means Unitranche Loans which are Performing.

“Preferred Stock,” as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to any shares (or other interests) of other Capital Stock of such Person, and shall include, without limitation, cumulative preferred, non-cumulative preferred, participating preferred and convertible preferred Capital Stock; provided that such Preferred Stock (i) pays a cash dividend on a monthly or quarterly basis and (ii) has a maturity date or is subject to mandatory redemption on a date certain that is not greater than ten (10) years from the date of initial issuance of such Preferred Stock.

“Second Lien Bank Loan” means a Bank Loan that is entitled to the benefit of a second lien and second priority perfected security interest (subject to customary encumbrances) on specified assets of the respective Borrower and guarantors obligated in respect thereof.

“Securities” means common and preferred stock, units and participations, member interests in limited liability companies, partnership interests in partnerships, notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, including debt instruments of public and private issuers and tax-exempt securities (including warrants, rights, put and call options and other options relating thereto, representing

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rights, or any combination thereof) and other property or interests commonly regarded as securities or any form of interest or participation therein, but not including Bank Loans.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Short-Term U.S. Government Securities” means U.S. Government Securities maturing within one year of the applicable date of determination.

“Structured Finance Obligation” means any obligation issued by a special purpose vehicle and secured directly by, referenced to, or representing ownership of, a pool of receivables or other financial assets of any obligor, including collateralized debt obligations and mortgaged-backed securities.  For the avoidance of doubt, if an obligation satisfies the definition of “Structured Finance Obligation”, such obligation shall not (a) qualify as any other category of Portfolio Investment and (b) be included in the Borrowing Base.

“U.S. Government Securities” has the meaning assigned to such term in Section 1.01.

“Unitranche Loan” means a Bank Loan that is a First Lien Bank Loan, a portion of which is, in effect, subject to debt subordination and superpriority rights of other lenders following an event of default (such portion, a “last out” portion); provided that, the aggregate principal amount of the “last out” portion of such Bank Loan is at least 50% of the aggregate principal amount of any “first out” portion of such Bank Loan; provided, further, that the underlying obligor with respect to such Bank Loan shall have a ratio of first lien debt (including the “first out” portion of such Bank Loan, but excluding the “last out” portion of such Bank Loan) to EBITDA that does not exceed 3.25 to 1.00 and a ratio of aggregate first lien debt (including both the “first out” portion and the “last out” portion of such Bank Loan) to EBITDA that does not exceed 5.25 to 1.00. An Obligor’s investment in (i) the “last out” portion of a Unitranche Loan shall be treated as a Unitranche Loan; (ii) the “first out” portion of a Unitranche Loan shall be treated as a First Lien Bank Loan; and (iii) any “last out” portion of a Unitranche Loan that does not meet the foregoing first lien debt to EBITDA criteria set forth in this definition shall be treated as a Second Lien Bank Loan, in each case, for purposes of determining the applicable Advance Rate for such Portfolio Investment under this Agreement.

“Value” means, with respect to any Portfolio Investment, the lower of:

(i) the most recent internal market value as determined pursuant to Section 5.12(b)(ii)(C) and

(ii) the most recent external market value as determined pursuant to Section 5.12(b)(ii)(A) and (B).

ARTICLE VI

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired, been terminated, Cash Collateralized or backstopped and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 6.01.  Indebtedness.  Subject to the last sentence of this Section 6.01, the Borrower will not, nor will it permit any of the Subsidiary Guarantors to, create, incur, assume or permit to exist any Indebtedness, except:

(a)Indebtedness created hereunder or under any other Loan Document;

(b)Secured Longer-Term Indebtedness and Unsecured Longer-Term Indebtedness so long as (i) no Default exists at the time of the incurrence thereof, (ii) the aggregate amount of such Secured Longer-Term Indebtedness and Unsecured Longer-Term Indebtedness, taken together with other then-outstanding Indebtedness, does not exceed the amount required to comply with the provisions of Sections 6.07(c) and (d), and (iii) prior to and

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immediately after giving effect to the incurrence of any Secured Longer-Term Indebtedness or Unsecured Longer-Term Indebtedness, the Covered Debt Amount does not or would not exceed the Borrowing Base then in effect;

(c)Other Permitted Indebtedness;

(d)Guarantees of Indebtedness otherwise permitted hereunder;

(e)Indebtedness of any Obligor owing to any other Obligor or, if such Indebtedness is subject to subordination terms and conditions that are satisfactory to the Administrative Agent, any other Subsidiary of the Borrower;

(f)[Reserved];

(g)repurchase obligations arising in the ordinary course of business with respect to U.S. Government Securities;

(h)obligations payable to clearing agencies, brokers or dealers in connection with the purchase or sale of securities in the ordinary course of business;

(i)Secured Shorter-Term Indebtedness so long as (i) no Default exists at the time of the incurrence thereof, (ii) the aggregate amount (determined at the time of the incurrence of such Indebtedness) of such Indebtedness does not exceed the greater of (A) $20,000,000 and (B) 5% of Borrower Net Worth, (iii) the aggregate amount of such Indebtedness, taken together with other then-outstanding Indebtedness, does not exceed the amount required to comply with the provisions of Sections 6.07(c) and (d), and (iv) prior to and immediately after giving effect to the incurrence of any such Indebtedness, the Covered Debt Amount does not or would not exceed the Borrowing Base then in effect;

(j)obligations (including Guarantees) in respect of Standard Securitization Undertakings;

(k)Permitted SBIC Guarantees;

(l)[Reserved]; and

(m)Unsecured Shorter-Term Indebtedness (other than Special Unsecured Indebtedness that would otherwise constitute Unsecured Shorter-Term Indebtedness) so long as (i) no Default exists at the time of the incurrence thereof, (ii) the aggregate amount (determined at the time of the incurrence of such Indebtedness) of such Indebtedness does not exceed $500,000,000, (iii) the aggregate amount (determined at the time of the incurrence of such Indebtedness) of such Indebtedness, taken together with then-outstanding Special Unsecured Indebtedness incurred pursuant to Section 6.01(n), does not exceed $1,000,000,000, (iv) the aggregate amount of such Indebtedness, taken together with other then-outstanding Indebtedness, does not exceed the amount required to comply with the provisions of Section 6.07(c) and (d), and (v) prior to and immediately after giving effect to the incurrence of any such Indebtedness, the Covered Debt Amount does not or would not exceed the Borrowing Base then in effect;

(n)Special Unsecured Indebtedness so long as (i) no Default exists at the time of the incurrence thereof, (ii) the aggregate amount (determined at the time of the incurrence of such Indebtedness) of such Indebtedness does not exceed $1,000,000,000, (iii) the aggregate amount (determined at the time of the incurrence of such Indebtedness) of such Indebtedness, taken together with then-outstanding Unsecured Shorter-Term Indebtedness incurred pursuant to Section 6.01(m), does not exceed $1,000,000,000, (iv) the aggregate amount of such Indebtedness, taken together with other then-outstanding Indebtedness, does not exceed the amount required to comply with the provisions of Section 6.07(c) and (d), and (v) prior to and immediately after giving effect to the incurrence of any such Indebtedness, the Covered Debt Amount does not or would not exceed the Borrowing Base then in effect;

(o)Indebtedness incurred pursuant to the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes or the 2026 Notes; and

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(p)other Indebtedness not to exceed the greater of (i) $25,000,000 and (ii) 5% of Borrower Net Worth at any time outstanding.

SECTION 6.02.  Liens.  The Borrower will not, nor will it permit any of the Subsidiary Guarantors to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof except:

(a)any Lien on any property or asset of the Borrower existing on the Effective Date and set forth in Part B of Schedule 3.11; provided that (i) no such Lien shall extend to any other property or asset of the Borrower or any of the Subsidiary Guarantors, and (ii) any such Lien shall secure only those obligations which it secures on the Effective Date and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(b)Liens created pursuant to this Agreement (including Section 2.19) or any of the Security Documents (including Liens in favor of the Designated Indebtedness Holders (as defined in the Guarantee and Security Agreement));

(c)[Reserved];

(d)Liens on Special Equity Interests included in the Portfolio Investments of the Borrower but only to the extent securing obligations in the manner provided in the definition of “Special Equity Interests” in Section 1.01;

(e)Liens securing Indebtedness or other obligations in an aggregate principal amount not exceeding the greater of (i) $25,000,000 and (ii) 5% of Borrower Net Worth at any one time outstanding (which may cover Portfolio Investments, but only to the extent released from the Lien in favor of the Collateral Agent pursuant to Section 10.03 of the Guarantee and Security Agreement), so long as at the time of incurrence of such Indebtedness or other obligations, the aggregate amount of Indebtedness permitted under clauses (a), (b), (i), (m) and (n) of Section 6.01, does not exceed the lesser of (i) the Borrowing Base and (ii) the amount required to comply with the provisions of Section 6.07(c) and (d);

(f)Permitted Liens;

(g)Liens on Equity Interests in any SBIC Subsidiary created in favor of the SBA;

(h)[Reserved];

(i)(x) Liens securing Hedging Agreements permitted under Section 6.04(c) and not otherwise permitted under clause (b) above in an aggregate amount not to exceed $15,000,000 at any time and (y) Liens incurred in connection with any Hedging Agreement either entered into with a Lender (or an Affiliate of a Lender) on an uncleared basis or cleared through a Lender (or Affiliate of a Lender) as futures commission merchant in the ordinary course of business and not for speculative purposes (it being understood that such Lien shall continue to be permitted pursuant to this sub-clause (y) even if such Lender has assigned all of its Loans and other interests in this Agreement and thus has ceased to be a Lender hereunder); provided that in no event shall any Obligor be permitted to create, incur or assume any Lien pursuant to this clause (i) or increase the aggregate amount of collateral securing any Liens previously permitted under this clause (i)  unless both before and after giving effect to the creation, incurrence or assumption of such Lien or such increase in the aggregate amount of collateral securing such Lien the Covered Debt Amount does not exceed the Borrowing Base (after giving effect to the exclusion of all such collateral from the Borrowing Base); and

(j)Liens securing repurchase obligations arising in the ordinary course of business with respect to U.S. Government Securities.

SECTION 6.03.  Fundamental Changes.  The Borrower will not, nor will it permit any of the Subsidiary Guarantors to, enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind

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up or dissolve or divide itself (or suffer any liquidation, dissolution or division). The Borrower will not, nor will it permit any of the Subsidiary Guarantors to, acquire any business or property from, or capital stock of, or be a party to any acquisition of, any Person, except for purchases or acquisitions of Portfolio Investments and other assets in the normal course of the day-to-day business activities of the Borrower and its Subsidiaries and not in violation of the terms and conditions of this Agreement or any other Loan Document.  The Borrower will not, nor will it permit any of the Subsidiary Guarantors to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, any part of its assets, whether now owned or hereafter acquired, but excluding (x) assets (other than Portfolio Investments) sold or disposed of in the ordinary course of business (including to make expenditures of cash in the normal course of the day-to-day business activities of the Borrower and its Subsidiaries) and (y) subject to the provisions of clauses (d) and (e) below, Portfolio Investments.

Notwithstanding the foregoing provisions of this Section:

(a)any Subsidiary Guarantor may be merged or consolidated with or into any other Subsidiary Guarantor; provided that if any such transaction shall be between a Subsidiary Guarantor and a wholly owned Subsidiary Guarantor, the wholly owned Subsidiary Guarantor shall be the continuing or surviving entity;

(b)any Subsidiary Guarantor of the Borrower may sell, lease, transfer (including a deemed transfer resulting from a division or plan of division) or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any wholly owned Subsidiary Guarantor of the Borrower;

(c)the capital stock of any Subsidiary of the Borrower may be sold, transferred (including a deemed transfer resulting from a division or plan of division) or otherwise disposed of to the Borrower or any wholly owned Subsidiary Guarantor of the Borrower;

(d)the Obligors may sell, transfer (including a deemed transfer resulting from a division or plan of division) or otherwise dispose of Portfolio Investments (other than to a Financing Subsidiary) so long as after giving effect to such sale, transfer or other disposition (and any concurrent acquisitions of Portfolio Investments or payment of outstanding Loans or Other Covered Indebtedness or any other Indebtedness that is included in the Covered Debt Amount at such time) the Covered Debt Amount does not exceed the Borrowing Base;

(e)the Obligors may sell, transfer (including a deemed transfer resulting from a division or plan of division) or otherwise dispose of Portfolio Investments to a Financing Subsidiary so long as (i) after giving effect to such sale, transfer or other disposition (and any concurrent acquisitions of Portfolio Investments or payment of outstanding Loans or Other Covered Indebtedness or any other Indebtedness that is included in the Covered Debt Amount at such time) the Covered Debt Amount does not exceed the Borrowing Base and the Borrower delivers to the Administrative Agent a certificate of a Financial Officer to such effect and (ii) either (x) the amount by which the Borrowing Base exceeds the Covered Debt Amount immediately prior to such release is not diminished as a result of such release or (y) the Borrowing Base immediately after giving effect to such release is at least 110% of the Covered Debt Amount;

(f)the Borrower may merge or consolidate with, or acquire all or substantially all of the assets of, any other Person (including any Subsidiary Guarantor) so long as (i) the Borrower is the continuing or surviving entity in such transaction and (ii) at the time thereof and after giving effect thereto, no Default shall have occurred or be continuing; provided that, in no event shall the Borrower enter in any transaction of merger or consolidation or amalgamation, or effect any internal reorganization, if the surviving entity would be organized under any jurisdiction other than a jurisdiction of the United States; and

(g)the Borrower and each of the Subsidiary Guarantors may sell, lease, transfer (including a deemed transfer resulting from a division or plan of division) or otherwise dispose of equipment or other property or assets that do not consist of Portfolio Investments so long as the aggregate amount of all such sales, leases, transfer and dispositions does not exceed $5,000,000 in any fiscal year.

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SECTION 6.04.  Investments.  The Borrower will not, nor will it permit any of the Subsidiary Guarantors to, acquire, make or enter into, or hold, any Investments except:

(a)operating deposit accounts with banks;

(b)Investments by the Borrower and the Subsidiary Guarantors in the Borrower and the Subsidiary Guarantors;

(c)Hedging Agreements entered into in the ordinary course of the Borrower’s financial planning and not for speculative purposes;

(d)Portfolio Investments by the Obligors to the extent such Portfolio Investments are permitted under the Investment Company Act and the Borrower’s Investment Policies as in effect as of the date such Portfolio Investments are acquired;

(e)Investments in Financing Subsidiaries so long as, (i) after giving effect to such Investment, either (A) the amount by which the Borrowing Base exceeds the Covered Debt Amount immediately prior to such Investment is not diminished as a result of such Investment or (B) the Borrowing Base immediately after giving effect to such Investment is at least 110% of the Covered Debt Amount and (ii) the sum of (x) all Investments under this clause (e) that occur after the Extended Commitment Termination Date and (y) all Investments under clause (f) below that occur after the Extended Commitment Termination Date, shall not exceed (A) $10,000,000 in the aggregate or (B) so long as the ratio obtained by dividing the Borrowing Base by the Covered Debt Amount after giving effect to any Investment under this clause (e) (together with any related disposition under Section 6.03(e) and any mandatory prepayment under Section 2.10(d)(i)) is greater than or equal to the ratio obtained by dividing the Borrowing Base by the Covered Debt Amount (immediately prior to such Investment), $25,000,000 in the aggregate;

(f)additional Investments up to but not exceeding $15,000,000 in the aggregate; provided that no Investments shall be permitted under this clause (f) following the Extended Commitment Termination Date upon the sum of (x) all Investments under this clause (f) that occur after the Extended Commitment Termination Date and (y) all Investments under clause (e) above that occur after the Extended Commitment Termination Date, equaling or exceeding $10,000,000 in the aggregate;

(g)Investments in Cash and Cash Equivalents;

(h)Investments described on Schedule 3.12(b);

(i)[Reserved];

(j)Investments in the form of Guarantees permitted pursuant to Section 6.01; and

(k)Joint Venture Investments to the extent that such Joint Venture Investments are permitted under the Investment Company Act and the Borrower’s Investment Policies as in effect as of the date such Joint Venture Investments are acquired; provided that no Obligor shall be permitted to make an Investment in a Joint Venture Investment that is a Non-Performing Joint Venture Investment under this Section 6.04 unless, after giving effect to such Investment, the Covered Debt Amount does not exceed the Borrowing Base.

For purposes of clause (f) of this Section, the aggregate amount of an Investment at any time shall be deemed to be equal to (A) the aggregate amount of cash, together with the aggregate fair market value of property, loaned, advanced, contributed, transferred or otherwise invested that gives rise to such Investment minus (B) the aggregate amount of dividends, distributions or other payments received in cash in respect of such Investment; provided that in no event shall the aggregate amount of such Investment be deemed to be less than zero; the amount of an Investment shall not in any event be reduced by reason of any write-off of such Investment nor increased by any increase in the amount of earnings retained in the Person in which such Investment is made that have not been dividended, distributed or otherwise paid out.

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SECTION 6.05.  Restricted Payments.  The Borrower will not, nor will it permit any of the Subsidiary Guarantors to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except that the Borrower may declare and pay:

(a)dividends with respect to the capital stock of the Borrower payable solely in additional shares of the Borrower’s common stock;

(b)dividends and distributions in either case in cash or other property (excluding for this purpose the Borrower’s common stock) in any taxable year of the Borrower in amounts not to exceed the amount that is determined in good faith by the Borrower to be required to (i) maintain the status of the Borrower as a RIC, and (ii) avoid federal excise taxes for such taxable year imposed by Section 4982 of the Code;

(c)dividends and distributions in each case in cash or other property (excluding for this purpose the Borrower’s common stock) in addition to the dividends and distributions permitted under the foregoing clauses (a) and (b), so long as on the date of such Restricted Payment and after giving effect thereto:

(i)no Default shall have occurred and be continuing or would result therefrom; and

(ii)the aggregate amount of Restricted Payments made during any taxable year of the Borrower after the date hereof under this clause (c) shall not exceed the difference of (x) an amount equal to 10% of the taxable income of the Borrower for such taxable year determined under section 852(b)(2) of the Code, but without regard to subparagraphs (A), (B) or (D) thereof, minus (y) the amount, if any, by which dividends and distributions made during such taxable year pursuant to the foregoing clause (b) (whether in respect of such taxable year or the previous taxable year) based upon the Borrower’s estimate of taxable income exceeded the actual amounts specified in subclauses (i) and (ii) of such foregoing clause (b) for such taxable year.

(d)other Restricted Payments so long as (i) on the date of such other Restricted Payment and after giving effect thereto (x) the Covered Debt Amount does not exceed 90% of the Borrowing Base and (y) no Default shall have occurred and be continuing or would result therefrom and (ii) on the date of such other Restricted Payment the Borrower delivers to the Administrative Agent and each Lender a Borrowing Base Certificate as at such date demonstrating compliance with subclause (x) after giving effect to such Restricted Payment.  For purposes of preparing such Borrowing Base Certificate, (A) the fair market value of Quoted Investments shall be the most recent quotation available for such Quoted Investment and (B) the fair market value of Unquoted Investments shall be the Value set forth in the Borrowing Base Certificate most recently delivered by the Borrower to the Administrative Agent and the Lenders pursuant to Section 5.01(d); provided that the Borrower shall reduce the Value of any Unquoted Investment to the extent necessary to take into account any events of which the Borrower has knowledge that adversely affect the value of such Portfolio Investment.

Nothing herein shall be deemed to prohibit the payment of Restricted Payments by any Subsidiary of the Borrower to the Borrower or to any other Subsidiary Guarantor.

SECTION 6.06.  Certain Restrictions on Subsidiaries.  The Borrower will not permit any of its Subsidiaries (other than Financing Subsidiaries) to enter into or suffer to exist any indenture, agreement, instrument or other arrangement (other than the Loan Documents) that prohibits or restrains, in each case in any material respect, or imposes materially adverse conditions upon, the incurrence or payment of Indebtedness, the declaration or payment of dividends, the making of loans, advances, guarantees or Investments or the sale, assignment, transfer or other disposition of property to the Borrower by any Subsidiary; provided that the foregoing shall not apply to (i) indentures, agreements, instruments or other arrangements pertaining to other Indebtedness permitted hereby (provided that such restrictions would not adversely affect the exercise of rights or remedies of the Administrative Agent or the Lenders hereunder or under the Security Documents or restrict any Subsidiary in any manner from performing its obligations under the Loan Documents) and (ii) indentures, agreements, instruments or other arrangements pertaining to any lease, sale or other disposition of any asset permitted by this Agreement or any Lien permitted by this Agreement on such asset so long as the applicable restrictions only apply to the assets subject to such lease, sale, other disposition or Lien.

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SECTION 6.07.  Certain Financial Covenants.

(a)Minimum Shareholders’ Equity.  The Borrower will not permit Shareholders’ Equity at the last day of any fiscal quarter of the Borrower to be less than the greater of (i) 30% of the value of the assets of the Borrower and its Subsidiaries and (ii) $4,000,000,000, plus 50% of the net proceeds of the sale of Equity Interests by the Borrower and its Subsidiaries after the Sixth Amendment Effective Date (other than proceeds of sales of Equity Interests by and among the Borrower and its Subsidiaries).

(b)Minimum Borrower Net Worth.  The Borrower will not permit Borrower Net Worth at the last day of any fiscal quarter of the Borrower to be less than $1,000,000,000.

(c)Borrower Asset Coverage Ratio.  The Borrower will not permit the Borrower Asset Coverage Ratio at the last day of any fiscal quarter to be less than 200% at any time.

(d)Consolidated Asset Coverage Ratio.  The Borrower will not permit the Consolidated Asset Coverage Ratio at the last day of any fiscal quarter of the Borrower to be less than 150% at any time.

(e)Liquidity Test.  The Borrower will not permit (a) the sum of (i) the aggregate Value of the Portfolio Investments that are Cash (excluding Cash Collateral for outstanding Letters of Credit) or that can be converted to Cash in fewer than 10 Business Days without more than a 5% change in price, plus (ii) the aggregate amount of Relevant Available Funds that can be converted to Cash in fewer than 10 Business Days, to be less than (b) 10% of the Covered Debt Amount, for more than 30 consecutive Business Days during any period when the Adjusted Covered Debt Balance is greater than 90% of the Adjusted Borrowing Base.

SECTION 6.08.  Transactions with Affiliates.  The Borrower will not, and will not permit any of its Subsidiaries to enter into any transactions with any of its Affiliates, even if otherwise permitted under this Agreement, except (a) transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary (other than a SBIC Subsidiary) than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Borrower and its Subsidiaries not involving any other Affiliate, (c) Restricted Payments permitted by Section 6.05, (d) the transactions provided in the Affiliate Agreements, (e) transactions described on Schedule 6.08, (f) any Investment that results in the creation of an Affiliate (g) co-investment transactions with any Affiliate as and to the extent permitted by any exemptive order that may be issued by the SEC to the Borrower and certain Affiliates pursuant to the exemptive application initially filed on October 19, 2015, and as amended from time to time, or otherwise permitted pursuant to applicable SEC guidance or (h) transactions between or among the Obligors and any SBIC Subsidiary or any “downstream affiliate” (as such term is used under the rules promulgated under the Investment Company Act) company of an Obligor at prices and on terms and conditions, taken as a whole, not materially less favorable to the Obligors than could be obtained at the time on an arm’s-length basis from unrelated third parties.

SECTION 6.09.  Lines of Business.  The Borrower will not, nor will it permit any of its Subsidiaries (other than Immaterial Subsidiaries) to, engage to any material extent in any business other than in accordance with its Investment Policies.  The Borrower will not, nor will it permit any of its Subsidiaries to amend or modify the Investment Policies (other than a Permitted Policy Amendment).

SECTION 6.10.  No Further Negative Pledge.  The Borrower will not, and will not permit any of the Subsidiary Guarantors to, enter into any agreement, instrument, deed or lease which prohibits or limits the ability of any Obligor to create, incur, assume or suffer to exist any Lien upon any of its properties, assets or revenues, whether now owned or hereafter acquired, or which requires the grant of any security for an obligation if security is granted for another obligation, except the following: (a) this Agreement, the other Loan Documents and documents with respect to Indebtedness permitted under Section 6.01(b), (i), (m) or (n); (b) covenants in documents creating Liens permitted by Section 6.02 (including covenants with respect to the Designated Obligations or Designated Indebtedness Holders under (and, in each case, as defined in) the Security Documents) prohibiting further Liens on the assets encumbered thereby; (c) customary restrictions contained in leases not subject to a waiver; (d) any such agreement that imposes restrictions on investments or other interests in Financing Subsidiaries (but no other assets of any Obligor); (e) any such agreement that imposes restrictions on Liens in Joint Venture Investments (solely to the extent such restrictions relate to Joint Venture Investments); and (f) any other agreement that does not restrict in any

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manner (directly or indirectly) Liens created pursuant to the Loan Documents on any Collateral securing the “Secured Obligations” under and as defined in the Guarantee and Security Agreement and does not require the direct or indirect granting of any Lien securing any Indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of any Obligor to secure the Loans or any Hedging Agreement.

SECTION 6.11.  Modifications of Longer-Term Indebtedness Documents.  The Borrower will not, and will not permit any other Obligor to, consent to any modification, supplement or waiver of:

(a)any of the provisions of any agreement, instrument or other document evidencing or relating to any Secured Longer-Term Indebtedness or Unsecured Longer-Term Indebtedness that would result in such Indebtedness not meeting the requirements of the definition of “Secured Longer-Term Secured Indebtedness” and “Unsecured Longer-Term Indebtedness”, as applicable, set forth in Section 1.01 of this Agreement, unless (i) in the case of Secured Longer Term Indebtedness, such Indebtedness would have been permitted to be incurred as Secured Shorter-Term Indebtedness at the time of such modification, supplement or waiver and the Borrower so designates such Indebtedness as “Secured Shorter-Term Indebtedness” (whereupon such Indebtedness shall be deemed to constitute “Secured Shorter-Term Indebtedness” for all purposes of this Agreement) and (ii) in the case of Unsecured Longer-Term Indebtedness, such Indebtedness would have been permitted to be incurred as Unsecured Shorter-Term Indebtedness at the time of such modification, supplement or waiver and the Borrower so designates such Indebtedness as “Unsecured Shorter-Term Indebtedness” (whereupon such Indebtedness shall be deemed to constitute “Unsecured Shorter-Term Indebtedness” for all purposes of this Agreement); or

(b)any of the Affiliate Agreements, unless such modification, supplement or waiver is not materially less favorable to the Borrower than could be obtained on an arm’s-length basis from unrelated third parties, in each case, without the prior consent of the Administrative Agent (with the approval of the Required Lenders).

SECTION 6.12.  Payments of Longer-Term Indebtedness and the 2023 Notes,the 2024 Notes, the 2025 March Notes, the 2025 July Notes and the 2026 Notes.  The Borrower will not, nor will it permit any of the Subsidiary Guarantors to, purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of, any Secured Longer-Term Indebtedness, Unsecured Longer-Term Indebtedness, Special Unsecured Indebtedness or the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes or the 2026 Notes (other than the refinancing of Secured Longer-Term Indebtedness, Unsecured Longer-Term Indebtedness, Special Unsecured Indebtedness or the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes or the 2026 Notes with Indebtedness permitted under Section 6.01), except for (a) regularly scheduled payments, prepayments or redemptions of principal and interest in respect thereof required pursuant to the instruments evidencing such Indebtedness (it being understood that: (w) the conversion features into Permitted Equity Interests under convertible notes; (x) the triggering of such conversion and/or settlement thereof solely with Permitted Equity Interests; and (y) any cash payment on account of interest or expenses on such convertible notes made by the Borrower in respect of such triggering and/or settlement thereof shall be permitted under this clause (a)); (b) so long as no Default shall exist or be continuing, any payment that, if treated as a Restricted Payment for purposes of Section 6.05(d), would be permitted to be made pursuant to the provisions set forth in Section 6.05(d); (c) voluntary payments or prepayments of Secured Longer-Term Indebtedness, so long as both before and after giving effect to such voluntary payment or prepayment (i) the Borrower is in pro forma compliance with the financial covenants set forth in Section 6.07 and (ii) no Default shall exist or be continuing; (d) mandatory payments, required prepayments or mandatory redemptions of any convertible notes constituting Unsecured Longer-Term Indebtedness or Special Unsecured Indebtedness in Cash (including any cash payment elected to be paid in connection with the settlement by the Borrower of any conversion at the option of any holder of such convertible notes pursuant to the conversion features thereunder) and the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes and the 2026 Notes, so long as both before and after giving effect to such payment (i) no Event of Default shall exist or be continuing and (ii) the Covered Debt Amount does not exceed 90% of the Borrowing Base; and (e) payments or prepayments of Secured Longer-Term Indebtedness, Unsecured Longer-Term Indebtedness, Special Unsecured Indebtedness or the 2023 Notes, the 2024 Notes, the 2025 March Notes, the 2025 July Notes or the 2026 Notes solely from the proceeds of any issuance of Equity Interests, so long as both before and after giving effect to such payment (i) no Default shall exist or be continuing and (ii) the Covered Debt Amount does not exceed 90% of the Borrowing Base.

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SECTION 6.13.  Accounting Changes.  The Borrower will not, nor will it permit any of its Subsidiaries to, make any change in (a) accounting policies or reporting practices, except as permitted under GAAP or required by law or rule or regulation of any Governmental Authority, or (b) its fiscal year.

SECTION 6.14.  SBIC Guarantee.  The Borrower will not, nor will it permit any of its Subsidiaries to, cause or permit the occurrence of any event or condition that would result in any recourse to any Obligor under any Permitted SBIC Guarantee.

ARTICLE VII

EVENTS OF DEFAULT

If any of the following events (“Events of Default”) shall occur and be continuing:

(a)the Borrower shall (i) fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise or (ii) fail to deposit any amount into the Letter of Credit Collateral Account as required by Section 2.09(a) on the Extended Commitment Termination Date or as required by Section 2.22(b) on the date so required;

(b)the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or under any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five or more Business Days;

(c)any representation, warranty or certification made or deemed made by or on behalf of the Borrower or any of its Subsidiaries in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, shall prove to have been incorrect when made or deemed made in any material respect;

(d)the Borrower shall fail to observe or perform any covenant, condition or agreement contained in (i) Section 5.03 (with respect to the Borrower’s existence) or Sections 5.08(a) and (b) or in Article VI or any Obligor shall default in the performance of any of its obligations contained in Sections 3 and 7 of the Guarantee and Security Agreement or (ii) Sections 5.01(e) and (f) or 5.02 and such failure shall continue unremedied for a period of five or more days after notice thereof by the Administrative Agent (given at the request of any Lender) to the Borrower;

(e)a Borrowing Base Deficiency shall occur and continue unremedied for a period of five or more Business Days after delivery of a Borrowing Base Certificate demonstrating such Borrowing Base Deficiency pursuant to Section 5.01(e); provided that it shall not be an Event of Default hereunder if the Borrower shall present the Administrative Agent with a reasonably feasible plan acceptable to the Required Lenders in their sole discretion to enable such Borrowing Base Deficiency to be cured within 30 Business Days (which 30-Business Day period shall include the five Business Days permitted for delivery of such plan), so long as such Borrowing Base Deficiency is cured within such 30-Business Day period;

(f)the Borrower or any Obligor, as applicable, shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b), (d), (e) or (r) of this Article) or any other Loan Document and such failure shall continue unremedied for a period of 30 or more days after notice thereof from the Administrative Agent (given at the request of any Lender) to the Borrower;

(g)the Borrower or any of its Subsidiaries shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable, taking into account any applicable grace period;

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(h)any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or shall continue unremedied for any applicable period of time sufficient to enable or permit the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity (for the avoidance of doubt, other than as permitted under Section 6.12 and that is not a result of a breach, default or other violation or failure in respect of such Material Indebtedness by the Borrower or any of its Subsidiaries after giving effect to any applicable grace period); provided that this clause (h) shall not apply to (1) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; or (2) convertible debt that becomes due as a result of a conversion or redemption event, other than as a result of an “event of default” (as defined in the documents governing such convertible Material Indebtedness);

(i)an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed and unstayed for a period of 60 or more days or an order or decree approving or ordering any of the foregoing shall be entered;

(j)the Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(k)the Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

(l)one or more judgments for the payment of money in an aggregate amount in excess of $25,000,000 shall be rendered against the Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) to enforce any such judgment;

(m)an ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, would reasonably be expected to result in a Material Adverse Effect;

(n)a Change in Control shall occur;

(o)At any time prior to the Borrower’s common stock being listed on a national securities exchange (i) a “Key Person Event” or “Cause Event” (each as defined in the PPM) shall occur, without regard to whether or not the “Commitment Period” (as defined in the PPM) is then in effect, or (ii) any “Key Person” (as defined in the PPM) is replaced in accordance with the PPM without the consent of the Administrative Agent and the Required Lenders; provided that, for purposes of this clause (o), the PPM shall mean the PPM as in effect as of the date hereof or as otherwise amended or modified from time to time with the consent of the Required Lenders;

(p)the Liens created by the Security Documents shall, at any time with respect to Portfolio Investments having an aggregate Value in excess of 5% of the aggregate Value of all Portfolio Investments, not be valid and perfected (to the extent perfection by filing, registration, recordation, possession or control is required herein

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or therein) in favor of the Administrative Agent, free and clear of all other Liens (other than Liens permitted under Section 6.02 or under the respective Security Documents) except to the extent that any such loss of perfection results from the failure of the Collateral Agent to maintain possession of the certificates representing the securities pledged under the Loan Documents;

(q)except for expiration in accordance with its terms, any of the Loan Documents shall for whatever reason be terminated or cease to be in full force and effect in any material respect, or the enforceability thereof shall be contested by the Borrower or any other Obligor;

(r)the Obligors shall at any time, without the consent of the Required Lenders fail to comply with the covenant contained in Section 5.11, and such failure shall continue unremedied for a period of 30 or more days after the earlier of notice thereof by the Administrative Agent (given at the request of any Lender) to the Borrower or knowledge thereof by a Financial Officer; or

(s)the Borrower or any of its Subsidiaries shall cause or permit the occurrence of any condition or event that would result in any recourse to any Obligor under any Permitted SBIC Guarantee;

then, and in every such event (other than an event with respect to the Borrower described in clause (i) or (j) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder and under the other Loan Documents, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (i) or (j) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder and under the other Loan Documents, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

In the event that the Loans shall be declared, or shall become, due and payable pursuant to the immediately preceding paragraph then, upon notice from the Administrative Agent or Lenders with LC Exposure representing more than 50% of the total LC Exposure demanding the deposit of Cash Collateral pursuant to this paragraph, the Borrower shall immediately deposit into the Letter of Credit Collateral Account cash in an amount equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (i) or (j) of this Article.

Notwithstanding anything to the contrary contained herein, on the CAM Exchange Date, to the extent not otherwise prohibited by law, (a) the Lenders shall automatically and without further act be deemed to have exchanged interests in the Designated Obligations such that, in lieu of the interests of each Lender in the Designated Obligations under each Loan in which it shall participate as of such date, such Lender shall own an interest equal to such Lender’s CAM Percentage in the Designated Obligations under each of the Loans and (b) simultaneously with the deemed exchange of interests pursuant to clause (a) above, the interests in the Designated Obligations to be received in such deemed exchange shall, automatically and with no further action required, be converted into the Dollar Equivalent of such amount (as of the Business Day immediately prior to the CAM Exchange Date) and on and after such date all amounts accruing and owed to the Lenders in respect of such Designated Obligations shall accrue and be payable in Dollars at the rate otherwise applicable hereunder. Each Lender, each Person acquiring a participation from any Lender as contemplated by Section 9.04 and the Borrower hereby consents and agrees to the CAM Exchange. The Borrower and the Lenders agree from time to time to execute and deliver to the Administrative Agent all such promissory notes and other instruments and documents as the Administrative Agent shall reasonably request to evidence and confirm the respective interests and obligations of the Lenders after giving effect to the CAM Exchange, and each Lender agrees to surrender any promissory notes originally received by it in connection with its

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Loans hereunder to the Administrative Agent against delivery of any promissory notes so executed and delivered; provided that the failure of the Borrower to execute or deliver or of any Lender to accept any such promissory note, instrument or document shall not affect the validity or effectiveness of the CAM Exchange.  As a result of the CAM Exchange, on and after the CAM Exchange Date, each payment received by the Administrative Agent pursuant to any Loan Document in respect of the Designated Obligations shall be distributed to the Lenders pro rata in accordance with their respective CAM Percentages (to be redetermined as of each such date of payment).

ARTICLE VIII

THE ADMINISTRATIVE AGENT

SECTION 8.01.  Appointment of the Administrative Agent.  Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative Agent as its agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Collateral Agent as its agent hereunder and under the other Loan Documents and authorizes the Collateral Agent to take such actions on its behalf and to exercise such powers as are delegated to the Collateral Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.

SECTION 8.02.  Capacity as Lender.  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

SECTION 8.03.  Limitation of Duties; Exculpation.  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise in writing by the Required Lenders, and (c) except as expressly set forth herein and in the other Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein or therein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

SECTION 8.04.  Reliance.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

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SECTION 8.05.  Sub-Agents.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.  The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

SECTION 8.06.  Resignation; Successor Administrative Agent.  The Administrative Agent may resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.  Upon any such resignation, the Required Lenders shall have the right, with the consent of the Borrower not to be unreasonably withheld or delayed (or, if an Event of Default has occurred and is continuing in consultation with the Borrower), to appoint a successor.  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent’s resignation shall nonetheless become effective and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and (2) the Required Lenders shall perform the duties of the Administrative Agent (and all payments and communications provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly) until such time as the Required Lenders appoint a successor agent as provided for above in this paragraph.  Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder (if not already discharged therefrom as provided above in this paragraph).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent.

Any resignation by Truist as Administrative Agent pursuant to this Section shall also constitute its resignation as an Issuing Bank and a Swingline Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank and Swingline Lender, (b) the retiring Issuing Bank and Swingline Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.

SECTION 8.07.  Reliance by Lenders.  Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.  The Administrative Agent shall have no duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and the Administrative Agent shall have no responsibility with respect to the accuracy of or the completeness of any information provided to Lenders.

Each Lender, by delivering its signature page to this Agreement or any Assignment and Assumption and funding any Loan shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be approved by the Administrative Agent, Required Lenders or Lenders.

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SECTION 8.08.  Modifications to Loan Documents.  Except as otherwise provided in Section 2.13(b) or Section 9.02(b) or (c) of this Agreement or the Security Documents with respect to this Agreement, the Administrative Agent may, with the prior consent of the Required Lenders (but not otherwise), consent to any modification, supplement or waiver under any of the Loan Documents; provided that, without the prior consent of each Lender, the Administrative Agent shall not (except as provided herein or in the Security Documents) release all or substantially all of the Collateral or otherwise terminate all or substantially all of the Liens under any Security Document providing for collateral security, agree to additional obligations being secured by all or substantially all of such collateral security, or alter the relative priorities of the obligations entitled to the benefits of the Liens created under the Security Documents with respect to all or substantially all of the Collateral, except that no such consent shall be required, and the Administrative Agent is hereby authorized, to release any Lien covering property that is the subject of either a disposition of property permitted hereunder or a disposition to which the Required Lenders have consented.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01.  Notices; Electronic Communications.

(a)Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i)if to the Borrower, to it at:

Owl Rock Capital Corporation
245 Park Avenue, 41st Floor
New York, NY 10167
Attention:
Telephone:

(ii)if to the Administrative Agent or Truist, in its capacity as a Swingline Lender, to it at:

Truist Bank
3333 Peachtree Road, 7th Floor
Atlanta, Georgia 30326
Attention: 
Telecopy Number:

with a copy to:

Truist Bank
Agency Services
303 Peachtree Street, N. E./ 25th Floor
Atlanta, Georgia 30308
Attention:
Telecopy Number:

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(iii)if to the Truist, in its capacity as Issuing Bank, to it at:

Truist Bank
303 Peachtree Street, N. E./ 25th Floor
Atlanta, Georgia 30308
Attention:
Telecopy Number:

(iv)if to ING, in its capacity as a Swingline Lender and an Issuing Bank:

ING Capital LLC
1133 Avenue of the Americas
New York, NY 10036
Attention:
Telephone:
Telecopy Number:

(v)if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.  Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b)Electronic Communications.  Notices and other communications to the Lenders and the Issuing Banks hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or any Issuing Bank pursuant to Section 2.06 if such Lender or such Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

(i) Notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

Each party hereto understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the willful misconduct or gross negligence of Administrative Agent, any Lender or their respective Related Parties, as determined by a final, non-appealable judgment of a court of competent jurisdiction. The Platform and any electronic communications media approved by the Administrative Agent as provided herein are provided “as is” and “as available”. None of the Administrative Agent or its Related Parties warrant the accuracy, adequacy, or completeness of the such media or the Platform and each expressly disclaims liability for errors or omissions in the Platform and such media. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Administrative Agent and any of its Related Parties in connection with the Platform or the electronic communications media approved by the Administrative Agent as provided for herein.

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(c)Private Side Information Contacts. Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States federal and state securities laws, to make reference to information that is not made available through the “Public Side Information” portion of the Platform and that may contain Non-Public Information with respect to the Borrower, its Subsidiaries or their Securities for purposes of United States federal or state securities laws. In the event that any Public Lender has determined for itself to not access any information disclosed through the Platform or otherwise, such Public Lender acknowledges that (i) other Lenders may have availed themselves of such information and (ii) neither Borrower nor Administrative Agent has any responsibility for such Public Lender’s decision to limit the scope of the information it has obtained in connection with this Agreement and the other Loan Documents.

(d)Documents to be Delivered under Sections 5.01 and 5.12(a).  For so long as an Intralinks™ or equivalent website is available to each of the Lenders hereunder, the Borrower may satisfy its obligation to deliver documents to the Administrative Agent or the Lenders under Sections 5.01 and 5.12(a) by delivering one hard copy thereof to the Administrative Agent and either an electronic copy or a notice identifying the website where such information is located for posting by the Administrative Agent on Intralinks™ or such equivalent website; provided that the Administrative Agent shall have no responsibility to maintain access to Intralinks™ or an equivalent website.

SECTION 9.02.  Waivers; Amendments.

(a)No Deemed Waivers Remedies Cumulative.  No failure or delay by the Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender in exercising any right or power hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent, the Issuing Banks, the Swingline Lenders and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan, Swingline Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Swingline Lender, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time.

(b)Amendments to this Agreement.  Except as provided in Section 2.13, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall:

(i)increase the Commitment of any Lender without the written consent of such Lender,

(ii)reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby,

(iii)postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby,

(iv)change Section 2.17(b), (c) or (d) in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender affected thereby,

(v)change any of the provisions of this Section or the definition of the term “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive,

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amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender affected thereby;

(vi)subject to clause (e) below, change any of the provisions of the definition of “Agreed Foreign Currencies” or any other provision specifying the Foreign Currencies in which Multicurrency Loans may be made hereunder, or make any determination or grant any consent hereunder with respect to the definition of “Agreed Foreign Currencies”, in each case, without the consent of each Multicurrency Lender; or

(vii)change Section 9.16 without the written consent of each Lender that is subject to the GBSA;

provided further that (x) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Banks or the Swingline Lenders hereunder without the prior written consent of the Administrative Agent, the Issuing Banks or the Swingline Lenders, as the case may be and (y) the consent of Lenders holding not less than two-thirds of the Revolving Credit Exposure and unused Commitments will be required (A) for any adverse change affecting the provisions of this Agreement relating to the determination of the Borrowing Base (excluding changes to the provisions of Section 5.12(b)(ii)(E) and (F), but including changes to the provisions of Section 5.12(c) and the definitions set forth in Section 5.13), and (B) for any release of any material portion of the Collateral other than for fair value or as otherwise permitted hereunder or under the other Loan Documents.

Anything in this Agreement  to the contrary notwithstanding, no waiver or modification of any provision of this Agreement or any other Loan Document that could reasonably be expected to adversely affect the Lenders of any Class in a manner that does not affect all Classes equally shall be effective against the Lenders of such Class unless the Required Lenders of such Class shall have concurred with such waiver or modification.  Anything in this Agreement to the contrary notwithstanding, this Agreement may be amended by the Borrower with the consent of the Administrative Agent and any Non-Extending Lender (but without the consent of the Required Lenders) for the sole purpose of extending the Commitments of such Non-Extending Lender so that such Non-Extending Lender becomes an Extending Lender hereunder.  Any Non-Extending Lender that has had all of its obligations under this Agreement and each other Loan Document paid in full shall cease to be a Lender under the Loan Documents following such Non-Extending Lender’s Non-Extended Commitment Termination Date except with respect to any provision that expressly survives the termination of a Loan Document.

(c)Amendments to Security Documents.  No Security Document nor any provision thereof may be waived, amended or modified, nor may the Liens thereof be spread to secure any additional obligations (including any increase in Loans hereunder, but excluding any such increase pursuant to a Commitment Increase under Section 2.08(e) except pursuant to an agreement or agreements in writing entered into by the Borrower, and by the Collateral Agent with the consent of the Required Lenders; provided that, (i) without the written consent of each Lender, no such agreement shall release all or substantially all of the Obligors from their respective obligations under the Security Documents and (ii) without the written consent of each Lender, no such agreement shall release all or substantially all of the collateral security or otherwise terminate all or substantially all of the Liens under the Security Documents, alter the relative priorities of the obligations entitled to the Liens created under the Security Documents (except in connection with securing additional obligations equally and ratably with the Loans and other obligations hereunder) with respect to all or substantially all of the collateral security provided thereby, or release all or substantially all of the guarantors under the Guarantee and Security Agreement from their guarantee obligations thereunder, except that no such consent shall be required, and the Administrative Agent is hereby authorized (and so agrees with the Borrower) to direct the Collateral Agent under the Guarantee and Security Agreement, (x) to release any Lien covering property (and to release any such guarantor) that is the subject of either a disposition of property permitted hereunder or a disposition to which the Required Lenders have consented, (y) to release any Lien and/or guarantee obligation in accordance with the Guarantee and Security Agreement and (z) to release (and to acknowledge the release of) all Liens and guarantees of Obligors upon the termination of this Agreement (including in connection with a complete refinancing).

(d)Replacement of Non-Consenting Lender.  If, in connection with any proposed change, waiver, discharge or termination to any of the provisions of this Agreement as contemplated by this Section 9.02, the consent of the Required Lenders shall have been obtained but the consent of one or more Lenders (each a “Non-Consenting Lender”) whose consent is required for such proposed change, waiver, discharge or termination is not

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obtained, then (so long as no Event of Default has occurred and is continuing) the Borrower shall have the right, at its sole cost and expense, to replace each such Non-Consenting Lender or Lenders with one or more replacement Lenders pursuant to Section 2.18(b) so long as at the time of such replacement, each such replacement Lender consents to the proposed change, waiver, discharge or termination.

(e)Re-designation of Non-Consenting Multicurrency Lender.  

(i)If, in connection with any request by the Borrower to add a Foreign Currency as an Agreed Foreign Currency hereunder, the consent of the Required Multicurrency Lenders shall have been obtained but the consent of one or more Multicurrency Lenders (each a “Non-Consenting Multicurrency Lender”) is not obtained, then the Borrower shall have the right upon four (4) Business Days’ prior written notice to the Administrative Agent and each Non-Consenting Multicurrency Lender to re-designate each Non-Consenting Multicurrency Lender as a Dollar Lender hereunder with a Dollar Commitment equal to the Multicurrency Commitment of such Non-Consenting Multicurrency Lender in effect immediately prior to such re-designation; provided that, no re-designation of any Multicurrency Lender’s Multicurrency Commitment shall be permitted hereunder if (A) the conditions set forth in Section 4.02 are not satisfied both before and after giving effect to such re-designation, (B) without such Issuing Bank’s consent to be re-designated pursuant to this clause (i), any Non-Consenting Multicurrency Lender is an Issuing Bank that has an outstanding Letter of Credit denominated in an Agreed Foreign Currency as of the date of such re-designation notice or (C) after giving effect to such re-designation and the re-allocation described in clause (ii) below, (I) any Lender’s Revolving Dollar Credit Exposure or Revolving Multicurrency Credit Exposure, as applicable, exceeds such Lender’s Dollar Commitment or Multicurrency Commitment, as applicable, (II) the aggregate Revolving Dollar Credit Exposure of all of the Dollar Lenders exceeds the aggregate Dollar Commitments, (III) the aggregate Revolving Multicurrency Credit Exposure of all of the Multicurrency Lenders exceeds the aggregate Multicurrency Commitments or (IV) the aggregate Revolving Credit Exposure exceeds the aggregate Commitments; provided, further, that, in the event any Non-Consenting Multicurrency Lender is an Issuing Bank that has agreed to issue Letters of Credit in Agreed Foreign Currencies (but does not have any Letters of Credit denominated in Agreed Foreign Currencies as of the date of such re-designation notice), such Issuing Bank shall, on and after the re-designation date, only be required to issue Letters of Credit denominated in Dollars up to the amount set forth opposite the name of such Issuing Bank on Schedule 2.05 (or such greater amount as such Issuing Bank may agree in its sole discretion).

(ii)On the date of and immediately after giving effect to any such re-designation of the Commitment of the Non-Consenting Multicurrency Lenders pursuant to clause (i) above, the Borrower shall (A) prepay the outstanding Loans in full, (B) simultaneously borrow new Loans in an amount equal to and in the same Currencies as such prepayment; provided that with respect to subclauses (A) and (B), (x) the prepayment to, and borrowing from, any Lender shall be effected by book entry to the extent that any portion of the amount prepaid to such Lender will be subsequently borrowed from such Lender and (y) the Lenders shall make and receive payments among themselves, in a manner acceptable to the Administrative Agent, so that, after giving effect thereto, (I) the Multicurrency Loans denominated in Agreed Foreign Currencies and the Multicurrency Loans denominated in Dollars are, in each case, held ratably by the Multicurrency Lenders in accordance with their respective Multicurrency Commitments, (II) the Dollar Loans are held ratably by the Dollar Lenders in accordance with their respective Dollar Commitments and (III) to the extent possible, the Loans are held ratably by the Lenders in accordance with their respective Applicable Percentage and (C) pay to the Lenders the amounts, if any, payable under Section 2.15 as a result of any such prepayment.  Concurrently therewith, the Multicurrency Lenders and Dollar Lenders shall be deemed to have adjusted their participation interests in any outstanding Letters of Credit under the Multicurrency Commitments and the Dollar Commitments, respectively, so that such interests are held ratably in accordance with clauses (I), (II) and (III).

SECTION 9.03.  Expenses; Indemnity; Damage Waiver.

(a)Costs and Expenses.  The Borrower shall pay (i) all reasonable and documented out-of-pocket costs and expenses incurred by the Administrative Agent, the Collateral Agent and their Affiliates, including the reasonable and documented fees, charges and disbursements of counsel for the Administrative Agent and the Collateral Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and

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administration of this Agreement and the other Loan Documents and any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit by such Issuing Bank or any demand for payment thereunder, (iii) all documented out-of-pocket expenses incurred by the Administrative Agent, any Issuing Bank, any Swingline Lender or any Lender, including the reasonable and documented fees, charges and disbursements of one outside counsel for the Administrative Agent, each Issuing Bank and each Swingline Lender as well as one outside counsel for the Lenders and additional counsel should any conflict of interest arise, in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect thereof and (iv) and all documented costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by any Security Document or any other document referred to therein.

(b)Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent, each Issuing Bank, each Swingline Lender and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable and documented out-of-pocket fees and disbursements of one outside counsel for all Indemnitees (and, if reasonably necessary, of one local counsel in any relevant jurisdiction for all Indemnitees) unless, in the reasonable opinion of an Indemnitee, representation of all Indemnitees by such counsel would be inappropriate due to the existence of an actual or potential conflict of interest) in connection with any investigative, administrative or judicial proceeding or hearing commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and laws, statutes, rules or regulations relating to environmental, occupational safety and health or land use matters), on common law or equitable cause or on contract or otherwise and related expenses or disbursements of any kind (other than Taxes or Other Taxes which shall only be indemnified by the Borrower to the extent provided in Section 2.16, other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim), including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of; in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan, Swingline Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by an Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit) or (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and whether brought by the Borrower or a third party and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are (A) determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the willful misconduct or gross negligence of such Indemnitee or its Related Parties, (B) result from the settlement of any such claim, investigation, litigation or other proceedings described in clause (iii) above unless the Borrower has consented to such settlement (which consent shall not be unreasonably withheld, delayed or conditioned (provided that nothing in this clause (B) shall restrict the right of any person to settle any claim for which it has waived its right of indemnity by the Borrower)) or (C) result from disputes solely among Indemnitees and not involving any act or omission of an Obligor or any of its Affiliates (other than any dispute against the Administrative Agent in its capacity as such).  Notwithstanding the foregoing, it is understood and agreed that indemnification for Taxes is subject to the provisions of Section 2.16, other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

The Borrower shall not be liable to any Indemnitee for any special, indirect, consequential or punitive damages (as opposed to direct or actual damages (which may include special, indirect, consequential or punitive damages asserted against any such party hereto by a third party)) arising out of, in connection with, or as a result of the Transactions asserted by an Indemnitee against the Borrower or any other Obligor; provided that the

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foregoing limitation shall not be deemed to impair or affect the obligations of the Borrower under the preceding provisions of this subsection.

(c)Reimbursement by Lenders.  To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, any Issuing Bank or any Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the applicable Issuing Bank or the applicable Swingline Lender, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the applicable Issuing Bank or the applicable Swingline Lender in its capacity as such.

(d)Waiver of Consequential Damages, Etc.  To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.  No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent caused by the willful misconduct or gross negligence of such Indemnitee, as determined by a final, non-appealable judgment of a court of competent jurisdiction.

(e)Payments.  All amounts due under this Section shall be payable promptly after written demand therefor.

SECTION 9.04.  Successors and Assigns.

(a)Assignments Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)Assignments by Lenders.

(i)Assignments Generally.  Subject to the conditions set forth in clause (ii) below, any Lender may assign to one or more assignees (other than natural persons (or a holding company, investments vehicle, investment vehicle or trust for, or owned and operated by or for the primary benefit of a natural Person) or any Defaulting Lender) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans and LC Exposure at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

(A)the Borrower; provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, or, if an Event of Default has occurred and is continuing, any other assignee; provided, further, that the Borrower shall be deemed to have consented to any such assignment unless it shall have objected thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof; and

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(B)the Administrative Agent and each Issuing Bank: provided that no consent of the Administrative Agent or the Issuing Banks shall be required for an assignment by a Lender to an Affiliate of such Lender.

(ii)Certain Conditions to Assignments.  Assignments shall be subject to the following additional conditions:

(A)except in the case of an Assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans and LC Exposure of a Class, the amount of the Commitment or Loans and LC Exposure of such Class of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such Assignment is delivered to the Administrative Agent) shall not be less than U.S. $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent; provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

(B)each partial assignment of any Commitments or Loans and LC Exposure shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement in respect of such Commitments, Loans and LC Exposure;

(C)the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption in substantially the form of Exhibit A hereto, together with a processing and recordation fee of U.S. $3,500 (which fee shall not be payable in connection with an assignment to a Lender or to an Affiliate of a Lender), for which the Borrower and the Guarantors shall not be obligated;

(D)the assignee, if it shall not already be a Lender of the applicable Class, shall deliver to the Administrative Agent an Administrative Questionnaire; and

(E)the assignee shall deliver to the Borrower and the Administrative Agent those documents specified in Section 2.16(f).

(iii)Effectiveness of Assignments.  Subject to acceptance and recording thereof pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03 with respect to facts and circumstances occurring prior to the effective date of such assignment).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (f) of this Section.  Notwithstanding anything to the contrary herein, in connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions set forth in Section 9.04(b)(ii) or otherwise, the parties to the assignment shall make such additional payments to Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of Borrower and Administrative Agent, the Applicable Percentage of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to Administrative Agent, each Issuing Bank, each Swingline Lender and each Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full Applicable Percentage of all Loans and participations in Letters of Credit and Swingline Loans. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder

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shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

(c)Maintenance of Registers by Administrative Agent.  The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in New York City a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount (and stated interest) of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Registers” and each individually, a “Register”).  The entries in the Registers shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, the Issuing Banks and the Lenders may treat each Person whose name is recorded in the Registers pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Registers shall be available for inspection by the Borrower, any Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d)Acceptance of Assignments by Administrative Agent.  Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(e)Special Purposes Vehicles.  Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”) owned or administered by such Granting Lender, identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make; provided that (i) nothing herein shall constitute a commitment to make any Loan by any SPC, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall, subject to the terms of this Agreement, make such Loan pursuant to the terms hereof, (iii) the rights of any such SPC shall be derivative of the rights of the Granting Lender, and such SPC shall be subject to all of the restrictions upon the Granting Lender herein contained, and (iv) no SPC shall be entitled to the benefits of Sections 2.14 (or any other increased costs protection provision), 2.15 or 2.16.  Each SPC shall be conclusively presumed to have made arrangements with its Granting Lender for the exercise of voting and other rights hereunder in a manner which is acceptable to the SPC, the Administrative Agent, the Lenders and the Borrower, and each of the Administrative Agent, the Lenders and the Obligors shall be entitled to rely upon and deal solely with the Granting Lender with respect to Loans made by or through its SPC.  The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by the Granting Lender.

Each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or similar proceedings under the laws of the United States or any State thereof, in respect of claims arising out of this Agreement; provided that the Granting Lender for each SPC hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage and expense arising out of their inability to institute any such proceeding against its SPC.  In addition, notwithstanding anything to the contrary contained in this Section, any SPC may (i) without the prior written consent of the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to its Granting Lender or to any financial institutions providing liquidity and/or credit facilities to or for the account of such SPC to fund the Loans made by such SPC or to support the securities (if any) issued by such SPC to fund such Loans (but nothing contained herein shall be construed in derogation of the obligation of the Granting Lender to make Loans hereunder); provided that neither the consent of the SPC or of any such assignee shall be required for amendments or waivers hereunder except for those amendments or waivers for which the consent of participants is required under paragraph (f) below, and (ii) disclose on a confidential basis (in the same manner described in Section 9.13(b)) any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of a surety, guarantee or credit or liquidity enhancement to such SPC.

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(f)Participations.  Any Lender may, with the consent of the Borrower (such consent not to be unreasonably withheld or delayed), sell participations to one or more banks or other entities (other than natural persons (or a holding company, investments vehicle, investment vehicle or trust for, or owned and operated by or for the primary benefit of a natural Person)) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Commitments and the Loans and LC Disbursements owing to it); provided that (i) the consent of the Borrower shall not be required if such Participant does not have the right to receive any non-public information that may be provided pursuant to this Agreement (and the Lender selling such participation agrees with the Borrower at the time of the sale of such participation that it will not deliver such non-public information to the Participant), (ii) such Lender’s obligations under this Agreement and the other Loan Documents shall remain unchanged, (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iv) the Borrower, the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement  and the other Loan Documents.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement or any other Loan Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant.  Subject to paragraph (g) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant shall not be entitled to receive any greater payment under Sections 2.14, 2.15 or 2.16, with respect to any participation, than its participating Lenders would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation; provided, further, that no Participant shall be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation granted to such Participant and such Participant shall have complied with the requirements of Section 2.16 as if such Participant is a Lender.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided such Participant agrees to be subject to Section 2.17(d) as though it were a Lender hereunder.  Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest of each Participant’s interest in the loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any other information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any person except to the extent that such disclosures are necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(g)Limitations on Rights of Participants.  A Participant shall not be entitled to receive any greater payment under Section 2.14, 2.15 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with paragraphs (e) and (f) of Section 2.16 as though it were a Lender and in the case of a Participant claiming exemption for portfolio interest under Section 871(h) or 881(c) of the Code, the applicable Lender shall provide the Borrower with satisfactory evidence that the participation is in registered form and shall permit the Borrower to review such register as reasonably needed for the Borrower to comply with its obligations under applicable laws and regulations.

(h)Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or assignment to a Federal Reserve Bank or any other central bank having jurisdiction over such Lender, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or

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assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.

(i)No Assignments to the Borrower or Affiliates.  Anything in this Section to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan or LC Exposure held by it hereunder to the Borrower or any of its Affiliates or Subsidiaries without the prior consent of each Lender.

SECTION 9.05.  Survival.  All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.  The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination, Cash Collateralization or backstop of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

SECTION 9.06.  Counterparts; Integration; Effectiveness; Electronic Execution.

(a)Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract between and among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page to this Agreement by telecopy electronically (e.g. pdf) shall be effective as delivery of a manually executed counterpart of this Agreement.

(b)Electronic Execution of Loan Documents.  The words “execution,” “signed,” “signature,” and words of like import in this Agreement and the other Loan Documents including any Assignment and Assumption shall be deemed to include electronic signatures or electronic records, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

SECTION 9.07.  Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured; provided that in the event that any Defaulting Lender shall exercise any

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such right of setoff, (x) all amounts so set off shall be paid over immediately to Administrative Agent for further application in accordance with the provisions of Sections 2.17(d) and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of Administrative Agent, the Issuing Banks, and the Lenders, and (y) the Defaulting Lender shall provide promptly to Administrative Agent a statement describing in reasonable detail the amounts owing to such Defaulting Lender hereunder as to which it exercised such right of setoff.  The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.  Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 9.09.  Governing Law; Jurisdiction; Etc.

(a)Governing Law.  This Agreement and, unless otherwise specified therein, each other Loan Document shall be construed in accordance with and governed by the law of the State of New York.

(b)Submission to Jurisdiction.  The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement and any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement  shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.

(c)Waiver of Venue.  The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)Service of Process.  Each party to this Agreement (i) irrevocably consents to service of process in the manner provided for notices in Section 9.01 and (ii) agrees that service as provided in the manner provided for notices in Section 9.01 is sufficient to confer personal jurisdiction over such party in any proceeding in any court and otherwise constitutes effective and binding service in every respect. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11.  Judgment Currency.  This is an international loan transaction in which the specification of Dollars or any Foreign Currency, as the case may be (the “Specified Currency”), and payment in New York City or the country of the Specified Currency, as the case may be (the “Specified Place”), is of the essence, and the Specified Currency shall be the currency of account in all events relating to Loans denominated in the Specified Currency.  The payment obligations of the Borrower under this Agreement shall not be discharged or satisfied by an amount paid in another currency or in another place, whether pursuant to a judgment or otherwise, to the extent that

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the amount so paid on conversion to the Specified Currency and transfer to the Specified Place under normal banking procedures does not yield the amount of the Specified Currency at the Specified Place due hereunder.  If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder in the Specified Currency into another currency (the “Second Currency”), the rate of exchange that shall be applied shall be the rate at which in accordance with normal banking procedures the Administrative Agent could purchase the Specified Currency with the Second Currency on the Business Day next preceding the day on which such judgment is rendered.  The obligation of the Borrower in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under any other Loan Document (in this Section called an “Entitled Person”) shall, notwithstanding the rate of exchange actually applied in rendering such judgment be discharged only to the extent that on the Business Day following receipt by such Entitled Person of any sum adjudged to be due hereunder in the Second Currency such Entitled Person may in accordance with normal banking procedures purchase and transfer to the Specified Place the Specified Currency with the amount of the Second Currency so adjudged to be due; and the Borrower hereby, as a separate obligation and notwithstanding any such judgment, agrees to indemnify such Entitled Person against, and to pay such Entitled Person on demand, in the Specified Currency, the amount (if any) by which the sum originally due to such Entitled Person in the Specified Currency hereunder exceeds the amount of the Specified Currency so purchased and transferred.

SECTION 9.12.  Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.13.  Treatment of Certain Information; No Fiduciary Duty; Confidentiality.

(a)Treatment of Certain Information; No Fiduciary Duty; No Conflicts.  The Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Subsidiaries (in connection with this Agreement or otherwise) by any Lender or by one or more subsidiaries or affiliates of such Lender and the Borrower hereby authorizes each Lender to share any information delivered to such Lender by the Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such subsidiary or affiliate, it being understood that any such subsidiary or affiliate receiving such information shall be bound by the provisions of paragraph (b) of this Section as if it were a Lender hereunder.  Such authorization shall survive the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.  Each Lender shall use all information delivered to such Lender by the Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, in connection with providing services to the Borrower. The Administrative Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Borrower or any of its Subsidiaries, their stockholders and/or their affiliates. The Borrower, on behalf of itself and each of its Subsidiaries, agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and the Borrower or any of its Subsidiaries, its stockholders or its affiliates, on the other. The Borrower and each of its Subsidiaries each acknowledge and agree that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Borrower and its Subsidiaries, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of the Borrower or any of its Subsidiaries, any of their stockholders or affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise the Borrower or any of its Subsidiaries, their stockholders or their affiliates on other matters) or any other obligation to the Borrower or any of its Subsidiaries except the obligations expressly set forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of the Borrower or any of its Subsidiaries, their management, stockholders, creditors or any other Person. The Borrower and each of its Subsidiaries each acknowledge and agree that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower and each of its Subsidiaries each agree that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower or any of its Subsidiaries, in connection with such transaction or the process leading thereto.

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(b)Confidentiality.  Each of the Administrative Agent, the Lenders, the Swingline Lenders and the Issuing Banks agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority), (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (x) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (y) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (vii) with the consent of the Borrower, (viii) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, any Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower or (ix) on a confidential basis to (x) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder or (y) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the credit facilities provided hereunder.

For purposes of this Section, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent any Lender or any Issuing Bank on a nonconfidential basis prior to disclosure by the Borrower or any of its Subsidiaries; provided that, in the case of Information received from the Borrower or any of its Subsidiaries after the date hereof; such Information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

SECTION 9.14.  USA PATRIOT Act.  Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107‑56 (signed into law October 26, 2001)), it is required to obtain, verify and record information that identifies the Borrower, each other Obligor and each designee of a Letter of Credit, which information includes the name and address of the Borrower, each other Obligor and each designee of a Letter of Credit and other information that will allow such Lender to identify Borrower, each other Obligor and each designee of a Letter of Credit in accordance with said Act.

SECTION 9.15.  Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Solely to the extent any Lender that is an Affected Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an Affected Financial Institution; and

(b)the effects of any Bail-In Action on any such liability, including, if applicable:

(i)a reduction in full or in part or cancellation of any such liability;

(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of

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ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.

SECTION 9.16.  German Bank Separation Act.  If any Lender subject to the GBSA (any such Lender, a “GBSA Lender”) shall have determined in good faith (which determination shall be made in consultation with the Borrower) that, due to the implementation of the German Act on the Ring-fencing of Risks and for the Recovery and Resolution Planning for Credit Institutions and Financial Groups (Gesetz zur Abschirmung von Risiken und zur Planung der Sanierung und Abwicklung von Kreditinstituten und Finanzgruppen) of 7 August 2013 (commonly referred to as the German Bank Separation Act (Trennbankengesetz) (the “GBSA”), whether before or after the date hereof, or any corresponding European legislation (such as the proposed regulation on structural measures improving the resilience of European Union credit institutions) that may amend or replace the GBSA in the future or any regulation thereunder, or due to the promulgation of, or any change in the interpretation by, any court, tribunal or regulatory authority with competent jurisdiction of the GBSA or any corresponding future European legislation or any regulation thereunder, the arrangements contemplated by this Agreement or the Loans have, or will, become illegal, prohibited or otherwise unlawful , then, and in any such event, such GBSA Lender shall give written notice to the Borrower and the Administrative Agent of such determination (which written notice shall include a reasonably detailed explanation of such illegality, prohibition or unlawfulness, including, without limitation, all evidence and calculations used in the determination thereof, a “GBSA Notice”), whereupon (i) all of the obligations (including outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, collectively, the “GBSA Obligations”) owed to such GBSA Lender hereunder and under the Loans shall become due and payable, and the Borrower shall repay the GBSA Obligations, on the fifteenth day immediately after the date of such GBSA Notice (such date being an “Initial Termination Date”) and, for the avoidance of doubt, such repayment shall not be subject to the terms and conditions of Section 2.17(c) or Section 2.17(d) to the extent that there are no outstanding amounts due and payable to the other Lenders at such date and (ii) the Commitments of such GBSA Lender shall terminate on such Initial Termination Date; provided that, notwithstanding the foregoing, prior to such Initial Termination Date and in the event the Borrower in good faith reasonably believes there is a mistake, error or omission in the grounds used to determine such illegality, prohibition or unlawfulness under the GBSA or any corresponding future European legislation or any regulation thereunder, then the Borrower may provide written notice (which written notice shall include a reasonably detailed explanation of the basis of such good faith belief, including, without limitation, all evidence and calculations used in the determination thereof, a “Consultation Notice”) to that effect, at which point the GBSA Obligations owed to such GBSA Lender hereunder and under the Loans shall not become due and payable, and the Commitments of such GBSA Lender shall not terminate, until the fifteenth day immediately following such Initial Termination Date (and the period from, and including, the date of the Consultation Notice until the date falling on the fifteenth day immediately after such Initial Termination Date being the “GBSA Consultation Period”). In the event the Borrower and such GBSA Lender cannot in good faith reasonably agree during the GBSA Consultation Period whether the arrangements contemplated by this Agreement or the Loans have, or will, become illegal, prohibited or otherwise unlawful under the GBSA or any corresponding future European legislation or any regulation thereunder, then all of the GBSA Obligations owed to such GBSA Lender hereunder and under the Loans shall become due and payable, and the Commitments of such GBSA Lender shall terminate, on the Business Day immediately following the last day of such GBSA Consultation Period. For the avoidance of doubt, so long as a GBSA Consultation Period has occurred and is continuing, (i) the Commitments and Revolving Credit Exposure of any GBSA Lender shall be subject to Section 2.18, and the Borrower shall have all rights to replace such GBSA Lender in accordance with Section 2.18(b), (ii) no GBSA Lender shall be required to fund its pro rata share of any Borrowing or acquire participations in any Swingline Loans under Section 2.04(e) or Letters of Credit under Section 2.05(e), (iii) each GBSA Lender shall be deemed to have an Applicable Percentage, Applicable Dollar Percentage and Applicable Multicurrency Percentage of zero for purposes of Sections 2.02(a), 2.04(c), 2.05(e) and 2.05(f) and (iv) no GBSA Lender shall be entitled to receive any fee pursuant to Sections 2.11(a) or (b) for any day during the continuance of such GBSA Consultation Period. To the extent any Swingline Exposure or LC Exposure exists at the time a GBSA Lender’s Loans are repaid in full and such GBSA Lender’s Commitment is cancelled pursuant to this Section 9.16, such Swingline Exposure or LC Exposure shall be reallocated as set forth in Section 2.19(a)(iii) to the extent such reallocation does not cause the aggregate Revolving Credit Exposure of any Lender to exceed such Lender’s Commitment.  If the reallocation described in the immediately prior sentence cannot, or can only partially, be effected, the Borrower shall not later than

104Revolving Credit Agreement

 

 

two Business Days after demand by the Administrative Agent (at the direction of any Issuing Bank and/or any Swingline Lender) (x) prepay Loans and/or (y) Cash Collateralize each Issuing Bank’s Fronting Exposure in accordance with the procedures set forth in Section 2.05(k) such that after giving effect to such prepayment and/or Cash Collateralization, the Revolving Credit Exposure of all Lenders on such date minus the LC Exposures fully Cash Collateralized on such date does not exceed the aggregate amount of the Lenders’ Commitments on such date. Additionally, notwithstanding anything to the contrary herein, during the GBSA Consultation Period, the Revolving Credit Exposure and unused Commitments of any GBSA Lender shall be disregarded in the determination of Required Lenders or Required Lenders of a Class.  

SECTION 9.17.  Certain ERISA Matters.  

(a)Each Lender (x) represents and warrants, as of the later of the date such Person became a Lender party hereto and the Sixth Amendment Effective Date, to, and (y) covenants, from such date to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, each Joint Lead Arranger, and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Obligor, that at least one of the following is and will be true:

(i)such Lender is not using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments,

(ii)the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,

(iii)(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or

(iv)such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender with respect to the Loan Documents.

(b)In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the later of the date such Person became a Lender party hereto and the Sixth Amendment Effective Date, to, and (y) covenants, from such date to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, each Joint Lead Arranger, and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Obligor, that:

(i)none of the Administrative Agent, the Joint Lead Arrangers, or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto),

105Revolving Credit Agreement

 

 

(ii)the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is independent (within the meaning of 29 CFR § 2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person that holds, or has under management or control, total assets of at least $50 million, in each case as described in 29 CFR § 2510.3-21(c)(1)(i)(A)-(E),

(iii)the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Secured Obligations (as defined in the Guarantee and Security Agreement)),

(iv)the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is a fiduciary under ERISA or the Code, or both, with respect to the Loans, the Letters of Credit, the Commitments and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder, and

(v)no fee or other compensation is being paid directly to the Administrative Agent, any Joint Lead Arranger or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Loans, the Letters of Credit, the Commitments or this Agreement.

(c)The Administrative Agent and each Joint Lead Arranger hereby inform the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments and this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

SECTION 9.18.  Acknowledgement Regarding Any Supported QFCs.  To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

(a)In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default

106Revolving Credit Agreement

 

 

Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

(b)As used in this Section 9.18, the following terms have the following meanings:

(i)“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

(ii)

“Covered Entity” means any of the following:

(A) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

(B) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

(C) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

(iii)“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

(iv)“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

 

107Revolving Credit Agreement

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

OWL ROCK CAPITAL CORPORATION

 

By:


Name:  
Title:  


Revolving Credit Agreement

 

 

TRUIST BANK (as successor by merger to SunTrust Bank), as Administrative Agent, a Swingline Lender, an Issuing Bank and a Lender

 

By:


Name:  
Title:


Revolving Credit Agreement

 

 

BANK OF AMERICA, N.A., as a Lender

 

By:


Name:  
Title:

 

 

Revolving Credit Agreement

 

 

___________________________, as a Lender

By:
Name:
Title:

Revolving Credit Agreement

 

 EX-31.1 3 owl-ex311_12.htm EX-31.1 owl-ex311_12.htm

 

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

 

I, Craig W. Packer, Chief Executive Officer of Owl Rock Capital Corporation, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Owl Rock Capital Corporation (the “registrant”) for the quarter ended September 30, 2020;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: November 4, 2020

 

By:

/s/ Craig W. Packer

 

 

 

Craig W. Packer

 

 

 

Chief Executive Officer

 

 

 

 EX-31.2 4 owl-ex312_11.htm EX-31.2 owl-ex312_11.htm

 

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Alan Kirshenbaum, Chief Financial Officer of Owl Rock Capital Corporation, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Owl Rock Capital Corporation (the “registrant”) for the quarter ended September 30, 2020;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: November 4, 2020

 

By:

/s/ Alan Kirshenbaum

 

 

 

Alan Kirshenbaum

 

 

 

Chief Operating Officer and Chief Financial Officer

 

 

 EX-32.1 5 owl-ex321_7.htm EX-32.1 owl-ex321_7.htm

 

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Executive Officer of Owl Rock Capital Corporation (the “Company”), does hereby certify that to the undersigned’s knowledge:

 

1) the Company’s Form 10-Q for the quarter ended September 30, 2020 fully complies with the requirements of Section 13(a) or 15(d) as applicable of the Securities Exchange Act of 1934, as amended; and

 

2) the information contained in the Company’s Form 10-Q for the quarter ended September 30, 2020 fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: November 4, 2020

 

By:

/s/ Craig W. Packer

 

 

 

Craig W. Packer

 

 

 

Chief Executive Officer

 

 

 

 EX-32.2 6 owl-ex322_8.htm EX-32.2 owl-ex322_8.htm

 

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Financial Officer of Owl Rock Capital Corporation (the “Company”), does hereby certify that to the undersigned’s knowledge:

 

1) the Company’s Form 10-Q for the quarter ended September 30, 2020 fully complies with the requirements of Section 13(a) or 15(d) as applicable of the Securities Exchange Act of 1934, as amended; and

 

2) the information contained in the Company’s Form 10-Q for the quarter ended September 30, 2020 fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: November 4, 2020

 

By:

/s/ Alan Kirshenbaum

 

 

 

Alan Kirshenbaum

 

 

 

Chief Operating Officer and Chief Financial Officer