UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
Amendment No. 1
(Mark One)
☒ | ||
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the fiscal year ended September 30, 2020
OR
☐ | ||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
COMMISSION FILE NUMBER: 1-35999
OaktreeStrategic Income Corporation
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE | 61-1713295 | |
(State or jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
333 South Grand Avenue, 28th Floor Los Angeles, CA | 90071 | |
(Address of principal executive office) | (Zip Code) |
REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE:
(213) 830-6300
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class | Trading Symbol(s) | Name of Each | ||
Common Stock, par value $0.01 per share | OCSI | The |
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨☐ No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
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 periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☐ | |||||
Non-accelerated filer | ☒ | Smaller reporting company | ||||
☐ | ||||||
Emerging growth company | ||||||
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 ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of
March 31,DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
Oaktree Strategic Income Corporation, (formerly known as Fifth Street Senior Floating Rate Corp. through October 17, 2017), a Delaware corporation, or together with its subsidiaries, where applicable, the Company, which may also be referred to as "we"“we”, "us"“us” or "our"“our”, is a specialty finance company dedicated to providing customized capital solutions for middle-market companies in both the syndicated and private placement markets. We were formed in May 2013 as a Delaware corporation, commenced operations on June 29, 2013, and currently operate as a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, we have qualified and elected to be treated as a regulated investment company, or RIC, under the Internal Revenue Code of 1986, as amended, or the Code, for tax purposes. See “Taxation as a Regulated Investment Company.” As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any net ordinary income or net realized capital gains that we distributefiling this Amendment No. 1 (the “Amendment”) to our stockholders if we meet certain source-of-income, income distribution and asset diversification requirements. Also, we are an “emerging growth company,” as definedAnnual Report on Form 10-K for the fiscal year ended September 30, 2020, which was filed with the SEC on November 19, 2020 (the “Form 10-K”), to (1) provide the information required by Items 10 through 14 of Part III because, in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and take advantagelight of the exemption for emerging growth companies allowing usproposed merger with Oaktree Specialty Lending Corporation, we no longer expect to temporarily forgofile a definitive proxy statement within 120 days after September 30, 2020, the auditor attestation requirements of Section 404(b)end of the Sarbanes-Oxley Act of 2002, orfiscal year covered by the Sarbanes-Oxley Act. We do not take advantage of other disclosure or reporting exemptions for emerging growth companies under the JOBS Act.
We have determined that the return on our subordinated note investment in FSFR Glick JV, was approximately 7.5%, including 7.3% representing cash payments. The weighted average annual yield of our debt investments is determined before the payment of, and therefore does not take into account, our (and our consolidated subsidiaries’) expenses and the payment by an investor of any stockholder transaction expenses, and does not represent the return on investment for our stockholders.
This Amendment also updates, amends and supplements Part II, Item 8 of the Form 10-K to $200.0 million of borrowings. As of September 30, 2017 and September 30, 2016, FSFR Glick JV had total capital commitments of $100.0 million, $87.5 million of which was(1) include the phrase “Public Company Accounting Oversight Board (United States)” inadvertently omitted by Ernst & Young LLP (“EY”) from the second paragraph of its “Report of Independent Registered Public Accounting Firm” and (2) add the following sentences inadvertently omitted by EY from the end of the third paragraph of its “Report of Independent Registered Public Accounting Firm”: “The Company and the remaining $12.5 million from GF Equity Funding and GF Debt Funding. At September 30, 2017,is not required to have, nor were we had funded approximately $71.4 millionengaged to perform, an audit of its internal control over financial reporting. As part of our commitment. Asaudits we are required to obtain an understanding of September 30, 2017, our investment in FSFR Glick JV was approximately $57.6 million at fair value. Weinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.” The changes to the report of EY do not consolidate FSFR Glick JVaffect EY’s unqualified opinion on the Company’s financial statements included in our Consolidated Financial Statements.
No other changes have been made to the Exchange Act. These include our annual reports onForm 10-K. This Amendment does not reflect subsequent events that may have occurred after the original filing date of the Form 10-K our quarterly reports on Form 10-Q and our current reports
Assumed Return on Portfolio (Net of Expenses) | - 10% | - 5% | 0% | 5% | 10% | ||||||||||
Corresponding net return to common stockholder | -23.82% | -13.46% | -3.10% | 7.27% | 17.63% |
Subscription Rights Exercise Price | Net Asset Value Per Share Prior To Exercise | Net Asset Value Per Share After Exercise | ||||||
10% premium to net asset value per common share | $ | 10.00 | $ | 10.20 | ||||
Net asset value per common share | $ | 10.00 | $ | 10.00 | ||||
10% discount to net asset value per common share | $ | 10.00 | $ | 9.80 |
High | Low | |||||||
Fiscal year ended September 30, 2017 | ||||||||
First quarter | $ | 9.53 | $ | 8.30 | ||||
Second quarter | $ | 10.37 | $ | 8.50 | ||||
Third quarter | $ | 8.88 | $ | 7.30 | ||||
Fourth quarter | $ | 9.09 | $ | 7.89 | ||||
Fiscal year ended September 30, 2016 | ||||||||
First quarter | $ | 9.10 | $ | 7.34 | ||||
Second quarter | $ | 8.68 | $ | 6.53 | ||||
Third quarter | $ | 8.35 | $ | 7.25 | ||||
Fourth quarter | $ | 8.99 | $ | 7.94 |
Frequency | Date Declared | Record Date | Payment Date | Amount per Share | Total Distribution | DRIP Shares Issued (1) | DRIP Shares Value | |||||||
Monthly | July 10, 2015 | October 6, 2015 | October 15, 2015 | 0.075 | 2,210,008 | 12,080 | 108,563 | |||||||
Monthly | July 10, 2015 | November 5, 2015 | November 16, 2015 | 0.075 | 2,210,008 | 13,269 | 116,730 | |||||||
Monthly | November 30, 2015 | December 11, 2015 | December 22, 2015 | 0.075 | 2,210,007 | 11,103 | 94,563 | |||||||
Monthly | November 30, 2015 | January 4, 2016 | January 15, 2016 | 0.075 | 2,210,007 | 8,627 | 61,079 | |||||||
Monthly | November 30, 2015 | February 5, 2016 | February 16, 2016 | 0.075 | 2,210,008 | 4,542 | 32,923 | |||||||
Monthly | February 8, 2016 | March 15, 2016 | March 31, 2016 | 0.075 | 2,210,008 | 4,383 | 34,578 | |||||||
Monthly | February 8, 2016 | April 15, 2016 | April 29, 2016 | 0.075 | 2,210,008 | 4,452 | 35,033 | |||||||
Monthly | February 8, 2016 | May 13, 2016 | May 31, 2016 | 0.075 | 2,210,007 | 4,256 | 33,494 | |||||||
Monthly | May 6, 2016 | June 15, 2016 | June 30, 2016 | 0.075 | 2,210,007 | 5,822 | 46,881 | |||||||
Monthly | May 6, 2016 | July 15, 2016 | July 29, 2016 | 0.075 | 2,210,008 | 3,627 | 30,745 | |||||||
Monthly | May 6, 2016 | August 15, 2016 | August 31, 2016 | 0.075 | 2,210,008 | 3,260 | 29,002 | |||||||
Monthly | August 4, 2016 | September 15, 2016 | September 30, 2016 | 0.075 | 2,210,008 | 3,078 | 26,811 | |||||||
Monthly | August 4, 2016 | October 14, 2016 | October 31, 2016 | 0.075 | 2,210,008 | 3,146 | 26,985 | |||||||
Monthly | August 4, 2016 | November 15, 2016 | November 30, 2016 | 0.075 | 2,210,008 | 2,986 | 26,909 | |||||||
Monthly | October 19, 2016 | December 15, 2016 | December 30, 2016 | 0.075 | 2,210,008 | 3,438 | 30,586 | |||||||
Monthly | October 19, 2016 | January 31, 2017 | January 31, 2017 | 0.075 | 2,210,008 | 2,905 | 29,363 | |||||||
Monthly | October 19, 2016 | February 15, 2017 | February 28, 2017 | 0.075 | 2,210,008 | 2,969 | 26,427 | |||||||
Monthly | February 6, 2017 | March 15, 2017 | March 31, 2017 | 0.040 | 1,178,671 | 1,508 | 13,253 | |||||||
Quarterly | February 6, 2017 | June 15, 2017 | June 30, 2017 | 0.190 | 5,598,686 | 6,840 | 55,221 | |||||||
Quarterly | August 7, 2017 | September 15, 2017 | September 29, 2017 | 0.190 | 5,598,686 | 6,991 | 61,887 | |||||||
Quarterly | August 7, 2017 | December 15, 2017 | December 29, 2017 | 0.190 |
7/12/13 | 9/13 | 12/13 | 3/14 | 6/14 | 9/14 | 12/14 | 3/15 | 6/15 | ||||||||||
Oaktree Strategic Income Corporation | 100.00 | 95.69 | 95.04 | 104.85 | 104.23 | 90.00 | 80.14 | 85.71 | 76.59 | |||||||||
NYSE Composite | 100.00 | 105.64 | 114.82 | 116.93 | 122.75 | 120.34 | 122.57 | 123.97 | 123.72 | |||||||||
NASDAQ Financial | 100.00 | 104.75 | 117.25 | 118.72 | 117.66 | 114.96 | 124.17 | 126.50 | 131.77 | |||||||||
Peer Group | 100.00 | 96.46 | 98.55 | 97.72 | 100.79 | 96.61 | 97.25 | 103.96 | 104.49 |
9/15 | 12/15 | 3/16 | 6/16 | 9/16 | 12/16 | 3/17 | 6/17 | 9/17 | ||||||||||
Oaktree Strategic Income Corporation | 73.94 | 75.19 | 70.94 | 73.29 | 80.95 | 84.47 | 87.36 | 82.74 | 91.28 | |||||||||
NYSE Composite | 112.91 | 117.55 | 119.12 | 123.31 | 126.85 | 131.59 | 137.62 | 141.83 | 148.09 | |||||||||
NASDAQ Financial | 122.67 | 128.11 | 124.96 | 127.04 | 137.93 | 161.48 | 160.89 | 169.33 | 180.84 | |||||||||
Peer Group | 94.94 | 95.11 | 99.33 | 109.35 | 116.81 | 124.87 | 131.45 | 131.22 | 137.57 |
For the three months ended | ||||||||||||||||||||||||||||||||||||
(dollars in thousands, except per share amounts) | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | ||||||||||||||||||||||||
Total investment income | $ | 11,820 | $ | 12,171 | $ | 11,020 | $ | 11,561 | $ | 13,203 | $ | 13,114 | $ | 13,195 | $ | 13,914 | $ | 14,068 | $ | 14,140 | $ | 11,341 | $ | 11,923 | ||||||||||||
Net investment income | 5,521 | 5,930 | 5,086 | 5,884 | 6,342 | 6,164 | 5,785 | 7,002 | 7,402 | 7,086 | 6,294 | 7,496 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) | (19,984 | ) | (5,791 | ) | (254 | ) | (5,159 | ) | 2,251 | (5,248 | ) | (6,445 | ) | (20,308 | ) | (7,115 | ) | (4,632 | ) | 393 | (1,012 | ) | ||||||||||||||
Net increase (decrease) in net assets resulting from operations | (14,463 | ) | 139 | 4,832 | 725 | 8,593 | 916 | (660 | ) | (13,306 | ) | 287 | 2,454 | 6,687 | 6,484 | |||||||||||||||||||||
Net assets | 293,636 | 313,698 | 319,158 | 319,924 | 325,829 | 323,866 | 329,580 | 334,661 | 356,807 | 361,782 | 368,168 | 370,322 | ||||||||||||||||||||||||
Total investment income per common share | $ | 0.40 | $ | 0.41 | $ | 0.37 | $ | 0.39 | $ | 0.45 | $ | 0.45 | $ | 0.45 | $ | 0.47 | $ | 0.48 | $ | 0.48 | $ | 0.38 | $ | 0.40 | ||||||||||||
Net investment income per common share | 0.19 | 0.20 | 0.17 | 0.20 | 0.22 | 0.21 | 0.20 | 0.24 | 0.25 | 0.24 | 0.21 | 0.25 | ||||||||||||||||||||||||
Earnings (loss) per common share | (0.49 | ) | — | 0.16 | 0.02 | 0.29 | 0.03 | (0.02 | ) | (0.45 | ) | 0.01 | 0.08 | 0.23 | 0.22 | |||||||||||||||||||||
Net asset value per common share at period end | 9.97 | 10.65 | 10.83 | 10.86 | 11.06 | 10.99 | 11.18 | 11.36 | 12.11 | 12.28 | 12.49 | 12.57 |
As of and for the Year Ended September 30, 2017 | As of and for the Year Ended September 30, 2016 | As of and for the Year Ended September 30, 2015 | As of and for the Year Ended September 30, 2014 | As of September 30 and for the period from June 29, 2013 through September 30, 2013 | ||||||||||||||||
Statement of Operations data: | ||||||||||||||||||||
Total investment income | $ | 46,571,856 | $ | 53,426,234 | $ | 51,472,531 | $ | 12,516,674 | $ | 456,417 | ||||||||||
Base management fee, net | 5,648,467 | 6,128,072 | 5,931,155 | 1,602,617 | 61,379 | |||||||||||||||
Part I incentive fee | 3,236,320 | 5,211,729 | 5,689,371 | 708,235 | — | |||||||||||||||
Part II incentive fee | — | — | (766,552 | ) | 774,841 | 137,609 | ||||||||||||||
All other expenses | 15,265,376 | 16,793,749 | 12,340,527 | 3,667,100 | 241,723 | |||||||||||||||
Net investment income | 22,421,693 | 25,292,684 | 28,278,030 | 5,763,881 | 15,706 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | (31,188,572 | ) | (29,750,301 | ) | (12,365,948 | ) | 3,600,076 | 688,043 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | (8,766,879 | ) | (4,457,617 | ) | 15,912,082 | 9,363,957 | 703,749 | |||||||||||||
Per share data: | ||||||||||||||||||||
Net asset value per common share at period end | $ | 9.97 | $ | 11.06 | $ | 12.11 | $ | 12.65 | $ | 15.11 | ||||||||||
Market price at period end | 8.80 | 8.56 | 8.73 | 11.82 | 13.54 | |||||||||||||||
Net investment income (2) | 0.76 | 0.86 | 0.96 | 0.62 | — | |||||||||||||||
Net realized and unrealized gain (loss) on investments (2) | (1.06 | ) | (1.01 | ) | (0.42 | ) | 0.39 | 0.13 | ||||||||||||
Net increase (decrease) in net assets resulting from operations (2) | (0.30 | ) | (0.15 | ) | 0.54 | 1.01 | 0.13 | |||||||||||||
Distributions per common share | 0.80 | 0.90 | 1.07 | 1.01 | — | |||||||||||||||
Balance Sheet data at period end: | ||||||||||||||||||||
Total investments at fair value | $ | 560,436,660 | $ | 573,604,381 | $ | 623,647,474 | $ | 300,001,397 | $ | 48,653,617 | ||||||||||
Cash, cash equivalents and restricted cash | 43,012,387 | 28,815,679 | 52,692,097 | 109,557,165 | 52,346,831 | |||||||||||||||
Other assets | 5,213,604 | 19,997,081 | 21,370,913 | 2,946,782 | 449,596 | |||||||||||||||
Total assets | 608,662,651 | 622,417,141 | 697,710,484 | 412,505,344 | 101,450,044 | |||||||||||||||
Total liabilities | 315,026,217 | 296,587,747 | 340,903,381 | 39,827,666 | 744,775 | |||||||||||||||
Total net assets | 293,636,434 | 325,829,394 | 356,807,103 | 372,677,678 | 100,705,269 | |||||||||||||||
Other data: | ||||||||||||||||||||
Weighted average yield on debt investments(1) | 7.52 | % | 8.58 | % | 8.22 | % | 7.27 | % | 6.81 | % | ||||||||||
Number of portfolio companies at period end | 67 | 63 | 64 | 48 | 8 |
Item 8. | ||
Financial Statements and Supplementary Data |
Index to the increased use of market quotations to value certain of our portfolio investments beginning in the quarter ended March 31, 2015.
September 30, 2017 | September 30, 2016 | |||||
Cost: | ||||||
Senior secured debt | 86.50 | % | 86.40 | % | ||
Subordinated notes of FSFR Glick JV | 10.61 | 10.66 | ||||
LLC equity interests of FSFR Glick JV | 1.18 | 1.18 | ||||
Purchased equity | 1.71 | 1.76 | ||||
Equity grants | — | — | ||||
Total | 100.00 | % | 100.00 | % |
September 30, 2017 | September 30, 2016 | |||||
Fair value: | ||||||
Senior secured debt | 89.53 | % | 87.58 | % | ||
Subordinated notes of FSFR Glick JV | 10.28 | 9.92 | ||||
LLC equity interests of FSFR Glick JV | — | 1.12 | ||||
Purchased equity | 0.19 | 1.36 | ||||
Equity grants | — | 0.02 | ||||
Total | 100.00 | % | 100.00 | % |
September 30, 2017 | September 30, 2016 | |||||
Cost: | ||||||
Internet software & services | 21.46 | % | 22.07 | % | ||
Multi-sector holdings (1) | 11.79 | 11.84 | ||||
Healthcare services | 8.41 | 14.80 | ||||
Advertising | 7.19 | 8.06 | ||||
Application software | 5.59 | 5.35 | ||||
Diversified support services | 4.00 | 3.28 | ||||
IT consulting & other services | 3.39 | 1.47 | ||||
Human resources & employment services | 3.33 | — | ||||
Specialized finance | 2.54 | — | ||||
Environmental & facilities services | 2.34 | 1.06 | ||||
Oil & gas equipment & services | 2.32 | 0.70 | ||||
Distributors | 2.14 | — | ||||
Industrial machinery | 2.06 | 0.64 | ||||
Real estate services | 2.02 | — | ||||
Commercial printing | 1.96 | 0.98 | ||||
Integrated telecommunication services | 1.87 | 4.06 | ||||
Food retail | 1.66 | 1.15 | ||||
Data processing & outsourced services | 1.62 | 1.64 | ||||
Pharmaceuticals | 1.50 | 1.53 | ||||
Specialty Stores | 1.38 | — | ||||
Security & alarm services | 1.33 | 2.97 | ||||
Computer & Electronics Retail | 1.22 | — | ||||
Research & consulting services | 1.14 | 2.85 | ||||
Personal products | 1.08 | 0.21 | ||||
Aerospace & defense | 1.07 | — | ||||
Auto parts & equipment | 0.97 | — | ||||
Healthcare distributors | 0.82 | — | ||||
Casinos & gaming | 0.82 | — | ||||
Housewares & specialties | 0.79 | — | ||||
Trucking | 0.67 | — | ||||
Fertilizers & agricultural chemicals | 0.54 | 0.59 | ||||
Hypermarkets & super centers | 0.50 | — | ||||
Specialized consumer services | 0.27 | 3.76 | ||||
Computer hardware | 0.21 | 0.66 | ||||
Education services | — | 2.54 | ||||
Electronic equipment & instruments | — | 1.82 | ||||
Diversified capital markets | — | 1.45 | ||||
Construction and engineering | — | 0.98 | ||||
Wireless telecommunication services | — | 0.95 | ||||
Food distributors | — | 0.95 | ||||
Restaurants | — | 0.83 | ||||
Healthcare technology | — | 0.81 | ||||
100.00 | % | 100.00 | % |
September 30, 2017 | September 30, 2016 | |||||
Fair value: | ||||||
Internet software & services | 21.72 | % | 20.82 | % | ||
Multi-sector holdings (1) | 10.28 | 11.04 | ||||
Advertising | 7.34 | 8.49 | ||||
Application software | 6.06 | 5.65 | ||||
Healthcare services | 5.27 | 14.64 | ||||
Diversified support services | 4.40 | 3.42 | ||||
IT consulting & other services | 3.66 | 1.55 | ||||
Human resources & employment services | 3.59 | — | ||||
Specialized finance | 2.79 | — | ||||
Environmental & facilities services | 2.55 | 1.14 | ||||
Oil & gas equipment & services | 2.51 | 0.71 | ||||
Distributors | 2.31 | — | ||||
Industrial machinery | 2.22 | 0.66 | ||||
Real estate services | 2.19 | — | ||||
Commercial printing | 2.13 | 1.03 | ||||
Integrated telecommunication services | 2.03 | 4.30 | ||||
Food retail | 1.82 | 1.22 | ||||
Data processing & outsourced services | 1.76 | 1.71 | ||||
Pharmaceuticals | 1.61 | 1.57 | ||||
Specialty Stores | 1.46 | — | ||||
Security & alarm services | 1.42 | 3.11 | ||||
Computer & Electronics Retail | 1.34 | — | ||||
Research & consulting services | 1.25 | 2.99 | ||||
Personal products | 1.18 | 0.22 | ||||
Aerospace & defense | 1.17 | — | ||||
Auto parts & equipment | 1.03 | — | ||||
Casinos & gaming | 0.90 | — | ||||
Healthcare distributors | 0.88 | — | ||||
Housewares & specialties | 0.85 | — | ||||
Trucking | 0.73 | — | ||||
Hypermarkets & super centers | 0.51 | — | ||||
Fertilizers & agricultural chemicals | 0.50 | 0.59 | ||||
Specialized consumer services | 0.30 | 3.93 | ||||
Computer hardware | 0.24 | 0.68 | ||||
Education services | — | 2.67 | ||||
Electronic equipment & instruments | — | 1.90 | ||||
Diversified capital markets | — | 1.53 | ||||
Construction and engineering | — | 1.01 | ||||
Food distributors | — | 0.98 | ||||
Restaurants | — | 0.87 | ||||
Healthcare technology | — | 0.83 | ||||
Wireless telecommunication services | — | 0.74 | ||||
100.00 | % | 100.00 | % |
September 30, 2017 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||||||||||||||||||||||||
Cost | % of Debt Portfolio | Fair Value | % of Debt Portfolio | Cost | % of Debt Portfolio | Fair Value | % of Debt Portfolio | Cost | % of Debt Portfolio | Fair Value | % of Debt Portfolio | |||||||||||||||||||||||||||||||
Accrual | $ | 564,231,285 | 96.02 | % | $ | 553,084,120 | 98.88 | % | $ | 563,757,229 | 96.74 | % | $ | 552,114,644 | 98.72 | % | $ | 619,529,324 | 98.79 | % | $ | 613,701,960 | 99.28 | % | ||||||||||||||||||
PIK non-accrual (paying) (1) | — | — | — | — | — | — | — | — | 7,605,257 | 1.21 | 4,427,839 | 0.72 | ||||||||||||||||||||||||||||||
Cash non-accrual (nonpaying) (2) | 23,381,863 | 3.98 | 6,292,551 | 1.12 | 19,027,017 | 3.26 | 7,156,160 | 1.28 | — | — | — | — | ||||||||||||||||||||||||||||||
Total | $ | 587,613,148 | 100.00 | % | $ | 559,376,671 | 100.00 | % | $ | 582,784,246 | 100.00 | % | $ | 559,270,804 | 100.00 | % | $ | 627,134,581 | 100.00 | % | $ | 618,129,799 | 100.00 | % |
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | ||||||||||
Cash interest income | $ | 1,291,399 | $ | 1,136,652 | $ | — | ||||||
PIK interest income | 351,323 | — | — | |||||||||
OID income | 89,553 | 57,735 | 13,816 | |||||||||
Total | $ | 1,732,275 | $ | 1,194,387 | $ | 13,816 |
September 30, 2017 | September 30, 2016 | |||
Senior secured loans (1) | $115,964,537 | $194,346,557 | ||
Weighted average current interest rate on senior secured loans (2) | 6.92% | 7.08% | ||
Number of borrowers in FSFR Glick JV | 23 | 36 | ||
Largest loan exposure to a single borrower (1) | $11,267,524 | $12,641,009 | ||
Total of five largest loan exposures to borrowers (1) | $42,833,696 | $49,318,344 |
Portfolio Company | Industry | Investment Type | Maturity Date | Current Interest Rate (1)(4) | Cash Interest Rate (1) | Principal | Cost | Fair Value (2) | |||||||||||||||
Ameritox Ltd. (3)(5) | Healthcare services | First Lien Term Loan | 4/11/2021 | LIBOR+5% (1% floor) cash 3% PIK | 6.33 | % | $ | 2,287,177 | $ | 2,243,202 | $ | 265,211 | |||||||||||
Healthcare services | 119,910.76 Class B Preferred Units | 119,911 | — | ||||||||||||||||||||
Healthcare services | 368.96 Class A Common Units | 2,174,034 | — | ||||||||||||||||||||
Total Ameritox Ltd. | 2,287,177 | 4,537,147 | 265,211 | ||||||||||||||||||||
Beyond Trust Software, Inc. (3) | Application software | First Lien Term Loan | 9/25/2019 | LIBOR+7% (1% floor) cash | 8.33 | % | 11,267,524 | 11,220,478 | 11,267,116 | ||||||||||||||
Compuware Corporation (3) | Internet software & services | First Lien Term Loan B3 | 12/15/2021 | LIBOR+4.25% (1% floor) cash | 5.49 | % | 6,279,920 | 6,225,992 | 6,358,419 | ||||||||||||||
Metamorph US 3, LLC (3)(5) | Internet software & services | First Lien Term Loan | 12/1/2020 | LIBOR+5.5% (1% floor) cash 2% PIK | 6.74 | % | 6,825,900 | 6,477,372 | 2,592,115 | ||||||||||||||
Motion Recruitment Partners LLC (3) | Human resources & employment services | First Lien Term Loan | 2/13/2020 | LIBOR+6% (1% floor) cash | 7.24 | % | 8,659,650 | 8,659,650 | 8,659,223 | ||||||||||||||
NAVEX Global, Inc. | Internet software & services | First Lien Term Loan | 11/19/2021 | LIBOR+4.25% (1% floor) cash | 5.49 | % | 2,977,041 | 2,967,620 | 2,988,205 | ||||||||||||||
Air Newco LLC | IT consulting & other services | First Lien Term Loan B | 3/20/2022 | LIBOR+5.5% (1% floor) cash | 6.82 | % | 8,160,622 | 8,141,224 | 8,099,417 | ||||||||||||||
CM Delaware LLC | Advertising | First Lien Term Loan | 3/18/2021 | LIBOR+5.25% (1% floor) cash | 6.58 | % | 2,075,162 | 2,073,617 | 2,064,786 | ||||||||||||||
New Trident Holdcorp, Inc. (3) | Healthcare services | First Lien Term Loan B | 7/31/2019 | LIBOR+5.75% (1.25% floor) cash | 7.08 | % | 2,018,206 | 2,000,877 | 1,453,109 | ||||||||||||||
Central Security Group, Inc. (3) | Specialized consumer services | First Lien Term Loan | 10/6/2021 | LIBOR+5.625% (1% floor) cash | 6.86 | % | 3,876,067 | 3,880,408 | 3,892,211 | ||||||||||||||
Aptos, Inc. (3) | Data processing & outsourced services | First Lien Term Loan B | 9/1/2022 | LIBOR+6.75% (1% floor) cash | 8.08 | % | 7,920,000 | 7,790,262 | 7,840,800 | ||||||||||||||
Vubiquity, Inc. | Application software | First Lien Term Loan | 8/12/2021 | LIBOR+5.5% (1% floor) cash | 6.83 | % | 4,126,500 | 4,099,195 | 4,095,551 | ||||||||||||||
Poseidon Merger Sub, Inc. (3) | Advertising | Second Lien Term Loan | 8/15/2023 | LIBOR+8.5% (1% floor) cash | 9.81 | % | 3,000,000 | 2,933,633 | 3,030,000 | ||||||||||||||
Novetta Solutions, LLC | Diversified support services | First Lien Term Loan | 10/16/2022 | LIBOR+5% (1% floor) cash | 6.34 | % | 5,990,978 | 5,932,073 | 5,826,226 | ||||||||||||||
SHO Holding I Corporation | Footwear | First Lien Term Loan | 10/27/2022 | LIBOR+5% (1% floor) cash | 6.24 | % | 6,386,250 | 6,338,479 | 6,306,422 | ||||||||||||||
Valet Merger Sub, Inc. (3) | Environmental & facilities services | First Lien Term Loan | 9/24/2021 | LIBOR+7% (1% floor) cash | 8.24 | % | 3,920,000 | 3,877,655 | 3,919,865 | ||||||||||||||
Environmental & facilities services | Incremental Term Loan | 9/24/2021 | LIBOR+7% (1% floor) cash | 8.24 | % | 1,027,425 | 1,006,080 | 1,027,390 | |||||||||||||||
Total Valet Merger Sub, Inc. (3) | 4,947,425 | 4,883,735 | 4,947,255 | ||||||||||||||||||||
RSC Acquisition, Inc. | Insurance brokers | First Lien Term Loan | 11/30/2022 | LIBOR+5.25% (1% floor) cash | 6.58 | % | 3,930,134 | 3,912,198 | 3,890,832 | ||||||||||||||
Integro Parent Inc. | Insurance brokers | First Lien Term Loan | 10/31/2022 | LIBOR+5.75% (1% floor) cash | 7.06 | % | 4,913,924 | 4,790,511 | 4,901,639 | ||||||||||||||
TruckPro, LLC | Auto parts & equipment | First Lien Term Loan | 8/6/2018 | LIBOR+5% (1% floor) cash | 6.24 | % | 1,823,268 | 1,821,822 | 1,825,054 | ||||||||||||||
Falmouth Group Holdings Corp. | Specialty chemicals | First Lien Term Loan | 12/13/2021 | LIBOR+6.75% (1% floor) cash | 8.08 | % | 4,610,174 | 4,572,990 | 4,610,400 | ||||||||||||||
Ancile Solutions, Inc. (3) | Internet software & services | First Lien Term Loan | 6/30/2021 | LIBOR+7% (1% floor) cash | 8.33 | % | 4,042,355 | 3,995,621 | 4,010,198 | ||||||||||||||
California Pizza Kitchen, Inc. | Restaurants | First Lien Term Loan | 8/23/2022 | LIBOR+6% (1% floor) cash | 7.24 | % | 4,950,000 | 4,938,077 | 4,917,008 | ||||||||||||||
MHE Intermediate Holdings, LLC (3) | Diversified support services | First Lien Term Loan B | 3/11/2024 | LIBOR+5% (1% floor) cash | 6.33 | % | 4,228,750 | 4,150,304 | 4,228,752 | ||||||||||||||
Diversified support services | Delayed Draw Term Loan | 3/11/2024 | LIBOR+5% (1% floor) cash | 6.33 | % | 667,510 | 635,208 | 667,510 | |||||||||||||||
Total MHE Intermediate Holdings, LLC | 4,896,260 | 4,785,512 | 4,896,262 | ||||||||||||||||||||
Total Portfolio Investments | $ | 115,964,537 | $ | 116,978,493 | $ | 108,737,459 |
Portfolio Company | Industry | Investment Type | Maturity Date | Current Interest Rate (1)(4) | Cash Interest Rate (1) | Principal | Cost | Fair Value (2) | |||||||||||||||
Ameritox Ltd. (3) | Healthcare services | First Lien Term Loan | 4/11/2021 | LIBOR+5% (1% floor) cash 3% PIK | 6.00 | % | $ | 2,339,146 | $ | 2,336,840 | $ | 2,322,917 | |||||||||||
Healthcare services | 119,910.76 Class B Preferred Units | — | 119,911 | 131,369 | |||||||||||||||||||
Healthcare services | 368.96 Class A Common Units | — | 2,174,034 | 981,348 | |||||||||||||||||||
Total Ameritox Ltd. | 2,339,146 | 4,630,785 | 3,435,634 | ||||||||||||||||||||
Answers Corporation (3) (5) | Internet software & services | First Lien Term Loan | 10/3/2021 | LIBOR+5.25% (1% floor) cash | 6.25 | % | 7,899,749 | 7,636,708 | 4,265,865 | ||||||||||||||
Beyond Trust Software, Inc. (3) | Application software | First Lien Term Loan | 9/25/2019 | LIBOR+7% (1% floor) cash | 8.00 | % | 12,641,009 | 12,554,571 | 12,538,499 | ||||||||||||||
Compuware Corporation (3) | Internet software & services | First Lien Term Loan B1 | 12/15/2019 | LIBOR+5.25% (1% floor) cash | 6.25 | % | 7,392,405 | 7,306,444 | 7,420,127 | ||||||||||||||
Metamorph US 3, LLC (3) | Internet software & services | First Lien Term Loan | 12/1/2020 | LIBOR+6.5% (1% floor) cash | 7.50 | % | 6,900,283 | 6,808,009 | 5,744,139 | ||||||||||||||
Motion Recruitment Partners LLC (3) | Human resources & employment services | First Lien Term Loan | 2/13/2020 | LIBOR+6% (1% floor) cash | 7.00 | % | 9,125,000 | 9,125,000 | 9,099,254 | ||||||||||||||
NAVEX Global, Inc. (3) | Internet software & services | First Lien Term Loan | 11/19/2021 | LIBOR+4.75% (1% floor) cash | 5.99 | % | 1,793,550 | 1,779,633 | 1,784,582 | ||||||||||||||
Teaching Strategies, LLC | Education services | First Lien Term Loan (3) | 10/1/2019 | LIBOR+5.5% (0.5% floor) cash | 6.34 | % | 2,570,471 | 2,567,575 | 2,556,891 | ||||||||||||||
Education services | First Lien Delayed Draw Term Loan | 10/1/2019 | LIBOR+5.5% (0.5% floor) cash | 6.34 | % | 6,840,000 | 6,832,715 | 6,803,695 | |||||||||||||||
Total Teaching Strategies, LLC | 9,410,471 | 9,400,290 | 9,360,586 | ||||||||||||||||||||
TrialCard Incorporated (3) | Healthcare services | First Lien Term Loan | 12/31/2019 | LIBOR+4.5% (1% floor) cash | 5.50 | % | 7,179,097 | 7,144,396 | 7,144,248 | ||||||||||||||
Air Newco LLC | IT consulting & other services | First Lien Term Loan B | 3/20/2022 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 8,291,864 | 8,267,671 | 7,960,189 | ||||||||||||||
Fineline Technologies, Inc. (3) | Electronic equipment & instruments | First Lien Term Loan | 5/5/2017 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 7,034,441 | 7,010,963 | 7,015,051 | ||||||||||||||
LegalZoom.com, Inc. (3) | Specialized consumer services | First Lien Term Loan | 5/13/2020 | LIBOR+7% (1% floor) cash | 8.00 | % | 9,850,000 | 9,672,034 | 9,772,706 | ||||||||||||||
GK Holdings, Inc. | IT consulting & other services | First Lien Term Loan | 1/20/2021 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 3,438,750 | 3,452,038 | 3,412,959 | ||||||||||||||
Vitera Healthcare Solutions, LLC | Healthcare technology | Second Lien Term Loan | 11/4/2021 | LIBOR+8.25% (1% floor) cash | 9.25 | % | 3,000,000 | 2,958,409 | 2,782,500 | ||||||||||||||
TIBCO Software, Inc. (3) | Internet software & services | First Lien Term Loan | 12/4/2020 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 2,304,900 | 2,308,815 | 2,277,114 | ||||||||||||||
CM Delaware LLC | Advertising | First Lien Term Loan | 3/18/2021 | LIBOR+5.25% (1% floor) cash | 6.25 | % | 2,096,666 | 2,094,658 | 1,978,729 | ||||||||||||||
New Trident Holdcorp, Inc. (3) | Healthcare services | First Lien Term Loan B | 7/31/2019 | LIBOR+5.25% (1.25% floor) cash | 6.50 | % | 2,041,357 | 2,014,233 | 1,755,567 | ||||||||||||||
Central Security Group, Inc. (3) | Specialized consumer services | First Lien Term Loan | 10/6/2020 | LIBOR+5.625% (1% floor) cash | 6.63 | % | 5,909,774 | 5,915,626 | 5,776,805 | ||||||||||||||
Auction.com, LLC | Internet software & services | First Lien Term Loan | 5/12/2019 | LIBOR+5% (1% floor) cash | 6.00 | % | 3,940,000 | 3,926,700 | 3,959,700 | ||||||||||||||
Aptos, Inc. (3) | Data processing & outsourced services | First Lien Term Loan B | 9/1/2022 | LIBOR+6.75% (1% floor) cash | 7.75 | % | 8,000,000 | 7,842,222 | 7,920,000 | ||||||||||||||
Vubiquity, Inc. | Application software | First Lien Term Loan | 8/12/2021 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 4,168,500 | 4,133,700 | 4,147,658 |
Too Faced Cosmetics, LLC (3) | Personal products | First Lien Term Loan B | 7/7/2021 | LIBOR+5% (1% floor) cash | 6.00 | % | 642,692 | 581,620 | 645,155 | ||||||||||||||
American Seafoods Group LLC (3) | Food distributors | First Lien Term Loan | 8/19/2021 | LIBOR+5% (1% floor) cash | 6.00 | % | 3,853,704 | 3,837,366 | 3,844,069 | ||||||||||||||
Worley Claims Services, LLC | Internet software & services | First Lien Term Loan | 10/31/2020 | LIBOR+8% (1% floor) cash | 9.00 | % | 5,730,937 | 5,707,511 | 5,702,282 | ||||||||||||||
Poseidon Merger Sub, Inc. (3) | Advertising | Second Lien Term Loan | 8/15/2023 | LIBOR+8.5% (1% floor) cash | 9.50 | % | 3,000,000 | 2,922,316 | 3,039,954 | ||||||||||||||
AccentCare, Inc. | Healthcare services | First Lien Term Loan | 9/3/2021 | LIBOR+5.75% (1% floor) cash | 6.75 | % | 7,850,000 | 7,773,386 | 7,727,344 | ||||||||||||||
Novetta Solutions, LLC | Diversified support services | First Lien Term Loan | 10/17/2022 | LIBOR+5.75% (1% floor) cash | 6.00 | % | 6,477,948 | 6,392,100 | 6,226,928 | ||||||||||||||
SHO Holding I Corporation | Footwear | First Lien Term Loan | 10/27/2022 | LIBOR+5% (1% floor) cash | 6.00 | % | 6,451,250 | 6,393,472 | 6,443,186 | ||||||||||||||
Valet Merger Sub, Inc. (3) | Environmental & facilities services | First Lien Term Loan | 9/24/2021 | LIBOR+7% (1% floor) cash | 8.00 | % | 3,960,000 | 3,906,498 | 4,026,826 | ||||||||||||||
RSC Acquisition, Inc. | Insurance brokers | First Lien Term Loan | 11/30/2022 | LIBOR+5.25% (1% floor) cash | 6.25 | % | 3,970,390 | 3,948,754 | 3,950,538 | ||||||||||||||
Integro Parent Inc. | Insurance brokers | First Lien Term Loan | 10/31/2022 | LIBOR+5.75% (1% floor) cash | 6.75 | % | 4,963,924 | 4,814,658 | 4,889,465 | ||||||||||||||
TruckPro, LLC | Auto parts & equipment | First Lien Term Loan | 8/6/2018 | LIBOR+5% (1% floor) cash | 6.00 | % | 1,920,000 | 1,916,612 | 1,919,232 | ||||||||||||||
Falmouth Group Holdings Corp. | Specialty chemicals | First Lien Term Loan | 12/13/2021 | LIBOR+6.75% (1% floor) cash | 7.75 | % | 4,962,500 | 4,912,596 | 4,967,689 | ||||||||||||||
Sundial Group Holdings LLC | Personal products | First Lien Term Loan | 10/19/2021 | LIBOR+6.25% (1% floor) cash | 7.25 | % | 3,900,000 | 3,839,938 | 3,954,402 | ||||||||||||||
Onvoy, LLC (3) | Integrated telecommunication services | First Lien Term Loan | 4/29/2021 | LIBOR+6.25% (1% floor) cash | 7.25 | % | 7,406,250 | 7,261,422 | 7,386,738 | ||||||||||||||
Ancile Solutions, Inc. (3) | Internet software & services | First Lien Term Loan | 6/30/2021 | LIBOR+7% (1% floor) cash | 8.00 | % | 4,500,000 | 4,433,644 | 4,432,500 | ||||||||||||||
Total Portfolio Investments | $ | 194,346,557 | $ | 194,624,798 | $ | 188,708,220 |
September 30, 2017 | September 30, 2016 | |||||||
Selected Balance Sheet Information: | ||||||||
Investments in loans at fair value (cost September 30, 2017: $116,978,493; cost September 30, 2016: $194,624,798) | $ | 108,737,459 | $ | 188,708,220 | ||||
Receivable from secured financing arrangement at fair value (September 30, 2016 cost: $5,000,000) | — | 4,985,425 | ||||||
Cash and cash equivalents | 13,891,899 | 980,605 | ||||||
Restricted cash | 2,249,575 | 3,343,303 | ||||||
Receivable from unsettled transactions | — | 952,591 | ||||||
Due from portfolio companies | 7,653 | — | ||||||
Other assets | 1,791,077 | 2,162,942 | ||||||
Total assets | $ | 126,677,663 | $ | 201,133,086 | ||||
Senior credit facility payable | $ | 56,881,939 | $ | 124,615,636 | ||||
Subordinated notes payable at fair value (proceeds September 30, 2017: $73,404,435; cost September 30, 2016: $73,149,434) | 65,836,199 | 65,012,167 | ||||||
Other liabilities | 3,959,525 | 4,196,688 | ||||||
Total liabilities | $ | 126,677,663 | $ | 193,824,491 | ||||
Members' equity | — | 7,308,595 | ||||||
Total liabilities and members' equity | $ | 126,677,663 | $ | 201,133,086 |
Year ended September 30, 2017 | Year ended September 30, 2016 | |||||||
Selected Statements of Operations Information: | ||||||||
Interest income | $ | 11,148,203 | $ | 14,109,946 | ||||
PIK interest income | 53,620 | 33,170 | ||||||
Fee income | 160,984 | 95,756 | ||||||
Total investment income | 11,362,807 | 14,238,872 | ||||||
Interest expense | $ | 11,055,880 | $ | 10,780,919 | ||||
Other expenses | 224,559 | 283,267 | ||||||
Total expenses (1) | 11,280,439 | 11,064,186 | ||||||
Net unrealized appreciation (depreciation) | $ | (2,893,408 | ) | $ | 3,832,274 | |||
Realized loss on investments | (3,873,454 | ) | (3,119,735 | ) | ||||
Net income (loss) | $ | (6,684,494 | ) | $ | 3,887,225 |
Frequency | Date Declared | Record Date | Payment Date | Amount per Share | Cash Distribution | DRIP Shares Issued (1) | DRIP Shares Value | |||||||||||||
Monthly | July 10, 2015 | October 6, 2015 | October 15, 2015 | $ | 0.075 | $ | 2,101,445 | 12,080 | $ | 108,563 | ||||||||||
Monthly | July 10, 2015 | November 5, 2015 | November 16, 2015 | 0.075 | 2,093,278 | 13,269 | 116,730 | |||||||||||||
Monthly | November 30, 2015 | December 11, 2015 | December 22, 2015 | 0.075 | 2,115,444 | 11,103 | 94,563 | |||||||||||||
Monthly | November 30, 2015 | January 4, 2016 | January 15, 2016 | 0.075 | 2,148,928 | 8,627 | 61,079 | |||||||||||||
Monthly | November 30, 2015 | February 5, 2016 | February 16, 2016 | 0.075 | 2,177,085 | 4,542 | 32,923 | |||||||||||||
Monthly | February 8, 2016 | March 15, 2016 | March 31, 2016 | 0.075 | 2,175,431 | 4,383 | 34,577 | |||||||||||||
Monthly | February 8, 2016 | April 15, 2016 | April 29, 2016 | 0.075 | 2,174,974 | 4,452 | 35,033 | |||||||||||||
Monthly | February 8, 2016 | May 13, 2016 | May 31, 2016 | 0.075 | 2,176,513 | 4,256 | 33,494 | |||||||||||||
Monthly | May 6, 2016 | June 15, 2016 | June 30, 2016 | 0.075 | 2,163,126 | 5,822 | 46,881 | |||||||||||||
Monthly | May 6, 2016 | July 15, 2016 | July 29, 2016 | 0.075 | 2,179,263 | 3,627 | 30,745 | |||||||||||||
Monthly | May 6, 2016 | August 15, 2016 | August 31, 2016 | 0.075 | 2,181,006 | 3,260 | 29,002 | |||||||||||||
Monthly | August 4, 2016 | September 15, 2016 | September 30, 2016 | 0.075 | 2,183,197 | 3,078 | 26,811 | |||||||||||||
Monthly | August 4, 2016 | October 14, 2016 | October 31, 2016 | 0.075 | 2,183,023 | 3,146 | 26,985 | |||||||||||||
Monthly | August 4, 2016 | November 15, 2016 | November 30, 2016 | 0.075 | 2,183,100 | 2,986 | 26,908 | |||||||||||||
Monthly | October 19, 2016 | December 15, 2016 | December 30, 2016 | 0.075 | 2,179,421 | 3,438 | 30,586 | |||||||||||||
Monthly | October 19, 2016 | January 31, 2017 | January 31, 2017 | 0.075 | 2,180,645 | 2,905 | 29,363 | |||||||||||||
Monthly | October 19, 2016 | February 15, 2017 | February 28, 2017 | 0.075 | 2,183,581 | 2,969 | 26,427 | |||||||||||||
Monthly | February 6, 2017 | March 15, 2017 | March 31, 2017 | 0.04 | 1,165,417 | 1,508 | 13,253 | |||||||||||||
Quarterly | February 6, 2017 | June 15, 2017 | June 30, 2017 | 0.19 | 5,543,465 | 6,840 | 55,221 | |||||||||||||
Quarterly | August 7, 2017 | September 15, 2017 | September 29, 2017 | 0.19 | 5,536,798 | 6,991 | 61,888 | |||||||||||||
Quarterly | August 7, 2017 | December 15, 2017 | December 29, 2017 | 0.19 |
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | ||||||||||
Interest expense | $ | 5,741,534 | $ | 4,668,947 | $ | 1,476,995 | ||||||
Loan administration fees | 69,514 | 79,882 | — | |||||||||
Amortization of debt issuance costs | 290,104 | 290,104 | 120,877 | |||||||||
Total interest and other debt financing expenses | $ | 6,101,152 | $ | 5,038,933 | $ | 1,597,872 | ||||||
Cash paid for interest expense | $ | 5,449,738 | $ | 5,136,063 | $ | — | ||||||
Annualized average interest rate | 3.425 | % | 2.466 | % | 2.39 | % | ||||||
Average outstanding balance | $ | 180,462,192 | $ | 181,782,413 | $ | 61,900,170 |
Year ended September 30, 2017 | ||||||||||||
Stated Interest Rate | LIBOR Spread (basis points) | Cash Paid for Interest | Interest Expense | |||||||||
Class A-T Notes | 3.1035% | 180 | $ | 3,487,268 | $ | 3,664,619 | ||||||
Class A-S Notes | 3.4035% | 210 | (1) | 850,073 | 926,401 | |||||||
Class A-R Notes | 2.9551% | 180 | (2) | 205,027 | 207,900 | |||||||
Class B Notes | 3.9535% | 265 | 907,370 | 942,614 | ||||||||
Class C Notes | 4.5535% | 325 | (3) | — | — | |||||||
Total | $ | 5,449,738 | $ | 5,741,534 |
Description | Class A-T Notes | Class A-S Notes | Class A-R Notes | Class B Notes | Class C Notes | Subordinated Notes | ||||||
Type | Senior Secured Floating Rate Term Debt | Senior Secured Floating Rate Term Debt | Senior Secured Floating Rate Revolver | Senior Secured Floating Rate Term Debt | Senior Secured Floating Rate Term Debt | Subordinated Term Notes | ||||||
Amount Outstanding | $126,000,000 | $29,000,000 | $— | $25,000,000 | $22,575,680 | $86,400,000 | ||||||
Moody's Rating | "Aaa" | "Aaa" | "Aaa" | "Aa2" | "Aa2" | NR | ||||||
S&P Rating | "AAA" | "AAA" | "AAA" | NR | NR | NR | ||||||
Interest Rate | LIBOR + 1.80% | LIBOR + 2.10%* | CP + 1.80% ** | LIBOR + 2.65% | LIBOR + 3.25% | NA | ||||||
Stated Maturity | May 28, 2025 | May 28, 2025 | May 28, 2025 | May 28, 2025 | May 28, 2025 | May 28, 2025 |
September 30, 2017 | September 30, 2016 | |||||||
FSFR Glick JV LLC | $ | 16,159,368 | $ | 16,382,494 | ||||
MHE Intermediate Holdings | 6,749,698 | — | ||||||
Triple Point Group Holdings, Inc. | 4,968,590 | 4,968,590 | ||||||
BeyondTrust Software, Inc. | 3,605,000 | 3,605,000 | ||||||
Motion Recruitment Partners LLC | 2,900,000 | 2,900,000 | ||||||
PowerPlan, Inc. | 2,100,000 | 2,100,000 | ||||||
Ministry Brands, LLC | 1,857,967 | — | ||||||
Impact Sales, LLC | 1,078,125 | — | ||||||
Valet Merger Sub, Inc. | 833,333 | 333,333 | ||||||
Executive Consulting Group, Inc. | 800,000 | 800,000 | ||||||
Internet Pipeline, Inc. | 800,000 | 800,000 | ||||||
Metamorph US 3, LLC (1) | 720,000 | 1,800,000 | ||||||
Systems, Inc. | 600,000 | — | ||||||
Sailpoint Technologies, Inc. | 300,000 | 200,000 | ||||||
4 Over International, LLC | 68,452 | 68,452 | ||||||
TIBCO Software, Inc. | — | 5,300,000 | ||||||
All Web Leads, Inc. | — | 3,458,537 | ||||||
Legalzoom.com, Inc. | — | 2,607,018 | ||||||
Teaching Strategies, LLC | — | 2,400,000 | ||||||
Dynatect Group Holdings, Inc. | — | 1,800,000 | ||||||
My Alarm Center, LLC | — | 1,212,472 | ||||||
Baart Programs, Inc. | — | 1,000,000 | ||||||
TrialCard Incorporated | — | 850,000 | ||||||
OBHG Management Services, LLC | — | 100,000 | ||||||
Accruent, LLC | — | 85,000 | ||||||
Total | $ | 43,540,533 | $ | 52,770,896 |
Debt Outstanding as of September 30, 2016 | Debt Outstanding as of September 30, 2017 | Weighted average debt outstanding for the year ended September 30, 2017 | Maximum debt outstanding for the year ended September 30, 2017 | |||||||||||||
Citibank facility | $ | 107,426,800 | $ | 76,456,800 | $ | 80,785,238 | $ | 107,426,800 | ||||||||
2015 Debt Securitization | 180,000,000 | 180,000,000 | 180,462,192 | 187,500,000 | ||||||||||||
East West Bank Facility | — | 6,500,000 | 6,306,301 | 19,500,000 | ||||||||||||
Secured borrowings | 5,000,000 | — | 54,795 | 5,000,000 | ||||||||||||
Total debt | $ | 292,426,800 | $ | 262,956,800 | $ | 267,608,526 |
Payments due by period as of September 30, 2017 | ||||||||||||||||||||
Total | < 1 year | 1-3 years | 3-5 years | > 5 years | ||||||||||||||||
Citibank facility | $ | 76,456,800 | $ | — | $ | 76,456,800 | $ | — | $ | — | ||||||||||
Interest due on Citibank facility | 6,636,652 | 2,894,119 | 3,742,533 | — | — | |||||||||||||||
2015 Debt Securitization | 180,000,000 | — | — | — | 180,000,000 | |||||||||||||||
Interest due on 2015 Debt Securitization | 45,102,966 | 5,885,800 | 11,771,600 | 11,771,600 | 15,673,966 | |||||||||||||||
East West Bank Facility | 6,500,000 | — | — | 6,500,000 | — | |||||||||||||||
Interest due on East West Bank Facility | 1,009,993 | 308,750 | 617,500 | 83,743 | — | |||||||||||||||
Total | $ | 315,706,411 | $ | 9,088,669 | $ | 92,588,433 | $ | 18,355,343 | $ | 195,673,966 |
Basis point increase | Interest Income | Interest Expense | Net increase (decrease) | |||||||||
500 | $ | 23,202,957 | $ | (13,147,840 | ) | $ | 10,055,117 | |||||
400 | 18,562,365 | (10,518,272 | ) | 8,044,093 | ||||||||
300 | 13,921,774 | (7,888,704 | ) | 6,033,070 | ||||||||
200 | 9,281,183 | (5,259,136 | ) | 4,022,047 | ||||||||
100 | 4,640,591 | (2,629,568 | ) | 2,011,023 |
Basis point decrease (1) | Interest Income | Interest Expense | Net increase (decrease) | ||||||
100 | (1,158,703 | ) | 2,629,568 | 1,470,865 |
September 30, 2017 | September 30, 2016 | |||||||||||||||
Interest Bearing Cash and Investments | Borrowings | Interest Bearing Cash and Investments | Borrowings | |||||||||||||
Money market rate | $ | 43,012,387 | $ | — | $ | 28,815,679 | $ | — | ||||||||
Prime rate | 490,693 | — | 543,445 | — | ||||||||||||
LIBOR: | ||||||||||||||||
30 day | 218,782,104 | 6,500,000 | — | — | ||||||||||||
60 day | 32,508,060 | — | — | |||||||||||||
90 day | 340,420,366 | 256,456,800 | 588,697,358 | 180,000,000 | ||||||||||||
180 day | — | — | — | 107,426,800 | ||||||||||||
Fixed rate | — | — | — | — | ||||||||||||
Total | $ | 635,213,610 | $ | 262,956,800 | $ | 618,056,482 | $ | 287,426,800 |
2 | ||||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
14 | ||||
21 |
1
To the Shareholders and Board of Directors Opinion on the Financial Statements We have audited the accompanying consolidated statements of assets and liabilities of Oaktree Strategic Income Corporation (the Company), including the Basis for Opinion These financial statements We conducted our audits Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence 2 and Shareholders of Oaktree Strategic Income CorporationIn our opinion,scheduleconsolidated schedules of investments, as of September 30, 2020 and 2019, the related consolidated statements of operations, of changes in net assets, and of cash flows present fairly, in all material respects, the financial position of Oaktree Strategic Income Corporation (formerly known as Fifth Street Senior Floating Rate Corp.) and its subsidiaries as of September 30, 2017 and 2016, and the results of their operations, the changes in their net assets and their cash flows for each of the three years in the period ended September 30, 2017 in conformity with accounting principles generally accepted in2020, and the United States of America.related notes (collectively referred to as the “consolidated financial statements”). In addition, in our opinion, the consolidated financial statement schedule listed in the accompanying index presentsstatements present fairly, in all material respects, the information set forth therein when readfinancial position of the Company at September 30, 2020 and 2019, and the results of its operations, changes in conjunctionits net assets, and its cash flows for each of the three years in the period ended September 30, 2020, in conformity with the related consolidated financial statements. U.S. generally accepted accounting principles. and financial statement schedule are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements and financial statement schedule based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Anmisstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit includesof its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our procedures included confirmation of investments owned as of September 30, 2020 and 2019 by correspondence with the custodians, syndication agents and underlying investee companies, and by other appropriate auditing procedures where confirmation was not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, andas well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits which included confirmation of securities as of September 30, 2017 by correspondence with the custodian, transfer agent and brokers and the application of alternative auditing procedures where confirmation had not been received, provide a reasonable basis for our opinion./s/ Ernst & Young LLP We have served as the Company’s auditor since 2018. Los Angeles, CA November 18, 2020
Oaktree Strategic Income Corporation
September 30, 2017 | September 30, 2016 | |||||||
ASSETS | ||||||||
Investments at fair value: | ||||||||
Control investments (cost September 30, 2017: $71,340,632; cost September 30, 2016: $71,117,506) | $ | 57,606,674 | $ | 63,316,667 | ||||
Affiliate investments (cost September 30, 2017: $17,479,053; cost September 30, 2016: $15,953,798) | 935,913 | 13,006,458 | ||||||
Non-control/Non-affiliate investments (cost September 30, 2017: $516,270,639; cost September 30, 2016: $513,397,659) | 501,894,073 | 497,281,256 | ||||||
Total investments at fair value (cost September 30, 2017: $605,090,324; cost September 30, 2016: $600,468,963) | 560,436,660 | 573,604,381 | ||||||
Cash and cash equivalents | 35,604,127 | 19,778,841 | ||||||
Restricted cash | 7,408,260 | 9,036,838 | ||||||
Interest, dividends and fees receivable | 3,014,075 | 4,579,935 | ||||||
Due from portfolio companies | 286,260 | 336,429 | ||||||
Receivables from unsettled transactions | 505,000 | 12,869,092 | ||||||
Deferred financing costs | 1,222,933 | 2,063,133 | ||||||
Other assets | 185,336 | 148,492 | ||||||
Total assets | $ | 608,662,651 | $ | 622,417,141 | ||||
LIABILITIES AND NET ASSETS | ||||||||
Liabilities: | ||||||||
Accounts payable, accrued expenses and other liabilities | $ | 482,877 | $ | 1,246,286 | ||||
Base management fee and incentive fee payable | 2,236,187 | 2,987,721 | ||||||
Due to FSC CT | 450,517 | 402,073 | ||||||
Interest payable | 1,996,171 | 1,798,653 | ||||||
Payables from unsettled transactions | 49,029,789 | — | ||||||
Amounts payable to syndication partners | — | 18,750 | ||||||
Director fees payable | 98,008 | 236,275 | ||||||
Credit facilities payable | 82,956,800 | 107,426,800 | ||||||
Notes payable (net of $2,224,132 and $2,514,236 of unamortized financing costs as of September 30, 2017 and September 30, 2016, respectively) | 177,775,868 | 177,485,764 | ||||||
Secured borrowings at fair value (proceeds September 30, 2016: $5,000,000) | — | 4,985,425 | ||||||
Total liabilities | 315,026,217 | 296,587,747 | ||||||
Commitments and contingencies (Note 13) | ||||||||
Net assets: | ||||||||
Common stock, $0.01 par value, 150,000,000 shares authorized; 29,466,768 shares issued and outstanding at September 30, 2017 and September 30, 2016 | 294,668 | 294,668 | ||||||
Additional paid-in-capital | 373,995,934 | 373,995,934 | ||||||
Net unrealized depreciation on investments and secured borrowings | (44,653,664 | ) | (26,850,007 | ) | ||||
Net realized loss on investments | (24,354,622 | ) | (10,969,707 | ) | ||||
Accumulated overdistributed net investment income | (11,645,882 | ) | (10,641,494 | ) | ||||
Total net assets (equivalent to $9.97 and $11.06 per common share at September 30, 2017 and September 30, 2016, respectively) (Note 12) | 293,636,434 | 325,829,394 | ||||||
Total liabilities and net assets | $ | 608,662,651 | $ | 622,417,141 |
September 30, 2020 | September 30, 2019 | |||||||
ASSETS | ||||||||
Investments at fair value: | ||||||||
Control investments (cost September 30, 2020: $72,157,302; cost September 30, 2019: $73,189,664) | $ | 49,409,901 | $ | 54,326,418 | ||||
Non-control/Non-affiliate investments (cost September 30, 2020: $466,907,805; cost September 30, 2019: $553,679,070) | 452,883,464 | 542,778,029 | ||||||
|
|
|
| |||||
Total investments at fair value (cost September 30, 2020: $539,065,107; cost September 30, 2019: $626,868,734) | 502,293,365 | 597,104,447 | ||||||
Cash and cash equivalents | 25,072,749 | 5,646,899 | ||||||
Restricted cash | 4,427,678 | 8,404,733 | ||||||
Interest, dividends and fees receivable | 1,273,014 | 3,813,730 | ||||||
Due from portfolio companies | 527,064 | 350,597 | ||||||
Receivables from unsettled transactions | 7,966,668 | 5,091,671 | ||||||
Deferred financing costs | 2,130,020 | 2,139,299 | ||||||
Deferred offering costs | 121,310 | — | ||||||
Derivative asset at fair value | — | 20,876 | ||||||
Other assets | 557,776 | 761,462 | ||||||
|
|
|
| |||||
Total assets | $ | 544,369,644 | $ | 623,333,714 | ||||
|
|
|
| |||||
LIABILITIES AND NET ASSETS | ||||||||
Liabilities: | ||||||||
Accounts payable, accrued expenses and other liabilities | $ | 1,401,709 | $ | 901,410 | ||||
Base management fee and incentive fee payable | 1,663,660 | 1,368,431 | ||||||
Due to affiliate | 1,165,838 | 1,457,007 | ||||||
Interest payable | 1,486,077 | 2,750,587 | ||||||
Payables from unsettled transactions | 4,254,635 | 37,724,473 | ||||||
Derivative liability at fair value | 129,936 | — | ||||||
Director fees payable | — | 25,000 | ||||||
Credit facilities payable | 256,656,800 | 294,656,800 | ||||||
Secured borrowings | 10,929,578 | — | ||||||
|
|
|
| |||||
Total liabilities | 277,688,233 | 338,883,708 | ||||||
Commitments and contingencies (Note 14) | ||||||||
Net assets: | ||||||||
Common stock, $0.01 par value per share, 150,000,000 shares authorized; 29,466,768 shares issued and outstanding as of September 30, 2020 and September 30, 2019 | 294,668 | 294,668 | ||||||
Additional paid-in-capital | 369,199,332 | 369,199,332 | ||||||
Accumulated overdistributed earnings | (102,812,589 | ) | (85,043,994 | ) | ||||
|
|
|
| |||||
Total net assets (equivalent to $9.05 and $9.65 per common share as of September 30, 2020 and September 30, 2019, respectively) (Note 12) | 266,681,411 | 284,450,006 | ||||||
|
|
|
| |||||
Total liabilities and net assets | $ | 544,369,644 | $ | 623,333,714 | ||||
|
|
|
|
See notes to Consolidated Financial Statements.
3
Oaktree Strategic Income Corporation
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | |||||||||||
Interest income: | |||||||||||||
Control investments | $ | 5,541,299 | $ | 5,065,350 | $ | 1,770,130 | |||||||
Affiliate investments | 331,804 | 182,194 | — | ||||||||||
Non-control/Non-affiliate investments | 38,489,924 | 42,152,565 | 39,269,556 | ||||||||||
Interest on cash and cash equivalents | 166,896 | 68,630 | 28,571 | ||||||||||
Total interest income | 44,529,923 | 47,468,739 | 41,068,257 | ||||||||||
PIK interest income: | |||||||||||||
Control investments | 223,125 | — | — | ||||||||||
Affiliate investments | 164,331 | 91,097 | — | ||||||||||
Non-control/Non-affiliate investments | 20,965 | 75,968 | — | ||||||||||
Total PIK interest income | 408,421 | 167,065 | — | ||||||||||
Fee income: | |||||||||||||
Affiliate investments | 9,647 | 6,296 | — | ||||||||||
Non-control/Non-affiliate investments | 2,199,909 | 3,071,634 | 9,673,649 | ||||||||||
Total fee income | 2,209,556 | 3,077,930 | 9,673,649 | ||||||||||
Dividend and other income: | |||||||||||||
Control investments | (576,044 | ) | 2,712,500 | 730,625 | |||||||||
Total dividend and other income | (576,044 | ) | 2,712,500 | 730,625 | |||||||||
Total investment income | 46,571,856 | 53,426,234 | 51,472,531 | ||||||||||
Expenses: | |||||||||||||
Base management fee | 5,654,699 | 6,134,304 | 5,931,155 | ||||||||||
Part I incentive fee | 3,236,320 | 5,211,729 | 5,689,371 | ||||||||||
Part II incentive fee | — | — | (766,552 | ) | |||||||||
Professional fees | 1,515,536 | 4,193,532 | 985,607 | ||||||||||
Board of Directors fees | 538,072 | 546,300 | 359,700 | ||||||||||
Interest expense | 10,769,842 | 9,594,441 | 8,950,703 | ||||||||||
Administrator expense | 661,170 | 504,299 | 794,725 | ||||||||||
General and administrative expenses | 2,030,756 | 1,955,177 | 1,249,792 | ||||||||||
Total expenses | 24,406,395 | 28,139,782 | 23,194,501 | ||||||||||
Base management fee waived | (6,232 | ) | (6,232 | ) | — | ||||||||
Insurance recoveries | (250,000 | ) | — | — | |||||||||
Net expenses | 24,150,163 | 28,133,550 | 23,194,501 | ||||||||||
Net investment income | 22,421,693 | 25,292,684 | 28,278,030 | ||||||||||
Unrealized appreciation (depreciation) on investments: | |||||||||||||
Control investments | (5,933,119 | ) | (5,979,787 | ) | (1,821,052 | ) | |||||||
Affiliate investments | (13,595,800 | ) | (2,947,340 | ) | — | ||||||||
Non-control/Non-affiliate investments | 1,739,837 | (8,067,972 | ) | (10,951,116 | ) | ||||||||
Net unrealized depreciation on investments | (17,789,082 | ) | (16,995,099 | ) | (12,772,168 | ) | |||||||
Net unrealized (appreciation) depreciation on secured borrowings | (14,575 | ) | 14,575 | — | |||||||||
Realized gain (loss) on investments and secured borrowings: | |||||||||||||
Non-control/Non-affiliate investments | (13,384,915 | ) | (12,769,777 | ) | 406,220 | ||||||||
Net realized gain (loss) on investments and secured borrowings | (13,384,915 | ) | (12,769,777 | ) | 406,220 | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | (8,766,879 | ) | $ | (4,457,617 | ) | $ | 15,912,082 | |||||
Net investment income per common share — basic and diluted | $ | 0.76 | $ | 0.86 | $ | 0.96 | |||||||
Earnings (loss) per common share — basic and diluted (Note 5) | $ | (0.30 | ) | $ | (0.15 | ) | $ | 0.54 | |||||
Weighted average common shares outstanding — basic and diluted | 29,466,768 | 29,466,768 | 29,466,768 | ||||||||||
Distributions per common share | $ | 0.80 | $ | 0.90 | $ | 1.07 |
Year ended September 30, 2020 | Year ended September 30, 2019 | Year ended September 30, 2018 | ||||||||||
Interest income: | ||||||||||||
Control investments | $ | 1,436,726 | $ | 5,945,194 | $ | 3,970,056 | ||||||
Non-control/Non-affiliate investments | 34,892,600 | 42,847,646 | 39,139,739 | |||||||||
Interest on cash and cash equivalents | 61,971 | 202,213 | 273,552 | |||||||||
|
|
|
|
|
| |||||||
Total interest income | 36,391,297 | 48,995,053 | 43,383,347 | |||||||||
|
|
|
|
|
| |||||||
PIK interest income: | ||||||||||||
Control investments | — | — | 2,161,339 | |||||||||
Non-control/Non-affiliate investments | 1,983,129 | 26,220 | 26,059 | |||||||||
|
|
|
|
|
| |||||||
Total PIK interest income | 1,983,129 | 26,220 | 2,187,398 | |||||||||
Fee income: | ||||||||||||
Affiliate investments | — | — | 14,822 | |||||||||
Non-control/Non-affiliate investments | 1,153,610 | 606,197 | 2,084,980 | |||||||||
|
|
|
|
|
| |||||||
Total fee income | 1,153,610 | 606,197 | 2,099,802 | |||||||||
|
|
|
|
|
| |||||||
Dividend income: | ||||||||||||
Non-control/Non-affiliate investments | 6,008 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total dividend income | 6,008 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total investment income | 39,534,044 | 49,627,470 | 47,670,547 | |||||||||
|
|
|
|
|
| |||||||
Expenses: | ||||||||||||
Base management fee | 5,642,982 | 5,875,236 | 5,657,786 | |||||||||
Part I incentive fee | 1,873,858 | 4,293,999 | 2,923,076 | |||||||||
Professional fees | 1,316,387 | 1,534,958 | 2,691,950 | |||||||||
Directors fees | 420,000 | 420,278 | 479,093 | |||||||||
Interest expense | 12,431,910 | 14,528,318 | 14,379,881 | |||||||||
Administrator expense | 911,612 | 1,121,984 | 1,085,819 | |||||||||
General and administrative expenses | 1,055,916 | 1,201,721 | 1,383,871 | |||||||||
|
|
|
|
|
| |||||||
Total expenses | 23,652,665 | 28,976,494 | 28,601,476 | |||||||||
Fees waived | (322,121 | ) | (489,275 | ) | (702,261 | ) | ||||||
|
|
|
|
|
| |||||||
Net expenses | 23,330,544 | 28,487,219 | 27,899,215 | |||||||||
|
|
|
|
|
| |||||||
Net investment income | 16,203,500 | 21,140,251 | 19,771,332 | |||||||||
|
|
|
|
|
| |||||||
Unrealized appreciation (depreciation): | ||||||||||||
Control investments | (3,884,155 | ) | (3,873,446 | ) | (1,255,842 | ) | ||||||
Affiliate investments | — | — | 16,543,140 | |||||||||
Non-control/Non-affiliate investments | (3,123,300 | ) | (9,806,905 | ) | 13,282,430 | |||||||
Foreign currency forward contract | (150,812 | ) | (24,931 | ) | 45,807 | |||||||
|
|
|
|
|
| |||||||
Net unrealized appreciation (depreciation) | (7,158,267 | ) | (13,705,282 | ) | 28,615,535 | |||||||
|
|
|
|
|
| |||||||
Realized gains (losses): | ||||||||||||
Affiliate investments | — | — | (15,914,916 | ) | ||||||||
Non-control/Non-affiliate investments | (10,326,109 | ) | (943,588 | ) | (11,675,522 | ) | ||||||
Foreign currency forward contract | 13,673 | 482,601 | (123,380 | ) | ||||||||
|
|
|
|
|
| |||||||
Net realized gains (losses) | (10,312,436 | ) | (460,987 | ) | (27,713,818 | ) | ||||||
|
|
|
|
|
| |||||||
Net realized and unrealized gains (losses) | (17,470,703 | ) | (14,166,269 | ) | 901,717 | |||||||
|
|
|
|
|
| |||||||
Net increase (decrease) in net assets resulting from operations | $ | (1,267,203 | ) | $ | 6,973,982 | $ | 20,673,049 | |||||
|
|
|
|
|
| |||||||
Net investment income per common share — basic and diluted | $ | 0.55 | $ | 0.72 | $ | 0.67 | ||||||
Earnings (loss) per common share — basic and diluted (Note 5) | $ | (0.04 | ) | $ | 0.24 | $ | 0.70 | |||||
Weighted average common shares outstanding — basic and diluted | 29,466,768 | 29,466,768 | 29,466,768 |
See notes to Consolidated Financial Statements.
4
Oaktree Strategic Income Corporation
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | ||||||||||
Operations: | ||||||||||||
Net investment income | $ | 22,421,693 | $ | 25,292,684 | $ | 28,278,030 | ||||||
Net unrealized depreciation on investments | (17,789,082 | ) | (16,995,099 | ) | (12,772,168 | ) | ||||||
Net unrealized (appreciation) depreciation on secured borrowings | (14,575 | ) | 14,575 | — | ||||||||
Net realized gain (loss) on investments and secured borrowings | (13,384,915 | ) | (12,769,777 | ) | 406,220 | |||||||
Net increase (decrease) in net assets resulting from operations | (8,766,879 | ) | (4,457,617 | ) | 15,912,082 | |||||||
Stockholder transactions: | ||||||||||||
Distributions to stockholders | (23,426,081 | ) | (26,520,092 | ) | (31,676,775 | ) | ||||||
Net decrease in net assets from stockholder transactions | (23,426,081 | ) | (26,520,092 | ) | (31,676,775 | ) | ||||||
Capital share transactions: | ||||||||||||
Issuance of common stock, net | — | — | (105,882 | ) | ||||||||
Issuance of common stock under dividend reinvestment plan | 270,630 | 650,402 | 889,511 | |||||||||
Repurchases of common stock under dividend reinvestment plan | (270,630 | ) | (650,402 | ) | (889,511 | ) | ||||||
Net decrease in net assets from capital share transactions | — | — | (105,882 | ) | ||||||||
Total decrease in net assets | (32,192,960 | ) | (30,977,709 | ) | (15,870,575 | ) | ||||||
Net assets at beginning of period | 325,829,394 | 356,807,103 | 372,677,678 | |||||||||
Net assets at end of period | $ | 293,636,434 | $ | 325,829,394 | $ | 356,807,103 | ||||||
Net asset value per common share | $ | 9.97 | $ | 11.06 | $ | 12.11 | ||||||
Common shares outstanding at end of period | 29,466,768 | 29,466,768 | 29,466,768 |
Year ended September 30, 2020 | Year ended September 30, 2019 | Year ended September 30, 2018 | ||||||||||
Operations: | ||||||||||||
Net investment income | $ | 16,203,500 | $ | 21,140,251 | $ | 19,771,332 | ||||||
Net unrealized appreciation (depreciation) | (7,158,267 | ) | (13,705,282 | ) | 28,615,535 | |||||||
Net realized gains (losses) | (10,312,436 | ) | (460,987 | ) | (27,713,818 | ) | ||||||
|
|
|
|
|
| |||||||
Net increase (decrease) in net assets resulting from operations | (1,267,203 | ) | 6,973,982 | 20,673,049 | ||||||||
|
|
|
|
|
| |||||||
Stockholder transactions: | ||||||||||||
Distributions to stockholders | (16,501,392 | ) | (18,269,396 | ) | (16,452,988 | ) | ||||||
Tax return of capital | — | — | (2,111,075 | ) | ||||||||
|
|
|
|
|
| |||||||
Net increase (decrease) in net assets from stockholder transactions | (16,501,392 | ) | (18,269,396 | ) | (18,564,063 | ) | ||||||
|
|
|
|
|
| |||||||
Capital share transactions: | ||||||||||||
Issuance of common stock under dividend reinvestment plan | 291,848 | 215,067 | 281,737 | |||||||||
Repurchases of common stock under dividend reinvestment plan | (291,848 | ) | (215,067 | ) | (281,737 | ) | ||||||
|
|
|
|
|
| |||||||
Net change in net assets from capital share transactions | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total increase (decrease) in net assets | (17,768,595 | ) | (11,295,414 | ) | 2,108,986 | |||||||
Net assets at beginning of period | 284,450,006 | 295,745,420 | 293,636,434 | |||||||||
|
|
|
|
|
| |||||||
Net assets at end of period | $ | 266,681,411 | $ | 284,450,006 | $ | 295,745,420 | ||||||
|
|
|
|
|
| |||||||
Net asset value per common share | $ | 9.05 | $ | 9.65 | $ | 10.04 | ||||||
|
|
|
|
|
| |||||||
Common shares outstanding at end of period | 29,466,768 | 29,466,768 | 29,466,768 |
See notes to Consolidated Financial Statements.
5
Oaktree Strategic Income Corporation
Consolidated Statements of Cash Flows
Year ended September 30, 2020 | Year ended September 30, 2019 | Year ended September 30, 2018 | ||||||||||
Operating activities: | ||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (1,267,203 | ) | $ | 6,973,982 | $ | 20,673,049 | |||||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | ||||||||||||
Net unrealized (appreciation) depreciation | 7,158,267 | 13,705,282 | (28,615,535 | ) | ||||||||
Net realized (gains) losses | 10,312,436 | 460,987 | 27,713,818 | |||||||||
PIK interest income | (1,983,129 | ) | (26,220 | ) | (2,187,398 | ) | ||||||
Deferred fee income | — | — | 182,004 | |||||||||
Accretion of original issue discount on investments | (1,488,128 | ) | (2,226,783 | ) | (2,846,469 | ) | ||||||
Amortization of deferred financing costs | 1,283,258 | 618,376 | 2,745,365 | |||||||||
Purchases of investments | (223,983,589 | ) | (249,144,958 | ) | (455,031,026 | ) | ||||||
Proceeds from the sales and repayments of investments | 304,685,202 | 196,995,385 | 464,333,631 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
(Increase) decrease in interest, dividends and fees receivable | 2,658,062 | (674,396 | ) | (125,259 | ) | |||||||
(Increase) decrease in due from portfolio companies | (176,467 | ) | (182,651 | ) | 118,314 | |||||||
(Increase) decrease in receivables from unsettled transactions | (2,874,997 | ) | 51,862 | (4,638,533 | ) | |||||||
(Increase) decrease in other assets | 203,686 | 130,498 | (706,624 | ) | ||||||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | (127,501 | ) | (26,371 | ) | 166,904 | |||||||
Increase (decrease) in base management fee and incentive fee payable | 295,229 | (547,251 | ) | (320,505 | ) | |||||||
Increase (decrease) in due to affiliate | (291,169 | ) | (243,945 | ) | 1,250,435 | |||||||
Increase (decrease) in interest payable | (1,264,510 | ) | 1,619,852 | (865,436 | ) | |||||||
Increase (decrease) in payables from unsettled transactions | (33,469,838 | ) | 28,791,973 | (40,097,289 | ) | |||||||
Increase (decrease) in director fees payable | (25,000 | ) | 25,000 | (98,008 | ) | |||||||
|
|
|
|
|
| |||||||
Net cash provided by (used in) operating activities | 59,644,609 | (3,699,378 | ) | (18,348,562 | ) | |||||||
|
|
|
|
|
| |||||||
Financing activities: | ||||||||||||
Distributions paid in cash | (16,209,544 | ) | (18,054,329 | ) | (18,282,326 | ) | ||||||
Borrowings under credit facilities | 79,500,000 | 122,100,000 | 311,000,000 | |||||||||
Repayments of borrowings under credit facilities | (117,500,000 | ) | (102,500,000 | ) | (118,900,000 | ) | ||||||
Proceeds from secured borrowings | 10,929,578 | — | — | |||||||||
Proceeds from issuance of notes payable | — | — | 3,000,000 | |||||||||
Repayments of notes payable | — | — | (183,000,000 | ) | ||||||||
Repurchases of common stock under dividend reinvestment plan | (291,848 | ) | (215,067 | ) | (281,737 | ) | ||||||
Deferred financing costs paid | (646,179 | ) | (10,000 | ) | (1,767,975 | ) | ||||||
Offering costs paid | (121,310 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Net cash provided by (used in) financing activities | (44,339,303 | ) | 1,320,604 | (8,232,038 | ) | |||||||
|
|
|
|
|
| |||||||
Effect of exchange rate changes on foreign currency | 143,489 | (1,381 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 15,448,795 | (2,380,155 | ) | (26,580,600 | ) | |||||||
|
|
|
|
|
| |||||||
Cash and cash equivalents and restricted cash, beginning of period | 14,051,632 | 16,431,787 | 43,012,387 | |||||||||
|
|
|
| �� |
| |||||||
Cash and cash equivalents and restricted cash, end of period | $ | 29,500,427 | $ | 14,051,632 | $ | 16,431,787 | ||||||
|
|
|
|
|
| |||||||
Supplemental information: | ||||||||||||
Cash paid for interest | $ | 12,413,162 | $ | 12,290,090 | $ | 12,499,952 | ||||||
Non-cash financing activities: | ||||||||||||
Issuance of shares of common stock under dividend reinvestment plan | $ | 291,848 | $ | 215,067 | $ | 281,737 | ||||||
Deferred financing costs incurred | (627,800 | ) | (278,000 | ) | — | |||||||
Reconciliation to the Consolidated Statements of Assets and Liabilities | September 30, 2020 | September 30, 2019 | September 30, 2018 | |||||||||
Cash and cash equivalents | $ | 25,072,749 | $ | 5,646,899 | $ | 10,439,023 | ||||||
Restricted cash | 4,427,678 | 8,404,733 | 5,992,764 | |||||||||
|
|
|
|
|
| |||||||
Total cash and cash equivalents and restricted cash | $ | 29,500,427 | $ | 14,051,632 | $ | 16,431,787 | ||||||
|
|
|
|
|
| |||||||
See notes to Consolidated Financial Statements. |
|
6
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | ||||||||||
Operating activities: | ||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (8,766,879 | ) | $ | (4,457,617 | ) | $ | 15,912,082 | ||||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided (used) by operating activities: | ||||||||||||
Net unrealized depreciation on investments | 17,789,082 | 16,995,099 | 12,772,168 | |||||||||
Net unrealized appreciation (depreciation) on secured borrowings | 14,575 | (14,575 | ) | — | ||||||||
Net realized (gain) loss on investments and secured borrowings | 13,384,915 | 12,769,777 | (406,220 | ) | ||||||||
PIK interest income | (408,421 | ) | (167,065 | ) | — | |||||||
Recognition of fee income | (2,209,556 | ) | (3,077,930 | ) | (9,673,649 | ) | ||||||
Accretion of original issue discount on investments | (3,945,886 | ) | (1,924,087 | ) | (1,634,191 | ) | ||||||
Amortization of deferred financing costs | 1,255,304 | 874,680 | 2,768,573 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Fee income received | 2,190,276 | 3,060,760 | 9,767,645 | |||||||||
(Increase) decrease in restricted cash | 1,628,578 | 2,221,958 | (9,131,391 | ) | ||||||||
(Increase) decrease in interest, dividends and fees receivable | 1,565,860 | (1,796,556 | ) | (1,663,369 | ) | |||||||
(Increase) decrease in due from portfolio companies | 50,169 | (324,842 | ) | 189,253 | ||||||||
(Increase) decrease in receivables from unsettled transactions | 12,364,092 | 5,671,964 | (13,541,056 | ) | ||||||||
Increase in other assets | (36,844 | ) | (115,276 | ) | (33,216 | ) | ||||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | (763,409 | ) | (665,313 | ) | 697,916 | |||||||
Increase (decrease) in base management fee and incentive fee payable | (751,534 | ) | 932,542 | 589,489 | ||||||||
Increase in due to FSC CT | 48,444 | 22,432 | 140,024 | |||||||||
Increase in interest payable | 197,518 | 129,641 | 1,463,366 | |||||||||
Increase (decrease) in payables from unsettled transactions | 49,029,789 | (11,809,500 | ) | (16,053,500 | ) | |||||||
Increase (decrease) in amounts payable to syndication partners | (18,750 | ) | 18,750 | — | ||||||||
Increase (decrease) in director fees payable | (138,267 | ) | 183,625 | 52,650 | ||||||||
Purchases of investments and net revolver activity | (290,578,883 | ) | (286,134,332 | ) | (886,999,491 | ) | ||||||
Principal payments received on investments (scheduled payments) | 16,222,229 | 12,221,079 | 11,677,139 | |||||||||
Principal payments received on investments (payoffs) | 215,278,210 | 132,931,016 | 60,488,532 | |||||||||
PIK interest income received in cash | — | 78,226 | — | |||||||||
Proceeds from the sale of investments | 45,445,755 | 163,290,550 | 480,361,990 | |||||||||
Net cash provided (used) by operating activities | 68,846,367 | 40,915,006 | (342,255,256 | ) | ||||||||
Financing activities: | ||||||||||||
Distributions paid in cash | (23,155,451 | ) | (25,869,690 | ) | (39,436,200 | ) | ||||||
Borrowings under credit facilities | 55,500,000 | 16,267,000 | 428,509,800 | |||||||||
Repayments of borrowings under credit facilities | (79,970,000 | ) | (45,500,000 | ) | (291,850,000 | ) | ||||||
Repayments of secured borrowings | (5,000,000 | ) | — | — | ||||||||
Proceeds from issuance of notes payable | 7,500,000 | 29,715,000 | 186,366,000 | |||||||||
Repayments of notes payable | (7,500,000 | ) | (36,081,000 | ) | — | |||||||
Repurchases of common stock under dividend reinvestment plan | (270,630 | ) | (650,402 | ) | (1,080,605 | ) | ||||||
Deferred financing costs paid | (125,000 | ) | (450,374 | ) | (6,144,316 | ) | ||||||
Offering costs paid | — | — | (105,882 | ) | ||||||||
Net cash provided (used) by financing activities | (53,021,081 | ) | (62,569,466 | ) | 276,258,797 | |||||||
Net increase (decrease) in cash and cash equivalents | 15,825,286 | (21,654,460 | ) | (65,996,459 | ) | |||||||
Cash and cash equivalents, beginning of period | 19,778,841 | 41,433,301 | 107,429,760 | |||||||||
Cash and cash equivalents, end of period | $ | 35,604,127 | $ | 19,778,841 | $ | 41,433,301 |
Consolidated StatementsSchedule of Cash FlowsInvestments
September 30, 2020
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
Control Investments | (8) | |||||||||||||||||||||
OCSI Glick JV LLC | Multi-Sector Holdings | (10)(11) | ||||||||||||||||||||
Subordinated Note, LIBOR+4.50% cash due 10/20/2028 | $ | 65,045,551 | $ | 65,045,551 | $ | 49,409,901 | (6)(9)(14)(15)(16) | |||||||||||||||
87.5% equity interest | 7,111,751 | — | (9)(12)(14) | |||||||||||||||||||
|
|
|
| |||||||||||||||||||
72,157,302 | 49,409,901 | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||
Total Control Investments (18.5% of net assets) | $ | 72,157,302 | $ | 49,409,901 | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
Non-Control/Non-Affiliate Investments | (13) | |||||||||||||||||||||
4 Over International, LLC | Commercial Printing | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022 | 7.00 | % | $ | 5,492,885 | $ | 5,432,331 | $ | 5,094,651 | (6)(15) | |||||||||||||
First Lien Revolver, LIBOR+6.00% cash due 6/7/2021 | 7.00 | % | 68,452 | 67,950 | 63,489 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,500,281 | 5,158,140 | |||||||||||||||||||||
99 Cents Only Stores LLC | General Merchandise Stores | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash 1.50% PIK due 1/13/2022 | 6.00 | % | 1,635,810 | 1,593,419 | 1,504,945 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
1,593,419 | 1,504,945 | |||||||||||||||||||||
Access CIG, LLC | Diversified Support Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025 | 3.91 | % | 5,406,946 | 5,370,428 | 5,303,052 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,370,428 | 5,303,052 | |||||||||||||||||||||
Accupac, Inc. | Personal Products | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.00% cash due 1/17/2026 | 7.00 | % | 3,816,685 | 3,757,755 | 3,816,685 | (6)(15) | ||||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 1/17/2026 | — | (11,070) | — | (6)(14)(15) | ||||||||||||||||||
First Lien Revolver, LIBOR+6.00% cash due 1/17/2026 | 7.00 | % | 477,989 | 470,609 | 477,989 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,217,294 | 4,294,674 | |||||||||||||||||||||
AI Ladder (Luxembourg) Subco S.a.r.l. | Electrical Components & Equipment | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 | 4.65 | % | 6,412,119 | 6,280,139 | 6,139,604 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
6,280,139 | 6,139,604 | |||||||||||||||||||||
Airbnb, Inc. | Hotels, Resorts & Cruise Lines | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025 | 8.50 | % | 4,755,083 | 4,645,028 | 5,159,265 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,645,028 | 5,159,265 | |||||||||||||||||||||
Aldevron, L.L.C. | Biotechnology | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 10/12/2026 | 5.25 | % | 5,493,198 | 5,449,615 | 5,504,624 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,449,615 | 5,504,624 | |||||||||||||||||||||
All Web Leads, Inc. | Advertising | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash 2.0% PIK due 12/29/2023 | 6.50 | % | 24,174,889 | 24,174,863 | 22,317,000 | (6)(15)(18) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
24,174,863 | 22,317,000 | |||||||||||||||||||||
Amplify Finco Pty Ltd. | Movies & Entertainment | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026 | 4.75 | % | 5,970,000 | 5,910,300 | 5,134,200 | (6)(9)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,910,300 | 5,134,200 | |||||||||||||||||||||
Ancile Solutions, Inc. | Application Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021 | 8.00 | % | 7,825,529 | 7,747,218 | 7,770,750 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,747,218 | 7,770,750 | |||||||||||||||||||||
Apptio, Inc. | Application Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025 | 8.25 | % | 10,693,944 | 10,539,199 | 10,483,861 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025 | — | (9,867) | (13,600) | (6)(14)(15) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
10,529,332 | 10,470,261 | |||||||||||||||||||||
Ardonagh Midco 3 PLC | Insurance Brokers | |||||||||||||||||||||
First Lien Term Loan, EURIBOR+7.50% cash due 7/14/2026 | 8.50 | % | € | 480,000 | 531,300 | 546,549 | (6)(9)(15) | |||||||||||||||
First Lien Term Loan, UK LIBOR+7.50% cash due 7/14/2026 | 8.25 | % | £ | 3,767,573 | 4,584,049 | 4,729,468 | (6)(9)(15)(18) | |||||||||||||||
First Lien Delayed Draw Term Loan, UK LIBOR+7.50% cash due 7/14/2026 | £ | — | — | — | (6)(9)(14)(15) | |||||||||||||||||
|
|
|
| |||||||||||||||||||
5,115,349 | 5,276,017 |
7
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | ||||||||||
Supplemental information: | ||||||||||||
Cash paid for interest | $ | 9,317,020 | $ | 8,590,120 | $ | 4,718,763 | ||||||
Non-cash operating activities: | ||||||||||||
Purchase of investment from restructuring | $ | — | $ | (12,559,122 | ) | $ | — | |||||
Proceeds from investment restructuring | $ | — | $ | 12,559,122 | $ | — | ||||||
Exchange of investments | $ | — | $ | 1,325,000 | $ | 58,823,756 | ||||||
Non-cash financing activities: | ||||||||||||
Proceeds from unsettled secured borrowings | $ | — | $ | 5,000,000 | $ | — | ||||||
Issuance of shares of common stock under dividend reinvestment plan | $ | 270,630 | $ | 650,402 | $ | 1,080,605 |
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 20172020
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
Athenex, Inc. | Pharmaceuticals | |||||||||||||||||||||
First Lien Term Loan, 11.00% cash due 6/19/2026 | $ | 5,316,814 | $ | 5,094,543 | $ | 5,276,938 | (9)(15) | |||||||||||||||
First Lien Delayed Draw Term Loan, 11.00% cash due 6/19/2026 | 1,329,204 | 1,198,792 | 1,279,359 | (9)(14)(15) | ||||||||||||||||||
62,097 Common Stock Warrants (exercise price $12.63) expiration date 6/19/2027 | 213,614 | 183,186 | (9)(15) | |||||||||||||||||||
|
|
|
| |||||||||||||||||||
6,506,949 | 6,739,483 | |||||||||||||||||||||
Ball Metalpack Finco, LLC | Metal & Glass Containers | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 7/31/2025 | 4.76 | % | 3,424,981 | 3,413,060 | 3,308,532 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,413,060 | 3,308,532 | |||||||||||||||||||||
Blackhawk Network Holdings, Inc. | Data Processing & Outsourced Services | |||||||||||||||||||||
Second Lien Term Loan, LIBOR+7.00% cash due 6/15/2026 | 7.19 | % | 4,375,000 | 4,341,470 | 4,025,000 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,341,470 | 4,025,000 | |||||||||||||||||||||
Boxer Parent Company Inc. | Systems Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025 | 4.40 | % | 6,057,113 | 5,992,780 | 5,895,357 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,992,780 | 5,895,357 | |||||||||||||||||||||
Cadence Aerospace, LLC | Aerospace & Defense | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.25% cash 5.25% PIK due 11/14/2023 | 4.25 | % | 13,590,961 | 13,499,354 | 12,481,939 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
13,499,354 | 12,481,939 | |||||||||||||||||||||
Carrols Restaurant Group, Inc. | Restaurants | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026 | 7.25 | % | 3,577,035 | 3,398,183 | 3,550,207 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,398,183 | 3,550,207 | |||||||||||||||||||||
Chief Power Finance II, LLC | Independent Power Producers & Energy Traders | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.50% cash due 12/31/2022 | 7.50 | % | 3,325,000 | 3,265,964 | 3,167,063 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,265,964 | 3,167,063 | |||||||||||||||||||||
CircusTrix Holdings LLC | �� | Leisure Facilities | ||||||||||||||||||||
First Lien Term Loan, LIBOR+6.75% PIK due 12/16/2021 | 9,434,200 | 9,402,902 | 7,260,560 | (6)(15) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
9,402,902 | 7,260,560 | |||||||||||||||||||||
CITGO Petroleum Corp. | Oil & Gas Refining & Marketing | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 | 6.00 | % | 5,387,652 | 5,333,776 | 5,131,738 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,333,776 | 5,131,738 | |||||||||||||||||||||
Connect U.S. Finco LLC | Alternative Carriers | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026 | 5.50 | % | 1,340,037 | 1,278,156 | 1,302,355 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
1,278,156 | 1,302,355 | |||||||||||||||||||||
Continental Intermodal Group LP | Oil & Gas Storage & Transportation | |||||||||||||||||||||
First Lien Term Loan, LIBOR+9.50% PIK due 1/28/2025 | 10,224,899 | 10,224,899 | 8,989,731 | (6)(15) | ||||||||||||||||||
Common Stock Warrants expiration date 7/28/2025 | — | 690,993 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||
10,224,899 | 9,680,724 | |||||||||||||||||||||
Coyote Buyer, LLC | Specialty Chemicals | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.00% cash due 2/6/2026 | 7.00 | % | 5,450,344 | 5,395,841 | 5,395,841 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+6.00% cash due 2/6/2025 | — | (3,913) | (3,913) | (6)(14)(15) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
5,391,928 | 5,391,928 | |||||||||||||||||||||
CPI Holdco, LLC | Health Care Supplies | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 11/4/2026 | 4.40 | % | 5,894,380 | 5,869,505 | 5,875,960 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,869,505 | 5,875,960 |
8
Portfolio Company/Type of Investment (1)(2)(9)(10)(14) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Control Investments (3) | ||||||||||||||||
FSFR Glick JV LLC (7)(12)(15) | Multi-sector holdings | |||||||||||||||
Subordinated Note, LIBOR+8% cash due 10/20/2021 (8) | 9.23% | $ | 64,228,881 | $ | 64,228,881 | $ | 57,606,674 | |||||||||
87.5% equity interest | 7,111,751 | — | ||||||||||||||
71,340,632 | 57,606,674 | |||||||||||||||
Total Control Investments (19.6% of net assets) | $ | 71,340,632 | $ | 57,606,674 | ||||||||||||
Affiliate Investments (4) | ||||||||||||||||
Ameritox Ltd. | Healthcare services | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 (8)(13) | 6.33% | 8,071,313 | $ | 7,906,087 | $ | 935,913 | ||||||||||
3,309,873.6 Class A Preferred Units in Ameritox Holdings II, LLC | 3,309,874 | — | ||||||||||||||
327,393.6 Class B Preferred Units in Ameritox Holdings II, LLC | 327,394 | — | ||||||||||||||
1,007.36 Class A Units in Ameritox Holdings II, LLC | 5,935,698 | — | ||||||||||||||
17,479,053 | 935,913 | |||||||||||||||
Total Affiliate Investments (0.3% of net assets) | $ | 17,479,053 | $ | 935,913 | ||||||||||||
Non-Control/Non-Affiliate Investments (6) | ||||||||||||||||
Triple Point Group Holdings, Inc. | Application software | |||||||||||||||
First Lien Revolver, LIBOR+4.25% (1% floor) cash due 7/10/2018 (8)(11) | 5.25% | $ | — | $ | (437,932 | ) | ||||||||||
— | (437,932 | ) | ||||||||||||||
New Trident Holdcorp, Inc. | Healthcare services | |||||||||||||||
First Lien Term Loan B, LIBOR+5.75% (1.25% floor) cash due 7/31/2019 (8)(13)(16) | 7.08% | 13,552,077 | 13,285,041 | 9,757,495 | ||||||||||||
Second Lien Term Loan, LIBOR+9.5% (1.25% floor) cash due 7/31/2020 (8)(16) | 10.83% | 1,000,000 | 950,590 | 50,000 | ||||||||||||
14,235,631 | 9,807,495 | |||||||||||||||
Survey Sampling International, LLC | Research & consulting services | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 12/16/2020 (8)(13) | 6.27% | 5,668,523 | 5,642,223 | 5,583,495 | ||||||||||||
Second Lien Term Loan, LIBOR+9% (1% floor) cash due 12/16/2021 (8) | 10.27% | 1,000,000 | 988,095 | 990,000 | ||||||||||||
6,630,318 | 6,573,495 | |||||||||||||||
Maxor National Pharmacy Services, LLC | Pharmaceuticals | |||||||||||||||
First Lien Term Loan, LIBOR+4.75% (1.25% floor) cash due 1/31/2020 (8)(13) | 6.08% | 9,068,650 | 9,068,650 | 9,038,634 | ||||||||||||
9,068,650 | 9,038,634 | |||||||||||||||
NextCare, Inc. | Healthcare services | |||||||||||||||
Senior Term Loan, LIBOR+6% (1% floor) cash due 7/31/2018 (8)(13) | 7.24% | 6,957,971 | 6,957,970 | 6,667,987 | ||||||||||||
Delayed Draw Term Loan, LIBOR+6% (1% floor) cash due 7/31/2018 (8) | 7.24% | 1,393,853 | 1,393,853 | 1,322,900 | ||||||||||||
8,351,823 | 7,990,887 | |||||||||||||||
Aptean, Inc. | Application software | |||||||||||||||
First Lien Term Loan, LIBOR+4.25% (1% floor) cash due 12/20/2022 (8)(13) | 5.59% | 11,243,500 | 11,170,440 | 11,323,161 | ||||||||||||
Second Lien Term Loan, LIBOR+9.5% (1% floor) cash due 12/20/2023 (8) | 10.84% | 200,000 | 197,320 | 201,750 | ||||||||||||
11,367,760 | 11,524,911 | |||||||||||||||
Stratus Technologies, Inc. | Computer hardware | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 4/28/2021 (8)(13) | 6.24% | 1,315,119 | 1,279,988 | 1,324,983 | ||||||||||||
1,279,988 | 1,324,983 |
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 20172020
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
CTOS, LLC | Trading Companies & Distributors | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 4/18/2025 | 4.40 | % | $ | 8,731,138 | $ | 8,827,767 | $ | 8,671,111 | (6) | |||||||||||||
|
|
|
| |||||||||||||||||||
8,827,767 | 8,671,111 | |||||||||||||||||||||
Curium Bidco S.à.r.l. | Biotechnology | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026 | 3.97 | % | 3,960,000 | 3,930,300 | 3,930,300 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,930,300 | 3,930,300 | |||||||||||||||||||||
Dealer Tire, LLC | Distributors | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 12/12/2025 | 4.40 | % | 8,851,404 | 8,760,175 | 8,674,375 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
8,760,175 | 8,674,375 | |||||||||||||||||||||
EnergySolutions LLC | Environmental & Facilities Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 5/9/2025 | 4.75 | % | 3,910,000 | 3,897,041 | 3,753,600 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,897,041 | 3,753,600 | |||||||||||||||||||||
eResearch Technology, Inc. | Application Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027 | 5.50 | % | 3,990,000 | 3,950,100 | 3,979,187 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,950,100 | 3,979,187 | |||||||||||||||||||||
Firstlight Holdco, Inc. | Alternative Carriers | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.50% cash due 7/23/2025 | 3.65 | % | 7,084,337 | 7,059,645 | 6,827,530 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,059,645 | 6,827,530 | |||||||||||||||||||||
Fortress Biotech, Inc. | Biotechnology | |||||||||||||||||||||
First Lien Term Loan, 11.00% cash due 8/27/2025 | 3,013,000 | 2,831,219 | 2,854,818 | (9)(15)(18) | ||||||||||||||||||
87,852 Common Stock Warrants (exercise price $3.20) expiration date 8/27/2030 | 93,123 | 151,105 | (9)(15) | |||||||||||||||||||
|
|
|
| |||||||||||||||||||
2,924,342 | 3,005,923 | |||||||||||||||||||||
GI Chill Acquisition LLC | Managed Health Care | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025 | 4.22 | % | 2,969,697 | 2,947,424 | 2,917,727 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
2,947,424 | 2,917,727 | |||||||||||||||||||||
GKD Index Partners, LLC | Specialized Finance | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.00% cash due 6/29/2023 | 8.00 | % | 8,051,177 | 8,007,041 | 7,914,307 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+7.00% cash due 6/29/2023 | 8.00 | % | 355,556 | 352,069 | 347,556 | (6)(14)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
8,359,110 | 8,261,863 | |||||||||||||||||||||
Global Medical Response | Health Care Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 3/14/2025 | 5.25 | % | 2,463,340 | 2,422,270 | 2,395,598 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
2,422,270 | 2,395,598 | |||||||||||||||||||||
Guidehouse LLP | Research & Consulting Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 5/1/2025 | 4.65 | % | 2,474,683 | 2,453,364 | 2,456,135 | (6) | ||||||||||||||||
Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026 | 8.15 | % | 5,000,000 | 4,982,443 | 4,825,000 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,435,807 | 7,281,135 | |||||||||||||||||||||
Gulf Operating, LLC | Oil & Gas Storage & Transportation | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.25% cash due 8/25/2023 | 6.25 | % | 1,316,869 | 751,248 | 934,430 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
751,248 | 934,430 | |||||||||||||||||||||
Helios Software Holdings, Inc. | Systems Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025 | 4.52 | % | 3,969,690 | 3,929,993 | 3,922,570 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,929,993 | 3,922,570 | |||||||||||||||||||||
iCIMs, Inc. | Application Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.50% cash due 9/12/2024 | 7.50 | % | 5,572,549 | 5,497,575 | 5,527,968 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+6.50% cash due 9/12/2024 | — | (4,940) | (2,353) | (6)(14)(15) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
5,492,635 | 5,525,615 | |||||||||||||||||||||
Immucor, Inc. | Health Care Supplies | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.75% cash due 7/2/2025 | 6.75 | % | 2,267,567 | 2,224,475 | 2,222,215 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+5.75% cash due 7/2/2025 | — | (3,600) | (3,789) | (6)(14)(15) | ||||||||||||||||||
Second Lien Term Loan, LIBOR+8.00% cash 3.50% PIK due 10/2/2025 | 9.00 | % | 5,465,318 | 5,362,101 | 5,356,011 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,582,976 | 7,574,437 |
9
Portfolio Company/Type of Investment (1)(2)(9)(10)(14) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
TravelCLICK, Inc. | Internet software & services | |||||||||||||||
Second Lien Term Loan, LIBOR+7.75% (1% floor) cash due 11/6/2021 (8)(13) | 8.99% | $ | 2,048,485 | $ | 2,010,607 | $ | 2,058,727 | |||||||||
2,010,607 | 2,058,727 | |||||||||||||||
Verdesian Life Sciences, LLC | Fertilizers & agricultural chemicals | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 7/1/2020 (8)(13) | 6.31% | 3,295,860 | 3,273,753 | 2,801,481 | ||||||||||||
3,273,753 | 2,801,481 | |||||||||||||||
TV Borrower US, LLC (7) | Integrated telecommunication services | |||||||||||||||
First Lien Dollar Term B-1 Loan, LIBOR+4.75% (1% floor) cash due 2/22/2024 (8) | 6.08% | 3,383,000 | 3,367,510 | 3,406,258 | ||||||||||||
3,367,510 | 3,406,258 | |||||||||||||||
BeyondTrust Software, Inc. | Application software | |||||||||||||||
First Lien Term Loan, LIBOR+7% (1% floor) cash due 9/25/2019 (8)(13) | 8.33% | 16,384,644 | 16,255,828 | 16,384,050 | ||||||||||||
First Lien Revolver, LIBOR+7% (1% floor) cash due 9/25/2019 (8)(11) | 8.33% | (21,305 | ) | (130 | ) | |||||||||||
500,000 Class A membership interests in BeyondTrust Holdings LLC | 500,000 | 628,846 | ||||||||||||||
16,734,523 | 17,012,766 | |||||||||||||||
Dynatect Group Holdings, Inc. | Industrial machinery | |||||||||||||||
First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 9/30/2020 (8) | 5.83% | 3,786,203 | 3,786,203 | 3,672,617 | ||||||||||||
3,786,203 | 3,672,617 | |||||||||||||||
Idera, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan B, LIBOR+5% (1% floor) cash due 6/27/2024 (8) | 6.24% | 3,457,698 | 3,424,359 | 3,483,630 | ||||||||||||
3,424,359 | 3,483,630 | |||||||||||||||
Central Security Group, Inc. | Specialized consumer services | |||||||||||||||
First Lien Term Loan, LIBOR+5.625% (1% floor) cash due 10/6/2021 (8) | 6.86% | 1,665,740 | 1,660,679 | 1,672,677 | ||||||||||||
1,660,679 | 1,672,677 | |||||||||||||||
Kellermeyer Bergensons Services, LLC | Diversified support services | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 10/29/2021 (8)(13) | 6.32% | 5,251,500 | 5,208,454 | 5,248,218 | ||||||||||||
Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 4/29/2022 (8)(13) | 9.81% | 280,000 | 280,000 | 274,400 | ||||||||||||
5,488,454 | 5,522,618 | |||||||||||||||
GOBP Holdings Inc. | Food retail | |||||||||||||||
Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 10/21/2022 (8)(13) | 9.58% | 3,685,714 | 3,644,031 | 3,717,983 | ||||||||||||
3,644,031 | 3,717,983 | |||||||||||||||
Executive Consulting Group, LLC | Healthcare services | |||||||||||||||
First Lien Term Loan, LIBOR+4.75% (1% floor) cash due 11/21/2019 (8)(13) | 5.99% | 7,000,000 | 7,000,000 | 6,999,745 | ||||||||||||
Delayed Draw Term Loan, LIBOR+4.75% (1% floor) cash due 11/21/2019 (8) | 5.99% | 3,791,650 | 3,791,650 | 3,791,657 | ||||||||||||
10,791,650 | 10,791,402 | |||||||||||||||
Metamorph US 3, LLC | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+5.5% (1% floor) cash 2% PIK due 12/1/2020 (8)(13) | 6.74% | 14,070,138 | 13,488,111 | 5,343,093 | ||||||||||||
First Lien Revolver, LIBOR+6.5% (1% floor) cash due 12/1/2020 (8)(11)(13) | 7.74% | 1,080,000 | 1,037,075 | (36,455 | ) | |||||||||||
14,525,186 | 5,306,638 |
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 20172020
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
KIK Custom Products Inc. | Household Products | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023 | 5.00 | % | $ | 3,326,063 | $ | 3,338,452 | $ | 3,313,557 | (6)(9) | |||||||||||||
|
|
|
| |||||||||||||||||||
3,338,452 | 3,313,557 | |||||||||||||||||||||
Lannett Company, Inc. | Pharmaceuticals | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.38% cash due 11/25/2022 | 6.38 | % | 6,794,491 | 6,802,553 | 6,692,574 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
6,802,553 | 6,692,574 | |||||||||||||||||||||
Lightbox Intermediate, L.P. | Real Estate Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026 | 5.15 | % | 9,875,000 | 9,755,743 | 9,430,625 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
9,755,743 | 9,430,625 | |||||||||||||||||||||
LogMeIn, Inc. | Application Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027 | 4.91 | % | 4,000,000 | 3,900,591 | 3,873,760 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,900,591 | 3,873,760 | |||||||||||||||||||||
MHE Intermediate Holdings, LLC | Diversified Support Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024 | 6.00 | % | 11,419,753 | 11,305,654 | 11,114,846 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+5.00% cash due 3/10/2023 | — | (228,947) | (140,296) | (6)(14)(15) | ||||||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 3/8/2024 | 6.00 | % | 2,325,487 | 2,351,985 | 2,263,397 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
13,428,692 | 13,237,947 | |||||||||||||||||||||
Mindbody, Inc. | Internet Services & Infrastructure | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025 | 8.00 | % | 9,092,898 | 8,961,003 | 8,383,652 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025 | — | (13,884) | (75,238) | (6)(14)(15) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
8,947,119 | 8,308,414 | |||||||||||||||||||||
Ministry Brands, LLC | Application Software | |||||||||||||||||||||
First Lien Revolver, LIBOR+5.00% cash due 12/2/2022 | 6.00 | % | 57,500 | 56,639 | 56,650 | (6)(14)(15) | ||||||||||||||||
Second Lien Term Loan, LIBOR+9.25% cash due 6/2/2023 | 10.25 | % | 2,000,000 | 1,985,308 | 1,982,994 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
2,041,947 | 2,039,644 | |||||||||||||||||||||
MRI Software LLC | Application Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026 | 6.50 | % | 5,968,744 | 5,918,189 | 5,824,509 | (6)(15) | ||||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026 | — | (22,352) | (52,991) | (6)(14)(15) | ||||||||||||||||||
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026 | — | (5,283) | (12,765) | (6)(14)(15) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
5,890,554 | 5,758,753 | |||||||||||||||||||||
NeuAG, LLC | Fertilizers & Agricultural Chemicals | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash 7.0% PIK due 9/11/2024 | 7.00 | % | 8,529,688 | 8,194,410 | 8,188,501 | (6)(15) | ||||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash 7.0% PIK due 9/11/2024 | (42,360) | (42,360) | (6)(14)(15) | |||||||||||||||||||
|
|
|
| |||||||||||||||||||
8,152,050 | 8,146,141 | |||||||||||||||||||||
Northwest Fiber, LLC | Integrated Telecommunication Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027 | 5.66 | % | 4,200,473 | 4,049,552 | 4,205,723 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,049,552 | 4,205,723 | |||||||||||||||||||||
OEConnection LLC | Application Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026 | 4.15 | % | 7,920,420 | 7,881,988 | 7,831,315 | (6) | ||||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026 | — | (2,227) | (5,640) | (6)(14) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
7,879,761 | 7,825,675 | |||||||||||||||||||||
Olaplex, Inc. | Personal Products | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026 | 7.50 | % | 8,887,500 | 8,731,401 | 8,887,500 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025 | 7.50 | % | 486,000 | 469,401 | 486,000 | (6)(14)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
9,200,802 | 9,373,500 |
10
Portfolio Company/Type of Investment (1)(2)(9)(10)(14) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Compuware Corporation | Internet software & services | |||||||||||||||
First Lien Term Loan B3, LIBOR+4.25% (1% floor) cash due 12/15/2021 (8)(13) | 5.49% | $ | 8,423,623 | $ | 8,345,374 | $ | 8,528,918 | |||||||||
8,345,374 | 8,528,918 | |||||||||||||||
Motion Recruitment Partners LLC | Diversified support services | |||||||||||||||
First Lien Term Loan, LIBOR+6% (1% floor) cash due 2/13/2020 (8)(13) | 7.24% | 13,509,054 | 13,498,295 | 13,508,389 | ||||||||||||
First Lien Revolver, LIBOR+6% (1% floor) cash due 2/13/2020 (8)(11) | 7.24% | — | (960 | ) | (143 | ) | ||||||||||
13,497,335 | 13,508,246 | |||||||||||||||
PowerPlan, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 2/23/2022 (8)(13) | 6.49% | 17,839,352 | 17,800,018 | 17,839,013 | ||||||||||||
First Lien Revolver, LIBOR+5.25% (1% floor) cash due 2/23/2021 (8)(11) | 6.49% | — | (40 | ) | ||||||||||||
17,800,018 | 17,838,973 | |||||||||||||||
Digital River, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+6.5% (1% floor) cash due 2/12/2021 (8)(13) | 7.82% | 4,723,868 | 4,681,840 | 4,747,488 | ||||||||||||
4,681,840 | 4,747,488 | |||||||||||||||
Research Now Group, Inc. | Data processing & outsourced services | |||||||||||||||
Second Lien Term Loan, LIBOR+8.75% (1% floor) cash due 3/18/2022 (8) | 10.08% | 4,000,000 | 3,962,143 | 3,960,000 | ||||||||||||
3,962,143 | 3,960,000 | |||||||||||||||
Staples, Inc. | Distributors | |||||||||||||||
First Lien Term Loan, LIBOR+4% (1% floor) cash due 9/12/2024 (8)(16) | 5.31% | 13,000,000 | 12,967,500 | 12,957,035 | ||||||||||||
12,967,500 | 12,957,035 | |||||||||||||||
Raley's | Food retail | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 5/18/2022 (8)(13) | 6.49% | 3,209,821 | 3,164,432 | 3,209,821 | ||||||||||||
3,164,432 | 3,209,821 | |||||||||||||||
Aptos, Inc. | Data processing & outsourced services | |||||||||||||||
First Lien Term Loan, LIBOR+6.75% (1% floor) cash due 9/1/2022 (8)(13) | 8.08% | 5,940,000 | 5,842,031 | 5,880,600 | ||||||||||||
5,842,031 | 5,880,600 | |||||||||||||||
Zep Inc. | Housewares & specialties | |||||||||||||||
First Lien Term Loan, LIBOR+4% (1% floor) cash due 8/12/2024 (8) | 5.24% | 4,750,000 | 4,795,075 | 4,771,779 | ||||||||||||
4,795,075 | 4,771,779 | |||||||||||||||
All Web Leads, Inc. | Advertising | |||||||||||||||
First Lien Term Loan, LIBOR+7.5% (1% floor) cash due 12/29/2020 (8)(13) | 8.77% | 25,839,538 | 25,839,538 | 23,192,266 | ||||||||||||
25,839,538 | 23,192,266 | |||||||||||||||
Allied Universal Holdco, LLC (f/k/a USAGM Holdco, LLC) | Security & alarm services | |||||||||||||||
First Lien Term Loan, LIBOR+3.75% (1% floor) cash due 7/28/2022 (8)(16) | 5.08% | 7,979,747 | 8,018,318 | 7,972,286 | ||||||||||||
8,018,318 | 7,972,286 | |||||||||||||||
Internet Pipeline, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+7.25% (1% floor) cash due 8/4/2022 (8)(13) | 8.49% | 13,081,433 | 13,068,115 | 13,212,714 | ||||||||||||
First Lien Revolver, LIBOR+7.25% (1% floor) cash due 8/4/2021 (8) | 8.49% | — | 8,029 | |||||||||||||
13,068,115 | 13,220,743 |
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 20172020
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
Onvoy, LLC | Integrated Telecommunication Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 2/10/2024 | 5.50 | % | $ | 3,821,010 | $ | 3,811,810 | $ | 3,668,571 | (6) | |||||||||||||
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|
|
| |||||||||||||||||||
3,811,810 | 3,668,571 | |||||||||||||||||||||
PaySimple, Inc. | Data Processing & Outsourced Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025 | 5.65 | % | 9,906,964 | 9,742,150 | 9,560,221 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
9,742,150 | 9,560,221 | |||||||||||||||||||||
Peraton Corp. | Aerospace & Defense | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.25% cash due 4/29/2024 | 6.25 | % | 6,288,750 | 6,272,774 | 6,241,584 | (6)(15) | ||||||||||||||||
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|
| |||||||||||||||||||
6,272,774 | 6,241,584 | |||||||||||||||||||||
PG&E Corporation | Electric Utilities | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 6/23/2025 | 5.50 | % | 1,995,000 | 1,966,495 | 1,958,422 | (6) | ||||||||||||||||
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|
| |||||||||||||||||||
1,966,495 | 1,958,422 | |||||||||||||||||||||
ProFrac Services, LLC | Industrial Machinery | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.50% cash due 9/15/2023 | 8.75 | % | 8,289,847 | 8,240,727 | 6,362,458 | (6)(15) | ||||||||||||||||
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|
|
| |||||||||||||||||||
8,240,727 | 6,362,458 | |||||||||||||||||||||
Project Boost Purchaser, LLC | Application Software | |||||||||||||||||||||
Second Lien Term Loan, LIBOR+8.00% cash due 5/9/2027 | 8.15 | % | 1,500,000 | 1,500,000 | 1,350,000 | (6)(15) | ||||||||||||||||
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|
|
| |||||||||||||||||||
1,500,000 | 1,350,000 | |||||||||||||||||||||
Pug LLC | Internet & Direct Marketing Retail | |||||||||||||||||||||
First Lien Term Loan, LIBOR+8.00% cash due 2/12/2027 | 8.75 | % | 5,704,000 | 5,363,954 | 5,547,140 | (6) | ||||||||||||||||
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| |||||||||||||||||||
5,363,954 | 5,547,140 | |||||||||||||||||||||
Recorded Books Inc. | Publishing | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 8/29/2025 | 4.16 | % | 9,757,714 | 9,660,137 | 9,708,926 | (6) | ||||||||||||||||
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|
| |||||||||||||||||||
9,660,137 | 9,708,926 | |||||||||||||||||||||
RevSpring, Inc. | Commercial Printing | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 10/11/2025 | 4.47 | % | 9,825,000 | 9,807,175 | 9,628,500 | (6)(15) | ||||||||||||||||
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|
|
| |||||||||||||||||||
9,807,175 | 9,628,500 | |||||||||||||||||||||
Sabert Corporation | Metal & Glass Containers | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026 | 5.50 | % | 1,885,500 | 1,866,645 | 1,860,366 | (6) | ||||||||||||||||
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|
| |||||||||||||||||||
1,866,645 | 1,860,366 | |||||||||||||||||||||
Salient CRGT, Inc. | Aerospace & Defense | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022 | 7.50 | % | 5,488,244 | 5,457,684 | 5,104,067 | (6)(15) | ||||||||||||||||
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|
| |||||||||||||||||||
5,457,684 | 5,104,067 | |||||||||||||||||||||
Signify Health, LLC | Health Care Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024 | 5.50 | % | 10,725,000 | 10,658,741 | 10,349,625 | (6) | ||||||||||||||||
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|
|
| |||||||||||||||||||
10,658,741 | 10,349,625 | |||||||||||||||||||||
Sirva Worldwide, Inc. | Diversified Support Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025 | 5.65 | % | 7,650,000 | 7,535,250 | 6,387,750 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,535,250 | 6,387,750 | |||||||||||||||||||||
Star US Bidco LLC | Industrial Machinery | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027 | 5.25 | % | 5,826,911 | 5,529,350 | 5,564,700 | (6) | ||||||||||||||||
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|
|
| |||||||||||||||||||
5,529,350 | 5,564,700 | |||||||||||||||||||||
Supermoose Borrower, LLC | Application Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025 | 3.90 | % | 1,483,087 | 1,401,939 | 1,337,099 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
1,401,939 | 1,337,099 | |||||||||||||||||||||
Trident Topco LLC | Health Care Services | |||||||||||||||||||||
58.99 Class A Warrants (exercise price $156.164) expiration date 3/20/2021 | — | — | (15) | |||||||||||||||||||
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|
|
| |||||||||||||||||||
— | — | |||||||||||||||||||||
Truck Hero, Inc. | Auto Parts & Equipment | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 4/22/2024 | 3.90 | % | 5,681,160 | 5,688,828 | 5,520,667 | (6) | ||||||||||||||||
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|
| |||||||||||||||||||
5,688,828 | 5,520,667 |
11
Portfolio Company/Type of Investment (1)(2)(9)(10)(14) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Poseidon Merger Sub, Inc. | Advertising | |||||||||||||||
Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 8/15/2023 (8) | 9.81% | $ | 7,000,000 | $ | 6,980,121 | $ | 7,070,000 | |||||||||
6,980,121 | 7,070,000 | |||||||||||||||
Valet Merger Sub, Inc. | Environmental & facilities services | |||||||||||||||
First Lien Term Loan, LIBOR+7% (1% floor) cash due 9/24/2021 (8)(13) | 8.24% | 5,880,000 | 5,852,065 | 5,879,798 | ||||||||||||
First Lien Revolver, LIBOR+7% (1% floor) cash due 9/24/2021 (8)(11) | 8.24% | — | (10,697 | ) | (29 | ) | ||||||||||
Incremental Term Loan , LIBOR+7% (1% floor) cash due 9/24/2021 (8) | 8.24% | 8,407,683 | 8,328,663 | 8,407,394 | ||||||||||||
14,170,031 | 14,287,163 | |||||||||||||||
DigiCert, Inc. | Internet software & services | |||||||||||||||
Second Lien Term Loan, LIBOR+9% (1% floor) cash due 10/21/2022 (8)(13) | 10.24% | 2,000,000 | 1,984,880 | 2,000,000 | ||||||||||||
First Lien Term Loan, LIBOR+4.75% (1% floor) cash due 10/21/2021 (8) | 5.99% | 11,000,000 | 10,945,000 | 11,000,000 | ||||||||||||
12,929,880 | 13,000,000 | |||||||||||||||
Lytx, Inc. | Research & consulting services | |||||||||||||||
500 Class B Units in Lytx Holdings, LLC | — | 351,355 | ||||||||||||||
500 Class A Units in Lytx Holdings, LLC | 292,459 | 79,788 | ||||||||||||||
292,459 | 431,143 | |||||||||||||||
4 Over International, LLC | Commercial printing | |||||||||||||||
First Lien Term Loan, LIBOR+6.0% (1% floor) cash due 6/7/2022 (8)(13) | 7.24% | 5,850,412 | 5,804,485 | 5,850,463 | ||||||||||||
First Lien Revolver, LIBOR+6.0% (1% floor) cash due 6/7/2021 (8)(11) | 7.24% | (502 | ) | — | ||||||||||||
5,803,983 | 5,850,463 | |||||||||||||||
Ancile Solutions, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+7% (1% floor) cash due 6/30/2021 (8)(13) | 8.33% | 9,881,312 | 9,664,392 | 9,802,707 | ||||||||||||
9,664,392 | 9,802,707 | |||||||||||||||
Pomeroy Group Holdings, Inc. | IT consulting & other services | |||||||||||||||
First Lien Term Loan, LIBOR+6% (1% floor) cash due 11/30/2021 (8)(13) | 7.59% | 4,443,467 | 4,339,309 | 4,443,467 | ||||||||||||
4,339,309 | 4,443,467 | |||||||||||||||
Sailpoint Technologies, Inc. | Application software | |||||||||||||||
First Lien Term Loan, LIBOR+7% (1% floor) cash due 8/16/2021 (8) | 8.33% | 17,391,304 | 17,070,160 | 17,391,307 | ||||||||||||
First Lien Revolver, LIBOR+7% (1% floor) cash due 8/16/2021 (8)(11) | 8.33% | (3,067 | ) | — | ||||||||||||
17,067,093 | 17,391,307 | |||||||||||||||
Curvature, Inc. | IT consulting & other services | |||||||||||||||
First Lien Term Loan B, LIBOR+5% (1% floor) cash due 10/30/2023 (8)(13) | 6.24% | 9,925,000 | 9,871,624 | 9,701,688 | ||||||||||||
9,871,624 | 9,701,688 | |||||||||||||||
Cardenas Markets LLC | Food retail | |||||||||||||||
First Lien Term Loan, LIBOR+5.75% (1% floor) cash due 11/29/2023 (8)(13) | 7.08% | 3,275,250 | 3,246,405 | 3,254,780 | ||||||||||||
3,246,405 | 3,254,780 |
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 2017
Portfolio Company/Type of Investment (1)(2)(9)(10)(14) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Ministry Brands, LLC | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 12/2/2022 (8)(13) | 6.24% | $ | 9,648,871 | $ | 9,565,812 | $ | 9,648,874 | |||||||||
First Lien Delayed Draw Term Loan, LIBOR+5% (1% floor) cash due 12/2/2022 (8)(13) | 6.24% | 3,354,904 | 3,314,185 | 3,354,905 | ||||||||||||
Second Lien Term Loan, LIBOR+9.25% (1% floor) cash due 6/2/2023 (8)(13) | 10.49% | 1,568,067 | 1,547,561 | 1,568,067 | ||||||||||||
Second Lien Delayed Draw Term Loan, LIBOR+9.25% (1% floor) cash due 6/2/2023 (8) | 10.49% | 431,933 | 426,285 | 431,933 | ||||||||||||
First Lien Revolver, LIBOR+5% (1% floor) cash due 12/2/2022 (8)(11) | 6.24% | (861 | ) | — | ||||||||||||
14,852,982 | 15,003,779 | |||||||||||||||
Impact Sales, LLC | Advertising | |||||||||||||||
First Lien Term Loan B, LIBOR+7% (1% floor) cash due 12/30/2021 (8) | 8.30% | 3,721,875 | 3,628,868 | 3,715,131 | ||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+7% (1% floor) cash due 12/30/2021 (8) | 8.30% | 171,016 | 171,016 | 168,751 | ||||||||||||
3,799,884 | 3,883,882 | |||||||||||||||
Empower Payments Acquisition, Inc. | Commercial printing | |||||||||||||||
First Lien Term Loan B, LIBOR+5.5% (1% floor) cash due 11/30/2023 (8)(13) | 6.83% | 6,153,500 | 6,043,807 | 6,091,669 | ||||||||||||
6,043,807 | 6,091,669 | |||||||||||||||
First American Payment Systems, L.P. | Diversified support services | |||||||||||||||
First Lien Term Loan B, LIBOR+5.75% (1% floor) cash due 1/8/2024 (8)(13) | 6.98% | 4,143,750 | 4,106,872 | 4,131,319 | ||||||||||||
4,106,872 | 4,131,319 | |||||||||||||||
DFT Intermediate LLC | Specialized finance | |||||||||||||||
First Lien Term Loan, LIBOR+5.5% (1% floor) cash due 3/1/2023 (8)(13) | 6.74% | 14,962,500 | 14,624,842 | 14,864,020 | ||||||||||||
First Lien Revolver, LIBOR+5.5% (1% floor) cash due 3/1/2022 (8) | 6.74% | 750,000 | 733,438 | 745,064 | ||||||||||||
15,358,280 | 15,609,084 | |||||||||||||||
Systems, Inc. | Industrial machinery | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 3/3/2022 (8)(13) | 6.57% | 8,831,921 | 8,715,152 | 8,787,762 | ||||||||||||
First Lien Revolver, LIBOR+5.5% (1% floor) cash due 3/3/2022 (8)(11) | 6.57% | (7,950 | ) | (7,920 | ) | |||||||||||
8,707,202 | 8,779,842 | |||||||||||||||
Onvoy, LLC | Integrated telecommunication services | |||||||||||||||
First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 2/10/2024 (8)(13) | 5.83% | 7,960,000 | 7,923,563 | 7,962,507 | ||||||||||||
7,923,563 | 7,962,507 | |||||||||||||||
Salient CRGT, Inc. | IT consulting & other services | |||||||||||||||
First Lien Term Loan, LIBOR+5.75% (1% floor) cash due 2/28/2022 (8)(13) | 6.99% | 6,387,798 | 6,275,056 | 6,343,083 | ||||||||||||
6,275,056 | 6,343,083 | |||||||||||||||
MHE Intermediate Holdings, LLC | Diversified support services | |||||||||||||||
First Lien Term Loan B, LIBOR+5% (1% floor) cash due 3/11/2024 (8)(13) | 6.33% | 11,774,771 | 11,556,138 | 11,774,776 | ||||||||||||
First Lien Revolver, LIBOR+5% (1% floor) cash due 3/10/2023 (8) | 6.33% | 1,353,038 | 1,255,454 | 1,353,038 | ||||||||||||
Delayed Draw Term Loan, LIBOR+5% (1% floor) cash due 3/11/2024 (8) | 6.33% | 1,873,430 | 1,782,689 | 1,873,430 | ||||||||||||
14,594,281 | 15,001,244 |
Portfolio Company/Type of Investment (1)(2)(9)(10)(14) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Paris Presents Incorporated | Personal Products | |||||||||||||||
First Lien Term Loan B, LIBOR+5% (1% floor) cash due 12/31/2020 (8)(13) | 6.24% | $ | 3,134,006 | $ | 3,106,950 | $ | 3,134,006 | |||||||||
Second Lien Term Loan, LIBOR+8.75% (1% floor) cash due 12/31/2021 (8)(13) | 9.99% | 3,500,000 | 3,437,500 | 3,465,000 | ||||||||||||
6,544,450 | 6,599,006 | |||||||||||||||
PSI Services LLC | Human Resource & Employment Services | |||||||||||||||
First Lien Term Loan B, LIBOR+5% (1% floor) cash due 1/20/2023 (8)(13) | 6.24% | 6,736,979 | 6,644,622 | 6,616,844 | ||||||||||||
6,644,622 | 6,616,844 | |||||||||||||||
MHVC Acquisition Corp. | Aerospace & Defense | |||||||||||||||
First Lien Term Loan B, LIBOR+5.25% (1% floor) cash due 4/25/2024 (8)(13) | 6.49% | 6,483,750 | 6,453,287 | 6,556,692 | ||||||||||||
6,453,287 | 6,556,692 | |||||||||||||||
LSF9 Atlantis Holdings, LLC | Computer & Electronics Retail | |||||||||||||||
First Lien Term Loan B, LIBOR+6% (1% floor) cash due 5/1/2023 (8)(13) | 7.24% | 7,453,125 | 7,383,862 | 7,498,142 | ||||||||||||
7,383,862 | 7,498,142 | |||||||||||||||
Everi Payments Inc. | Casinos & gaming | |||||||||||||||
First Lien Term Loan B, LIBOR+4.5% (1% floor) cash due 5/9/2024 (8)(13)(16) | 5.74% | 4,987,500 | 4,963,767 | 5,038,622 | ||||||||||||
4,963,767 | 5,038,622 | |||||||||||||||
BJ's Wholesale Club, Inc. | Hypermarkets & super centers | |||||||||||||||
First Lien Term Loan B, LIBOR+3.75% (1% floor) cash due 1/26/2024 (8)(16) | 4.98% | 2,992,500 | 2,996,051 | 2,876,002 | ||||||||||||
2,996,051 | 2,876,002 | |||||||||||||||
Bass Pro Group, LLC | Specialty Stores | |||||||||||||||
First Lien Term Loan B, LIBOR+5% (1% floor) cash due 12/15/2023 (8) | 6.24% | 6,000,000 | 5,877,353 | 5,667,480 | ||||||||||||
5,877,353 | 5,667,480 | |||||||||||||||
Imagine! Print Solutions, LLC | Advertising | |||||||||||||||
First Lien Term Loan B, LIBOR+4.75% (1% floor) cash due 6/21/2022 (8) | 6.09% | 6,965,000 | 6,898,900 | 6,999,825 | ||||||||||||
6,898,900 | 6,999,825 | |||||||||||||||
MND Holdings III Corp. | Specialty Stores | |||||||||||||||
First Lien Term Loan B, LIBOR+4.5% (1% floor) cash due 6/19/2024 (8)(13) | 5.83% | 2,493,750 | 2,481,733 | 2,526,480 | ||||||||||||
2,481,733 | 2,526,480 | |||||||||||||||
Veritas US Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan B, LIBOR+4.5% (1% floor) cash due 1/27/2023 (8)(16) | 5.83% | 10,077,193 | 10,215,779 | 10,189,503 | ||||||||||||
10,215,779 | 10,189,503 | |||||||||||||||
UOS, LLC | Trucking | |||||||||||||||
First Lien Term Loan B, LIBOR+5.5% (1% floor) cash due 4/18/2023 (8) | 6.74% | 3,990,000 | 4,079,548 | 4,099,725 | ||||||||||||
4,079,548 | 4,099,725 | |||||||||||||||
Accudyne Industries, LLC | Oil & gas equipment & services | |||||||||||||||
First Lien Term Loan, LIBOR+3.75% (1% floor) cash due 8/18/2024 (8)(16) | 5.01% | 14,000,000 | 14,057,018 | 14,052,500 | ||||||||||||
14,057,018 | 14,052,500 |
Portfolio Company/Type of Investment (1)(2)(9)(10)(14) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
DTZ U.S. Borrower, LLC | Real Estate Services | |||||||||||||||
First Lien Term Loan, LIBOR+3.25% (1% floor) cash due 11/4/2021 (8)(16) | 4.57% | $ | 12,211,343 | $ | 12,247,424 | $ | 12,256,098 | |||||||||
12,247,424 | 12,256,098 | |||||||||||||||
Truck Hero, Inc. | Auto parts & equipment | |||||||||||||||
First Lien Term Loan, LIBOR+4% (1% floor) cash due 4/22/2024 (8) | 5.33% | 5,857,320 | 5,871,777 | 5,798,747 | ||||||||||||
5,871,777 | 5,798,747 | |||||||||||||||
Alphabet Holding Company, Inc. | Healthcare distributors | |||||||||||||||
First Lien Term Loan, LIBOR+3.5% (1% floor) cash due 9/26/2024 (8) | 4.83% | 5,000,000 | 4,975,000 | 4,948,950 | ||||||||||||
4,975,000 | 4,948,950 | |||||||||||||||
McAfee, LLC | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 9/30/2024 (8) | 5.83% | 7,000,000 | 6,930,000 | 7,072,905 | ||||||||||||
6,930,000 | 7,072,905 | |||||||||||||||
Total Non-Control/Non-Affiliate Investments (170.9% of net assets) | $ | 516,270,639 | $ | 501,894,073 | ||||||||||||
Total Portfolio Investments (190.9% of net assets) | $ | 605,090,324 | $ | 560,436,660 | ||||||||||||
Cash and Cash Equivalents | ||||||||||||||||
Wells Fargo Bank Institutional Money Market Fund | $ | 32,214,184 | $ | 32,214,184 | ||||||||||||
JP Morgan Prime Money Market Fund | 3,118,675 | 3,118,675 | ||||||||||||||
Other cash accounts | 271,268 | 271,268 | ||||||||||||||
Total Cash and Cash Equivalents (12.1% of net assets) | $ | 35,604,127 | $ | 35,604,127 | ||||||||||||
Total Portfolio Investments, Cash and Cash Equivalents (203.0% of net assets) | $ | 640,694,451 | $ | 596,040,787 |
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
UFC Holdings, LLC | Movies & Entertainment | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026 | 4.25 | % | $ | 2,887,362 | $ | 2,819,945 | $ | 2,844,961 | (6) | |||||||||||||
|
|
|
| |||||||||||||||||||
2,819,945 | 2,844,961 | |||||||||||||||||||||
Uniti Group Inc. | Specialized REITs | |||||||||||||||||||||
40,052 Shares of Common Stock | 253,529 | 421,948 | (9)(17) | |||||||||||||||||||
|
|
|
| |||||||||||||||||||
253,529 | 421,948 | |||||||||||||||||||||
Veritas US Inc. | Application Software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 9/1/2025 | 6.50 | % | 6,000,000 | 5,880,994 | 5,885,010 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,880,994 | 5,885,010 | |||||||||||||||||||||
Verscend Holding Corp. | Health Care Technology | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025 | 4.65 | % | 11,830,827 | 11,732,318 | 11,752,447 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
11,732,318 | 11,752,447 | |||||||||||||||||||||
William Morris Endeavor Entertainment, LLC | Movies & Entertainment | |||||||||||||||||||||
First Lien Term Loan, LIBOR+8.50% cash due 5/18/2025 | 9.50 | % | 8,371,098 | 7,942,825 | 8,371,098 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,942,825 | 8,371,098 | |||||||||||||||||||||
Windstream Services II, LLC | Integrated Telecommunication Services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027 | 7.25 | % | 5,985,000 | 5,746,163 | 5,807,964 | (6) | ||||||||||||||||
11,903 Shares of Common Stock in Windstream Holdings II, LLC | 102,837 | 134,504 | (15) | |||||||||||||||||||
72,205 Warrants in Windstream Holdings II, LLC | 1,785,324 | 793,624 | (15) | |||||||||||||||||||
|
|
|
| |||||||||||||||||||
7,634,324 | 6,736,092 | |||||||||||||||||||||
WP CPP Holdings, LLC | Aerospace & Defense | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.50% cash due 4/30/2025 | 4.50 | % | 4,411,964 | 4,404,415 | 3,886,941 | (6) | ||||||||||||||||
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 | 8.75 | % | 1,000,000 | 992,746 | 780,000 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,397,161 | 4,666,941 | |||||||||||||||||||||
Zep Inc. | Specialty Chemicals | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 8/12/2024 | 5.00 | % | 4,607,500 | 4,632,209 | 4,349,779 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,632,209 | 4,349,779 | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||
Total Non-Control/Non-Affiliate Investments (169.8% of net assets) | $ | 466,907,805 | $ | 452,883,464 | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
Total Portfolio Investments (188.3% of net assets) | $ | 539,065,107 | $ | 502,293,365 | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
Cash and Cash Equivalents and Restricted Cash | ||||||||||||||||||||||
JP Morgan Prime Money Market Fund, Institutional Shares | $ | 7,052,674 | $ | 7,052,674 | ||||||||||||||||||
Other cash accounts | 22,447,753 | 22,447,753 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||
Cash and Cash Equivalents and Restricted Cash (11.1% of net assets) | $ | 29,500,427 | $ | 29,500,427 | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
Total Portfolio Investments, Cash and Cash Equivalents and Restricted Cash (199.4% of net assets) | $ | 568,565,534 | $ | 531,793,792 | ||||||||||||||||||
|
|
|
|
Derivatives Instrument | Notional Amount Purchased / (Sold) in U.S. Dollars | Notional Amount Purchased / (Sold) in Local Currency | Maturity Date | Counterparty | Cumulative Unrealized Appreciation (Depreciation) | |||||||||||||
Foreign currency forward contract | $ | 529,015 | € | (465,600 | ) | 11/12/2020 | JPMorgan Chase Bank, N.A. | $ | (17,450 | ) | ||||||||
Foreign currency forward contract | $ | 4,613,133 | £ | (3,654,546 | ) | 11/12/2020 | JPMorgan Chase Bank, N.A. | $ | (112,486 | ) | ||||||||
|
| |||||||||||||||||
$ | (129,936 | ) | ||||||||||||||||
|
|
(1) | All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted. |
(2) | See Note 3 |
(3) |
Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents. |
12
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 2020
(4) | |
Each of the |
(5) | |
Equity ownership may be held in shares or units of companies related to the portfolio companies. |
Portfolio Company/Type of Investment (1)(2)(9)(10)(17)(19) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Control Investments (3) | ||||||||||||||||
FSFR Glick JV LLC (7)(12)(18) | Multi-sector holdings | |||||||||||||||
Subordinated Note, LIBOR+8% cash due 10/20/2021 (8) | 8.47% | $ | 64,005,755 | $ | 64,005,755 | $ | 56,885,646 | |||||||||
87.5% equity interest (14) | 7,111,751 | 6,431,021 | ||||||||||||||
71,117,506 | 63,316,667 | |||||||||||||||
Total Control Investments (19.4% of net assets) | $ | 71,117,506 | $ | 63,316,667 | ||||||||||||
Affiliate Investments (4) | ||||||||||||||||
Ameritox Ltd. (15) | Healthcare services | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 (8)(13) | 6.00% | 6,387,128 | $ | 6,380,832 | $ | 6,342,286 | ||||||||||
3,309,873.6 Class A Preferred Units in Ameritox Holdings II, LLC | 3,309,874 | 3,626,150 | ||||||||||||||
327,393.6 Class B Preferred Units in Ameritox Holdings II, LLC | 327,394 | 358,679 | ||||||||||||||
1,007.36 Class A Units in Ameritox Holdings II, LLC | 5,935,698 | 2,679,343 | ||||||||||||||
15,953,798 | 13,006,458 | |||||||||||||||
Total Affiliate Investments (4.0% of net assets) | $ | 15,953,798 | $ | 13,006,458 | ||||||||||||
Non-Control/Non-Affiliate Investments (6) | ||||||||||||||||
Triple Point Group Holdings, Inc. | Application software | |||||||||||||||
First Lien Revolver, LIBOR+4.25% (1% floor) cash due 7/10/2018 (8) | 5.25% | — | — | |||||||||||||
— | — | |||||||||||||||
Blackhawk Specialty Tools, LLC | Oil & gas equipment & services | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1.25% floor) cash due 8/1/2019 (8)(13) | 6.50% | 4,249,996 | 4,177,081 | 4,090,429 | ||||||||||||
4,177,081 | 4,090,429 | |||||||||||||||
New Trident Holdcorp, Inc. | Healthcare services | |||||||||||||||
First Lien Term Loan B, LIBOR+5.25% (1.25% floor) cash due 7/31/2019 (8)(13) | 6.50% | 13,707,532 | 13,289,778 | 11,788,478 | ||||||||||||
Second Lien Term Loan, LIBOR+9% (1.25% floor) cash due 7/31/2020 (8) | 10.25% | 1,000,000 | 972,500 | 820,000 | ||||||||||||
14,262,278 | 12,608,478 | |||||||||||||||
NXT Capital, LLC | Diversified capital markets | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 9/4/2018 (8)(13) | 6.25% | 8,719,887 | 8,685,189 | 8,763,486 | ||||||||||||
8,685,189 | 8,763,486 | |||||||||||||||
Vitera Healthcare Solutions, LLC | Healthcare technology | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 11/4/2020 (8)(13) | 6.00% | 4,862,500 | 4,856,420 | 4,747,016 | ||||||||||||
4,856,420 | 4,747,016 | |||||||||||||||
The Active Network, Inc. | Internet software & services | |||||||||||||||
Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 11/15/2021 (8)(13) | 9.50% | 2,400,000 | 2,314,573 | 2,370,000 | ||||||||||||
2,314,573 | 2,370,000 | |||||||||||||||
Accruent, LLC | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 5/16/2022 (8) | 6.25% | 9,975,000 | 9,881,944 | 9,994,012 | ||||||||||||
First Lien Revolver, LIBOR+5.25% (1% floor) cash due 5/16/2022 (8)(11) | 6.25% | (791 | ) | — | ||||||||||||
9,881,153 | 9,994,012 |
Portfolio Company/Type of Investment (1)(2)(9)(10)(17)(19) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Survey Sampling International, LLC | Research & consulting services | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 12/16/2020 (8)(13) | 6.00% | $ | 5,726,682 | $ | 5,691,793 | $ | 5,726,682 | |||||||||
Second Lien Term Loan, LIBOR+9% (1% floor) cash due 12/16/2021 (8) | 10.00% | 1,000,000 | 985,238 | 980,000 | ||||||||||||
6,677,031 | 6,706,682 | |||||||||||||||
Answers Corporation | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 10/3/2021 (8)(13) | 6.25% | 11,820,000 | 11,421,760 | 6,382,800 | ||||||||||||
Second Lien Term Loan, LIBOR+9% (1% floor) cash due 10/3/2022 (8) | 10.00% | 8,000,000 | 7,605,257 | 773,360 | ||||||||||||
19,027,017 | 7,156,160 | |||||||||||||||
Maxor National Pharmacy Services, LLC | Pharmaceuticals | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1.25% floor) cash due 1/31/2020 (8)(13) | 6.50% | 9,162,870 | 9,162,870 | 9,033,850 | ||||||||||||
9,162,870 | 9,033,850 | |||||||||||||||
NextCare, Inc. | Healthcare services | |||||||||||||||
Senior Term Loan, LIBOR+7.5% (1% floor) cash due 7/31/2018 (8)(13) | 8.50% | 7,029,160 | 7,029,160 | 6,744,944 | ||||||||||||
Delayed Draw Term Loan, LIBOR+7.5% (1% floor) cash due 7/31/2018 (8) | 8.50% | 1,407,969 | 1,407,969 | 1,330,269 | ||||||||||||
8,437,129 | 8,075,213 | |||||||||||||||
Aptean, Inc. | Application software | |||||||||||||||
Second Lien Term Loan, LIBOR+7.5% (1% floor) cash due 2/26/2021 (8) | 8.50% | 1,250,000 | 1,240,179 | 1,232,038 | ||||||||||||
1,240,179 | 1,232,038 | |||||||||||||||
Stratus Technologies, Inc. | Computer hardware | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 4/28/2021 (8)(13) | 6.00% | 4,003,658 | 3,956,802 | 3,903,567 | ||||||||||||
3,956,802 | 3,903,567 | |||||||||||||||
TravelCLICK, Inc. | Internet software & services | |||||||||||||||
Second Lien Term Loan, LIBOR+7.75% (1% floor) cash due 11/6/2021 (8)(13) | 8.75% | 3,380,000 | 3,299,165 | 3,027,128 | ||||||||||||
3,299,165 | 3,027,128 | |||||||||||||||
GTCR Valor Companies, Inc. | Advertising | |||||||||||||||
First Lien Term Loan, LIBOR+6% (1% floor) cash due 6/16/2023 (8)(13) | 7.00% | 12,219,375 | 11,607,301 | 11,688,626 | ||||||||||||
11,607,301 | 11,688,626 | |||||||||||||||
ConvergeOne Holdings Corp. | Integrated telecommunication services | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 6/17/2020 (8)(13) | 6.00% | 5,343,010 | 5,316,746 | 5,322,974 | ||||||||||||
5,316,746 | 5,322,974 | |||||||||||||||
Verdesian Life Sciences, LLC | Fertilizers & agricultural chemicals | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 7/1/2020 (8)(13) | 6.00% | 3,554,890 | 3,522,668 | 3,377,146 | ||||||||||||
3,522,668 | 3,377,146 | |||||||||||||||
PR Wireless, Inc. | Wireless telecommunication services | |||||||||||||||
First Lien Term Loan, LIBOR+9% (1% floor) cash due 6/29/2020 (7)(8) | 10.00% | 5,836,771 | 5,719,729 | 4,111,317 | ||||||||||||
35.5263 Common Stock Warrants (exercise price $0.01) expiration date 6/27/2024 (7) | — | 120,342 | ||||||||||||||
5,719,729 | 4,231,659 |
Portfolio Company/Type of Investment (1)(2)(9)(10)(17)(19) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
TV Borrower US, LLC | Integrated telecommunication services | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 1/8/2021 (7)(8)(13) | 6.00% | $ | 6,086,385 | $ | 5,973,885 | $ | 6,063,561 | |||||||||
Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 7/8/2021 (7)(8)(13) | 9.50% | 3,000,000 | 2,921,780 | 2,910,000 | ||||||||||||
8,895,665 | 8,973,561 | |||||||||||||||
American Dental Partners, Inc. | Healthcare services | |||||||||||||||
First Lien Term Loan, LIBOR+4.75% (1% floor) cash due 8/30/2021 (8)(13) | 5.75% | 5,880,000 | 5,860,000 | 5,791,800 | ||||||||||||
5,860,000 | 5,791,800 | |||||||||||||||
BeyondTrust Software, Inc. | Application software | |||||||||||||||
First Lien Term Loan, LIBOR+7% (1% floor) cash due 9/25/2019 (8)(13) | 8.00% | 18,381,895 | 18,136,331 | 18,309,259 | ||||||||||||
First Lien Revolver, LIBOR+7% (1% floor) cash due 9/25/2019 (8)(11) | 8.00% | (30,304 | ) | — | ||||||||||||
500,000 Class A membership interests in BeyondTrust Holdings LLC | 500,000 | 613,869 | ||||||||||||||
18,606,027 | 18,923,128 | |||||||||||||||
Hill International, Inc. | Construction & engineering | |||||||||||||||
First Lien Term Loan, LIBOR+6.75% (1% floor) cash due 9/26/2020 (8)(13) | 7.75% | 5,978,000 | 5,907,850 | 5,768,770 | ||||||||||||
5,907,850 | 5,768,770 | |||||||||||||||
Teaching Strategies, LLC | Education services | |||||||||||||||
First Lien Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (8)(13) | 6.34% | 15,252,341 | 15,262,322 | 15,293,164 | ||||||||||||
First Lien Revolver, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (8) | 6.34% | — | — | |||||||||||||
15,262,322 | 15,293,164 | |||||||||||||||
Dynatect Group Holdings, Inc. | Industrial machinery | |||||||||||||||
First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 9/30/2020 (8) | 5.50% | 3,826,203 | 3,826,203 | 3,778,376 | ||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+4.5% (1% floor) cash due 9/30/2020 (8) | 5.50% | — | — | |||||||||||||
3,826,203 | 3,778,376 | |||||||||||||||
Idera, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+5.5% (1% floor) cash due 4/9/2021 (8)(13) | 6.50% | 17,356,053 | 16,490,668 | 16,878,761 | ||||||||||||
16,490,668 | 16,878,761 | |||||||||||||||
Central Security Group, Inc. | Specialized consumer services | |||||||||||||||
First Lien Term Loan, LIBOR+5.625% (1% floor) cash due 10/6/2020 (8) | 6.63% | 2,539,726 | 2,532,917 | 2,482,582 | ||||||||||||
2,532,917 | 2,482,582 | |||||||||||||||
Kellermeyer Bergensons Services, LLC | Diversified support services | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 10/29/2021 (8)(13) | 6.00% | 5,265,325 | 5,211,587 | 5,081,038 | ||||||||||||
Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 4/29/2022 (8)(13) | 9.50% | 280,000 | 280,000 | 266,000 | ||||||||||||
5,491,587 | 5,347,038 | |||||||||||||||
GOBP Holdings Inc. | Food retail | |||||||||||||||
Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 10/21/2022 (8)(13) | 9.25% | 3,685,714 | 3,635,831 | 3,685,714 | ||||||||||||
3,635,831 | 3,685,714 |
Portfolio Company/Type of Investment (1)(2)(9)(10)(17)(19) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
NAVEX Global, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+4.75% (1% floor) cash due 11/19/2021 (8)(13) | 5.99% | $ | 3,450,918 | $ | 3,440,820 | $ | 3,433,662 | |||||||||
Second Lien Term Loan, LIBOR+9.5% (1% floor) cash due 11/18/2022 (8) | 10.31% | 1,438,468 | 1,438,468 | 1,395,314 | ||||||||||||
4,879,288 | 4,828,976 | |||||||||||||||
Executive Consulting Group, LLC | Healthcare services | |||||||||||||||
First Lien Term Loan, LIBOR+4.75% (1% floor) cash due 11/21/2019 (8)(13) | 5.75% | 7,000,000 | 7,000,000 | 6,960,668 | ||||||||||||
Delayed Draw Term Loan, LIBOR+4.75% (1% floor) cash due 11/21/2019 (8) | 5.75% | 4,000,000 | 4,000,000 | 3,979,448 | ||||||||||||
11,000,000 | 10,940,116 | |||||||||||||||
TIBCO Software, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+5.5% (1% floor) cash due 12/4/2020 (8) | 6.50% | 7,919,400 | 7,590,582 | 7,823,932 | ||||||||||||
First Lien Revolver, LIBOR+4% cash due 11/25/2020 (8) | 4.24% | — | — | |||||||||||||
7,590,582 | 7,823,932 | |||||||||||||||
Metamorph US 3, LLC | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+6.5% (1% floor) cash due 12/1/2020 (8)(13) | 7.50% | 14,223,467 | 14,181,149 | 11,840,322 | ||||||||||||
First Lien Revolver, LIBOR+6.5% (1% floor) cash due 12/1/2020 (8)(13) | 7.50% | 600,000 | 573,856 | 600,000 | ||||||||||||
14,755,005 | 12,440,322 | |||||||||||||||
Compuware Corporation | Internet software & services | |||||||||||||||
First Lien Term Loan B1, LIBOR+5.25% (1% floor) cash due 12/15/2019 (8)(13) | 6.25% | 7,825,554 | 7,720,514 | 7,854,900 | ||||||||||||
First Lien Term Loan B2, LIBOR+5.25% (1% floor) cash due 12/15/2021 (8) | 6.25% | 905,896 | 889,191 | 904,198 | ||||||||||||
8,609,705 | 8,759,098 | |||||||||||||||
AF Borrower, LLC | IT consulting & other services | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 1/28/2022 (8)(13) | 6.25% | 1,036,642 | 1,020,406 | 1,041,612 | ||||||||||||
1,020,406 | 1,041,612 | |||||||||||||||
TrialCard Incorporated | Healthcare services | |||||||||||||||
First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 12/31/2019 (8)(13) | 5.50% | 9,874,962 | 9,869,718 | 9,827,027 | ||||||||||||
First Lien Revolver, LIBOR+4.5% (1% floor) cash due 12/31/2019 (8)(11) | 5.50% | (375 | ) | — | ||||||||||||
9,869,343 | 9,827,027 | |||||||||||||||
Motion Recruitment Partners LLC | Diversified support services | |||||||||||||||
First Lien Term Loan, LIBOR+6% (1% floor) cash due 2/13/2020 (8)(13) | 7.00% | 14,235,000 | 14,224,241 | 14,250,584 | ||||||||||||
First Lien Revolver, LIBOR+6% (1% floor) cash due 2/13/2020 (8)(11) | 7.00% | (960 | ) | — | ||||||||||||
14,223,281 | 14,250,584 | |||||||||||||||
PowerPlan, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+4.75% (1% floor) cash due 2/23/2022 (8)(13) | 5.75% | 16,737,833 | 16,710,709 | 16,731,213 | ||||||||||||
First Lien Revolver, LIBOR+4.75% (1% floor) cash due 2/23/2021 (8) | 5.75% | — | — | |||||||||||||
16,710,709 | 16,731,213 |
Portfolio Company/Type of Investment (1)(2)(9)(10)(17)(19) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Digital River, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+6.5% (1% floor) cash due 2/12/2021 (8)(13) | 7.50% | $ | 4,523,868 | $ | 4,349,859 | $ | 4,515,386 | |||||||||
4,349,859 | 4,515,386 | |||||||||||||||
Research Now Group, Inc. | Data processing & outsourced services | |||||||||||||||
Second Lien Term Loan, LIBOR+8.75% (1% floor) cash due 3/18/2022 (8) | 9.75% | 4,000,000 | 3,953,571 | 3,880,000 | ||||||||||||
3,953,571 | 3,880,000 | |||||||||||||||
Fineline Technologies, Inc. | Electronic equipment & instruments | |||||||||||||||
First Lien Term Loan, LIBOR+5.5% (1% floor) cash due 5/5/2017 (8)(13) | 6.50% | 10,942,464 | 10,942,464 | 10,912,302 | ||||||||||||
10,942,464 | 10,912,302 | |||||||||||||||
My Alarm Center, LLC | Security & alarm services | |||||||||||||||
First Lien Term Loan A, LIBOR+8% (1% floor) cash due 1/9/2019 (8)(13) | 9.00% | 16,047,619 | 16,047,619 | 16,075,921 | ||||||||||||
First Lien Term Loan B, LIBOR+8% (1% floor) cash due 1/9/2019 (8) | 9.00% | 909,936 | 909,936 | 911,452 | ||||||||||||
First Lien Term Loan C, LIBOR+8% (1% floor) cash due 1/9/2019 (8) | 9.00% | 757,592 | 757,592 | 757,750 | ||||||||||||
First Lien Term Revolver, LIBOR+8% (1% floor) cash due 1/9/2019 (8) | 9.00% | 120,000 | 120,000 | 120,000 | ||||||||||||
17,835,147 | 17,865,123 | |||||||||||||||
Legalzoom.com, Inc. | Specialized consumer services | |||||||||||||||
First Lien Term Loan, LIBOR+7% (1% floor) cash due 5/13/2020 (8)(13) | 8.00% | 19,700,000 | 19,690,068 | 19,659,526 | ||||||||||||
First Lien Revolver, LIBOR+7% (1% floor) cash due 5/13/2020 (8)(11) | 8.00% | (17,714 | ) | — | ||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+7% (1% floor) cash due 5/13/2020 (8) | 8.00% | 400,000 | 400,000 | 396,683 | ||||||||||||
20,072,354 | 20,056,209 | |||||||||||||||
Raley's | Food retail | |||||||||||||||
First Lien Term Loan, LIBOR+6.25% (1% floor) cash due 5/18/2022 (8)(13) | 7.25% | 3,319,504 | 3,254,099 | 3,325,728 | ||||||||||||
3,254,099 | 3,325,728 | |||||||||||||||
Aptos, Inc. | Data processing & outsourced services | |||||||||||||||
First Lien Term Loan, LIBOR+6.75% (1% floor) cash due 9/1/2022 (8)(13) | 7.75% | 6,000,000 | 5,881,667 | 5,940,000 | ||||||||||||
5,881,667 | 5,940,000 | |||||||||||||||
All Web Leads, Inc. | Advertising | |||||||||||||||
First Lien Term Loan, LIBOR+6.5% (1% floor) cash due 6/30/2020 (8)(13) | 7.50% | 29,808,067 | 29,808,066 | 29,983,454 | ||||||||||||
First Lien Revolver, LIBOR+6.5% (1% floor) cash due 6/30/2020 (8) | 7.50% | — | — | |||||||||||||
29,808,066 | 29,983,454 | |||||||||||||||
Too Faced Cosmetics, LLC | Personal products | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 7/7/2021 (8)(13) | 6.00% | 1,285,383 | 1,285,383 | 1,290,310 | ||||||||||||
1,285,383 | 1,290,310 | |||||||||||||||
Internet Pipeline, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+7.25% (1% floor) cash due 8/4/2022 (8)(13) | 8.25% | 11,880,000 | 11,880,000 | 12,045,801 | ||||||||||||
First Lien Revolver, LIBOR+7.25% (1% floor) cash due 8/4/2021 (8) | 8.25% | — | — | |||||||||||||
11,880,000 | 12,045,801 |
Portfolio Company/Type of Investment (1)(2)(9)(10)(17)(19) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Poseidon Merger Sub, Inc. | Advertising | |||||||||||||||
Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 8/15/2023 (8) | 9.50% | $ | 7,000,000 | $ | 6,980,768 | $ | 7,012,868 | |||||||||
6,980,768 | 7,012,868 | |||||||||||||||
American Seafoods Group LLC | Food distributors | |||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash due 8/19/2021 (8)(13) | 6.00% | 2,780,556 | 2,736,111 | 2,773,604 | ||||||||||||
Second Lien Term Loan, LIBOR+9% (1% floor) cash due 2/19/2022 (8) | 10.00% | 3,000,000 | 2,975,385 | 2,850,000 | ||||||||||||
5,711,496 | 5,623,604 | |||||||||||||||
CRGT Inc. | IT consulting & other services | |||||||||||||||
First Lien Term Loan, LIBOR+6.5% (1% floor) cash due 12/19/2020 (8)(13) | 7.50% | 3,440,713 | 3,433,096 | 3,449,315 | ||||||||||||
3,433,096 | 3,449,315 | |||||||||||||||
Valet Merger Sub, Inc. | Environmental & facilities services | |||||||||||||||
First Lien Term Loan, LIBOR+7% (1% floor) cash due 9/24/2021 (8)(13) | 8.00% | 5,940,000 | 5,905,025 | 6,040,239 | ||||||||||||
First Lien Revolver, LIBOR+7% (1% floor) cash due 9/24/2021 (8) | 8.00% | 500,000 | 486,811 | 500,000 | ||||||||||||
6,391,836 | 6,540,239 | |||||||||||||||
Baart Programs, Inc. | Healthcare services | |||||||||||||||
First Lien Term Loan, LIBOR+7.75% cash due 10/9/2021 (8)(13) | 8.42% | 7,661,077 | 7,377,745 | 7,647,291 | ||||||||||||
First Lien Revolver, LIBOR+7.75% cash due 10/9/2021 (8)(11) | 8.42% | (12,500 | ) | — | ||||||||||||
7,365,245 | 7,647,291 | |||||||||||||||
DigiCert, Inc. | Internet software & services | |||||||||||||||
Second Lien Term Loan, LIBOR+9% (1% floor) cash due 10/21/2022 (8) | 10.00% | 2,000,000 | 1,982,857 | 2,032,529 | ||||||||||||
1,982,857 | 2,032,529 | |||||||||||||||
Lytx, Inc. | Research & consulting services | |||||||||||||||
First Lien Term Loan, LIBOR+8.5% (1% floor) cash due 3/15/2023 (8) | 9.50% | 9,951,389 | 9,951,389 | 9,951,389 | ||||||||||||
500 Class A Units in Lytx Holdings, LLC | 500,000 | 504,173 | ||||||||||||||
10,451,389 | 10,455,562 | |||||||||||||||
Onvoy, LLC | Integrated telecommunication services | |||||||||||||||
First Lien Term Loan, LIBOR+6.25% (1% floor) cash due 4/29/2021 (8)(13) | 7.25% | 10,368,750 | 10,173,233 | 10,341,433 | ||||||||||||
10,173,233 | 10,341,433 | |||||||||||||||
4 Over International, LLC | Commercial printing | |||||||||||||||
First Lien Term Loan, LIBOR+6.0% (1% floor) cash due 6/7/2022 (8)(13) | 7.00% | 5,970,000 | 5,913,333 | 5,929,733 | ||||||||||||
First Lien Revolver LIBOR+6.0% (1% floor) cash due 6/7/2021 (8)(11) | 7.00% | (639 | ) | — | ||||||||||||
5,912,694 | 5,929,733 | |||||||||||||||
OBHG Management Services, LLC | Healthcare services | |||||||||||||||
First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 6/28/2022 (8)(13) | 6.25% | 16,123,227 | 16,117,309 | 16,076,397 | ||||||||||||
First Lien Revolver, LIBOR+5.25% (1% floor) cash due 6/28/2021 (8)(11) | 6.25% | (39 | ) | — | ||||||||||||
16,117,270 | 16,076,397 | |||||||||||||||
Ancile Solutions, Inc. | Internet software & services | |||||||||||||||
First Lien Term Loan, LIBOR+7% (1% floor) cash due 6/30/2021 (8)(13) | 8.00% | 11,000,000 | 10,692,000 | 10,835,000 | ||||||||||||
10,692,000 | 10,835,000 | |||||||||||||||
See notes to Consolidated Financial Statements. |
Portfolio Company/Type of Investment (1)(2)(9)(10)(17)(19) | Cash Interest Rate (8) | Industry | Principal (5) | Cost | Fair Value | |||||||||||
Pomeroy Group Holdings, Inc. | IT consulting & other services | |||||||||||||||
First Lien Term Loan, LIBOR+6% (1% floor) cash due 11/30/2021 (8)(13) | 7.00% | $ | 4,488,693 | $ | 4,357,979 | $ | 4,393,309 | |||||||||
4,357,979 | 4,393,309 | |||||||||||||||
Sailpoint Technologies, Inc. | Application software | |||||||||||||||
First Lien Term Loan, LIBOR+8% (1% floor) cash due 8/16/2021 (8) | 9.00% | 12,500,000 | 12,258,333 | 12,250,000 | ||||||||||||
First Lien Revolver, LIBOR+8% (1% floor) cash due 8/16/2021 (8)(11) | 9.00% | (3,867 | ) | — | ||||||||||||
12,254,466 | 12,250,000 | |||||||||||||||
California Pizza Kitchen, Inc. (16) | Restaurants | |||||||||||||||
First Lien Term Loan, LIBOR+6% (1% floor) cash due 8/23/2022 (8) | 7.00% | 5,000,000 | 5,000,000 | 4,985,425 | ||||||||||||
5,000,000 | 4,985,425 | |||||||||||||||
Total Non-Control/Non-Affiliate Investments (152.6% of net assets) | $ | 513,397,659 | $ | 497,281,256 | ||||||||||||
Total Portfolio Investments (176.0% of net assets) | $ | 600,468,963 | $ | 573,604,381 | ||||||||||||
Cash and Cash Equivalents | ||||||||||||||||
Wells Fargo Bank Institutional Money Market Fund | $ | 18,856,559 | $ | 18,856,559 | ||||||||||||
Other cash accounts | 922,282 | 922,282 | ||||||||||||||
Total Cash and Cash Equivalents (6.1% of net assets) | $ | 19,778,841 | $ | 19,778,841 | ||||||||||||
Total Portfolio Investments, Cash and Cash Equivalents (182.1% of net assets) | $ | 620,247,804 | $ | 593,383,222 |
(6) |
The interest rate on the principal balance outstanding for all floating rate loans is indexed to |
(7) | Principal includes accumulated payment in kind (“PIK”) interest and is net of repayments, if any. “£” signifies the investment is denominated in British Pounds. “€” signifies the investment is denominated in Euros. All other investments are denominated in U.S. dollars. |
(8) | Control Investments generally are defined by the Investment Company Act of 1940, as amended (the “Investment Company Act”), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation. |
(9) | Investment is not a “qualifying asset” as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2020, qualifying assets represented 83.1% of the Company’s total assets and non-qualifying assets represented 16.9% of the Company’s total assets. |
(10) | As defined in the Investment Company Act, the Company is deemed to be both an “Affiliated Person” of and to “Control” 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). See Schedule 12-14 in the accompanying notes to the Consolidated Financial Statements for transactions during the year ended September 30, 2020 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to control. |
(11) | See Note 3 to the Consolidated Financial Statements for portfolio composition. |
(12) | This investment was valued using net asset value as a practical expedient for fair value. Consistent with Financial Accounting Standards Board (“FASB”) guidance under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosure (“ASC 820”), these investments are excluded from the hierarchical levels. |
(13) | Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments. Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities. |
(14) | Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par. |
(15) | As of September 30, 2020, these investments are categorized as Level 3 within the fair value hierarchy established by ASC 820. |
(16) | This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual is inclusive of PIK and other non-cash income, where applicable. |
(17) | Income producing through payment of dividends or distributions. |
(18) | The sale of all or a portion of this investment did not qualify for sale accounting under FASB ASC Topic 860, Transfers and Servicing (“ASC 860”), and therefore the investment remains on the Company’s Consolidated Schedule of Investments as of September 30, 2020. See Note 6 in the Consolidated Financial Statements for further details. |
See notes to Consolidated Financial Statements.
13
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 2019
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
Control Investments | (8) | |||||||||||||||||||||
OCSI Glick JV LLC | Multi-sector holdings | (10)(11) | ||||||||||||||||||||
Subordinated Note, LIBOR+6.50% cash due 10/20/2021 | 8.89 | % | �� | $ | 66,077,912 | $ | 66,077,913 | $ | 54,326,418 | (6)(9)(14)(15) | ||||||||||||
87.5% equity interest | 7,111,751 | — | (9)(12)(14) | |||||||||||||||||||
|
|
|
| |||||||||||||||||||
73,189,664 | 54,326,418 | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||
Total Control Investments (19.1% of net assets) | $ | 73,189,664 | $ | 54,326,418 | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
Non-Control/Non-Affiliate Investments | (13) | |||||||||||||||||||||
4 Over International, LLC | Commercial printing | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022 | 8.04 | % | $ | 5,612,060 | $ | 5,547,000 | $ | 5,504,869 | (6)(15) | |||||||||||||
First Lien Revolver, PRIME+5.00% cash due 6/7/2021 | 10.00 | % | 7,823 | 7,321 | 6,516 | (6)(14)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,554,321 | 5,511,385 | |||||||||||||||||||||
99 Cents Only Stores LLC | | General merchandise stores | | |||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash 1.50% PIK due 1/13/2022 | 7.10 | % | 1,626,953 | 1,549,641 | 1,425,618 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
1,549,641 | 1,425,618 | |||||||||||||||||||||
Access CIG, LLC | | Diversified support services | | |||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025 | 6.07 | % | 5,462,360 | 5,417,080 | 5,404,350 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,417,080 | 5,404,350 | |||||||||||||||||||||
AI Ladder (Luxembourg) Subco S.a.r.l. | | Electrical components & equipment | | |||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 | 6.60 | % | 6,525,584 | 6,363,049 | 6,009,639 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
6,363,049 | 6,009,639 | |||||||||||||||||||||
Air Medical Group Holdings, Inc. | Healthcare services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 3/14/2025 | 6.29 | % | 2,488,670 | 2,437,830 | 2,337,272 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
2,437,830 | 2,337,272 | |||||||||||||||||||||
Airxcel, Inc. | Household appliances | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 4/28/2025 | 6.54 | % | 6,912,500 | 6,857,242 | 6,661,922 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
6,857,242 | 6,661,922 | |||||||||||||||||||||
AL Midcoast Holdings LLC | | Oil & gas storage & transportation | | |||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 8/1/2025 | 7.60 | % | 564,300 | 558,657 | 556,541 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
558,657 | 556,541 | |||||||||||||||||||||
Aldevron, L.L.C. | Biotechnology | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 9/20/2026 | 6.36 | % | 4,000,000 | 3,960,000 | 4,020,000 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,960,000 | 4,020,000 | |||||||||||||||||||||
All Web Leads, Inc. | Advertising | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.50% cash due 12/29/2020 | 9.62 | % | 24,102,647 | 24,102,621 | 20,960,795 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
24,102,621 | 20,960,795 | |||||||||||||||||||||
Allen Media, LLC | Movies & entertainment | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.50% cash due 8/30/2023 | 8.60 | % | 4,809,488 | 4,714,403 | 4,653,180 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,714,403 | 4,653,180 | |||||||||||||||||||||
Ancile Solutions, Inc. | Application software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021 | 9.10 | % | 8,299,803 | 8,184,777 | 8,133,807 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
8,184,777 | 8,133,807 | |||||||||||||||||||||
Apptio, Inc. | Application software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025 | 9.56 | % | 10,693,944 | 10,502,939 | 10,496,106 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025 | — | (12,179 | ) | (12,808 | ) | (6)(14)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
10,490,760 | 10,483,298 | |||||||||||||||||||||
Aptos, Inc. | | Computer & electronics retail | | |||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 7/23/2025 | 7.70 | % | 10,917,500 | 10,808,325 | 10,781,031 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
10,808,325 | 10,781,031 | |||||||||||||||||||||
Avaya, Inc. | | Communications equipment | | |||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 12/15/2024 | 6.28 | % | 9,825,000 | 9,740,555 | 9,361,407 | (6) | ||||||||||||||||
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|
|
| |||||||||||||||||||
9,740,555 | 9,361,407 |
14
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 2020
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||||
Ball Metalpack Finco, LLC | Metal & glass containers | |||||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 7/31/2025 | 6.62 | % | $ | 8,887,500 | $ | 8,850,147 | $ | 8,387,578 | (6)(15) | |||||||||||||||
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|
|
| |||||||||||||||||||||
8,850,147 | 8,387,578 | |||||||||||||||||||||||
Blackhawk Network Holdings, Inc. | | Data processing & outsourced services | | |||||||||||||||||||||
Second Lien Term Loan, LIBOR+7.00% cash due 6/15/2026 | 9.06 | % | 4,375,000 | 4,335,578 | 4,380,491 | (6) | ||||||||||||||||||
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|
|
| |||||||||||||||||||||
4,335,578 | 4,380,491 | |||||||||||||||||||||||
Boxer Parent Company Inc. | Systems software | |||||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025 | 6.29 | % | 6,118,763 | 6,051,218 | 5,899,007 | (6) | ||||||||||||||||||
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|
| |||||||||||||||||||||
6,051,218 | 5,899,007 | |||||||||||||||||||||||
Cadence Aerospace LLC | Aerospace & defense | |||||||||||||||||||||||
First Lien Term Loan, LIBOR+6.50% cash due 11/14/2023 | 8.54 | % | 13,514,012 | 13,406,773 | 13,277,761 | (6)(15) | ||||||||||||||||||
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|
|
| |||||||||||||||||||||
13,406,773 | 13,277,761 | |||||||||||||||||||||||
Canyon Buyer, Inc. | Application software | |||||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 2/15/2025 | 6.36 | % | 8,931,990 | 8,834,396 | 8,887,330 | (6) | ||||||||||||||||||
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|
|
| |||||||||||||||||||||
8,834,396 | 8,887,330 | |||||||||||||||||||||||
Cast & Crew Payroll, LLC | Application software | |||||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 2/9/2026 | 6.05 | % | 4,975,000 | 4,925,250 | 5,018,531 | (6) | ||||||||||||||||||
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| |||||||||||||||||||||
4,925,250 | 5,018,531 | |||||||||||||||||||||||
Cincinnati Bell Inc. | | Integrated telecommunication services | | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.25% cash due 10/2/2024 | 5.29 | % | 4,893,420 | 4,879,432 | 4,888,649 | (6)(9) | ||||||||||||||||||
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|
|
| |||||||||||||||||||||
4,879,432 | 4,888,649 | |||||||||||||||||||||||
CircusTrix Holdings LLC | Leisure facilities | |||||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 12/16/2021 | 7.54 | % | 8,072,229 | 8,025,765 | 8,014,503 | (6)(15) | ||||||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 12/16/2021 | 7.54 | % | 971,967 | 966,372 | 965,016 | (6)(15) | ||||||||||||||||||
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|
|
| |||||||||||||||||||||
8,992,137 | 8,979,519 | |||||||||||||||||||||||
CITGO Petroleum Corp. | | Oil & gas refining & marketing | | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 7/29/2021 | 6.60 | % | 5,937,500 | 5,921,943 | 5,963,505 | (6) | ||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 | 7.10 | % | 5,970,000 | 5,910,301 | 6,007,313 | (6) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
11,832,244 | 11,970,818 | |||||||||||||||||||||||
Connect U.S. Finco LLC | Alternative carriers | |||||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 9/23/2026 | 7.10 | % | 10,000,000 | 9,800,000 | 9,860,150 | (6)(9) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
9,800,000 | 9,860,150 | |||||||||||||||||||||||
Curium Bidco S.à r.l. | Biotechnology | |||||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 7/9/2026 | 6.10 | % | 4,000,000 | 3,970,000 | 4,020,000 | (6)(9) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
3,970,000 | 4,020,000 | |||||||||||||||||||||||
Curvature, Inc. | | IT consulting & other services | | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 10/30/2023 | 7.04 | % | 9,725,000 | 9,683,496 | 7,974,500 | (6) | ||||||||||||||||||
9,683,496 | 7,974,500 | |||||||||||||||||||||||
Dcert Buyer, Inc. | | Internet services & infrastructure | | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 8/8/2026 | 6.26 | % | 9,000,000 | 8,977,500 | 8,983,125 | (6) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
8,977,500 | 8,983,125 | |||||||||||||||||||||||
DigiCert, Inc. | | Internet services & infrastructure | | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 10/31/2024 | 6.04 | % | 10,631,986 | 10,611,348 | 10,629,753 | (6) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
10,611,348 | 10,629,753 | |||||||||||||||||||||||
Ellie Mae, Inc. | Application software | |||||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 4/17/2026 | 6.04 | % | 6,500,000 | 6,467,500 | 6,518,980 | (6) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
6,467,500 | 6,518,980 | |||||||||||||||||||||||
EnergySolutions LLC | | Environmental & facilities services | | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 5/9/2025 | 5.85 | % | 3,950,000 | 3,934,058 | 3,703,125 | (6) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||
3,934,058 | 3,703,125 |
15
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 2019
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
Femur Buyer, Inc. | Healthcare equipment | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 3/5/2026 | 6.38 | % | $ | 8,977,500 | $ | 8,887,725 | $ | 8,994,333 | (6) | |||||||||||||
|
|
|
| |||||||||||||||||||
8,887,725 | 8,994,333 | |||||||||||||||||||||
Firstlight Holdco, Inc. | Alternative carriers | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.50% cash due 7/23/2025 | 5.54 | % | 7,156,627 | 7,126,483 | 7,098,479 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,126,483 | 7,098,479 | |||||||||||||||||||||
Frontier Communications Corporation | Integrated telecommunication services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 6/15/2024 | 5.80 | % | 1,488,579 | 1,450,620 | 1,488,050 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
1,450,620 | 1,488,050 | |||||||||||||||||||||
Gentiva Health Services, Inc. | Healthcare services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 7/2/2025 | 5.81 | % | 3,989,924 | 3,985,062 | 4,017,355 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,985,062 | 4,017,355 | |||||||||||||||||||||
GKD Index Partners, LLC | Specialized finance | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.25% cash due 6/29/2023 | 9.35 | % | 8,616,315 | 8,551,811 | 8,503,011 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+7.25% cash due 6/29/2023 | — | (3,327 | ) | (5,844 | ) | (6)(14)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
8,548,484 | 8,497,167 | |||||||||||||||||||||
GoodRx, Inc. | Interactive media & services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+2.75% cash due 10/10/2025 | 4.81 | % | 3,925,963 | 3,917,442 | 3,930,871 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,917,442 | 3,930,871 | |||||||||||||||||||||
Guidehouse LLP | Research & consulting services | |||||||||||||||||||||
Second Lien Term Loan, LIBOR+7.50% cash due 5/1/2026 | 9.54 | % | 5,000,000 | 4,979,290 | 4,937,500 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,979,290 | 4,937,500 | |||||||||||||||||||||
iCIMs, Inc. | Application software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.50% cash due 9/12/2024 | 8.56 | % | 5,572,549 | 5,478,546 | 5,479,203 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+6.50% cash due 9/12/2024 | — | (4,852 | ) | (4,927 | ) | (6)(14)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,473,694 | 5,474,276 | |||||||||||||||||||||
Indivior Finance S.a.r.l. | Pharmaceuticals | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 12/19/2022 | 6.76 | % | 5,368,935 | 5,344,971 | 4,943,903 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,344,971 | 4,943,903 | |||||||||||||||||||||
Kellermeyer Bergensons Services, LLC | Environmental & facilities services | |||||||||||||||||||||
Second Lien Term Loan, LIBOR+8.50% cash due 4/29/2022 | 10.77 | % | 280,000 | 280,000 | 272,300 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
280,000 | 272,300 | |||||||||||||||||||||
KIK Custom Products Inc. | Household products | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023 | 6.26 | % | 5,000,000 | 5,025,753 | 4,756,250 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,025,753 | 4,756,250 | |||||||||||||||||||||
Lannett Company, Inc. | Pharmaceuticals | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.38% cash due 11/25/2022 | 7.42 | % | 7,269,303 | 7,281,949 | 7,138,455 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,281,949 | 7,138,455 | |||||||||||||||||||||
Lightbox Intermediate, L.P. | Real estate services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026 | 7.05 | % | 9,975,000 | 9,832,986 | 9,875,250 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
9,832,986 | 9,875,250 | |||||||||||||||||||||
Lytx Holdings, LLC | Research & consulting services | |||||||||||||||||||||
500 Class B Units | — | 293,339 | (15) | |||||||||||||||||||
|
|
|
| |||||||||||||||||||
— | 293,339 | |||||||||||||||||||||
McAfee, LLC | Systems software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 9/30/2024 | 5.79 | % | 8,138,690 | 8,082,911 | 8,166,891 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
8,082,911 | 8,166,891 | |||||||||||||||||||||
McDermott Technology (Americas), Inc. | Oil & gas equipment & services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 5/9/2025 | 7.10 | % | 642,238 | 631,923 | 410,497 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
631,923 | 410,497 |
16
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 2019
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
MHE Intermediate Holdings, LLC | Diversified support services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024 | 7.10 | % | $ | 11,538,092 | $ | 11,389,771 | $ | 11,307,331 | (6)(15) | |||||||||||||
First Lien Revolver, LIBOR+5.00% cash due 3/10/2023 | 7.09 | % | 788,177 | 559,231 | 683,087 | (6)(14)(15) | ||||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 3/8/2024 | 7.10 | % | 2,349,480 | 2,376,251 | 2,302,490 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
14,325,253 | 14,292,908 | |||||||||||||||||||||
Mindbody, Inc. | Internet services & infrastructure | |||||||||||||||||||||
First Lien Term Loan, LIBOR+7.00% cash due 2/14/2025 | 9.06 | % | 9,047,619 | 8,885,497 | 8,875,714 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+7.00% cash due 2/14/2025 | — | (17,065 | ) | (18,095 | ) | (6)(14)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
8,868,432 | 8,857,619 | |||||||||||||||||||||
Ministry Brands, LLC | Application software | |||||||||||||||||||||
Second Lien Term Loan, LIBOR+9.25% cash due 6/2/2023 | 11.34 | % | 1,568,067 | 1,554,797 | 1,568,067 | (6)(15) | ||||||||||||||||
Second Lien Delayed Draw Term Loan, LIBOR+9.25% cash due 6/2/2023 | 11.34 | % | 431,933 | 428,278 | 431,933 | (6)(15) | ||||||||||||||||
First Lien Revolver, LIBOR+5.00% cash due 12/2/2022 | 7.04 | % | 20,000 | 19,139 | 20,000 | (6)(14)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
2,002,214 | 2,020,000 | |||||||||||||||||||||
New Trident Holdcorp, Inc. | Healthcare services | |||||||||||||||||||||
58.99 Class A Warrants (exercise price $156.164) expiration date 3/20/2021 | — | — | (15) | |||||||||||||||||||
|
|
|
| |||||||||||||||||||
— | — | |||||||||||||||||||||
OCI Beaumont LLC | Commodity chemicals | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 3/13/2025 | 6.10 | % | 4,925,000 | 4,920,165 | 4,931,156 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,920,165 | 4,931,156 | |||||||||||||||||||||
OEConnection LLC | Application software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 9/24/2026 | 6.13 | % | 7,768,817 | 7,729,973 | 7,754,251 | (6) | ||||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/24/2026 | — | (3,656 | ) | (1,371 | ) | (6)(14) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,726,317 | 7,752,880 | |||||||||||||||||||||
Onvoy, LLC | Integrated telecommunication services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 2/10/2024 | 6.54 | % | 3,860,606 | 3,848,514 | 3,238,083 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
3,848,514 | 3,238,083 | |||||||||||||||||||||
PaySimple, Inc. | Data processing & outsourced services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025 | 7.55 | % | 7,550,000 | 7,400,733 | 7,436,750 | (6)(15) | ||||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 8/23/2025 | — | (48,438 | ) | (36,750 | ) | (6)(14)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,352,295 | 7,400,000 | |||||||||||||||||||||
Peraton Corp. | Aerospace & defense | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.25% cash due 4/29/2024 | 7.30 | % | 6,353,750 | 6,333,030 | 6,306,097 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
6,333,030 | 6,306,097 | |||||||||||||||||||||
ProFrac Services, LLC | Industrial machinery | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.25% cash due 9/15/2023 | 8.66 | % | 9,394,444 | 9,319,898 | 9,206,556 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
9,319,898 | 9,206,556 | |||||||||||||||||||||
Project Boost Purchaser, LLC | Application software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.50% cash due 6/1/2026 | 5.54 | % | 2,800,000 | 2,772,000 | 2,785,650 | (6) | ||||||||||||||||
Second Lien Term Loan, LIBOR+8.00% cash due 5/9/2027 | 10.14 | % | 1,500,000 | 1,500,000 | 1,500,000 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,272,000 | 4,285,650 | |||||||||||||||||||||
PSI Services LLC | Human resource & employment services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 1/20/2023 | 7.04 | % | 6,601,580 | 6,545,627 | 6,555,342 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
6,545,627 | 6,555,342 | |||||||||||||||||||||
Recorded Books Inc. | Publishing | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 8/29/2025 | 6.54 | % | 10,395,000 | 10,291,050 | 10,421,039 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
10,291,050 | 10,421,039 | |||||||||||||||||||||
RevSpring, Inc. | Commercial printing | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 10/11/2025 | 6.04 | % | 9,925,000 | 9,903,404 | 9,866,095 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
9,903,404 | 9,866,095 |
17
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 2020
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
Salient CRGT, Inc. | Aerospace & defense | |||||||||||||||||||||
First Lien Term Loan, LIBOR+6.00% cash due 2/28/2022 | 8.05 | % | $ | 5,731,994 | $ | 5,676,942 | $ | 5,445,395 | (6)(15) | |||||||||||||
|
|
|
| |||||||||||||||||||
5,676,942 | 5,445,395 | |||||||||||||||||||||
Signify Health, LLC | Healthcare services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024 | 6.60 | % | 10,835,000 | 10,752,193 | 10,821,456 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
10,752,193 | 10,821,456 | |||||||||||||||||||||
Sirva Worldwide, Inc. | Diversified support services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025 | 7.54 | % | 7,850,000 | 7,732,250 | 7,614,500 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,732,250 | 7,614,500 | |||||||||||||||||||||
Sophia, L.P. | Systems software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.25% cash due 9/30/2022 | 5.35 | % | 1,398,788 | 1,396,201 | 1,400,830 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
1,396,201 | 1,400,830 | |||||||||||||||||||||
StandardAero Aviation Holdings Inc. | Aerospace & defense | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 4/6/2026 | 6.10 | % | 2,000,000 | 1,997,545 | 2,011,870 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
1,997,545 | 2,011,870 | |||||||||||||||||||||
Sunshine Luxembourg VII SARL | Personal products | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.25% cash due 9/25/2026 | 6.59 | % | 3,000,000 | 2,985,000 | 3,017,820 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
2,985,000 | 3,017,820 | |||||||||||||||||||||
The Dun & Bradstreet Corporation | Research & consulting services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 2/6/2026 | 7.05 | % | 5,000,000 | 4,908,337 | 5,037,050 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,908,337 | 5,037,050 | |||||||||||||||||||||
TIBCO Software Inc. | Application software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 6/30/2026 | 6.07 | % | 7,989,795 | 7,979,663 | 8,011,448 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
7,979,663 | 8,011,448 | |||||||||||||||||||||
Tribe Buyer LLC | Human resources & employment services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 2/16/2024 | 6.54 | % | 1,556,998 | 1,554,180 | 1,453,201 | (6)(15) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
1,554,180 | 1,453,201 | |||||||||||||||||||||
Truck Hero, Inc. | Auto parts & equipment | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 4/22/2024 | 5.79 | % | 5,739,880 | 5,749,771 | 5,385,930 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
5,749,771 | 5,385,930 | |||||||||||||||||||||
Uber Technologies, Inc. | Application software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025 | 6.03 | % | 2,239,323 | 2,224,436 | 2,230,467 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
2,224,436 | 2,230,467 | |||||||||||||||||||||
UFC Holdings, LLC | Movies & entertainment | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026 | 5.30 | % | 4,944,058 | 4,941,992 | 4,962,945 | (6) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
4,941,992 | 4,962,945 | |||||||||||||||||||||
Uniti Group LP | Specialized REITs | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 10/24/2022 | 7.04 | % | 8,848,483 | 8,642,094 | 8,648,021 | (6)(9) | ||||||||||||||||
|
|
|
| |||||||||||||||||||
8,642,094 | 8,648,021 | |||||||||||||||||||||
UOS, LLC | Trading companies & distributors | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.50% cash due 4/18/2023 | 7.54 | % | 8,819,673 | 8,943,835 | 8,929,919 | (6 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||
8,943,835 | 8,929,919 | |||||||||||||||||||||
Veritas US Inc. | Application software | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 1/27/2023 | 6.60 | % | 12,811,879 | 12,902,946 | 12,142,266 | (6 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||
12,902,946 | 12,142,266 | |||||||||||||||||||||
Verra Mobility, Corp. | Data processing & outsourced services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 2/28/2025 | 5.79 | % | 4,949,749 | 4,960,502 | 4,976,552 | (6 | )(9) | |||||||||||||||
|
|
|
| |||||||||||||||||||
4,960,502 | 4,976,552 | |||||||||||||||||||||
Verscend Holding Corp. | Healthcare technology | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025 | 6.54 | % | 10,975,140 | 10,897,989 | 11,032,320 | (6 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||
10,897,989 | 11,032,320 |
18
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 2019
Portfolio Company/Type of Investment (1)(2)(3)(4)(5) | Cash Interest Rate (6) | Industry | Principal (7) | Cost | Fair Value | Notes | ||||||||||||||||
WeddingWire, Inc. | Interactive media & services | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.50% cash due 12/19/2025 | 6.54 | % | $ | 7,940,000 | $ | 7,904,378 | $ | 7,949,925 | (6 | ) | ||||||||||||
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|
| |||||||||||||||||||
�� | 7,904,378 | 7,949,925 | ||||||||||||||||||||
Windstream Services, LLC | Integrated telecommunication services | |||||||||||||||||||||
First Lien Term Loan, PRIME+5.00% cash due 3/29/2021 | 10.00 | % | 7,384,828 | 7,227,936 | 7,524,069 | (6 | )(9) | |||||||||||||||
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| |||||||||||||||||||
7,227,936 | 7,524,069 | |||||||||||||||||||||
Woodford Express LLC | Oil & gas exploration & production | |||||||||||||||||||||
First Lien Term Loan, LIBOR+5.00% cash due 1/27/2025 | 7.04 | % | 14,775,000 | 14,662,039 | 13,947,600 | (6 | ) | |||||||||||||||
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|
| |||||||||||||||||||
14,662,039 | 13,947,600 | |||||||||||||||||||||
WP CPP Holdings, LLC | Aerospace & defense | |||||||||||||||||||||
First Lien Term Loan, LIBOR+3.75% cash due 4/30/2025 | 6.01 | % | 4,455,000 | 4,445,709 | 4,467,541 | (6 | ) | |||||||||||||||
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 | 10.01 | % | 1,000,000 | 991,442 | 995,830 | (6 | ) | |||||||||||||||
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| |||||||||||||||||||
5,437,151 | 5,463,371 | |||||||||||||||||||||
Zep Inc. | Specialty chemicals | |||||||||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 8/12/2024 | 6.04 | % | 4,655,000 | 4,686,365 | 3,687,132 | (6 | ) | |||||||||||||||
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| |||||||||||||||||||
4,686,365 | 3,687,132 | |||||||||||||||||||||
Zephyr Bidco Limited | Specialized finance | |||||||||||||||||||||
First Lien Term Loan, UK LIBOR+4.50% cash due 7/23/2025 | 5.21 | % | £ | 5,000,000 | 6,667,495 | 5,976,039 | (6 | )(9) | ||||||||||||||
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| |||||||||||||||||||
6,667,495 | 5,976,039 | |||||||||||||||||||||
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| |||||||||||||||||||
Total Non-Control/Non-Affiliate Investments (190.8% of net assets) | $ | 553,679,070 | $ | 542,778,029 | ||||||||||||||||||
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| |||||||||||||||||||
Total Portfolio Investments (209.9% of net assets) | $ | 626,868,734 | $ | 597,104,447 | ||||||||||||||||||
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|
| |||||||||||||||||||
Cash and Cash Equivalents and Restricted Cash | ||||||||||||||||||||||
JP Morgan Prime Money Market Fund, Institutional Shares | $ | 228,653 | $ | 228,653 | ||||||||||||||||||
Other cash accounts | 13,822,979 | 13,822,979 | ||||||||||||||||||||
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|
|
| |||||||||||||||||||
Total Cash and Cash Equivalents and Restricted Cash (4.9% of net assets) | $ | 14,051,632 | $ | 14,051,632 | ||||||||||||||||||
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|
|
| |||||||||||||||||||
Total Portfolio Investments, Cash and Cash Equivalents and Restricted Cash (214.9% of net assets) | $ | 640,920,366 | $ | 611,156,079 | ||||||||||||||||||
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|
|
|
Derivatives Instrument | Notional Amount Purchased / (Sold) in U.S. Dollars | Notional Amount Purchased / (Sold) in Local Currency | Maturity Date | Counterparty | Cumulative Unrealized Appreciation (Depreciation) | |||||||||||||||
Foreign currency forward contract | $ | 6,106,199 | £ | (4,934,900 | ) | 10/15/2019 | JPMorgan Chase Bank, N.A. | $ | 20,876 |
19
Oaktree Strategic Income Corporation
Consolidated Schedule of Investments
September 30, 2019
(1) | All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted. |
(2) | See Note 3 to the Consolidated Financial Statements for portfolio composition by geographic region. |
Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents. |
(4) | |
Each of the |
(5) | |
Equity ownership may |
(6) | The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower’s option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of September 30, 2019, the reference rates for the Company’s variable rate loans were the 30-day LIBOR at 2.04%, the 60-day LIBOR at 2.09%, the 90-day LIBOR at 2.10%, the 180-day LIBOR at 2.06%, the PRIME at 5.00% and the 30-day UK LIBOR at 0.71%. Most loans include an interest floor, which generally ranges from 0% to 1%. |
Principal includes accumulated PIK interest and is net of repayments, if any. “£” signifies the investment is denominated in British Pounds. All other investments are denominated in U.S. dollars. |
(8) | Control Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation. |
(9) | Investment is not a “qualifying asset” as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2019, qualifying assets represented 78.6% of the Company’s total assets and non-qualifying assets represented 21.4% of the Company’s total assets. |
(10) | As defined in the |
(11) | |
See Note 3 to the Consolidated Financial Statements for portfolio composition. |
(12) | This investment was valued using net asset value as a practical expedient for fair value. Consistent with ASC 820, these investments are excluded from the hierarchical levels. |
Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments. Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities. |
(14) | Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par. |
(15) | As of September 30, |
See notes to Consolidated Financial Statements.
20
Note 1. Organization
Oaktree Strategic Income Corporation (formerly known as Fifth Street Senior Floating Rate Corp. through October 17, 2017), (together with its consolidated subsidiaries, the "Company"“Company”) is a specialty finance company that islooks to provide customized capital solutions for middle-market companies in both the syndicated and private placement markets. The Company was formed in May 2013 and operates as a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business development companyBusiness Development Company (“BDC”) under the 1940Investment Company Act. The Company has qualified and elected to be treated as a regulated investment company ("RIC"(“RIC”) under the Internal Revenue Code of 1986, as amended (the "Code"“Code”), for tax purposes.
The Company’s investment objective is externally managed by Oaktree Capital Management, L.P., (“Oaktree” or the “Investment Adviser”), a subsidiary of Oaktree Capital Group, LLC (“OCG”), a global investment manager specializing in alternative investments, pursuant to an investment advisory agreement between the Company and the Investment Adviser (the “New Investment Advisory Agreement”). Oaktree Fund Administration, LLC (“Oaktree Administrator” or “OFA”), a subsidiary of the Investment Adviser, provides certain administrative and other services necessary for the Company to operate pursuant to an administration agreement between the Company and OFA (the “New Administration Agreement”). See Note 11 for additional information regarding the New Investment Advisory Agreement and the New Administration Agreement.
The Company is externally managed by Oaktree entered into an Asset Purchase Agreement (the “Purchase Agreement”Fund Advisors, LLC (“Oaktree”) with FSM, and, for certain limited purposes, FSAM, and Fifth Street Holdings L.P., the direct, partial owner of FSM.
Note 2. Significant Accounting Policies
Basis of Presentation:
The Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"(“GAAP”) and pursuant to the requirements for reporting on Form 10-K and Regulation S-X. All intercompany balances and transactions have been eliminated. The Company is an investment company following the accounting and reporting guidance in FASB ASC Topic 946,
Use of Estimates:
The preparation of the financial statements in conformity with GAAP requires management to make certain estimates and assumptions affecting amounts reported in the financial statements and accompanying notes. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Changes in the economic and political environments, financial markets and any other parameters used in determining these estimates could cause actual results to differ and such differences could be material. Significant estimates include the valuation of investments and revenue recognition.
Consolidation:
The accompanying Consolidated Financial Statements include the accounts of Oaktree Strategic Income Corporation and its consolidated subsidiaries. Each consolidated subsidiary is wholly-owned and, as such, consolidated into the Consolidated Financial Statements. Certain subsidiaries that hold investments are treated as pass through entities for tax purposes. The assets of certain of the Company's consolidated subsidiaries are not directly available to satisfy the claims of the creditors of the CompanyOaktree Strategic Income Corporation or any of its other
As of September 30, 2017, the Company's consolidated subsidiaries were FS Senior Funding CLO LLC, FS Senior Funding II LLC and FS Senior Funding Ltd. (“2015 Issuer”).
21
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair Value Measurements:
The Company values its investments in accordance with ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability'sliability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices derived from such prices over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments'investments’ complexity.
Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:
Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities atas of the measurement date.
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that reflect management'smanagement’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
If inputs used to measure fair value fall into different levels of the fair value hierarchy, an investment'sinvestment’s level is based on the lowest level of input that is significant to the fair value measurement. The Company'sCompany’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. This includes investment securities that are valued using "bid"“bid” and "ask"“ask” prices obtained from independent third party pricing services or directly from brokers. These investments may be classified as Level 3 because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustments for investment-specific factors or restrictions.
Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, the Investment AdviserOaktree obtains and analyzes readily available market quotations provided by independent pricing servicesvendors and brokers for all of the Company's first lien and second lien ("senior secured") debtCompany’s investments for which quotations are available. In determining the fair value of a particular investment, pricing servicesvendors and brokers use observable market information, including both binding and non-binding indicative quotations.
The Investment Adviser evaluatesCompany seeks to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If the Company is unable to obtain two quotes from pricing vendors, or if the prices obtained from independent pricing servicesvendors are not within the Company’s set threshold, the Company seeks to obtain a quote directly from a broker making a market for the asset. Oaktree evaluates the quotations provided by pricing vendors and company specific data that could affect the credit quality and/or fair valuebrokers based on available market information, including trading activity of the investment. Investments for which market quotationssubject or similar securities, or by performing a comparable security analysis to ensure that fair values are readily available may be valued at such market quotations.reasonably estimated. Oaktree also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In orderaddition to validate market quotations,ongoing monitoring and back-testing, Oaktree performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the Investment Adviser looks at a number of factors to determine ifvaluation process. Generally, the quotations are representative of fair value, including the source and nature of the quotations. The Investment AdviserCompany does not adjust any of the prices unless it has a reasonreceived from these sources.
22
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
If the quotations obtained from pricing vendors or brokers are determined to believe market quotationsnot be reliable or are not reflective of the fair value of an investment. Examples of events that would cause market quotations to not reflect fair value could include cases when a security trades infrequently causing a quoted purchase or sale price to become stale or in the event of a "fire sale" by a distressed seller. In these instances,readily available, the Company values such investments by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available (as discussed below).
In accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. Consistent with FASB guidance under ASC 820, these investments are excluded from the hierarchical levels.
The Company estimates the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an EV analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk free rate. Changes in the subjective input assumptions can materially affect the fair value estimates.
The Company'sCompany’s Board of Directors undertakes a multi-step valuation process each quarter in connection with determining the fair value of the Company'sCompany’s investments:
The quarterly valuation process begins with each portfolio company or investment being initially valued by the Investment Adviser'sOaktree’s valuation team in conjunction with the Investment Adviser'sOaktree’s portfolio management team and investment professionals responsible for each portfolio investment;
Preliminary valuations are then reviewed and discussed with management of the Investment Adviser;
Separately, independent valuation firms engaged by the Board of Directors prepare valuations of the Company'sCompany’s investments, on a selected basis, for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment, and submit the reports to the Company and provide such reports to the Investment AdviserOaktree and the Audit Committee of the Board of Directors;
Oaktree compares and contrasts its preliminary valuations to the valuations of the independent valuation firms and prepares a valuation report for the Audit Committee of the Board of Directors;Committee;
The Audit Committee of the Board of Directors reviews the preliminary valuations with the Investment Adviser,Oaktree, and the Investment AdviserOaktree responds and supplements the preliminary valuations to reflect any discussions between the Investment AdviserOaktree and the Audit Committee;
The Audit Committee of the Board of Directors makes a recommendation to the full Board of Directors regarding the fair value of the investments in the Company'sCompany’s portfolio; and
The Board of Directors discusses valuations and determines the fair value of each investment in the Company'sCompany’s portfolio.
The fair value of the Company'sCompany’s investments atas of September 30, 20172020 and September 30, 20162019 was determined in good faith by the Board of Directors. The Board of Directors has authorized the engagement of independent valuation firms to provide valuation assistance. The Companyand will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of a portion of the Company'sCompany’s portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board of Directors may reasonably rely on that assistance. As of September 30, 2017, 84.5% of the Company's portfolio at fair value was valued either using market quotations or
23
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
With the exception of the line items entitled “deferred financing costs,” “deferred offering costs,” “other assets,” “credit facilities payable” and “secured borrowings” which are reported at amortized cost, all assets and liabilities approximate fair value on the Consolidated Statements of Assets and Liabilities. The carrying value of the line items titled “interest, dividends and fees receivable,” “due from portfolio companies,” “receivables from unsettled transactions,” “accounts payable, accrued expenses and other liabilities,” “base management fee and incentive fee payable,” “due to affiliate,” “interest payable,” “payables from unsettled transactions” and “director fees payable” approximate fair value due to their short maturities.
24
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign Currency Translation:
The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the prevailing foreign exchange rate on the reporting date. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. The Company’s investments in foreign securities may involve certain risks, including foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.
Derivative Instruments:
The Company does not utilize hedge accounting and as such values its derivative instruments at fair value with the unrealized gains or losses recorded in “net unrealized appreciation (depreciation)” in the Company’s Consolidated Statements of Operations.
Secured Borrowings:
Securities sold and simultaneously repurchased at a premium are reported as financing transactions in accordance with ASC 860. Amounts payable to the counterparty are due on the repurchase settlement date and, excluding accrued interest, such amounts are presented in the accompanying Statements of Assets and Liabilities as secured borrowings. Premiums payable are separately reported as accrued interest.
Investment Income:
Interest Income
Interest income, adjusted for accretion of original issue discount ("OID"(“OID”), is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment. SuchA non-accrual investments areinvestment is restored to accrual status if past due principal and interest are paid in cash and the portfolio companies,company, in management'smanagement’s judgment, areis likely to continue timely payment of theirits remaining interest.
In connection with its investment in a portfolio company, the Company sometimes receives nominal cost equity that is valued as part of the negotiation process with the portfolio company. When the Company receives nominal cost equity, the Company allocates its cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan.
For the Company’s secured borrowings, the interest earned on the entire loan balance is recorded within interest income and the interest earned by the buyer from the partial loan salescounterparty is recorded within interest expense in the Consolidated Statements of Operations.
PIK Interest Income
The Company'sCompany’s investments in debt securities may contain PIK interest provisions. PIK interest, which generally represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. The Company generally ceases accruing PIK interest if there is insufficient value to support the accrual or if the Company does not expect the portfolio company to be able to pay all principal and interest due. The Company'sCompany’s decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; the Company'sCompany’s assessment of the portfolio company'scompany’s business development success; information obtained by the Company in connection with periodic formal update interviews with the portfolio company'scompany’s management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. Based on this and other information, the Company determines whether to cease accruing PIK interest on a loan or debt security. The Company'sCompany’s determination to cease accruing PIK interest on a loan or debt security is generally made well before the Company'sCompany’s full write-down of sucha loan or debt security. In addition, if it is subsequently determined that the Company will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on the Company’s debt investments increases the recorded cost bases of these investments in the consolidated financial statements and, as a result, increases the cost bases of these investmentsConsolidated Financial Statements including for purposes of computing the capital gaingains incentive fee payable by the Company to the Investment Adviser.Oaktree. To maintain its status as a RIC, certain income from PIK interest mustmay be paid outrequired to be distributed to the Company’s stockholders, as distributions, even though the Company has not yet collected the cash and may never collectdo so.
25
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fee Income
Oaktree or its affiliates may provide financial advisory services to portfolio companies, and in return, the cash relating toCompany may receive fees for capital structuring services. These fees are generally nonrecurring and are recognized by the PIK interest.
The Company has also structured exit fees across certain of its portfolio investments to be received upon the future exit of those investments. These fees are typically paid to the Company upon the earliest to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. These fees are included in net investment income over the life of the loan.
Dividend Income
The Company generally recognizes dividend income on the ex-dividend date.date for public securities and the record date for private equity investments. Distributions received from private equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from suchprivate equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents and restricted cash consist of demand deposits and highly liquid investments with maturities of three months or less when acquired. The Company places its cash and cash equivalents and restricted cash with financial institutions and, at times, cash held in bank accounts may exceed the Federal Deposit Insurance Corporation ("FDIC"(“FDIC”) insurance limit. Cash and cash equivalents and restricted cash are included on the Company’s Consolidated Schedule of Investments and cash equivalents are classified as Level 1 assets and are included on the Company's Consolidated Schedule of Investments.
As of September 30, 2017,2020, included in restricted cash was $7.4$4.1 million that was held at Wells Fargo Bank, N.A. in connection with the Company'sCompany’s Citibank facilityFacility and 2015 Debt SecuritizationDeutsche Bank Facility (each as defined in Note 6 – Borrowings), and $0.3 million that was held at U.S. Bank National Association as collateral in connection with the ISDA Master Agreement (as defined in Note 6
26
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2016,2019, included in restricted cash was $9.0$7.6 million that was held at Wells Fargo Bank, N.A. in connection with the Company'sCompany’s Citibank facilityFacility and 2015 Debt Securitization. PursuantDeutsche Bank Facility and $0.8 million held at East West Bank in connection with the Company’s East West Bank Facility (as defined in Note 6 – Borrowings). Of the $7.6 million of restricted cash held at Wells Fargo Bank, N.A., pursuant to the terms of the Citibank facility,Facility, the Company was restricted in terms of access to $3.5$3.4 million of that amount until such time as the Company submitsoccurrence of the periodic distribution dates and, in connection therewith, the Company’s submission of its required monthlyperiodic reporting schedules.schedules and verifications of the Company’s compliance with the terms of the credit agreement. As of September 30, 2016, $5.52019, the remaining $4.3 million of cash held in connection with the 2015 Debt Securitizationat Wells Fargo Bank, N.A. was restricted due to the obligation to pay interest on the notes under the terms of the 2015 Debt Securitization.
Due from Portfolio Companies:
Due from portfolio companies consists of amounts payable to the Company from its portfolio companies, including proceeds from the sale of portfolio companies not yet received or being held in escrow, and excluding those amounts attributable to interest, dividends or fees receivable. These amounts are recognized as they become payable to the Company (
e.g., principal payments on the scheduled amortization payment date).27
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Receivables/Payables Fromfrom Unsettled Transactions:
Receivables/payables from unsettled transactions consistsconsist of amounts receivable to or payable by the Company for transactions that have not settled at the reporting date.
Deferred Financing Costs:
Deferred financing costs consist of fees and expenses paid in connection with the closing or amending of credit facilities and debt offerings. Deferred financing costs in connection with credit facilities are capitalized as an asset at the time of payment.when incurred. Deferred financing costs in connection with all other debt arrangements are a direct deduction from the related debt liability at the time of payment.when incurred. Deferred financing costs are amortized either using the straight line method or effective interest method over the termsterm of the respective debt arrangement, as appropriate.arrangement. This amortization expense is included in interest expense in the Company'sCompany’s Consolidated Statements of Operations. Upon early termination or modification of a credit facility, all or a portion of unamortized fees related to such facility may be accelerated into interest expense.
Deferred Offering Costs:
Legal fees and expensesother costs incurred in connection with the offer and sale of the Company's securities, including legal, accounting and printing fees. The Company chargesCompany’s shelf registration statement are capitalized as deferred offering costs to capital at the time of an offering. There were
Income Taxes:
The Company has elected to be subject to tax as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends to its stockholders of an amount generally at least equal to 90% of investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each taxable year. As a RIC, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to stockholders as a dividend. Depending on the level of taxable income earned during a taxable year, the Company may choose to retain taxable income in excess of current year dividend distributions and would distribute such taxable income in the next taxable year. The Company would then incur a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income, determined on a calendar year basis, could exceed estimated current calendar year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. The Company anticipates timely distribution of its taxable income within the tax rules under Subchapter M of the Code. The Company did not incur a U.S. federal excise tax for calendar years 20152018 and 20162019, and does not expect to incur a U.S. federal excise tax for calendar year 2017. 2020.
The Company may incur a U.S. federal excise tax in future years.
28
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FASB ASC Topic 740,
Accounting for Uncertainty in Income TaxesRecent Accounting Pronouncements:
In March 2016, the FASB issued
The SEC issued final rules that, among other things, amended the FASB issued ASU 2015-07,
Note 3. Portfolio Investments
As of September 30, 2017, 190.9%2020, 188.3% of net assets at fair value, or $560.4$502.3 million, was invested in 6778 portfolio companies, including 19.6%18.5% of net assets, or $57.6$49.4 million at fair value, in subordinated notes and limited liability company ("LLC"(“LLC”) equity interests of FSFROCSI Glick JV LLC (together with its consolidated subsidiaries, "FSFRthe “OCSI Glick JV"JV”), a joint venture through which the Company and 14.6%GF Equity Funding 2014 LLC (“GF Equity Funding”) co-invest primarily in senior secured loans of middle-market companies, and 11.1% of net assets, or $43.0$29.5 million, was invested in cash and cash equivalents (including $7.4$4.4 million of restricted cash). In comparison, atas of September 30, 2016, 176.0%2019, 209.9% of net assets at fair value, or $573.6$597.1 million, was invested in 6384 portfolio companies, including 19.4%19.1% of net assets, or $63.3$54.3 million at fair value, in subordinated notes and LLC equity interests of FSFRthe OCSI Glick JV, and 8.8%4.9% of net assets, or $28.8$14.1 million, was invested in cash and cash equivalents (including $9.0$8.4 million of restricted cash). As of September 30, 2017, 89.5%2020, 89.7% of the Company'sCompany’s portfolio at fair value consisted of senior secured debt investments, that bore interest at floating rates and that are secured by first or second priority liens on the assets of the portfolio companies, 10.3%9.8% consisted of investments in the subordinated notes of FSFRthe OCSI Glick JV and 0.2%0.5% consisted of equity investments in other portfolio companies.investments. As of September 30, 2016, 87.6%2019, 90.9% of the Company'sCompany’s portfolio at fair value consisted of senior secured debt investments that bore interest at floating rates and that are secured by first or second priority liens on the assets of the portfolio companies, 9.9%9.1% consisted of investments in the subordinated notes of FSFRthe OCSI Glick JV, 1.1%JV.
As of September 30, 2020 and September 30, 2019, the Company’s equity investments consisted of investments in the LLC equity interests, of FSFR Glick JVcommon stock and 1.4% consisted of equity investmentswarrants in other portfolio companies.
During the years ended September 30, 2017, 20162020, 2019 and 2015,2018, the Company recorded net realized gain (loss) on investments and secured borrowingslosses of $(13.4)$10.3 million, $(12.8)$0.5 million, and $0.4$27.7 million, respectively. During the years ended September 30, 2017, 20162020, 2019 and 2015,2018, the Company recorded net unrealized depreciation on investments and secured borrowingsappreciation (depreciation) of $17.8$(7.2) million, $17.0$(13.7) million, and $12.8$28.6 million, respectively.
29
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The composition of the Company'sCompany’s investments as of September 30, 20172020 and September 30, 20162019 at cost and fair value was as follows:
September 30, 2020 | September 30, 2019 | |||||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||||
Senior secured loans | $ | 464,459,378 | $ | 450,508,104 | $ | 553,679,070 | $ | 542,484,690 | ||||||||
OCSI Glick JV subordinated notes | 65,045,551 | 49,409,901 | 66,077,913 | 54,326,418 | ||||||||||||
OCSI Glick JV equity interests | 7,111,751 | — | 7,111,751 | — | ||||||||||||
Equity securities, excluding the OCSI Glick JV | 2,448,427 | 2,375,360 | — | 293,339 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 539,065,107 | $ | 502,293,365 | $ | 626,868,734 | $ | 597,104,447 | ||||||||
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|
|
|
|
|
|
30
September 30, 2017 | September 30, 2016 | |||||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||||
Investments in debt securities (senior secured) | $ | 523,384,267 | $ | 501,769,997 | $ | 518,778,491 | $ | 502,385,158 | ||||||||
Investments in equity securities (common stock, preferred stock and warrants) | 10,365,425 | 1,059,989 | 10,572,966 | 7,902,556 | ||||||||||||
Debt investment in FSFR Glick JV | 64,228,881 | 57,606,674 | 64,005,755 | 56,885,646 | ||||||||||||
Equity investment in FSFR Glick JV | 7,111,751 | — | 7,111,751 | 6,431,021 | ||||||||||||
Total | $ | 605,090,324 | $ | 560,436,660 | $ | 600,468,963 | $ | 573,604,381 |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the composition of the Company’s debt investments as of September 30, 2020 and September 30, 2019 at floating rates and fixed rates:
September 30, 2020 | September 30, 2019 | |||||||||||||||
Fair Value | % of Debt Portfolio | Fair Value | % of Debt Portfolio | |||||||||||||
Floating rate debt securities, including debt investments in the OCSI Glick JV | $ | 490,506,890 | 98.12 | % | $ | 596,811,108 | 100.00 | % | ||||||||
Fixed rate debt securities | 9,411,115 | 1.88 | % | — | — | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 499,918,005 | 100.00 | % | $ | 596,811,108 | 100.00 | % | ||||||||
|
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|
|
|
|
The following table presents the financial instruments carried at fair value as of September 30, 20172020 on the Company'sCompany’s Consolidated Statement of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820:
Level 1 | Level 2 | Level 3 | Measured at Net Asset Value (a) | Total | ||||||||||||||||
Investments in debt securities (senior secured) | $ | — | $ | 75,149,541 | $ | 426,620,456 | $ | — | $ | 501,769,997 | ||||||||||
Investments in debt securities (subordinated notes of FSFR Glick JV) | — | — | 57,606,674 | — | 57,606,674 | |||||||||||||||
Investment in equity securities (common stock, preferred stock and warrants, including LLC equity interests of FSFR Glick JV) | — | — | 1,059,989 | — | 1,059,989 | |||||||||||||||
Total investments at fair value | — | 75,149,541 | 485,287,119 | — | 560,436,660 | |||||||||||||||
Cash and cash equivalents | 35,604,127 | — | — | — | 35,604,127 | |||||||||||||||
Total assets at fair value | $ | 35,604,127 | $ | 75,149,541 | $ | 485,287,119 | $ | — | $ | 596,040,787 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Senior secured loans | $ | — | $ | 207,278,600 | $ | 243,229,504 | $ | 450,508,104 | ||||||||
OCSI Glick JV subordinated notes | — | — | 49,409,901 | 49,409,901 | ||||||||||||
Equity securities | 421,948 | — | 1,953,412 | 2,375,360 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments at fair value | 421,948 | 207,278,600 | 294,592,817 | 502,293,365 | ||||||||||||
Cash equivalents | 7,052,674 | — | — | 7,052,674 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets at fair value | $ | 7,474,622 | $ | 207,278,600 | $ | 294,592,817 | $ | 509,346,039 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative liability | $ | — | $ | 129,936 | $ | — | $ | 129,936 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities at fair value | $ | — | $ | 129,936 | $ | — | $ | 129,936 | ||||||||
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|
|
The following table presents the financial instruments carried at fair value as of September 30, 20162019 on the Company'sCompany’s Consolidated Statement of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820:
Level 1 | Level 2 | Level 3 | Measured at Net Asset Value (a) | Total | ||||||||||||||||
Investments in debt securities (senior secured) | $ | — | $ | — | $ | 502,385,158 | $ | — | $ | 502,385,158 | ||||||||||
Investments in debt securities (subordinated notes of FSFR Glick JV) | — | — | 56,885,646 | — | 56,885,646 | |||||||||||||||
Investment in equity securities (common stock, preferred stock and warrants, including LLC equity interests of FSFR Glick JV) | — | — | 7,902,556 | 6,431,021 | 14,333,577 | |||||||||||||||
Total investments at fair value | — | — | 567,173,360 | 6,431,021 | 573,604,381 | |||||||||||||||
Cash and cash equivalents | 19,778,841 | — | — | — | 19,778,841 | |||||||||||||||
Total assets at fair value | $ | 19,778,841 | $ | — | $ | 567,173,360 | $ | 6,431,021 | $ | 593,383,222 | ||||||||||
Secured borrowings | — | — | 4,985,425 | — | 4,985,425 | |||||||||||||||
Total liabilities at fair value | $ | — | $ | — | $ | 4,985,425 | $ | — | $ | 4,985,425 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Senior secured loans | $ | — | $ | 360,600,227 | $ | 181,884,463 | $ | 542,484,690 | ||||||||
OCSI Glick JV subordinated notes | — | — | 54,326,418 | 54,326,418 | ||||||||||||
Equity securities | — | — | 293,339 | 293,339 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments at fair value | — | 360,600,227 | 236,504,220 | 597,104,447 | ||||||||||||
Cash equivalents | 228,653 | — | — | 228,653 | ||||||||||||
Derivative asset | — | 20,876 | — | 20,876 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets at fair value | $ | 228,653 | $ | 360,621,103 | $ | 236,504,220 | $ | 597,353,976 | ||||||||
|
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|
|
|
|
|
|
When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the fact that the unobservable factors are significant to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to thehave both unobservable or Level 3 components and observable components (i.e. components that are actively quoted and can be validated by external sources). Accordingly, the appreciation (depreciation) in the tables below includes changes in fair value due in part to observable factors that are part of the valuation methodology. Transfers between levels are recognized at the beginning of the reporting period.
31
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides a roll-forward in the changes in fair value from September 30, 20162019 to September 30, 2017,2020 for all investments and secured borrowings for which the Company determined fair value using unobservable (Level 3) factors:
Investments | Liabilities | |||||||||||||||||||
Senior Secured Debt | Subordinated notes of FSFR Glick JV | Common stock, preferred stock and warrants | Total | Secured Borrowings | ||||||||||||||||
Fair value as of September 30, 2016 | $ | 502,385,158 | $ | 56,885,646 | $ | 7,902,556 | $ | 567,173,360 | $ | 4,985,425 | ||||||||||
New investments & net revolver activity | 225,012,781 | — | 14,743 | 225,027,524 | — | |||||||||||||||
Redemptions/repayments/sales | (276,479,425 | ) | — | (222,284 | ) | (276,701,709 | ) | (5,000,000 | ) | |||||||||||
Transfers out (a) | (12,608,478 | ) | — | — | (12,608,478 | ) | — | |||||||||||||
Net accrual of PIK interest income | 185,296 | 223,125 | — | 408,421 | — | |||||||||||||||
Accretion of original issue discount | 3,794,604 | — | — | 3,794,604 | — | |||||||||||||||
Net change in unearned income | 19,280 | — | — | 19,280 | — | |||||||||||||||
Net unrealized appreciation (depreciation) on investments | (2,303,845 | ) | 497,903 | (6,635,026 | ) | (8,440,968 | ) | — | ||||||||||||
Net unrealized appreciation on secured borrowings | — | — | — | — | 14,575 | |||||||||||||||
Net realized loss on investments | (13,384,915 | ) | — | — | (13,384,915 | ) | — | |||||||||||||
Fair value as of September 30, 2017 | $ | 426,620,456 | $ | 57,606,674 | $ | 1,059,989 | $ | 485,287,119 | $ | — | ||||||||||
Net unrealized appreciation (depreciation) relating to Level 3 assets and liabilities still held at September 30, 2017 and reported within net unrealized appreciation (depreciation) on investments and net unrealized appreciation on secured borrowings in the Consolidated Statement of Operations for the year ended September 30, 2017 | $ | (15,458,340 | ) | $ | 497,902 | $ | 149,488 | $ | (14,810,950 | ) | $ | — |
Investments | ||||||||||||||||
�� | Senior Secured Loans | OCSI Glick JV Subordinated Notes | Equity Securities | Total Investments | ||||||||||||
Fair value as of September 30, 2019 | $ | 181,884,463 | $ | 54,326,418 | $ | 293,339 | $ | 236,504,220 | ||||||||
Purchases | 106,044,210 | — | 1,008,393 | 107,052,603 | ||||||||||||
Sales and repayments | (59,618,644 | ) | (1,032,362 | ) | (736,493 | ) | (61,387,499 | ) | ||||||||
Transfers in (a)(b) | 21,631,700 | — | 1,183,057 | 22,814,757 | ||||||||||||
Transfer out (b) | (1,183,057 | ) | — | — | (1,183,057 | ) | ||||||||||
PIK interest income | 1,889,489 | — | — | 1,889,489 | ||||||||||||
Accretion of OID | 762,072 | — | — | 762,072 | ||||||||||||
Net unrealized appreciation (depreciation) | (6,365,959 | ) | (3,884,155 | ) | (531,377 | ) | (10,781,491 | ) | ||||||||
Net realized gains (losses) | (1,814,770 | ) | — | 736,493 | (1,078,277 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Fair value as of September 30, 2020 | $ | 243,229,504 | $ | 49,409,901 | $ | 1,953,412 | $ | 294,592,817 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net unrealized appreciation (depreciation) relating to Level 3 assets still held as of September 30, 2020 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the year ended September 30, 2020 | $ | (6,745,313 | ) | $ | (3,884,155 | ) | $ | (238,038 | ) | $ | (10,867,506 | ) |
(a) | There |
(b) | There was a transfer from senior secured debt to common equity and warrants during the year ended September 30, 2020 as a result of an |
The following table provides a roll-forward in the changes in fair value from September 30, 20152018 to September 30, 20162019 for all investments for which the Company determined fair value using unobservable (Level 3) factors:
Investments | ||||||||||||||||
Senior Secured Debt | OCSI Glick JV Subordinated Notes | Equity Securities | Total Investments | |||||||||||||
Fair value as of September 30, 2018 | $ | 182,756,067 | $ | 58,512,170 | $ | 1,962,245 | $ | 243,230,482 | ||||||||
Purchases | 68,133,733 | — | — | 68,133,733 | ||||||||||||
Sales and repayments | (85,294,241 | ) | (312,307 | ) | (1,875,587 | ) | (87,482,135 | ) | ||||||||
Transfers in (a) | 29,045,393 | — | — | 29,045,393 | ||||||||||||
Transfers out (a) | (10,618,125 | ) | — | — | (10,618,125 | ) | ||||||||||
Accretion of OID | 1,535,926 | — | — | 1,535,926 | ||||||||||||
Net unrealized appreciation (depreciation) | (2,886,044 | ) | (3,873,445 | ) | (1,168,906 | ) | (7,928,395 | ) | ||||||||
Net realized gains (losses) | (788,246 | ) | — | 1,375,587 | 587,341 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Fair value as of September 30, 2019 | $ | 181,884,463 | $ | 54,326,418 | $ | 293,339 | $ | 236,504,220 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net unrealized appreciation (depreciation) relating to Level 3 assets still held as of September 30, 2019 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the year ended September 30, 2019 | $ | (3,101,771 | ) | $ | (3,873,445 | ) | $ | 90,044 | $ | (6,885,172 | ) |
(a) | There were transfers in/out of Level 3 from/to Level 2 for certain investments during the year ended September 30, 2019 as a result of a change in the number of market quotes available and/or a change in market liquidity. |
32
Investments | Liabilities | |||||||||||||||||||
Senior Secured Debt | Subordinated notes of FSFR Glick JV | Common stock, preferred stock and warrants | Total | Secured Borrowings | ||||||||||||||||
Fair value as of September 30, 2015 | $ | 565,526,453 | $ | 52,603,346 | $ | 964,100 | $ | 619,093,899 | $ | — | ||||||||||
New investments & net revolver activity | 276,326,738 | 11,064,375 | 10,072,966 | 297,464,079 | 5,000,000 | |||||||||||||||
Redemptions/repayments/sales | (320,847,550 | ) | (154,217 | ) | — | (321,001,767 | ) | — | ||||||||||||
Net accrual of PIK interest income | 88,839 | — | — | 88,839 | — | |||||||||||||||
Accretion of original issue discount | 1,924,087 | — | — | 1,924,087 | — | |||||||||||||||
Net change in unearned income | 17,170 | — | — | 17,170 | — | |||||||||||||||
Net unrealized depreciation on investments | (7,880,802 | ) | (6,627,858 | ) | (3,134,510 | ) | (17,643,170 | ) | — | |||||||||||
Net unrealized depreciation on secured borrowings | — | — | — | — | (14,575 | ) | ||||||||||||||
Net realized loss on investments | (12,769,777 | ) | — | — | (12,769,777 | ) | — | |||||||||||||
Fair value as of September 30, 2016 | $ | 502,385,158 | $ | 56,885,646 | $ | 7,902,556 | $ | 567,173,360 | $ | 4,985,425 | ||||||||||
Net unrealized depreciation relating to Level 3 assets and liabilities still held at September 30, 2016 and reported within net unrealized appreciation (depreciation) on investments and net unrealized depreciation on secured borrowings in the Consolidated Statement of Operations for the year ended September 30, 2016 | $ | (10,913,833 | ) | $ | (6,627,858 | ) | $ | (2,486,439 | ) | $ | (20,028,130 | ) | $ | (14,575 | ) |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Significant Unobservable Inputs for Level 3 Investments
The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, which are carried at fair value as of September 30, 2017:
Asset | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average (c) | ||||||||||
Senior secured debt | $ | 208,118,444 | Market yield technique | Capital structure premium | (a) | 0.0% | - | 2.0% | 0.2% | ||||||
Tranche specific risk premium / (discount) | (a) | (3.1)% | - | 8.0% | 0.2% | ||||||||||
Size premium | (a) | 0.0% | - | 1.5% | 0.7% | ||||||||||
Industry premium / (discount) | (a) | (1.1)% | - | 2.6% | 0.0% | ||||||||||
23,192,266 | Enterprise value technique | EBITDA multiple | (b) | 6.4x | - | 6.4x | 6.4x | ||||||||
6,242,550 | Enterprise value technique | Revenue multiple | (b) | 0.2x | - | 0.6x | 0.5x | ||||||||
20,070,000 | Transactions precedent technique | Transaction price | (d) | N/A | - | N/A | N/A | ||||||||
168,997,196 | Market quotations | Broker quoted price | (e) | N/A | - | N/A | N/A | ||||||||
FSFR Glick JV subordinated notes | 57,606,674 | Enterprise value technique | N/A | (f) | N/A | - | N/A | N/A | |||||||
Preferred & Common Equity | 1,059,989 | Enterprise value technique | EBITDA multiple | (b) | 0.2x | - | 15.5x | 8.1x | |||||||
Total | $ | 485,287,119 |
Asset | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average (a) | |||||||||||||||||||||||||||
Senior Secured Loans | $ | 157,196,179 | Market Yield | Market Yield | (b | ) | 6.6 | % | — | 16.0 | % | 11.0 | % | |||||||||||||||||||
78,772,765 | Broker Quotations | Broker Quoted Price | (c | ) | N/A | — | N/A | N/A | ||||||||||||||||||||||||
7,260,560 | Enterprise Value | EBITDA Multiple | (d | ) | 7.0 | x | — | 9.0 | x | 8.0 | x | |||||||||||||||||||||
OCSI Glick JV Subordinated Notes | 49,409,901 | Enterprise Value | N/A | (e | ) | N/A | — | N/A | N/A | |||||||||||||||||||||||
Equity Securities | 1,953,412 | Transactions Precedent | Transaction Price | (f | ) | N/A | — | N/A | N/A | |||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Total | $ | 294,592,817 | ||||||||||||||||||||||||||||||
|
|
(a) | Weighted averages are calculated based on fair value of investments. |
(b) | Used when market participants would take into account market yield when pricing the investment. |
(c) | The Company generally uses prices provided by an independent pricing service which are non-binding indicative prices on or near the valuation date as the primary basis for the fair value determinations for quoted senior secured debt investments. Since these prices are non-binding, they may not be indicative of fair value. The Company evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company’s Board of Directors in conjunction with additional information compiled by Oaktree. |
(d) | Used when market participants would use such multiples when pricing the investment. |
(e) | The Company determined the value of its subordinated notes of the OCSI Glick JV based on the total assets less the total liabilities senior to the subordinated notes held at the OCSI Glick JV in an amount not exceeding par under the EV technique. |
(f) | Used when there is an observable transaction or pending event for the investment. |
The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, and secured borrowings, which are carried at fair value as of September 30, 2016:2019:
Asset | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average (a) | |||||||||||||||||||||||||||
Senior Secured Loans | $ | 92,083,082 | Market Yield | Market Yield | (b | ) | 6.7 | % | — | 13.0 | % | 8.9 | % | |||||||||||||||||||
67,340,586 | Broker Quotations | Broker Quoted Price | (c | ) | N/A | — | N/A | N/A | ||||||||||||||||||||||||
20,960,795 | Enterprise Value | EBITDA Multiple | (d | ) | 4.2 | x | — | 6.2 | x | 5.2 | x | |||||||||||||||||||||
1,500,000 | Transactions Precedent | Transaction Price | (e | ) | N/A | — | N/A | N/A | ||||||||||||||||||||||||
OCSI Glick JV Subordinated Notes | 54,326,418 | Enterprise Value | N/A | (f | ) | N/A | — | N/A | N/A | |||||||||||||||||||||||
Equity Securities | 293,339 | Enterprise Value | EBITDA Multiple | (d | ) | 16.0 | x | — | 18.0 | x | 17.0 | x | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Total | $ | 236,504,220 | ||||||||||||||||||||||||||||||
|
|
(a) | Weighted averages are calculated based on fair value of investments. |
(b) | Used when market participants would take into account market yield when pricing the investment. |
33
Asset | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average (c) | ||||||||||
Senior secured debt | $ | 270,620,843 | Market yield technique | Capital structure premium | (a) | 0.0% | - | 2.0% | 0.1% | ||||||
Tranche specific risk premium / (discount) | (a) | (4.5)% | - | 5.3% | (1.4)% | ||||||||||
Size premium | (a) | 0.0% | - | 1.5% | 0.8% | ||||||||||
Industry premium / (discount) | (a) | (1.3)% | - | 5.4% | 0.3% | ||||||||||
12,440,322 | Enterprise value technique | Weighted average cost of capital | 23.0% | - | 23.0% | 23.0% | |||||||||
Company specific risk premium | (a) | 15.0% | - | 15.0% | 15.0% | ||||||||||
Revenue growth rate | 6.0% | - | 6.0% | 6.0% | |||||||||||
Revenue multiple | (b) | 1.1x | - | 1.1x | 1.1x | ||||||||||
33,036,389 | Transactions precedent technique | Transaction price | (d) | N/A | - | N/A | N/A | ||||||||
186,287,604 | Market quotations | Broker quoted price | (e) | N/A | - | N/A | N/A | ||||||||
FSFR Glick JV subordinated notes | 56,885,646 | Market yield technique | Capital structure premium | (a) | 2.0% | - | 2.0% | 2.0% | |||||||
Tranche specific risk premium / (discount) | (a) | (1.4)% | - | (1.4)% | (1.4)% | ||||||||||
Size premium | (a) | 2.0% | - | 2.0% | 2.0% | ||||||||||
Industry premium / (discount) | (a) | 1.9% | - | 1.9% | 1.9% | ||||||||||
Preferred & Common Equity | 7,902,556 | Enterprise value technique | Weighted average cost of capital | 14.0% | - | 18.0% | 14.5% | ||||||||
Company specific risk premium | (a) | 1.0% | - | 2.0% | 1.9% | ||||||||||
Revenue growth rate | (21.6)% | - | 57.8% | (12.0)% | |||||||||||
Revenue multiple | 1.0x | - | 1.0x | 1.0x | |||||||||||
EBITDA multiple | (b) | 13.7x | - | 18.0x | 15.6x | ||||||||||
Total | $ | 567,173,360 | |||||||||||||
Liabilities | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||
Secured borrowings | $ | 4,985,425 | Market quotations | Broker quoted price | (e) | N/A | - | N/A | N/A | ||||||
Total | $ | 4,985,425 |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(c) | The Company generally uses prices provided by an independent pricing service which are non-binding indicative prices on or near the valuation date as the primary basis for the fair value determinations for quoted senior secured debt investments. Since these prices are non-binding, they may not be indicative of fair value. The Company evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company’s Board of Directors in conjunction with additional information compiled by Oaktree. |
(d) | Used when market participants would use such multiples when pricing the investment. |
(e) | Used when there is an observable transaction or pending event for the investment. |
(f) | The Company determined the value of its subordinated notes of the OCSI Glick JV based on the total assets less the total liabilities senior to the subordinated notes held at the OCSI Glick JV in an amount not exceeding par under the EV technique. |
Under the market yield technique, the significant unobservable inputs used in the fair value measurement of the Company's investments in debt securities and secured borrowings are capital structure premium, tranche specific risk premium (discount), size premium and industry premium (discount). Increases or decreases in any of those inputs in isolation may result in a lower or higher fair value measurement, respectively.
Under the EV technique, the significant unobservable input used in the fair value measurement of the Company’s investments in debt or equity securities is the EBITDA/Revenue multiple.earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue or asset multiple, as applicable. Increases or decreases in the valuation multiples in isolation may result in a higher or lower fair value measurement, respectively.
Financial Instruments Disclosed, But Not Carried, At Fair Value
The following table presents the carrying value and fair value of the Company’s financial liabilities disclosed, but not carried, at fair value as of September 30, 20172020 and the level of each financial liability within the fair value hierarchy:
Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Citibank facility payable | $ | 76,456,800 | $ | 76,456,800 | $ | — | $ | — | $ | 76,456,800 | ||||||||||
East West Bank facility payable | 6,500,000 | 6,500,000 | — | — | 6,500,000 | |||||||||||||||
Notes payable (net of unamortized financing costs) | 177,775,868 | 180,000,000 | — | — | 180,000,000 | |||||||||||||||
Total | $ | 260,732,668 | $ | 262,956,800 | $ | — | $ | — | $ | 262,956,800 |
Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Citibank Facility payable | $ | 119,056,800 | $ | 119,056,800 | $ | — | $ | — | $ | 119,056,800 | ||||||||||
Deutsche Bank Facility payable | 137,600,000 | 137,600,000 | — | — | 137,600,000 | |||||||||||||||
Secured Borrowings payable | 10,929,578 | 10,929,578 | — | — | 10,929,578 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 267,586,378 | $ | 267,586,378 | $ | — | $ | — | $ | 267,586,378 | ||||||||||
|
|
|
|
|
|
|
|
|
|
The following table presents the carrying value and fair value of the Company’s financial liabilities disclosed, but not carried, at fair value as of September 30, 20162019 and the level of each financial liability within the fair value hierarchy:
Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Citibank facility payable | $ | 107,426,800 | $ | 107,426,800 | $ | — | $ | — | $ | 107,426,800 | ||||||||||
Notes payable (net of unamortized financing costs) | 177,485,764 | 180,000,000 | — | — | 180,000,000 | |||||||||||||||
Total | $ | 284,912,564 | $ | 287,426,800 | $ | — | $ | — | $ | 287,426,800 |
Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Citibank Facility payable | $ | 126,056,800 | $ | 126,056,800 | $ | — | $ | — | $ | 126,056,800 | ||||||||||
East West Bank Facility payable | 11,000,000 | 11,000,000 | — | — | 11,000,000 | |||||||||||||||
Deutsche Bank Facility payable | 157,600,000 | 157,600,000 | — | — | 157,600,000 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 294,656,800 | $ | 294,656,800 | $ | — | $ | — | $ | 294,656,800 | ||||||||||
|
|
|
|
|
|
|
|
|
|
The principal values of the credit facilities payable and notes payable approximate their fair values due to their variable interest rates and are included in Level 3 of the hierarchy. The principal value of the secured borrowings payable approximates fair value due to its short-term nature and is included in Level 3 of the hierarchy.
34
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Portfolio Composition
Summaries of the composition of the Company's investmentCompany’s portfolio at cost as a percentage of total investments and at fair value as a percentage of total investments and total net assets are shown in the following tables:
September 30, 2017 | September 30, 2016 | |||||||||||||
Cost: | % of Total Investments | % of Total Investments | ||||||||||||
Senior secured debt | $ | 523,384,267 | 86.50 | % | $ | 518,778,491 | 86.40 | % | ||||||
Subordinated notes of FSFR Glick JV | 64,228,881 | 10.61 | % | 64,005,755 | 10.66 | % | ||||||||
LLC equity interests of FSFR Glick JV | 7,111,751 | 1.18 | % | 7,111,751 | 1.18 | % | ||||||||
Purchased equity | 10,365,425 | 1.71 | % | 10,572,966 | 1.76 | % | ||||||||
Equity grants | — | — | — | — | ||||||||||
Total | $ | 605,090,324 | 100.00 | % | $ | 600,468,963 | 100.00 | % |
September 30, 2017 | September 30, 2016 | |||||||||||||||||||
Fair Value: | % of Total Investments | % of Total Net Assets | % of Total Investments | % of Total Net Assets | ||||||||||||||||
Senior secured debt | $ | 501,769,997 | 89.53 | % | 170.87 | % | $ | 502,385,158 | 87.58 | % | 154.18 | % | ||||||||
Subordinated notes of FSFR Glick JV | 57,606,674 | 10.28 | % | 19.62 | % | 56,885,646 | 9.92 | % | 17.46 | % | ||||||||||
LLC equity interests of FSFR Glick JV | — | — | — | 6,431,021 | 1.12 | % | 1.97 | % | ||||||||||||
Purchased equity | 1,059,989 | 0.19 | % | 0.36 | % | 7,782,214 | 1.36 | % | 2.39 | % | ||||||||||
Equity grants | — | — | — | 120,342 | 0.02 | % | 0.04 | % | ||||||||||||
Total | $ | 560,436,660 | 100.00 | % | 190.85 | % | $ | 573,604,381 | 100.00 | % | 176.04 | % |
September 30, 2020 | September 30, 2019 | |||||||||||||||
Cost: | % of Total Investments | % of Total Investments | ||||||||||||||
Senior secured loans | $ | 464,459,378 | 86.16 | % | $ | 553,679,070 | 88.33 | % | ||||||||
OCSI Glick JV subordinated notes | 65,045,551 | 12.07 | % | 66,077,913 | 10.54 | % | ||||||||||
OCSI Glick JV equity interests | 7,111,751 | 1.32 | % | 7,111,751 | 1.13 | % | ||||||||||
Equity securities, excluding the OCSI Glick JV | 2,448,427 | 0.45 | % | — | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 539,065,107 | 100.00 | % | $ | 626,868,734 | 100.00 | % | ||||||||
|
|
|
|
|
|
|
|
September 30, 2020 | September 30, 2019 | |||||||||||||||||||||||
Fair Value: | % of Total Investments | % of Net Assets | % of Total Investments | % of Net Assets | ||||||||||||||||||||
Senior secured loans | $ | 450,508,104 | 89.69 | % | 168.89 | % | $ | 542,484,690 | 90.85 | % | 190.70 | % | ||||||||||||
OCSI Glick JV subordinated notes | 49,409,901 | 9.84 | % | 18.53 | % | 54,326,418 | 9.10 | % | 19.10 | % | ||||||||||||||
Equity securities, excluding the OCSI Glick JV | 2,375,360 | 0.47 | % | 0.90 | % | 293,339 | 0.05 | % | 0.10 | % | ||||||||||||||
OCSI Glick JV equity interests | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 502,293,365 | 100.00 | % | 188.32 | % | $ | 597,104,447 | 100.00 | % | 209.90 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company'scompany’s business. The following tables show the composition of the Company’s portfolio composition by geographic region at cost as a percentage of total investments and at fair value as a percentage of total investments and total net assets:
September 30, 2020 | September 30, 2019 | |||||||||||||||
Cost: | % of Total Investments | % of Total Investments | ||||||||||||||
Northeast | $ | 175,000,822 | 32.46 | % | $ | 163,840,735 | 26.13 | % | ||||||||
West | 107,100,584 | 19.87 | % | 156,427,384 | 24.95 | % | ||||||||||
Midwest | 88,346,293 | 16.39 | % | 90,085,074 | 14.37 | % | ||||||||||
Southwest | 60,351,662 | 11.20 | % | 94,396,340 | 15.06 | % | ||||||||||
Southeast | 43,464,437 | 8.06 | % | 65,420,955 | 10.44 | % | ||||||||||
International | 25,852,696 | 4.80 | % | 40,156,268 | 6.41 | % | ||||||||||
South | 24,369,729 | 4.52 | % | 6,051,218 | 0.97 | % | ||||||||||
Northwest | 14,578,884 | 2.70 | % | 10,490,760 | 1.67 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 539,065,107 | 100.00 | % | $ | 626,868,734 | 100.00 | % | ||||||||
|
|
|
|
|
|
|
|
35
September 30, 2017 | September 30, 2016 | |||||||||||||
Cost: | % of Total Investments | % of Total Investments | ||||||||||||
Northeast U.S. | $ | 217,508,260 | 35.94 | % | $ | 223,662,953 | 37.25 | % | ||||||
Midwest U.S. | 115,147,194 | 19.03 | % | 77,086,840 | 12.84 | % | ||||||||
Southwest U.S. | 101,583,440 | 16.79 | % | 123,909,372 | 20.64 | % | ||||||||
Southeast U.S. | 89,214,997 | 14.74 | % | 76,201,785 | 12.69 | % | ||||||||
West U.S. | 74,469,039 | 12.31 | % | 84,992,619 | 14.15 | % | ||||||||
Northwest | 3,799,884 | 0.63 | % | — | — | |||||||||
International | 3,367,510 | 0.56 | % | 14,615,394 | 2.43 | % | ||||||||
Total | $ | 605,090,324 | 100.00 | % | $ | 600,468,963 | 100.00 | % |
September 30, 2017 | September 30, 2016 | |||||||||||||||||||
Fair Value: | % of Total Investments | % of Total Net Assets | % of Total Investments | % of Total Net Assets | ||||||||||||||||
Northeast U.S. | $ | 173,667,526 | 30.99 | % | 59.14 | % | $ | 208,857,837 | 36.41 | % | 64.10 | % | ||||||||
Midwest U.S. | 115,780,284 | 20.66 | % | 39.43 | % | 65,672,577 | 11.45 | % | 20.16 | % | ||||||||||
Southwest U.S. | 99,398,397 | 17.74 | % | 33.85 | % | 124,470,758 | 21.70 | % | 38.20 | % | ||||||||||
Southeast U.S. | 89,246,247 | 15.92 | % | 30.39 | % | 76,053,964 | 13.26 | % | 23.34 | % | ||||||||||
West U.S. | 75,054,066 | 13.39 | % | 25.56 | % | 85,344,025 | 14.88 | % | 26.19 | % | ||||||||||
Northwest | 3,883,882 | 0.69 | % | 1.32 | % | — | — | — | ||||||||||||
International | 3,406,258 | 0.61 | % | 1.16 | % | 13,205,220 | 2.30 | % | 4.05 | % | ||||||||||
Total | $ | 560,436,660 | 100.00 | % | 190.85 | % | $ | 573,604,381 | 100.00 | % | 176.04 | % |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 | September 30, 2019 | |||||||||||||||||||||||
Fair Value: | % of Total Investments | % of Net Assets | % of Total Investments | % of Net Assets | ||||||||||||||||||||
Northeast | $ | 150,734,661 | 30.00 | % | 56.52 | % | $ | 145,176,830 | 24.31 | % | 51.04 | % | ||||||||||||
West | 104,906,992 | 20.89 | % | 39.33 | % | 154,984,247 | 25.95 | % | 54.46 | % | ||||||||||||||
Midwest | 85,420,874 | 17.01 | % | 32.04 | % | 88,834,091 | 14.88 | % | 31.24 | % | ||||||||||||||
Southwest | 55,716,384 | 11.09 | % | 20.89 | % | 90,401,243 | 15.14 | % | 31.78 | % | ||||||||||||||
Southeast | 42,020,215 | 8.37 | % | 15.75 | % | 62,741,930 | 10.51 | % | 22.06 | % | ||||||||||||||
International | 25,096,033 | 5.00 | % | 9.40 | % | 38,583,801 | 6.46 | % | 13.56 | % | ||||||||||||||
South | 23,722,222 | 4.72 | % | 8.89 | % | 5,899,007 | 0.99 | % | 2.07 | % | ||||||||||||||
Northwest | 14,675,984 | 2.92 | % | 5.50 | % | 10,483,298 | 1.76 | % | 3.69 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 502,293,365 | 100.00 | % | 188.32 | % | $ | 597,104,447 | 100.00 | % | 209.90 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
36
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables show the composition of the Company'sCompany’s portfolio by industry at cost as a percentage of total investments and at fair value as a percentage of total investments and total net assets as of September 30, 20172020 and September 30, 2016 was as follows:2019:
September 30, 2020 | September 30, 2019 | |||||||||||||||
Cost: | % of Total Investments | % of Total Investments | ||||||||||||||
Multi-Sector Holdings (1) | $ | 72,157,302 | 13.36 | % | $ | 73,189,664 | 11.68 | % | ||||||||
Application Software | 56,215,071 | 10.43 | 81,483,953 | 12.98 | ||||||||||||
Aerospace & Defense | 30,626,973 | 5.68 | 32,851,441 | 5.24 | ||||||||||||
Diversified Support Services | 26,334,370 | 4.89 | 27,474,583 | 4.38 | ||||||||||||
Advertising | 24,174,863 | 4.48 | 24,102,621 | 3.84 | ||||||||||||
Movies & Entertainment | 16,673,070 | 3.09 | 9,656,395 | 1.54 | ||||||||||||
Integrated Telecommunication Services | 15,495,686 | 2.87 | 17,406,502 | 2.78 | ||||||||||||
Commercial Printing | 15,307,456 | 2.84 | 15,457,725 | 2.47 | ||||||||||||
Data Processing & Outsourced Services | 14,083,620 | 2.61 | 16,648,375 | 2.66 | ||||||||||||
Industrial Machinery | 13,770,077 | 2.55 | 9,319,898 | 1.49 | ||||||||||||
Health Care Supplies | 13,452,481 | 2.50 | — | — | ||||||||||||
Personal Products | 13,418,096 | 2.49 | 2,985,000 | 0.48 | ||||||||||||
Pharmaceuticals | 13,309,502 | 2.47 | 12,626,920 | 2.01 | ||||||||||||
Health Care Services | 13,081,011 | 2.43 | 17,175,085 | 2.74 | ||||||||||||
Biotechnology | 12,304,257 | 2.28 | 7,930,000 | 1.27 | ||||||||||||
Health Care Technology | 11,732,318 | 2.18 | 10,897,989 | 1.74 | ||||||||||||
Oil & Gas Storage & Transportation | 10,976,147 | 2.04 | 558,657 | 0.09 | ||||||||||||
Specialty Chemicals | 10,024,137 | 1.86 | 4,686,365 | 0.75 | ||||||||||||
Systems Software | 9,922,773 | 1.84 | 15,530,330 | 2.48 | ||||||||||||
Real Estate Services | 9,755,743 | 1.81 | 9,832,986 | 1.57 | ||||||||||||
Publishing | 9,660,137 | 1.79 | 10,291,050 | 1.64 | ||||||||||||
Leisure Facilities | 9,402,902 | 1.74 | 8,992,137 | 1.43 | ||||||||||||
Internet Services & Infrastructure | 8,947,119 | 1.66 | 28,457,280 | 4.54 | ||||||||||||
Trading Companies & Distributors | 8,827,767 | 1.64 | 8,943,835 | 1.43 | ||||||||||||
Distributors | 8,760,175 | 1.63 | — | — | ||||||||||||
Specialized Finance | 8,359,110 | 1.55 | 15,215,979 | 2.43 | ||||||||||||
Alternative Carriers | 8,337,801 | 1.55 | 16,926,483 | 2.70 | ||||||||||||
Fertilizers & Agricultural Chemicals | 8,152,050 | 1.51 | — | — | ||||||||||||
Research & Consulting Services | 7,435,807 | 1.38 | 9,887,627 | 1.58 | ||||||||||||
Electrical Components & Equipment | 6,280,139 | 1.17 | 6,363,049 | 1.02 | ||||||||||||
Auto Parts & Equipment | 5,688,828 | 1.06 | 5,749,771 | 0.92 | ||||||||||||
Internet & Direct Marketing Retail | 5,363,954 | 1.00 | — | — | ||||||||||||
Oil & Gas Refining & Marketing | 5,333,776 | 0.99 | 11,832,244 | 1.89 | ||||||||||||
Metal & Glass Containers | 5,279,705 | 0.98 | 8,850,147 | 1.41 | ||||||||||||
Insurance Brokers | 5,115,349 | 0.95 | — | — | ||||||||||||
Hotels, Resorts & Cruise Lines | 4,645,028 | 0.86 | — | — | ||||||||||||
Environmental & Facilities Services | 3,897,041 | 0.72 | 4,214,058 | 0.67 | ||||||||||||
Restaurants | 3,398,183 | 0.63 | — | — | ||||||||||||
Household Products | 3,338,452 | 0.62 | 5,025,753 | 0.80 | ||||||||||||
Independent Power Producers & Energy Traders | 3,265,964 | 0.61 | — | — | ||||||||||||
Managed Health Care | 2,947,424 | 0.55 | — | — | ||||||||||||
Electric Utilities | 1,966,495 | 0.36 | — | — | ||||||||||||
General Merchandise Stores | 1,593,419 | 0.30 | 1,549,641 | 0.25 | ||||||||||||
Specialized REITs | 253,529 | 0.05 | 8,642,094 | 1.38 | ||||||||||||
Oil & Gas Exploration & Production | — | — | 14,662,039 | 2.34 | ||||||||||||
Interactive Media & Services | — | — | 11,821,820 | 1.89 | ||||||||||||
Computer & Electronics Retail | — | — | 10,808,325 | 1.72 | ||||||||||||
Communications Equipment | — | — | 9,740,555 | 1.55 | ||||||||||||
IT Consulting & Other Services | — | — | 9,683,496 | 1.54 | ||||||||||||
Health Care Equipment | — | — | 8,887,725 | 1.42 | ||||||||||||
Human Resource & Employment Services | — | — | 8,099,807 | 1.29 | ||||||||||||
Household Appliances | — | — | 6,857,242 | 1.09 | ||||||||||||
Commodity Chemicals | — | — | 4,920,165 | 0.78 | ||||||||||||
Oil & Gas Equipment & Services | — | — | 631,923 | 0.10 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 539,065,107 | 100.00 | % | $ | 626,868,734 | 100.00 | % | ||||||||
|
|
|
|
|
|
|
|
37
September 30, 2017 | September 30, 2016 | ||||||||||||
Cost: | % of Total Investments | % of Total Investments | |||||||||||
Internet software & services | $ | 129,816,292 | 21.46 | % | $ | 132,462,581 | 22.07 | % | |||||
Multi-sector holdings (1) | 71,340,632 | 11.79 | 71,117,506 | 11.84 | |||||||||
Healthcare services | 50,858,157 | 8.41 | 88,865,063 | 14.80 | |||||||||
Advertising | 43,518,443 | 7.19 | 48,396,135 | 8.06 | |||||||||
Application software | 33,801,616 | 5.59 | 32,100,672 | 5.35 | |||||||||
Diversified support services | 24,189,607 | 4.00 | 19,714,868 | 3.28 | |||||||||
IT consulting & other services | 20,485,989 | 3.39 | 8,811,481 | 1.47 | |||||||||
Human resources & employment services | 20,141,957 | 3.33 | — | — | |||||||||
Specialized finance | 15,358,280 | 2.54 | — | — | |||||||||
Environmental & facilities services | 14,170,031 | 2.34 | 6,391,836 | 1.06 | |||||||||
Oil & gas equipment & services | 14,057,018 | 2.32 | 4,177,081 | 0.70 | |||||||||
Distributors | 12,967,500 | 2.14 | — | — | |||||||||
Industrial machinery | 12,493,405 | 2.06 | 3,826,203 | 0.64 | |||||||||
Real estate services | 12,247,424 | 2.02 | — | — | |||||||||
Commercial printing | 11,847,790 | 1.96 | 5,912,694 | 0.98 | |||||||||
Integrated telecommunication services | 11,291,073 | 1.87 | 24,385,644 | 4.06 | |||||||||
Food retail | 10,054,868 | 1.66 | 6,889,930 | 1.15 | |||||||||
Data processing & outsourced services | 9,804,174 | 1.62 | 9,835,238 | 1.64 | |||||||||
Pharmaceuticals | 9,068,650 | 1.50 | 9,162,870 | 1.53 | |||||||||
Specialty Stores | 8,359,086 | 1.38 | — | — | |||||||||
Security & alarm services | 8,018,318 | 1.33 | 17,835,147 | 2.97 | |||||||||
Computer & Electronics Retail | 7,383,862 | 1.22 | — | — | |||||||||
Research & consulting services | 6,922,777 | 1.14 | 17,128,420 | 2.85 | |||||||||
Personal products | 6,544,450 | 1.08 | 1,285,383 | 0.21 | |||||||||
Aerospace & defense | 6,453,287 | 1.07 | — | — | |||||||||
Auto parts & equipment | 5,871,777 | 0.97 | — | — | |||||||||
Healthcare distributors | 4,975,000 | 0.82 | — | — | |||||||||
Casinos & gaming | 4,963,767 | 0.82 | — | — | |||||||||
Housewares & specialties | 4,795,075 | 0.79 | — | — | |||||||||
Trucking | 4,079,548 | 0.67 | — | — | |||||||||
Fertilizers & agricultural chemicals | 3,273,753 | 0.54 | 3,522,668 | 0.59 | |||||||||
Hypermarkets & super centers | 2,996,051 | 0.50 | — | — | |||||||||
Specialized consumer services | 1,660,679 | 0.27 | 22,605,271 | 3.76 | |||||||||
Computer hardware | 1,279,988 | 0.21 | 3,956,802 | 0.66 | |||||||||
Education services | — | — | 15,262,322 | 2.54 | |||||||||
Electronic equipment & instruments | — | — | 10,942,464 | 1.82 | |||||||||
Diversified capital markets | — | — | 8,685,189 | 1.45 | |||||||||
Construction and engineering | — | — | 5,907,850 | 0.98 | |||||||||
Wireless telecommunication services | — | — | 5,719,729 | 0.95 | |||||||||
Food distributors | — | — | 5,711,496 | 0.95 | |||||||||
Restaurants | — | — | 5,000,000 | 0.83 | |||||||||
Healthcare technology | 4,856,420 | 0.81 | |||||||||||
Total | $ | 605,090,324 | 100.00 | % | $ | 600,468,963 | 100.00 | % |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017 | September 30, 2016 | ||||||||||||||||||
Fair Value: | % of Total Investments | % of Total Net Assets | % of Total Investments | % of Total Net Assets | |||||||||||||||
Internet software & services | $ | 121,778,922 | 21.72 | % | 41.43 | % | $ | 119,438,318 | 20.82 | % | 36.64 | % | |||||||
Multi-sector holdings (1) | 57,606,674 | 10.28 | 19.62 | 63,316,667 | 11.04 | 19.43 | |||||||||||||
Advertising | 41,145,973 | 7.34 | 14.01 | 48,684,948 | 8.49 | 14.94 | |||||||||||||
Application software | 33,966,141 | 6.06 | 11.57 | 32,405,166 | 5.65 | 9.95 | |||||||||||||
Healthcare services | 29,525,697 | 5.27 | 10.06 | 83,972,780 | 14.64 | 25.77 | |||||||||||||
Diversified support services | 24,655,181 | 4.40 | 8.40 | 19,597,622 | 3.42 | 6.01 | |||||||||||||
IT consulting & other services | 20,488,238 | 3.66 | 6.98 | 8,884,236 | 1.55 | 2.73 | |||||||||||||
Human resources & employment services | 20,125,090 | 3.59 | 6.85 | — | — | — | |||||||||||||
Specialized finance | 15,609,084 | 2.79 | 5.32 | — | — | — | |||||||||||||
Environmental & facilities services | 14,287,163 | 2.55 | 4.87 | 6,540,239 | 1.14 | 2.01 | |||||||||||||
Oil & gas equipment & services | 14,052,500 | 2.51 | 4.79 | 4,090,429 | 0.71 | 1.26 | |||||||||||||
Distributors | 12,957,035 | 2.31 | 4.41 | — | — | — | |||||||||||||
Industrial machinery | 12,452,459 | 2.22 | 4.24 | 3,778,376 | 0.66 | 1.16 | |||||||||||||
Real estate services | 12,256,098 | 2.19 | 4.17 | — | — | — | |||||||||||||
Commercial printing | 11,942,132 | 2.13 | 4.07 | 5,929,733 | 1.03 | 1.82 | |||||||||||||
Integrated telecommunication services | 11,368,765 | 2.03 | 3.87 | 24,637,968 | 4.30 | 7.56 | |||||||||||||
Food retail | 10,182,584 | 1.82 | 3.47 | 7,011,442 | 1.22 | 2.15 | |||||||||||||
Data processing & outsourced services | 9,840,600 | 1.76 | 3.35 | 9,820,000 | 1.71 | 3.01 | |||||||||||||
Pharmaceuticals | 9,038,634 | 1.61 | 3.08 | 9,033,850 | 1.57 | 2.77 | |||||||||||||
Specialty Stores | 8,193,960 | 1.46 | 2.79 | — | — | — | |||||||||||||
Security & alarm services | 7,972,286 | 1.42 | 2.72 | 17,865,123 | 3.11 | 5.48 | |||||||||||||
Computer & Electronics Retail | 7,498,142 | 1.34 | 2.55 | — | — | — | |||||||||||||
Research & consulting services | 7,004,638 | 1.25 | 2.39 | 17,162,244 | 2.99 | 5.27 | |||||||||||||
Personal products | 6,599,006 | 1.18 | 2.25 | 1,290,310 | 0.22 | 0.40 | |||||||||||||
Aerospace & defense | 6,556,692 | 1.17 | 2.23 | — | — | — | |||||||||||||
Auto parts & equipment | 5,798,747 | 1.03 | 1.97 | — | — | — | |||||||||||||
Casinos & gaming | 5,038,622 | 0.90 | 1.72 | — | — | — | |||||||||||||
Healthcare distributors | 4,948,950 | 0.88 | 1.69 | — | — | — | |||||||||||||
Housewares & specialties | 4,771,779 | 0.85 | 1.63 | — | — | — | |||||||||||||
Trucking | 4,099,725 | 0.73 | 1.40 | — | — | — | |||||||||||||
Hypermarkets & super centers | 2,876,002 | 0.51 | 0.98 | — | — | — | |||||||||||||
Fertilizers & agricultural chemicals | 2,801,481 | 0.50 | 0.95 | 3,377,146 | 0.59 | 1.04 | |||||||||||||
Specialized consumer services | 1,672,677 | 0.30 | 0.57 | 22,538,791 | 3.93 | 6.92 | |||||||||||||
Computer hardware | 1,324,983 | 0.24 | 0.45 | 3,903,567 | 0.68 | 1.20 | |||||||||||||
Education services | — | — | — | 15,293,164 | 2.67 | 4.69 | |||||||||||||
Electronic equipment & instruments | — | — | — | 10,912,302 | 1.90 | 3.35 | |||||||||||||
Diversified capital markets | — | — | — | 8,763,486 | 1.53 | 2.69 | |||||||||||||
Construction and engineering | — | — | — | 5,768,770 | 1.01 | 1.77 | |||||||||||||
Food distributors | — | — | — | 5,623,604 | 0.98 | 1.73 | |||||||||||||
Restaurants | — | — | — | 4,985,425 | 0.87 | 1.53 | |||||||||||||
Healthcare technology | — | — | — | 4,747,016 | 0.83 | 1.46 | |||||||||||||
Wireless telecommunication services | — | — | — | 4,231,659 | 0.74 | 1.30 | |||||||||||||
Total | $ | 560,436,660 | 100.00 | % | 190.85 | % | $ | 573,604,381 | 100.00 | % | 176.04 | % |
September 30, 2020 | September 30, 2019 | |||||||||||||||||||||||
Fair Value: | % of Total Investments | % of Net Assets | % of Total Investments | % of Net Assets | ||||||||||||||||||||
Application Software | $ | 55,815,754 | 11.13 | % | 20.92 | % | $ | 80,958,933 | 13.52 | % | 28.46 | % | ||||||||||||
Multi-Sector Holdings (1) | 49,409,901 | 9.84 | 18.53 | 54,326,418 | 9.10 | 19.10 | ||||||||||||||||||
Aerospace & Defense | 28,494,531 | 5.67 | 10.68 | 32,504,494 | 5.44 | 11.42 | ||||||||||||||||||
Diversified Support Services | 24,928,749 | 4.96 | 9.36 | 27,311,758 | 4.57 | 9.62 | ||||||||||||||||||
Advertising | 22,317,000 | 4.44 | 8.37 | 20,960,795 | 3.51 | 7.37 | ||||||||||||||||||
Movies & Entertainment | 16,350,259 | 3.26 | 6.14 | 9,616,125 | 1.61 | 3.38 | ||||||||||||||||||
Commercial Printing | 14,786,640 | 2.94 | 5.54 | 15,377,480 | 2.58 | 5.41 | ||||||||||||||||||
Integrated Telecommunication Services | 14,610,386 | 2.91 | 5.49 | 17,138,851 | 2.87 | 6.03 | ||||||||||||||||||
Personal Products | 13,668,174 | 2.72 | 5.12 | 3,017,820 | 0.51 | 1.06 | ||||||||||||||||||
Data Processing & Outsourced Services | 13,585,221 | 2.70 | 5.09 | 16,757,043 | 2.81 | 5.89 | ||||||||||||||||||
Health Care Supplies | 13,450,397 | 2.68 | 5.04 | — | — | — | ||||||||||||||||||
Pharmaceuticals | 13,432,057 | 2.67 | 5.04 | 12,082,358 | 2.02 | 4.25 | ||||||||||||||||||
Health Care Services | 12,745,223 | 2.54 | 4.78 | 17,176,083 | 2.88 | 6.03 | ||||||||||||||||||
Biotechnology | 12,440,847 | 2.48 | 4.66 | 8,040,000 | 1.35 | 2.82 | ||||||||||||||||||
Industrial Machinery | 11,927,158 | 2.37 | 4.48 | 9,206,556 | 1.54 | 3.24 | ||||||||||||||||||
Health Care Technology | 11,752,447 | 2.34 | 4.41 | 11,032,320 | 1.85 | 3.88 | ||||||||||||||||||
Oil & Gas Storage & Transportation | 10,615,154 | 2.11 | 3.98 | 556,541 | 0.09 | 0.20 | ||||||||||||||||||
Systems Software | 9,817,927 | 1.95 | 3.68 | 15,466,728 | 2.59 | 5.43 | ||||||||||||||||||
Specialty Chemicals | 9,741,707 | 1.94 | 3.65 | 3,687,132 | 0.62 | 1.30 | ||||||||||||||||||
Publishing | 9,708,926 | 1.93 | 3.64 | 10,421,039 | 1.75 | 3.66 | ||||||||||||||||||
Real Estate Services | 9,430,625 | 1.88 | 3.54 | 9,875,250 | 1.65 | 3.47 | ||||||||||||||||||
Distributors | 8,674,375 | 1.73 | 3.25 | — | — | — | ||||||||||||||||||
Trading Companies & Distributors | 8,671,111 | 1.73 | 3.25 | 8,929,919 | 1.50 | 3.14 | ||||||||||||||||||
Internet Services & Infrastructure | 8,308,414 | 1.65 | 3.11 | 28,470,497 | 4.77 | 10.01 | ||||||||||||||||||
Specialized Finance | 8,261,863 | 1.64 | 3.10 | 14,473,206 | 2.42 | 5.09 | ||||||||||||||||||
Fertilizers & Agricultural Chemicals | 8,146,141 | 1.62 | 3.05 | — | — | — | ||||||||||||||||||
Alternative Carriers | 8,129,885 | 1.62 | 3.05 | 16,958,629 | 2.84 | 5.97 | ||||||||||||||||||
Research & Consulting Services | 7,281,135 | 1.45 | 2.73 | 10,267,889 | 1.72 | 3.61 | ||||||||||||||||||
Leisure Facilities | 7,260,560 | 1.45 | 2.72 | 8,979,519 | 1.50 | 3.16 | ||||||||||||||||||
Electrical Components & Equipment | 6,139,604 | 1.22 | 2.30 | 6,009,639 | 1.01 | 2.11 | ||||||||||||||||||
Internet & Direct Marketing Retail | 5,547,140 | 1.10 | 2.08 | — | — | — | ||||||||||||||||||
Auto Parts & Equipment | 5,520,667 | 1.10 | 2.07 | 5,385,930 | 0.90 | 1.89 | ||||||||||||||||||
Insurance Brokers | 5,276,017 | 1.05 | 1.97 | — | — | — | ||||||||||||||||||
Metal & Glass Containers | 5,168,898 | 1.03 | 1.94 | 8,387,578 | 1.40 | 2.95 | ||||||||||||||||||
Hotels, Resorts & Cruise Lines | 5,159,265 | 1.03 | 1.93 | — | — | — | ||||||||||||||||||
Oil & Gas Refining & Marketing | 5,131,738 | 1.02 | 1.92 | 11,970,818 | 2.00 | 4.21 | ||||||||||||||||||
Environmental & Facilities Services | 3,753,600 | 0.75 | 1.41 | 3,975,425 | 0.67 | 1.40 | ||||||||||||||||||
Restaurants | 3,550,207 | 0.71 | 1.33 | — | — | — | ||||||||||||||||||
Household Products | 3,313,557 | 0.66 | 1.24 | 4,756,250 | 0.80 | 1.67 | ||||||||||||||||||
Independent Power Producers & Energy Traders | 3,167,063 | 0.63 | 1.19 | — | — | — | ||||||||||||||||||
Managed Health Care | 2,917,727 | 0.58 | 1.09 | — | — | — | ||||||||||||||||||
Electric Utilities | 1,958,422 | 0.39 | 0.73 | — | — | — | ||||||||||||||||||
General Merchandise Stores | 1,504,945 | 0.30 | 0.56 | 1,425,618 | 0.24 | 0.50 | ||||||||||||||||||
Specialized REITs | 421,948 | 0.08 | 0.16 | 8,648,021 | 1.45 | 3.04 | ||||||||||||||||||
Oil & Gas Exploration & Production | — | — | — | 13,947,600 | 2.34 | 4.90 | ||||||||||||||||||
Interactive Media & Services | — | — | — | 11,880,796 | 1.99 | 4.17 | ||||||||||||||||||
Computer & Electronics Retail | — | — | — | 10,781,031 | 1.81 | 3.79 | ||||||||||||||||||
Communications Equipment | — | — | — | 9,361,407 | 1.57 | 3.29 | ||||||||||||||||||
Health Care Equipment | — | — | — | 8,994,333 | 1.51 | 3.16 | ||||||||||||||||||
Human Resource & Employment Services | — | — | — | 8,008,543 | 1.34 | 2.81 | ||||||||||||||||||
IT Consulting & Other Services | — | — | — | 7,974,500 | 1.34 | 2.80 | ||||||||||||||||||
Household Appliances | — | — | — | 6,661,922 | 1.12 | 2.34 | ||||||||||||||||||
Commodity Chemicals | — | — | — | 4,931,156 | 0.83 | 1.73 | ||||||||||||||||||
Oil & Gas Equipment & Services | — | — | — | 410,497 | 0.07 | 0.14 | ||||||||||||||||||
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Total | $ | 502,293,365 | 100.00 | % | 188.32 | % | $ | 597,104,447 | 100.00 | % | 209.90 | % | ||||||||||||
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(1) | This industry includes the |
38
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2020 and September 30, 2019, there were no investments are generally in middle-market companies in a variety of industries. The Company has one investment that represented greater than 10% of the total investment portfolio at fair value as of September 30, 2017 and September 30, 2016, which is as follows:
September 30, 2017 | September 30, 2016 | |||||
FSFR Glick JV LLC | 10.3 | % | 11.0 | % |
OCSI Glick JV LLC for the years ended September 30, 2017 and September 30, 2016 are as follows:
Year ended September 30, 2017 | Year ended September 30, 2016 | |||||||||||||
Investment Income | Percent of Total Investment Income | Investment Income | Percent of Total Investment Income | |||||||||||
FSFR Glick JV LLC | $ | 5,188,380 | 11.1 | % | $ | 7,777,850 | 14.6 | % |
In October 2014, the Company entered into an LLC agreement with GF Equity Funding 2014 LLC ("GF Equity Funding") to form FSFRthe OCSI Glick JV. On April 21, 2015, FSFRthe OCSI Glick JV began investing primarily in senior secured loans of middle-market companies. The Company co-invests in these securities with GF Equity Funding through FSFRthe OCSI Glick JV. FSFRThe OCSI Glick JV is managed by a four person Board of Directors, two of whom are selected by the Company and two of whom are selected by GF Equity Funding. FSFRThe OCSI Glick JV is capitalized as transactions are completed, and portfolio decisions and investment decisions in respect of FSFRthe OCSI Glick JV must be approved by the FSFROCSI Glick JV investment committee, which consists of one representative selected by the Company and one representative selected by GF Equity Funding (with approval from a representative of each required). Since the Company does not have a controlling financial interest in the OCSI Glick JV, the Company does not consolidate the OCSI Glick JV. The members provide capital to FSFRthe OCSI Glick JV in exchange for LLC equity interests, and the Company and GF Debt Funding 2014 LLC ("(“GF Debt Funding"Funding”), an entity advised by affiliates of GF Equity Funding, provide capital to FSFRthe OCSI Glick JV in exchange for subordinated notes (the "Subordinated Notes"“Subordinated Notes”). As of September 30, 20172020 and September 30, 2016,2019, the Company and GF Equity Funding owned 87.5% and 12.5%, respectively, of the outstanding LLC equity interests, and the Company and GF Debt Funding owned 87.5% and 12.5%, respectively, of the Subordinated Notes. FSFRThe OCSI Glick JV is not an "eligible“eligible portfolio company"company” as defined in section 2(a)(46) of the 1940Investment Company Act.
The OCSI Glick JV'sJV’s portfolio consisted of middle-market and other corporate debt securities of 2340 and 36 "eligible39 portfolio companies" (as defined in Section 2(a)(46) of the 1940 Act)companies as of September 30, 20172020 and September 30, 2016,2019, respectively. The portfolio companies in FSFRthe OCSI Glick JV are in industries similar to those in which the Company may invest directly.
The OCSI Glick JV hasentered into a senior revolving credit facility with Deutsche Bank AG, New York Branch ("(the “JV Deutsche Bank facility"Facility”) with, which, as of September 30, 2020, had a statedreinvestment period end date and maturity date of April 17, 2023, whichSeptember 30, 2021 and March 31, 2025, respectively, and permitted borrowings of up to $200.0$90.0 million of borrowings as of both September 30, 2017(subject to borrowing base and September 30, 2016. On June 29, 2017, the Deutsche Bank facility was assigned by Credit Suisse AG, Cayman Islands Branch to Deutsche Bank AG, New York Branch.other limitations). Borrowings under the JV Deutsche Bank facilityFacility are secured by all of the assets of FSFRthe OCSI Glick JV and all of the equity interests in FSFRthe OCSI Glick JV and, as of September 30, 2020, bore interest at a rate equal to the 3-month LIBOR plus 2.5%2.65% per annum with noa 0.25% LIBOR floor as of September 30, 2017 and September 30, 2016.floor. Under the JV Deutsche Bank facility, $56.9Facility, $80.7 million and $124.6$91.9 million of borrowings were outstanding as of September 30, 20172020 and September 30, 2016,2019, respectively.
As of September 30, 20172020, the JV Deutsche Bank Facility includes a waiver period (which extends through January 3, 2021) during which the facility agent is restricted from revaluing certain collateral obligations where the change in valuation is caused by or results from a business disruption due primarily to the COVID-19 pandemic (subject to OCSI Glick JV’s ability to earlier terminate such period in certain circumstances).
As of September 30, 2020 and September 30, 2016, FSFR2019, the OCSI Glick JV had total assets of $126.7$137.9 million and $201.1$179.7 million, respectively. As of September 30, 2017, the Company'sThe Company’s investment in FSFRthe OCSI Glick JV consisted of LLC equity interests and Subordinated Notes of $57.6$49.4 million and $54.3 million in the aggregate at fair value. Asvalue as of September 30, 2016, the Company's investment in FSFR Glick JV consisted of LLC equity interests2020 and Subordinated Notes of $63.3 million in the aggregate at fair value.September 30, 2019, respectively. The Subordinated Notes are junior in right of payment to the repayment of temporary contributions made by the Company to fund investments of FSFRthe OCSI Glick JV that are repaid when GF Equity Funding and GF Debt Funding make their capital contributions and fund their Subordinated Notes, respectively.
As of September 30, 20172020 and September 30, 2016, FSFR2019, the OCSI Glick JV had total capital commitments of $100.0 million, $87.5 million of which was from the Company and the remaining $12.5 million of which was from GF Equity Funding and GF Debt Funding.
39
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Below is a summary of FSFRthe OCSI Glick JV'sJV’s portfolio, followed by a listing of the individual loans in FSFRthe OCSI Glick JV'sJV’s portfolio as of September 30, 20172020 and September 30, 2016:2019:
September 30, 2020 | September 30, 2019 | |||||||
Senior secured loans (1) | $ | 143,138,964 | $ | 177,911,560 | ||||
Weighted average current interest rate on senior secured loans (2) | 5.56 | % | 6.92 | % | ||||
Number of borrowers in the OCSI Glick JV | 40 | 39 | ||||||
Largest loan exposure to a single borrower (1) | $ | 6,994,829 | $ | 7,425,000 | ||||
Total of five largest loan exposures to borrowers (1) | $ | 31,371,046 | $ | 34,662,500 |
(1) | At principal amount. |
(2) | Computed using the weighted average annual interest rate on accruing senior secured loans at fair value. |
40
September 30, 2017 | September 30, 2016 | |||
Senior secured loans (1) | $115,964,537 | $194,346,557 | ||
Weighted average current interest rate on senior secured loans (2) | 6.92% | 7.08% | ||
Number of borrowers in FSFR Glick JV | 23 | 36 | ||
Largest loan exposure to a single borrower (1) | $11,267,524 | $12,641,009 | ||
Total of five largest loan exposures to borrowers (1) | $42,833,696 | $49,318,344 |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCSI Glick JV Portfolio as of September 30, 2017
Portfolio Company | Investment Type | Cash Interest Rate (1)(2) | Industry | Principal | Cost | Fair Value (3) | Notes | |||||||||||||
AI Ladder (Luxembourg) Subco S.a.r.l. | First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 | 4.65% | Electrical Components & Equipment | $ | 2,671,716 | $ | 2,616,725 | $ | 2,558,168 | (4) | ||||||||||
Alvogen Pharma US, Inc. | First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023 | 6.25% | Pharmaceuticals | 6,994,829 | 6,808,979 | 6,773,337 | ||||||||||||||
Amplify Finco Pty Ltd. | First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026 | 4.75% | Movies & Entertainment | 2,985,000 | 2,955,150 | 2,567,100 | (4) | |||||||||||||
Anastasia Parent, LLC | First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025 | Personal Products | 1,684,513 | 1,352,429 | 743,814 | (6) | ||||||||||||||
Ancile Solutions, Inc. | First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021 | 8.00% | Application Software | 3,201,353 | 3,194,577 | 3,178,943 | (4) | |||||||||||||
Aurora Lux Finco S.À.R.L. | First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026 | 7.00% | Airport Services | 3,731,250 | 3,648,256 | 3,470,063 | ||||||||||||||
Brazos Delaware II, LLC | First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025 | 4.16% | Oil & Gas Equipment & Services | 4,887,066 | 4,870,862 | 3,733,376 | ||||||||||||||
California Pizza Kitchen, Inc. | First Lien Term Loan, LIBOR+8.00% cash due 8/23/2022 | Restaurants | 5,004,489 | 4,813,378 | 1,526,369 | (6) | ||||||||||||||
Carrols Restaurant Group, Inc. | First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026 | 7.25% | Restaurants | 1,118,198 | 1,062,723 | 1,109,811 | (4) | |||||||||||||
CITGO Petroleum Corp. | First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 | 6.00% | Oil & Gas Refining & Marketing | 3,591,768 | 3,555,850 | 3,421,159 | (4) | |||||||||||||
Connect U.S. Finco LLC | First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026 | 5.50% | Alternative Carriers | 4,582,107 | 4,482,733 | 4,453,258 | (4) | |||||||||||||
Curium Bidco S.à.r.l. | First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026 | 3.97% | Biotechnology | 4,950,000 | 4,912,875 | 4,912,875 | (4) | |||||||||||||
eResearch Technology, Inc. | First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027 | 5.50% | Application Software | 2,493,750 | 2,468,813 | 2,486,992 | (4) | |||||||||||||
Gigamon, Inc. | First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024 | 5.25% | Systems Software | 5,835,900 | 5,800,375 | 5,762,951 | ||||||||||||||
Guidehouse LLP | Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026 | 8.15% | Research & Consulting Services | 5,000,000 | 4,982,443 | 4,825,000 | (4) | |||||||||||||
Helios Software Holdings, Inc. | First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025 | 4.52% | Systems Software | 992,422 | 982,498 | 980,642 | (4) | |||||||||||||
Houghton Mifflin Harcourt Publishers Inc. | First Lien Term Loan, LIBOR+6.25% cash due 11/22/2024 | 7.25% | Education Services | 2,887,500 | 2,790,416 | 2,699,813 | ||||||||||||||
Integro Parent, Inc. | First Lien Term Loan, LIBOR+5.75% cash due 10/31/2022 | 6.75% | Insurance Brokers | 3,277,221 | 3,249,274 | 3,011,753 | ||||||||||||||
Intelsat Jackson Holdings S.A. | First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 7/13/2022 | 6.50% | Alternative Carriers | 398,251 | 328,422 | 414,511 | (5) | |||||||||||||
LTI Holdings, Inc. | First Lien Term Loan, LIBOR+3.50% cash due 9/6/2025 | 3.65% | Electronic Components | 1,386,341 | 1,100,748 | 1,294,496 | ||||||||||||||
MHE Intermediate Holdings, LLC | First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024 | 6.00% | Diversified Support Services | 4,101,250 | 4,058,056 | 3,991,747 | (4) | |||||||||||||
MHE Intermediate Holdings, LLC | First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 3/8/2024 | 6.00% | Diversified Support Services | 828,579 | 818,379 | 806,456 | (4) | |||||||||||||
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Total MHE Intermediate Holdings, LLC | 4,929,829 | 4,876,435 | 4,798,203 | |||||||||||||||||
MRI Software LLC | First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026 | 6.50% | Application Software | 1,614,980 | 1,601,301 | 1,575,954 | (4) | |||||||||||||
MRI Software LLC | First Lien Revolver, LIBOR+5.50% cash due 2/10/2026 | Application Software | — | (1,429 | ) | (3,454 | ) | (4)(5) | ||||||||||||
MRI Software LLC | First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026 | Application Software | — | (763 | ) | (1,568 | ) | (4)(5) | ||||||||||||
|
|
|
|
|
| |||||||||||||||
Total MRI Software LLC | 1,614,980 | 1,599,109 | 1,570,932 | |||||||||||||||||
Navicure, Inc. | First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026 | 4.15% | Health Care Technology | 3,980,000 | 3,960,100 | 3,899,584 | ||||||||||||||
Northern Star Industries Inc. | First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025 | 5.75% | Electrical Components & Equipment | 5,362,500 | 5,345,242 | 5,121,188 | ||||||||||||||
Northwest Fiber, LLC | First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027 | 5.66% | Integrated Telecommunication Services | 985,530 | 950,121 | 986,762 | (4) | |||||||||||||
Novetta Solutions, LLC | First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022 | 6.00% | Application Software | 5,807,651 | 5,770,724 | 5,706,017 | ||||||||||||||
OEConnection LLC | First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026 | 4.15% | Application Software | 3,727,256 | 3,709,171 | 3,685,325 | (4) | |||||||||||||
OEConnection LLC | First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026 | Application Software | — | (1,048 | ) | (2,654 | ) | (4)(5) | ||||||||||||
|
|
|
|
|
| |||||||||||||||
Total OEConnection LLC | 3,727,256 | 3,708,123 | 3,682,671 |
41
Portfolio Company | Industry | Investment Type | Maturity Date | Current Interest Rate (1)(4) | Cash Interest Rate (1) | Principal | Cost | Fair Value (2) | |||||||||||||||
Ameritox Ltd. (3)(5) | Healthcare services | First Lien Term Loan | 4/11/2021 | LIBOR+5% (1% floor) cash 3% PIK | 6.33 | % | $2,287,177 | $2,243,202 | $265,211 | ||||||||||||||
Healthcare services | 119,910.76 Class B Preferred Units | 119,911 | — | ||||||||||||||||||||
Healthcare services | 368.96 Class A Common Units | 2,174,034 | — | ||||||||||||||||||||
Total Ameritox Ltd | 2,287,177 | 4,537,147 | 265,211 | ||||||||||||||||||||
Beyond Trust Software, Inc. (3) | Application software | First Lien Term Loan | 9/25/2019 | LIBOR+7% (1% floor) cash | 8.33 | % | 11,267,524 | 11,220,478 | 11,267,116 | ||||||||||||||
Compuware Corporation (3) | Internet software & services | First Lien Term Loan B3 | 12/15/2021 | LIBOR+4.25% (1% floor) cash | 5.49 | % | 6,279,920 | 6,225,992 | 6,358,419 | ||||||||||||||
Metamorph US 3, LLC (3)(5) | Internet software & services | First Lien Term Loan | 12/1/2020 | LIBOR+5.5% (1% floor) cash 2% PIK | 6.74 | % | 6,825,900 | 6,477,372 | 2,592,115 | ||||||||||||||
Motion Recruitment Partners LLC (3) | Human resources & employment services | First Lien Term Loan | 2/13/2020 | LIBOR+6% (1% floor) cash | 7.24 | % | 8,659,650 | 8,659,650 | 8,659,223 | ||||||||||||||
NAVEX Global, Inc. | Internet software & services | First Lien Term Loan | 11/19/2021 | LIBOR+4.25% (1% floor) cash | 5.49 | % | 2,977,041 | 2,967,620 | 2,988,205 | ||||||||||||||
Air Newco LLC | IT consulting & other services | First Lien Term Loan B | 3/20/2022 | LIBOR+5.5% (1% floor) cash | 6.82 | % | 8,160,622 | 8,141,224 | 8,099,417 | ||||||||||||||
CM Delaware LLC | Advertising | First Lien Term Loan | 3/18/2021 | LIBOR+5.25% (1% floor) cash | 6.58 | % | 2,075,162 | 2,073,617 | 2,064,786 | ||||||||||||||
New Trident Holdcorp, Inc. (3) | Healthcare services | First Lien Term Loan B | 7/31/2019 | LIBOR+5.75% (1.25% floor) cash | 7.08 | % | 2,018,206 | 2,000,877 | 1,453,109 | ||||||||||||||
Central Security Group, Inc. (3) | Specialized consumer services | First Lien Term Loan | 10/6/2021 | LIBOR+5.625% (1% floor) cash | 6.86 | % | 3,876,067 | 3,880,408 | 3,892,211 | ||||||||||||||
Aptos, Inc. (3) | Data processing & outsourced services | First Lien Term Loan B | 9/1/2022 | LIBOR+6.75% (1% floor) cash | 8.08 | % | 7,920,000 | 7,790,262 | 7,840,800 | ||||||||||||||
Vubiquity, Inc. | Application software | First Lien Term Loan | 8/12/2021 | LIBOR+5.5% (1% floor) cash | 6.83 | % | 4,126,500 | 4,099,195 | 4,095,551 | ||||||||||||||
Poseidon Merger Sub, Inc. (3) | Advertising | Second Lien Term Loan | 8/15/2023 | LIBOR+8.5% (1% floor) cash | 9.81 | % | 3,000,000 | 2,933,633 | 3,030,000 | ||||||||||||||
Novetta Solutions, LLC | Diversified support services | First Lien Term Loan | 10/16/2022 | LIBOR+5% (1% floor) cash | 6.34 | % | 5,990,978 | 5,932,073 | 5,826,226 | ||||||||||||||
SHO Holding I Corporation | Footwear | First Lien Term Loan | 10/27/2022 | LIBOR+5% (1% floor) cash | 6.24 | % | 6,386,250 | 6,338,479 | 6,306,422 | ||||||||||||||
Valet Merger Sub, Inc. (3) | Environmental & facilities services | First Lien Term Loan | 9/24/2021 | LIBOR+7% (1% floor) cash | 8.24 | % | 3,920,000 | 3,877,655 | 3,919,865 | ||||||||||||||
Environmental & facilities services | Incremental Term Loan | 9/24/2021 | LIBOR+7% (1% floor) cash | 8.24 | % | 1,027,425 | 1,006,080 | 1,027,390 | |||||||||||||||
Total Valet Merger Sub, Inc. | 4,947,425 | 4,883,735 | 4,947,255 | ||||||||||||||||||||
RSC Acquisition, Inc. | Insurance brokers | First Lien Term Loan | 11/30/2022 | LIBOR+5.25% (1% floor) cash | 6.58 | % | 3,930,134 | 3,912,198 | 3,890,832 | ||||||||||||||
Integro Parent Inc. | Insurance brokers | First Lien Term Loan | 10/31/2022 | LIBOR+5.75% (1% floor) cash | 7.06 | % | 4,913,924 | 4,790,511 | 4,901,639 | ||||||||||||||
TruckPro, LLC | Auto parts & equipment | First Lien Term Loan | 8/6/2018 | LIBOR+5% (1% floor) cash | 6.24 | % | 1,823,268 | 1,821,822 | 1,825,054 | ||||||||||||||
Falmouth Group Holdings Corp. | Specialty chemicals | First Lien Term Loan | 12/13/2021 | LIBOR+6.75% (1% floor) cash | 8.08 | % | 4,610,174 | 4,572,990 | 4,610,400 | ||||||||||||||
Ancile Solutions, Inc. (3) | Internet software & services | First Lien Term Loan | 6/30/2021 | LIBOR+7% (1% floor) cash | 8.33 | % | 4,042,355 | 3,995,621 | 4,010,198 | ||||||||||||||
California Pizza Kitchen, Inc. | Restaurants | First Lien Term Loan | 8/23/2022 | LIBOR+6% (1% floor) cash | 7.24 | % | 4,950,000 | 4,938,077 | 4,917,008 | ||||||||||||||
MHE Intermediate Holdings, LLC (3) | Diversified support services | First Lien Term Loan B | 3/11/2024 | LIBOR+5% (1% floor) cash | 6.33 | % | 4,228,750 | 4,150,304 | 4,228,752 | ||||||||||||||
Diversified support services | Delayed Draw Term Loan | 3/11/2024 | LIBOR+5% (1% floor) cash | 6.33 | % | 667,510 | 635,208 | 667,510 | |||||||||||||||
Total MHE Intermediate Holdings, LLC | 4,896,260 | 4,785,512 | 4,896,262 | ||||||||||||||||||||
Total Portfolio Investments | $ | 115,964,537 | $ | 116,978,493 | $ | 108,737,459 |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Portfolio Company | Investment Type | Cash Interest Rate (1)(2) | Industry | Principal | Cost | Fair Value (3) | Notes | |||||||||||||||
Olaplex, Inc. | First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026 | 7.50% | Personal Products | $ | 2,962,500 | $ | 2,910,467 | $ | 2,962,500 | (4) | ||||||||||||
Olaplex, Inc. | First Lien Revolver, LIBOR+6.50% cash due 1/8/2025 | 7.50% | Personal Products | 162,000 | 156,467 | 162,000 | (4)(5) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||
Total Olaplex, Inc. | 3,124,500 | 3,066,934 | 3,124,500 | |||||||||||||||||||
Sabert Corporation | First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026 | 5.50% | Metal & Glass Containers | 1,885,500 | 1,866,645 | 1,860,366 | (4) | |||||||||||||||
SHO Holding I Corporation | First Lien Term Loan, LIBOR+3.00% cash PIK 2.25% due 4/27/2024 | 4.00% | Footwear | 6,239,067 | 6,212,276 | 4,382,944 | ||||||||||||||||
Signify Health, LLC | First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024 | 5.50% | Health Care Services | 5,850,000 | 5,813,914 | 5,645,250 | (4) | |||||||||||||||
Sunshine Luxembourg VII SARL | First Lien Term Loan, LIBOR+4.25% cash due 10/1/2026 | 5.25% | Personal Products | 6,451,250 | 6,418,993 | 6,427,573 | ||||||||||||||||
Supermoose Borrower, LLC | First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025 | 3.90% | Application Software | 2,878,863 | 2,692,385 | 2,595,483 | (4) | |||||||||||||||
Surgery Center Holdings, Inc. | First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024 | 4.25% | Health Care Facilities | 4,961,637 | 4,942,580 | 4,690,806 | ||||||||||||||||
Tribe Buyer LLC | First Lien Term Loan, LIBOR+4.50% cash due 2/16/2024 | 5.50% | Human Resource & Employment Services | 1,616,127 | 1,613,862 | 1,224,798 | ||||||||||||||||
UFC Holdings, LLC | First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026 | 4.25% | Movies & Entertainment | 1,557,649 | 1,540,707 | 1,534,775 | (4) | |||||||||||||||
Verscend Holding Corp. | First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025 | 4.65% | Health Care Technology | 1,733,723 | 1,720,364 | 1,722,238 | (4) | |||||||||||||||
VM Consolidated, Inc. | First Lien Term Loan, LIBOR+3.25% cash due 2/28/2025 | 3.40% | Data Processing & Outsourced Services | 4,771,728 | 4,756,892 | 4,682,258 | ||||||||||||||||
Windstream Services II, LLC | First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027 | 7.25% | Integrated Telecommunication Services | 4,987,500 | 4,788,469 | 4,839,970 | (4) | |||||||||||||||
WP CPP Holdings, LLC | Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 | 8.75% | Aerospace & Defense | 3,000,000 | 2,978,243 | 2,340,000 | (4) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||
Total Portfolio Investments | $ | 143,138,964 | $ | 140,599,644 | $ | 130,760,749 | ||||||||||||||||
|
|
|
|
|
|
(1) | Represents the interest rate as of September 30, 2020. All interest rates are payable in cash, unless otherwise noted. |
(2) | The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower’s option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars. As of September 30, 2020, the reference rates for the OCSI Glick JV’s variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22% and the 180-day LIBOR at 0.27%. Most loans include an interest floor, which generally ranges from 0% to 1%. |
(3) | Represents the current determination of fair value as of September 30, 2020 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company’s Board of Directors’ valuation process described elsewhere herein. |
(4) | This investment is held by both the Company and the OCSI Glick JV as of September 30, 2020. |
(5) | Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par. |
(6) | This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual is inclusive of PIK and other non-cash income where applicable. |
42
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCSI Glick JV Portfolio as of September 30, 2016
Portfolio Company | Investment Type | Cash Interest Rate (1)(2) | Industry | Principal | Cost | Fair Value (3) | Notes | |||||||||||||||
AI Ladder (Luxembourg) Subco S.a.r.l. | First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 | 6.60% | Electrical components & equipment | $ | 2,718,993 | $ | 2,651,270 | $ | 2,504,016 | (4) | ||||||||||||
Air Newco LP | First Lien Term Loan, LIBOR+4.75% cash due 5/31/2024 | 6.79% | IT consulting & other services | 7,425,000 | 7,406,438 | 7,437,400 | ||||||||||||||||
AL Midcoast Holdings LLC | First Lien Term Loan, LIBOR+5.50% cash due 8/1/2025 | 7.60% | Oil & gas storage & transportation | 6,930,000 | 6,860,699 | 6,834,712 | (4) | |||||||||||||||
Altice France S.A. | First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026 | 6.03% | Integrated telecommunication services | 2,977,500 | 2,912,809 | 2,975,639 | ||||||||||||||||
Alvogen Pharma US, Inc. | First Lien Term Loan, LIBOR+4.75% cash due 4/1/2022 | 6.79% | Pharmaceuticals | 5,359,286 | 5,359,286 | 4,874,270 | ||||||||||||||||
Ancile Solutions, Inc. | First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021 | 9.10% | Application software | 3,395,374 | 3,377,463 | 3,327,467 | (4) | |||||||||||||||
Aptos, Inc. | First Lien Term Loan, LIBOR+5.50% cash due 7/23/2025 | 7.70% | Computer & electronics retail | 2,977,500 | 2,947,725 | 2,940,281 | (4) | |||||||||||||||
Brazos Delaware II, LLC | First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025 | 6.05% | Oil & gas equipment & services | 4,937,500 | 4,917,589 | 4,570,273 | ||||||||||||||||
California Pizza Kitchen, Inc. | First Lien Term Loan, LIBOR+6.00% cash due 8/23/2022 | 8.53% | Restaurants | 4,850,000 | 4,838,318 | 4,349,868 | ||||||||||||||||
CITGO Petroleum Corp. | First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 | 7.10% | Oil & gas refining & marketing | 3,980,000 | 3,940,200 | 4,004,875 | (4) | |||||||||||||||
Connect U.S. Finco LLC | First Lien Term Loan, LIBOR+4.50% cash due 9/23/2026 | 7.10% | Alternative Carriers | 5,000,000 | 4,900,000 | 4,930,075 | (4) | |||||||||||||||
Covia Holdings Corporation | First Lien Term Loan, LIBOR+4.00% cash due 6/1/2025 | 6.31% | Oil & gas equipment & services | 6,912,500 | 6,912,500 | 5,673,745 | ||||||||||||||||
Curium Bidco S.à r.l. | First Lien Term Loan, LIBOR+4.00% cash due 7/9/2026 | 6.10% | Biotechnology | 5,000,000 | 4,962,500 | 5,025,000 | (4) | |||||||||||||||
Ellie Mae, Inc. | First Lien Term Loan, LIBOR+4.00% cash due 4/17/2026 | 6.04% | Application software | 1,000,000 | 995,000 | 1,002,920 | (4) | |||||||||||||||
Falmouth Group Holdings Corp. | First Lien Term Loan, LIBOR+6.75% cash due 12/14/2021 | 8.95% | Specialty chemicals | 4,658,544 | 4,626,032 | 4,632,004 | ||||||||||||||||
Frontier Communications Corporation | First Lien Term Loan, LIBOR+3.75% cash due 6/15/2024 | 5.80% | Integrated telecommunications services | 5,468,222 | 5,365,594 | 5,466,281 | (4) | |||||||||||||||
Gigamon, Inc. | First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024 | 6.29% | Systems software | 5,895,000 | 5,850,631 | 5,732,888 | ||||||||||||||||
Guidehouse LLP | Second Lien Term Loan, LIBOR+7.50% cash due 5/1/2026 | 9.54% | Research & consulting services | 5,000,000 | 4,979,290 | 4,937,500 | (4) | |||||||||||||||
Indivior Finance S.a.r.l. | First Lien Term Loan, LIBOR+4.50% cash due 12/19/2022 | 6.76% | Pharmaceuticals | 4,340,941 | 4,326,851 | 3,997,290 | (4) | |||||||||||||||
Integro Parent, Inc. | First Lien Term Loan, LIBOR+5.75% cash due 10/31/2022 | 7.80% | Insurance brokers | 4,813,924 | 4,744,243 | 4,681,541 | ||||||||||||||||
Intelsat Jackson Holdings S.A. | First Lien Term Loan, LIBOR+3.75% cash due 11/27/2023 | 5.80% | Alternative Carriers | 5,000,000 | 4,939,169 | 5,021,100 | ||||||||||||||||
McDermott Technology (Americas), Inc. | First Lien Term Loan, LIBOR+5.00% cash due 5/9/2025 | 7.10% | Oil & gas equipment & services | 1,429,306 | 1,406,187 | 913,565 | (4) | |||||||||||||||
MHE Intermediate Holdings, LLC | First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024 | 7.10% | Diversified support services | 4,143,750 | 4,089,029 | 4,060,875 | (4) | |||||||||||||||
First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 3/8/2024 | 7.10% | Diversified support services | 837,128 | 826,823 | 820,385 | (4) | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
Total MHE Intermediate Holdings, LLC | 4,980,878 | 4,915,852 | 4,881,260 | |||||||||||||||||||
Navicure, Inc. | First Lien Term Loan, LIBOR+4.00% cash due 9/18/2026 | 6.13% | Healthcare technology | 4,000,000 | 3,980,000 | 4,005,000 | ||||||||||||||||
Northern Star Industries Inc. | First Lien Term Loan, LIBOR+4.50% cash due 3/31/2025 | 6.56% | Electrical components & equipment | 5,417,500 | 5,396,178 | 5,336,238 | ||||||||||||||||
Novetta Solutions, LLC | First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022 | 7.05% | Application software | 5,868,628 | 5,824,577 | 5,760,440 | ||||||||||||||||
OCI Beaumont LLC | First Lien Term Loan, LIBOR+4.00% cash due 3/13/2025 | 6.10% | Commodity chemicals | 6,895,000 | 6,888,231 | 6,903,619 | (4) | |||||||||||||||
OEConnection LLC | First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/24/2026 | Application software | — | (1,720 | ) | (645 | ) | (4)(5) | ||||||||||||||
First Lien Term Loan, LIBOR+4.00% cash due 9/24/2026 | 6.13% | Application software | 3,655,914 | 3,637,634 | 3,649,059 | (4) | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
Total OEConnection LLC | 3,655,914 | 3,635,914 | 3,648,414 |
43
Portfolio Company | Industry | Investment Type | Maturity Date | Current Interest Rate (1)(4) | Cash Interest Rate (1) | Principal | Cost | Fair Value (2) | |||||||||||||||
Ameritox Ltd. (3) | Healthcare services | First Lien Term Loan | 4/11/2021 | LIBOR+5% (1% floor) cash 3% PIK | 6.00 | % | $2,339,146 | $2,336,840 | $2,322,917 | ||||||||||||||
Healthcare services | 119,910.76 Class B Preferred Units | — | 119,911 | 131,369 | |||||||||||||||||||
Healthcare services | 368.96 Class A Common Units | — | 2,174,034 | 981,348 | |||||||||||||||||||
Total Ameritox Ltd | 2,339,146 | 4,630,785 | 3,435,634 | ||||||||||||||||||||
Answers Corporation (3) (5) | Internet software & services | First Lien Term Loan | 10/3/2021 | LIBOR+5.25% (1% floor) cash | 6.25 | % | 7,899,749 | 7,636,708 | 4,265,865 | ||||||||||||||
Beyond Trust Software, Inc. (3) | Application software | First Lien Term Loan | 9/25/2019 | LIBOR+7% (1% floor) cash | 8.00 | % | 12,641,009 | 12,554,571 | 12,538,499 | ||||||||||||||
Compuware Corporation (3) | Internet software & services | First Lien Term Loan B1 | 12/15/2019 | LIBOR+5.25% (1% floor) cash | 6.25 | % | 7,392,405 | 7,306,444 | 7,420,127 | ||||||||||||||
Metamorph US 3, LLC (3) | Internet software & services | First Lien Term Loan | 12/1/2020 | LIBOR+6.5% (1% floor) cash | 7.50 | % | 6,900,283 | 6,808,009 | 5,744,139 | ||||||||||||||
Motion Recruitment Partners LLC (3) | Diversified support services | First Lien Term Loan | 2/13/2020 | LIBOR+6% (1% floor) cash | 7.00 | % | 9,125,000 | 9,125,000 | 9,099,254 | ||||||||||||||
NAVEX Global, Inc. (3) | Internet software & services | First Lien Term Loan | 11/19/2021 | LIBOR+4.75% (1% floor) cash | 5.99 | % | 1,793,550 | 1,779,633 | 1,784,582 | ||||||||||||||
Teaching Strategies, LLC | Education services | First Lien Term Loan (3) | 10/1/2019 | LIBOR+5.5% (0.5% floor) cash | 6.34 | % | 2,570,471 | 2,567,575 | 2,556,891 | ||||||||||||||
Education services | First Lien Delayed Draw Term Loan | 10/1/2019 | LIBOR+5.5% (0.5% floor) cash | 6.34 | % | 6,840,000 | 6,832,715 | 6,803,695 | |||||||||||||||
Total Teaching Strategies, LLC | 9,410,471 | 9,400,290 | 9,360,586 | ||||||||||||||||||||
TrialCard Incorporated (3) | Healthcare services | First Lien Term Loan | 12/31/2019 | LIBOR+4.5% (1% floor) cash | 5.50 | % | 7,179,097 | 7,144,396 | 7,144,248 | ||||||||||||||
Air Newco LLC | IT consulting & other services | First Lien Term Loan B | 3/20/2022 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 8,291,864 | 8,267,671 | 7,960,189 | ||||||||||||||
Fineline Technologies, Inc. (3) | Electronic equipment & instruments | First Lien Term Loan | 5/5/2017 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 7,034,441 | 7,010,963 | 7,015,051 | ||||||||||||||
LegalZoom.com, Inc. (3) | Specialized consumer services | First Lien Term Loan | 5/13/2020 | LIBOR+7% (1% floor) cash | 8.00 | % | 9,850,000 | 9,672,034 | 9,772,706 | ||||||||||||||
GK Holdings, Inc. | IT consulting & other services | First Lien Term Loan | 1/20/2021 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 3,438,750 | 3,452,038 | 3,412,959 | ||||||||||||||
Vitera Healthcare Solutions, LLC | Healthcare technology | Second Lien Term Loan | 11/4/2021 | LIBOR+8.25% (1% floor) cash | 9.25 | % | 3,000,000 | 2,958,409 | 2,782,500 | ||||||||||||||
TIBCO Software, Inc. (3) | Internet software & services | First Lien Term Loan | 12/4/2020 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 2,304,900 | 2,308,815 | 2,277,114 | ||||||||||||||
CM Delaware LLC | Advertising | First Lien Term Loan | 3/18/2021 | LIBOR+5.25% (1% floor) cash | 6.25 | % | 2,096,666 | 2,094,658 | 1,978,729 | ||||||||||||||
New Trident Holdcorp, Inc. (3) | Healthcare services | First Lien Term Loan B | 7/31/2019 | LIBOR+5.25% (1.25% floor) cash | 6.50 | % | 2,041,357 | 2,014,233 | 1,755,567 | ||||||||||||||
Central Security Group, Inc. (3) | Specialized consumer services | First Lien Term Loan | 10/6/2020 | LIBOR+5.625% (1% floor) cash | 6.63 | % | 5,909,774 | 5,915,626 | 5,776,805 | ||||||||||||||
Auction.com, LLC | Internet software & services | First Lien Term Loan | 5/12/2019 | LIBOR+5% (1% floor) cash | 6.00 | % | 3,940,000 | 3,926,700 | 3,959,700 | ||||||||||||||
Aptos, Inc. (3) | Data processing & outsourced services | First Lien Term Loan B | 9/1/2022 | LIBOR+6.75% (1% floor) cash | 7.75 | % | 8,000,000 | 7,842,222 | 7,920,000 | ||||||||||||||
Vubiquity, Inc. | Application software | First Lien Term Loan | 8/12/2021 | LIBOR+5.5% (1% floor) cash | 6.50 | % | 4,168,500 | 4,133,700 | 4,147,658 | ||||||||||||||
Too Faced Cosmetics, LLC (3) | Personal products | First Lien Term Loan B | 7/7/2021 | LIBOR+5% (1% floor) cash | 6.00 | % | 642,692 | 581,620 | 645,155 | ||||||||||||||
American Seafoods Group LLC (3) | Food distributors | First Lien Term Loan | 8/19/2021 | LIBOR+5% (1% floor) cash | 6.00 | % | 3,853,704 | 3,837,366 | 3,844,069 | ||||||||||||||
Worley Claims Services, LLC | Internet software & services | First Lien Term Loan | 10/31/2020 | LIBOR+8% (1% floor) cash | 9.00 | % | 5,730,937 | 5,707,511 | 5,702,282 |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Portfolio Company | Industry | Investment Type | Maturity Date | Current Interest Rate (1)(4) | Cash Interest Rate (1) | Principal | Cost | Fair Value (2) | |||||||||||||||
Poseidon Merger Sub, Inc. (3) | Advertising | Second Lien Term Loan | 8/15/2023 | LIBOR+8.5% (1% floor) cash | 9.50 | % | $ | 3,000,000 | $ | 2,922,316 | $ | 3,039,954 | |||||||||||
AccentCare, Inc. | Healthcare services | First Lien Term Loan | 9/3/2021 | LIBOR+5.75% (1% floor) cash | 6.75 | % | 7,850,000 | 7,773,386 | 7,727,344 | ||||||||||||||
Novetta Solutions, LLC | Diversified support services | First Lien Term Loan | 10/17/2022 | LIBOR+5.75% (1% floor) cash | 6.00 | % | 6,477,948 | 6,392,100 | 6,226,928 | ||||||||||||||
SHO Holding I Corporation | Footwear | First Lien Term Loan | 10/27/2022 | LIBOR+5% (1% floor) cash | 6.00 | % | 6,451,250 | 6,393,472 | 6,443,186 | ||||||||||||||
Valet Merger Sub, Inc. (3) | Environmental & facilities services | First Lien Term Loan | 9/24/2021 | LIBOR+7% (1% floor) cash | 8.00 | % | 3,960,000 | 3,906,498 | 4,026,826 | ||||||||||||||
RSC Acquisition, Inc. | Insurance brokers | First Lien Term Loan | 11/30/2022 | LIBOR+5.25% (1% floor) cash | 6.25 | % | 3,970,390 | 3,948,754 | 3,950,538 | ||||||||||||||
Integro Parent Inc. | Insurance brokers | First Lien Term Loan | 10/31/2022 | LIBOR+5.75% (1% floor) cash | 6.75 | % | 4,963,924 | 4,814,658 | 4,889,465 | ||||||||||||||
TruckPro, LLC | Auto parts & equipment | First Lien Term Loan | 8/6/2018 | LIBOR+5% (1% floor) cash | 6.00 | % | 1,920,000 | 1,916,612 | 1,919,232 | ||||||||||||||
Falmouth Group Holdings Corp. | Specialty chemicals | First Lien Term Loan | 12/13/2021 | LIBOR+6.75% (1% floor) cash | 7.75 | % | 4,962,500 | 4,912,596 | 4,967,689 | ||||||||||||||
Sundial Group Holdings LLC | Personal products | First Lien Term Loan | 10/19/2021 | LIBOR+6.25% (1% floor) cash | 7.25 | % | 3,900,000 | 3,839,938 | 3,954,402 | ||||||||||||||
Onvoy, LLC (3) | Integrated telecommunication services | First Lien Term Loan | 4/29/2021 | LIBOR+6.25% (1% floor) cash | 7.25 | % | 7,406,250 | 7,261,422 | 7,386,738 | ||||||||||||||
Ancile Solutions, Inc. (3) | Internet software & services | First Lien Term Loan | 6/30/2021 | LIBOR+7% (1% floor) cash | 8.00 | % | 4,500,000 | 4,433,644 | 4,432,500 | ||||||||||||||
Total Portfolio Investments | $ | 194,346,557 | $ | 194,624,798 | $ | 188,708,220 |
Portfolio Company | Investment Type | Cash Interest Rate (1)(2) | Industry | Principal | Cost | Fair Value (3) | Notes | |||||||||||||||
Red Ventures, LLC | First Lien Term Loan, LIBOR+3.00% cash due 11/8/2024 | 5.04% | Interactive media & services | $ | 3,989,924 | $ | 3,970,677 | $ | 4,010,712 | |||||||||||||
RSC Acquisition, Inc. | First Lien Term Loan, LIBOR+4.25% cash due 11/30/2022 | 6.29% | Trading companies & distributors | 3,849,574 | 3,835,594 | 3,820,702 | ||||||||||||||||
Servpro Borrower, LLC | First Lien Term Loan, PRIME+2.50% cash due 3/26/2026 | 7.50% | Specialized consumer services | 3,980,000 | 3,970,050 | 3,984,975 | ||||||||||||||||
SHO Holding I Corporation | First Lien Term Loan, LIBOR+5.00% cash due 10/27/2022 | 7.26% | Footwear | 6,256,250 | 6,227,881 | 5,943,438 | ||||||||||||||||
Signify Health, LLC | First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024 | 6.60% | Healthcare services | 5,910,000 | 5,864,902 | 5,902,613 | (4) | |||||||||||||||
Sunshine Luxembourg VII SARL | First Lien Term Loan, LIBOR+4.25% cash due 9/25/2026 | 6.59% | Personal products | 6,500,000 | 6,467,500 | 6,538,610 | (4) | |||||||||||||||
Tribe Buyer LLC | First Lien Term Loan, LIBOR+4.50% cash due 2/16/2024 | 6.54% | Human resources & employment services | 3,114,779 | 3,109,120 | 2,907,133 | (4) | |||||||||||||||
Triple Royalty Sub LLC | Fixed Rate Bond 144A 9.0% Toggle PIK cash due 4/15/2033 | Pharmaceuticals | 3,000,000 | 3,000,000 | 3,105,000 | |||||||||||||||||
UFC Holdings, LLC | First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026 | 5.30% | Movies & entertainment | 2,493,573 | 2,493,573 | 2,503,099 | (4) | |||||||||||||||
Verra Mobility, Corp. | First Lien Term Loan, LIBOR+3.75% cash due 2/28/2025 | 5.79% | Data processing & outsourced services | 4,929,950 | 4,913,436 | 4,956,645 | (4) | |||||||||||||||
WP CPP Holdings, LLC | Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 | 10.01% | Aerospace & defense | 3,000,000 | 2,974,333 | 2,987,490 | (4) | |||||||||||||||
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|
|
|
|
| |||||||||||||||||
Total Portfolio Investments | $ | 177,911,560 | $ | 176,687,612 | $ | 173,028,098 | ||||||||||||||||
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|
|
(1) | Represents the interest rate as of September 30, 2019. All interest rates are payable in cash, unless otherwise noted. |
(2) | The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower’s option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars. As of September 30, 2019, the reference rates for the OCSI Glick JV’s variable rate loans were the 30-day LIBOR at 2.04%, the 60-day LIBOR at 2.09%, the 90-day LIBOR at 2.10%, the 180-day LIBOR at 2.06% and the PRIME at 5.00%. Most loans include an interest floor, which generally ranges from 0% to 1%. |
(3) | Represents the current determination of fair value as of September 30, 2019 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company’s Board of Directors’ valuation process described elsewhere herein. |
(4) | This investment is held by both the Company and the OCSI Glick JV as of September 30, 2019. |
(5) | Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par. |
The cost and fair value of the Company'sCompany’s aggregate investment in FSFRthe OCSI Glick JV was $71.3$72.2 million and $57.6$49.4 million, respectively, as of September 30, 20172020 and $71.1$73.2 million and $63.3$54.3 million, respectively, as of September 30, 2016. The2019. As of September 30, 2020, the Company’s investment in the Subordinated Notes pay a weighted average interest rate of LIBOR plus 8.0% per annum.was on cash non-accrual status. For the years ended September 30, 20172020, 2019 and September 30, 2016,2018, the Company earned interest income of $5.8$1.4 million, $5.9 million and $5.1$6.1 million, respectively, on its investment in the Subordinated Notes.Notes, of which $0.0 million, $0.0 million and $2.2 million was PIK interest income, respectively. The Company reversed $0.6 million ofdid not earn any dividend income previously recorded in prior periods duringfor the yearyears ended September 30, 20172020, 2019 and 2018 with respect to its investment in the LLC equity interests sinceof the Company determined that such dividend payments may no longer be collectible. The Company earned dividend income of $2.7 million for the year ended September 30, 2016 with respect to its LLC equity interests.OCSI Glick JV. The LLC equity interests of the OCSI Glick JV are dividendincome producing to the extent there is residual cash to be distributed on a quarterly basis.
During the year ended September 30, 2020, the Company and GF Debt Funding amended the Subordinated Notes to (1) decrease the interest rate to 1-month LIBOR plus 4.5% per annum, (2) extend the maturity date from October 20, 2021 to October 20, 2028 and (3) provide that the Subordinated Notes will not pay interest on its previously scheduled April 15, 2020, July 15, 2020, October 15, 2020 or January 15, 2021 coupon dates. As of September 30, 2019, the Subordinated Notes bore an interest rate of 1-month LIBOR plus 6.5% per annum.
44
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Below is certain summarized financial information for FSFRthe OCSI Glick JV as of September 30, 20172020 and September 30, 20162019 and for the years ended September 30, 20172020, 2019 and September 30, 2016:
September 30, 2017 | September 30, 2016 | |||||||
Selected Balance Sheet Information: | ||||||||
Investments in loans at fair value (cost September 30, 2017: $116,978,493; cost September 30, 2016: $194,624,798) | $ | 108,737,459 | $ | 188,708,220 | ||||
Receivable from secured financing arrangement at fair value (September 30, 2016 cost: $5,000,000) | — | 4,985,425 | ||||||
Cash and cash equivalents | 13,891,899 | 980,605 | ||||||
Restricted cash | 2,249,575 | 3,343,303 | ||||||
Receivable from unsettled transactions | — | 952,591 | ||||||
Due from portfolio companies | 7,653 | — | ||||||
Other assets | 1,791,077 | 2,162,942 | ||||||
Total assets | $ | 126,677,663 | $ | 201,133,086 | ||||
Senior credit facility payable | $ | 56,881,939 | $ | 124,615,636 | ||||
Subordinated notes payable at fair value (proceeds September 30, 2017: $73,404,435; cost September 30, 2016: $73,149,434) | 65,836,199 | 65,012,167 | ||||||
Other liabilities | 3,959,525 | 4,196,688 | ||||||
Total liabilities | $ | 126,677,663 | $ | 193,824,491 | ||||
Members' equity | — | 7,308,595 | ||||||
Total liabilities and members' equity | $ | 126,677,663 | $ | 201,133,086 |
Year ended September 30, 2017 | Year ended September 30, 2016 | |||||||
Selected Statements of Operations Information: | ||||||||
Interest income | $ | 11,148,203 | $ | 14,109,946 | ||||
PIK interest income | 53,620 | 33,170 | ||||||
Fee income | 160,984 | 95,756 | ||||||
Total investment income | 11,362,807 | 14,238,872 | ||||||
Interest expense | 11,055,880 | 10,780,919 | ||||||
Other expenses | 224,559 | 283,267 | ||||||
Total expenses (1) | 11,280,439 | 11,064,186 | ||||||
Net unrealized appreciation (depreciation) | (2,893,408 | ) | 3,832,274 | |||||
Realized loss on investments | (3,873,454 | ) | (3,119,735 | ) | ||||
Net income (loss) | $ | (6,684,494 | ) | $ | 3,887,225 |
September 30, 2020 | September 30, 2019 | |||||||
Selected Balance Sheet Information: | ||||||||
Investments at fair value (cost September 30, 2020: $140,599,644; cost September 30, 2019: $176,687,612) | $ | 130,760,749 | $ | 173,028,098 | ||||
Cash and cash equivalents | 3,574,960 | 1,096,498 | ||||||
Restricted cash | 1,106,829 | 2,616,125 | ||||||
Other assets | 2,475,078 | 2,937,681 | ||||||
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| |||||
Total assets | $ | 137,917,616 | $ | 179,678,402 | ||||
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| |||||
Senior credit facility payable | $ | 80,681,939 | $ | 91,881,939 | ||||
Subordinated notes payable at fair value (proceeds September 30, 2020: $74,337,772; proceeds September 30, 2019: $75,517,614) | 56,469,250 | 62,087,348 | ||||||
Other liabilities | 766,427 | 25,709,115 | ||||||
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| |||||
Total liabilities | $ | 137,917,616 | $ | 179,678,402 | ||||
Members’ equity | — | — | ||||||
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| |||||
Total liabilities and members’ equity | $ | 137,917,616 | $ | 179,678,402 | ||||
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|
Year ended September 30, 2020 | �� | Year ended September 30, 2019 | Year ended September 30, 2018 | |||||||||
Selected Statements of Operations Information: | ||||||||||||
Interest income | $ | 9,994,321 | $ | 12,446,772 | $ | 9,823,972 | ||||||
Fee income | 301,288 | 29,999 | 77,999 | |||||||||
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| |||||||
Total investment income | 10,295,609 | 12,476,771 | 9,901,971 | |||||||||
Interest expense | 5,585,942 | 11,597,998 | 11,433,877 | |||||||||
Other expenses | 159,836 | 176,358 | 211,874 | |||||||||
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| |||||||
Total expenses (1) | 5,745,778 | 11,774,356 | 11,645,751 | |||||||||
Net unrealized appreciation (depreciation) | (382,788 | ) | (183,384 | ) | 10,626,928 | |||||||
Realized gain (loss) | (4,167,043 | ) | (519,031 | ) | (8,883,148 | ) | ||||||
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| |||||||
Net income (loss) | $ | — | $ | — | $ | — | ||||||
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(1) | There are no management fees or incentive fees charged at the OCSI Glick JV. |
The OCSI Glick JV has elected to fair value the Subordinated Notes issued to the Company and GF Debt Funding under FASB ASC 825.Topic 825, Financial Instruments - Fair Value Option. The Subordinated Notes are valued based on the total assets less the liabilities senior to the subordinated notes of FSFR Glick JVSubordinated Notes in an amount not exceeding par under the enterprise valueEV technique.
During the yearyears ended September 30, 2017,2020, 2019 and 2018, the Company did not sell any senior secured debt investments to FSFRthe OCSI Glick JV. During the year ended September 30, 2016, the Company sold $48.9 million of senior secured debt investments at fair value to FSFR Glick JV in exchange for $47.6 million cash consideration, $1.2 million of subordinated notes in FSFR Glick JV and $0.1 million of LLC equity interests in FSFR Glick JV. The Company realized a
Note 4. Fee Income
For the years ended September 30, 20172020, 2019 and September 30, 2016 under at least one of the significance conditions of Rule 4-08(g) of SEC Regulation S-X. The related summary financial information is presented in the "FSFR Glick JV LLC" heading above.
45
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Share Data and Distributions
Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share, pursuant to FASB ASC Topic 260-10,
Earnings per Share, for the years ended September 30,Year ended September 30, 2020 | Year ended September 30, 2019 | Year ended September 30, 2018 | ||||||||||
Earnings (loss) per common share — basic and diluted: | ||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (1,267,203 | ) | $ | 6,973,982 | $ | 20,673,049 | |||||
Weighted average common shares outstanding | 29,466,768 | 29,466,768 | 29,466,768 | |||||||||
Earnings (loss) per common share — basic and diluted | $ | (0.04 | ) | $ | 0.24 | $ | 0.70 |
46
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | |||||||||||
Earnings (loss) per common share — basic and diluted: | |||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (8,766,879 | ) | $ | (4,457,617 | ) | $ | 15,912,082 | |||||
Weighted average common shares outstanding | 29,466,768 | 29,466,768 | 29,466,768 | ||||||||||
Earnings (loss) per common share — basic and diluted | $ | (0.30 | ) | $ | (0.15 | ) | $ | 0.54 |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in Net Assets
The following table presents the changes in net assets for the years ended September 30, 2020, 2019 and 2018:
Common Stock | ||||||||||||||||||||
Shares | Par Value | Additional Paid-in-Capital | Accumulated Overdistributed Earnings | Total Net Assets | ||||||||||||||||
Balance at September 30, 2017 | 29,466,768 | $ | 294,668 | $ | 373,995,934 | $ | (80,654,168 | ) | $ | 293,636,434 | ||||||||||
Net investment income | — | — | — | 19,771,332 | 19,771,332 | |||||||||||||||
Net unrealized appreciation (depreciation) | — | — | — | 28,615,535 | 28,615,535 | |||||||||||||||
Net realized gains (losses) | — | — | — | (27,713,818 | ) | (27,713,818 | ) | |||||||||||||
Distributions to stockholders | — | — | — | (16,452,988 | ) | (16,452,988 | ) | |||||||||||||
Tax return of capital | — | — | (2,111,075 | ) | — | (2,111,075 | ) | |||||||||||||
Reclassification of additional paid-in capital | — | — | (1,133,470 | ) | 1,133,470 | — | ||||||||||||||
Issuance of common stock under dividend reinvestment plan | 33,462 | 335 | 281,402 | — | 281,737 | |||||||||||||||
Repurchases of common stock under dividend reinvestment plan | (33,462 | ) | (335 | ) | (281,402 | ) | — | (281,737 | ) | |||||||||||
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| |||||||||||
Balance at September 30, 2018 | 29,466,768 | $ | 294,668 | $ | 370,751,389 | $ | (75,300,637 | ) | $ | 295,745,420 | ||||||||||
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Net investment income | — | $ | — | $ | — | $ | 21,140,251 | $ | 21,140,251 | |||||||||||
Net unrealized appreciation (depreciation) | — | — | — | (13,705,282 | ) | (13,705,282 | ) | |||||||||||||
Net realized gains (losses) | — | — | — | (460,987 | ) | (460,987 | ) | |||||||||||||
Distributions to stockholders | — | — | — | (18,269,396 | ) | (18,269,396 | ) | |||||||||||||
Reclassification of additional paid-in capital | — | — | (1,552,057 | ) | 1,552,057 | — | ||||||||||||||
Issuance of common stock under dividend reinvestment plan | 26,350 | 263 | 214,804 | — | 215,067 | |||||||||||||||
Repurchases of common stock under dividend reinvestment plan | (26,350 | ) | (263 | ) | (214,804 | ) | — | (215,067 | ) | |||||||||||
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| |||||||||||
Balance at September 30, 2019 | 29,466,768 | $ | 294,668 | $ | 369,199,332 | $ | (85,043,994 | ) | $ | 284,450,006 | ||||||||||
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Net investment income | — | $ | — | $ | — | $ | 16,203,500 | $ | 16,203,500 | |||||||||||
Net unrealized appreciation (depreciation) | — | — | — | (7,158,267 | ) | (7,158,267 | ) | |||||||||||||
Net realized gains (losses) | — | — | — | (10,312,436 | ) | (10,312,436 | ) | |||||||||||||
Distributions to stockholders | — | — | — | (16,501,392 | ) | (16,501,392 | ) | |||||||||||||
Issuance of common stock under dividend reinvestment plan | 46,112 | 461 | 291,387 | — | 291,848 | |||||||||||||||
Repurchases of common stock under dividend reinvestment plan | (46,112 | ) | (461 | ) | (291,387 | ) | — | (291,848 | ) | |||||||||||
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| |||||||||||
Balance at September 30, 2020 | 29,466,768 | $ | 294,668 | $ | 369,199,332 | $ | (102,812,589 | ) | $ | 266,681,411 | ||||||||||
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Distributions
Distributions to common stockholders are recorded on the ex-dividend date. The Company is required to distribute dividends each taxable year to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, determined without regard to any deduction for dividends paid, in order to be eligible for tax benefits allowed to a RIC under Subchapter M of the Code. The Company anticipates paying out as a distribution all or substantially all of those amounts. The amount to be paid out as a dividend is determined by the Board of Directors and is based on management’s estimate of the Company’s annual taxable income. Net realized capital gains, if any, are generallymay be distributed although the Company may decide to retain such net realized capital gainsstockholders or retained for investment.
The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Company’s Board of Directors authorizes, and the Company declares a cash distribution, then the Company’s stockholders who have not “opted out” of the Company’s DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. If the Company’s shares are trading at a premium to net asset value, the Company typically issues new shares to implement the DRIP.DRIP with such shares issued at the greater of the most recently computed net asset value per share of common stock or 95% of the current market price per share of common stock on the payment date for such distribution. If the Company’s shares are trading at a discount to net asset value, the Company typically purchases shares in the open market in connection with the Company’s obligations under the DRIP.
47
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For income tax purposes, the Company estimates that its distributions for the 20172020 calendar year will be composed primarily of ordinary income and the actualincome. The character of such distributions will be appropriately reported to the Internal Revenue Service and stockholders for the 20172020 calendar year. To the extent that the Company’s taxable earnings for a fiscal and taxable year fall below the amount of distributions paid for the fiscal and taxable year, a portion of the total amount of the Company’s distributions for the fiscal and taxable year may beis deemed a return of capital for tax purposes to the Company’s stockholders.
The following table reflects the distributions per share that the Company has paid, including shares issued under the DRIP, on its common stock during the years ended September 30, 2017, 20162020, 2019 and 2015:
Frequency | Date Declared | Record Date | Payment Date | Amount per Share | Cash Distribution | DRIP Shares Issued (1) | DRIP Shares Value | |||||||||||||
Monthly | August 4, 2016 | October 14, 2016 | October 31, 2016 | $ | 0.075 | $ | 2,183,023 | 3,146 | $ | 26,985 | ||||||||||
Monthly | August 4, 2016 | November 15, 2016 | November 30, 2016 | 0.075 | 2,183,100 | 2,986 | 26,908 | |||||||||||||
Monthly | October 19, 2016 | December 15, 2016 | December 30, 2016 | 0.075 | 2,179,421 | 3,438 | 30,586 | |||||||||||||
Monthly | October 19, 2016 | January 31, 2017 | January 31, 2017 | 0.075 | 2,180,645 | 2,905 | 29,363 | |||||||||||||
Monthly | October 19, 2016 | February 15, 2017 | February 28, 2017 | 0.075 | 2,183,581 | 2,969 | 26,427 | |||||||||||||
Monthly | February 6, 2017 | March 15, 2017 | March 31, 2017 | 0.04 | 1,165,417 | 1,508 | 13,253 | |||||||||||||
Quarterly | February 6, 2017 | June 15, 2017 | June 30, 2017 | 0.19 | 5,543,465 | 6,840 | 55,221 | |||||||||||||
Quarterly | August 7, 2017 | September 15, 2017 | September 29, 2017 | 0.19 | 5,536,798 | 6,991 | 61,888 | |||||||||||||
Total for the year ended September 30, 2017 | $ | 0.80 | $ | 23,155,451 | 30,783 | $ | 270,630 |
Frequency | Date Declared | Record Date | Payment Date | Amount per Share | Cash Distribution | DRIP Shares Issued (1) | DRIP Shares Value (2) | |||||||||||||
Monthly | July 10, 2015 | October 6, 2015 | October 15, 2015 | $ | 0.075 | $ | 2,101,445 | 12,080 | $ | 108,563 | ||||||||||
Monthly | July 10, 2015 | November 5, 2015 | November 16, 2015 | 0.075 | 2,093,278 | 13,269 | 116,730 | |||||||||||||
Monthly | November 30, 2015 | December 11, 2015 | December 22, 2015 | 0.075 | 2,115,444 | 11,103 | 94,563 | |||||||||||||
Monthly | November 30, 2015 | January 4, 2016 | January 15, 2016 | 0.075 | 2,148,928 | 8,627 | 61,079 | |||||||||||||
Monthly | November 30, 2015 | February 5, 2016 | February 16, 2016 | 0.075 | 2,177,085 | 4,542 | 32,923 | |||||||||||||
Monthly | February 8, 2016 | March 15, 2016 | March 31, 2016 | 0.075 | 2,175,431 | 4,383 | 34,577 | |||||||||||||
Monthly | February 8, 2016 | April 15, 2016 | April 29, 2016 | 0.075 | 2,174,974 | 4,452 | 35,033 | |||||||||||||
Monthly | February 8, 2016 | May 13, 2016 | May 31, 2016 | 0.075 | 2,176,513 | 4,256 | 33,494 | |||||||||||||
Monthly | May 6, 2016 | June 15, 2016 | June 30, 2016 | 0.075 | 2,163,126 | 5,822 | 46,881 | |||||||||||||
Monthly | May 6, 2016 | July 15, 2016 | July 29, 2016 | 0.075 | 2,179,263 | 3,627 | 30,745 | |||||||||||||
Monthly | May 6, 2016 | August 15, 2016 | August 31, 2016 | 0.075 | 2,181,006 | 3,260 | 29,002 | |||||||||||||
Monthly | August 4, 2016 | September 15, 2016 | September 30, 2016 | 0.075 | 2,183,197 | 3,078 | 26,811 | |||||||||||||
Total for the year ended September 30, 2016 | $ | 0.90 | $ | 25,869,690 | 78,499 | $ | 650,402 |
Frequency | Date Declared | Record Date | Payment Date | Amount per Share | Cash Distribution | DRIP Shares Issued (1) | DRIP Shares Value | |||||||||||||
Quarterly | May 12, 2014 | September 15, 2014 | October 15, 2014 | 0.30 | 8,648,937 | 17,127 | 191,093 | |||||||||||||
Quarterly | September 9, 2014 | December 15, 2014 | January 15, 2015 | 0.30 | 8,597,352 | 23,183 | 242,678 | |||||||||||||
Quarterly | November 20, 2014 | April 2, 2015 | April 15, 2015 | 0.30 | 8,532,236 | 28,296 | 307,794 | |||||||||||||
Monthly | February 4, 2015 | May 1, 2015 | May 15, 2015 | 0.10 | 2,895,847 | 5,045 | 50,830 | |||||||||||||
Monthly | February 4, 2015 | June 1, 2015 | June 15, 2015 | 0.10 | 2,893,440 | 5,296 | 53,237 | |||||||||||||
Monthly | February 4, 2015 | July 1, 2015 | July 15, 2015 | 0.10 | 2,809,213 | 14,572 | 137,464 | |||||||||||||
Monthly | February 4, 2015 | August 3, 2015 | August 17, 2015 | 0.10 | 2,890,289 | 6,174 | 56,388 | |||||||||||||
Monthly | July 10, 2015 | September 4, 2015 | September 15, 2015 | 0.07 | 2,168,886 | 4,575 | 41,121 | |||||||||||||
Total for the year ended September 30, 2015 | $ | 1.37 | $ | 39,436,200 | 104,268 | $ | 1,080,605 |
Date Declared | Record Date | Payment Date | Amount per Share | Cash Distribution | DRIP Shares Issued (1) | DRIP Shares Value | ||||||||||||||
November 12, 2019 | December 13, 2019 | December 31, 2019 | $ | 0.155 | $ | 4,503,016 | 7,793 | $ | 64,334 | |||||||||||
January 31, 2020 | March 13, 2020 | March 31, 2020 | 0.155 | 4,489,700 | 14,852 | 77,648 | ||||||||||||||
April 30, 2020 | June 15, 2020 | June 30, 2020 | 0.125 | 3,589,622 | 14,977 | 93,725 | ||||||||||||||
July 31, 2020 | September 15, 2020 | September 30, 2020 | 0.125 | 3,627,206 | 8,490 | 56,141 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total for the year ended September 30, 2020 | $ | 0.56 | $ | 16,209,544 | 46,112 | $ | 291,848 |
Date Declared | Record Date | Payment Date | Amount per Share | Cash Distribution | DRIP Shares Issued (1) | DRIP Shares Value | ||||||||||||||
November 19, 2018 | December 17, 2018 | December 28, 2018 | $ | 0.155 | $ | 4,513,238 | 6,888 | $ | 54,111 | |||||||||||
February 1, 2019 | March 15, 2019 | March 29, 2019 | 0.155 | 4,516,806 | 6,187 | 50,543 | ||||||||||||||
May 3, 2019 | June 14, 2019 | June 28, 2019 | 0.155 | 4,514,262 | 6,314 | 53,088 | ||||||||||||||
August 2, 2019 | September 13, 2019 | September 30, 2019 | 0.155 | 4,510,023 | 6,961 | 57,325 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total for the year ended September 30, 2019 | $ | 0.62 | $ | 18,054,329 | 26,350 | $ | 215,067 |
Date Declared | Record Date | Payment Date | Amount per Share | Cash Distribution | DRIP Shares Issued (1) | DRIP Shares Value | ||||||||||||||||||
August 7, 2017 | December 15, 2017 | December 29, 2017 | $ | 0.190 | $ | 5,439,519 | 18,809 | $ | 159,167 | |||||||||||||||
February 5, 2018 | March 15, 2018 | March 30, 2018 | 0.140 | 4,091,583 | 4,204 | 33,764 | ||||||||||||||||||
May 3, 2018 | June 15, 2018 | June 29, 2018 | 0.145 | 4,232,547 | 4,829 | 40,134 | ||||||||||||||||||
August 1, 2018 | September 15, 2018 | September 28, 2018 | 0.155 | 4,518,677 | 5,620 | 48,672 | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total for the year ended September 30, 2018 |
| $ | 0.63 | $ | 18,282,326 | 33,462 | $ | 281,737 |
(1) | Shares were purchased on the open market and distributed. |
Common Stock Offering
There were no common stock offerings during the years ended September 30, 2017, September 30, 20162020, 2019 and September 30, 2015.
Note 6. Borrowings
Citibank Facility
On January 15, 2015, OCSI Senior Funding II LLC (formerly FS Senior Funding II LLC,LLC), the Company'sCompany’s wholly-owned, special purpose financing subsidiary, entered into a $175 million revolving credit facility (as amended, the "Citibank facility"“Citibank Facility”) with the lenders referred to therein, Citibank, N.A., as administrative agent, and Wells Fargo Bank, N.A., as collateral agent and custodian.
As of September 30, 2020 and September 30, 2019, the Company entered into an amendment (the “Citibank Amendment”) to the Citibank facility that amends the Loan and Security Agreement, dated as of January 15, 2015, by and among the Company, as the collateral manager and as the seller, FS Senior Funding II LLC, as the borrower, Citibank, N.A., as administrative agent, and Citibank, N.A., as the sole lender. Under the Citibank Amendment, certain events of default that would result from the closing of the Transaction are waived and the abilitywas able to borrow amountsup to $180 million under the Citibank facility for investment was revisedFacility (subject to require the consentborrowing base and other limitations). As of the lenders prior to the closing of the Transaction and completion of satisfactory due diligence by the lenders on Oaktree. In addition, the Citibank Amendment provided that if the closing of the Transaction did not occur by December 31, 2017,September 30, 2020, the reinvestment period under the Citibank Facility is scheduled to expire on July 19, 2021 and the maturity date for the Citibank facility would have terminated and the Company would have been required to pay down any amounts outstandingFacility is July 18, 2023.
48
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2020, borrowings under the Citibank facility as set forth in the Citibank Amendment.
As of September 30, 2020 and September 30, 2016,2019, the Company had $76.5$119.1 million and $107.4$126.1 million outstanding under the Citibank facility,Facility, respectively. Borrowings under the Citibank facilityFacility are secured by all of the assets of FSOCSI Senior Funding II LLC and all of the Company'sCompany’s equity interests in FSOCSI Senior Funding II LLC. The Company may use the Citibank facilityFacility to fund a portion of its loan origination activities and for general corporate purposes. Each loan origination under the Citibank facilityFacility is subject to the satisfaction of certain conditions. The Company'sCompany’s borrowings under the Citibank facilityFacility bore interest at a weighted average interest rate of 3.559%3.052%, 2.838%4.463% and 2.516%4.264% for the years ended September 30, 2017, September 30, 20162020, 2019 and September 30, 2015,2018, respectively. For the years ended September 30, 2017, September 30, 20162020, 2019 and September 30, 2015,2018, the Company recorded interest expense (inclusive of $4.2fees) of $4.6 million, $4.1$6.4 million and $2.6$4.2 million, respectively, related to the Citibank facility.Facility.
Deutsche Bank Facility
On September 24, 2018, OCSI Senior Funding Ltd., a wholly-owned subsidiary of the Company, entered into a loan financing and servicing agreement (as amended, the “Deutsche Bank Facility”) with the Company as equityholder and as servicer, the lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as facility agent, the other agents parties thereto and Wells Fargo Bank, National Association, as collateral agent and as collateral custodian.
As of September 30, 2020, (a) OCSI Senior Funding Ltd. may request drawdowns under the Deutsche Bank Facility until September 30, 2021 (the “revolving period”) unless there is an earlier termination or event of default, (b) the maturity date of the Deutsche Bank Facility is the earliest of March 30, 2022, the occurrence of an event of default or completion of a securitization transaction, (c) the size of the Deutsche Bank Facility is $160 million (subject to borrowing base and other limitations) and (d) the interest rate is three-month LIBOR plus 2.65% through September 30, 2021, following which the interest rate will reset to three-month LIBOR plus 2.80% for the remaining term of the Deutsche Bank Facility, in each case with a 0.25% LIBOR floor. There is a non-usage fee of 0.50% per annum payable on the undrawn amount under the Deutsche Bank Facility, and, as of September 30, 2020, a minimum utilization fee should the drawn amount under the Deutsche Bank Facility fall below 80%.
As of September 30, 2020, the Deutsche Bank Facility includes a waiver period (which extends through January 3, 2021) during which the facility agent is restricted from revaluing certain collateral obligations where the change in valuation is caused by or results from a business disruption due primarily to the COVID-19 pandemic (subject to the Company’s ability to earlier terminate such period in certain circumstances).
The Deutsche Bank Facility is secured by all of the assets held by OCSI Senior Funding Ltd. OCSI Senior Funding Ltd. has made customary representations and warranties and is required to comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar credit facilities. The borrowings of the Company, including indirectly under the Deutsche Bank Facility, are subject to the leverage restrictions contained in the Investment Company Act.
As of September 30, 2020 and September 30, 2019, the Company had $137.6 million and $157.6 million outstanding under the Deutsche Bank Facility, respectively. For the years ended September 30, 2020, and 2019 and the period from September 24, 2018 through September 30, 2018, the Company’s borrowings under the Deutsche Bank Facility bore interest at a weighted average interest rate of 3.634%, 4.524% and 4.266%, respectively, and the Company recorded interest expense (inclusive of fees) of $7.1 million, $7.5 million and $0.1 million, respectively.
49
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
East West Bank Facility
On January 6, 2016, the Company entered into a five-year $25 million senior secured revolving credit facility (subject to borrowing base and other limitations) with the lenders referenced therein, U.S. Bank National Association, as Custodian, and East West Bank as Secured Lender (the "East(as amended, the “East West Bank facility"Facility”). TheAs of September 30, 2020, the commitments under the East West Bank facility bearsFacility were terminated. Prior to its termination on September 30, 2020, the East West Bank Facility bore an interest rate of either (i) LIBOR plus 3.75%2.85% per annum for borrowings in year one, 3.50% per annum for borrowings in year two, 3.25% per annum for borrowings in years three and four and 3.00% per annum for borrowings in year five, or (ii) East West Bank’s prime rate, plus 0.75% per annum for borrowings in year one, 0.50% per annum for borrowingseach case with a 3.5% floor. Prior to its termination on September 30, 2020, the minimum asset coverage ratio applicable to the Company under the East West Bank Facility was 150% as determined in year two, 0.25% per annum for borrowings in years three and four, and 0.00% per annum for borrowings in year five.accordance with the requirements of the Investment Company Act. The East West Bank facility maturesFacility would have otherwise matured on January 6, 2021. The East West Bank facility requiresFacility required the Company to comply with certain affirmative and negative covenants and other customary requirements for similar credit facilities.
As of September 30, 2017, the Company had $6.5 million outstanding under the East West Bank facility. As of September 30, 2016, the Company had2020, there were no borrowings outstanding under the East West Bank facility.Facility. As of September 30, 2019, the Company had $11.0 million outstanding under the East West Bank Facility. Borrowings under the East West Bank facility areFacility were secured by the loans pledged as collateral thereunder from time to time as well as certain other assets of the Company. The Company may useused the East West Bank facilityFacility to fund a portion of its loan origination activities and for general corporate purposes. The Company’s borrowings under the East West Bank facilityFacility bore interest at a weighted average interest rate of 4.633%4.059%, 5.407% and 4.949% for the yearyears ended September 30, 2017. The Company’s borrowings under the East West Bank facility bore interest at a weighted average interest rate of
50
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2015 Debt Securitization
On May 28, 2015, the Company completed its $309.0 million debt securitization ("(“2015 Debt Securitization"Securitization”) consisting of $222.6 million in senior secured notes ("(“2015 Notes"Notes”) and $86.4 million of unsecured subordinated notes ("(“Subordinated 2015 Notes"Notes”). The notes offered in the 2015 Debt Securitization were issued by the 2015 Issuer,FS Senior Funding Ltd., a wholly-owned subsidiary of the Company, through a private placement. The 2015 Notes arewere secured by the assets held by the 2015 Issuer.FS Senior Funding Ltd. The 2015 Debt Securitization consistsconsisted of $126.0 million Class A-T Senior Secured 2015 Notes, which bearbore interest at three-month LIBOR plus 1.80% per annum; $29.0 million Class A-S Senior Secured 2015 Notes, which bore interest at a rate of three-month LIBOR plus 1.55% per annum, until a step-up in spread to 2.10% occurred in October 2016; $20.0 million Class A-R Senior Secured Revolving 2015 Notes, which bearbore interest at a rate of Commercial Paper ("CP"(“CP”) plus 1.80% per annum (collectively, the "Class“Class A Notes"Notes”) and $25.0 million Class B Senior Secured 2015 Notes, which bearbore interest at a rate of three-month LIBOR plus 2.65% per annum (the "Class“Class B Notes"Notes”).
In partial consideration forconnection with entry into the loans transferred to theDeutsche Bank Facility, on September 24, 2018, FS Senior Funding Ltd. and FS Senior Funding CLO LLC redeemed all outstanding 2015 Issuer as part ofNotes issued in the 2015 Debt Securitization pursuant to the Company currently retains the entire $22.6 millionterms of the Class C Senior Securedindenture governing the 2015 Notes (which the Company purchased at 98.0% of par value) (the "Class C Notes") and the entire $86.4 million of the Subordinated 2015 Notes. The Class A Notes and Class B Notes are included in the Company's September 30, 2017 Consolidated Statements of Assets and Liabilities as notes payable. As of September 30, 2017, the Class C Notes and the Subordinatedrevocable notice issued by the Company on August 14, 2018. Following such redemption, the agreements governing the 2015 Debt Securitization were terminated and FS Senior Funding Ltd. was merged with and into OCSI Senior Funding Ltd. with OCSI Senior Funding Ltd. continuing as the surviving entity. The 2015 Notes were eliminated in consolidation.
Prior to September 24, 2018, the Company servesserved as collateral manager to the 2015 IssuerFS Senior Funding Ltd. under a collateral management agreement. The Company iswas entitled
For the yearsyear ended September 30, 2017 and September 30, 2016,2018, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the 2015 Debt Securitization were as follows:
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | |||||||||||
Interest expense | $ | 5,741,534 | $ | 4,668,947 | $ | 1,476,995 | |||||||
Loan administration fees | 69,514 | 79,882 | — | ||||||||||
Amortization of debt issuance costs | 290,104 | 290,104 | 120,877 | ||||||||||
Total interest and other debt financing expenses | $ | 6,101,152 | $ | 5,038,933 | $ | 1,597,872 | |||||||
Cash paid for interest expense | $ | 5,449,738 | $ | 5,136,063 | $ | — | |||||||
Annualized average interest rate | 3.425 | % | 2.466 | % | 2.390 | % | |||||||
Average outstanding balance | $ | 180,462,192 | $ | 181,782,413 | $ | 61,900,170 |
Year ended September 30, 2018 | ||||
Interest expense | $ | 7,123,152 | ||
Loan administration fees | 93,209 | |||
Amortization of debt issuance costs | 2,224,132 | |||
|
| |||
Total interest and other debt financing expenses | $ | 9,440,493 | ||
|
| |||
Cash paid for interest expense | $ | 8,469,735 | ||
Annualized average interest rate | 4.170 | % | ||
Average outstanding balance | $ | 176,875,000 |
Secured Borrowings
As of September 30, 2020, the Company had $10.9 million of secured borrowings outstanding, which were recorded as a result of certain securities that were sold and simultaneously repurchased at a premium, with amounts payable to the counterparty due on the repurchase settlement date, which is generally within 60 days of the trade date. There were no secured borrowings outstanding as of September 30, 2019. The classes, interest rates, spread over LIBOR, cash paid for interest andCompany recorded less than $0.1 million of interest expense of each of the Class A-T, A-S, A-R, B and C 2015 Notesin connection with secured borrowings for the year ended September 30, 2017 is as follows:
Year ended September 30, 2017 | ||||||||||||
Stated Interest Rate | LIBOR Spread (basis points) | Cash Paid for Interest | Interest Expense | |||||||||
Class A-T Notes | 3.1035% | 180 | $ | 3,487,268 | $ | 3,664,619 | ||||||
Class A-S Notes | 3.4035% | 210 | (1) | 850,073 | 926,401 | |||||||
Class A-R Notes | 2.9551% | 180 | (2) | 205,027 | 207,900 | |||||||
Class B Notes | 3.9535% | 265 | 907,370 | 942,614 | ||||||||
Class C Notes | 4.5535% | 325 | (3) | — | — | |||||||
Total | $ | 5,449,738 | $ | 5,741,534 |
51
Description | Class A-T Notes | Class A-S Notes | Class A-R Notes | Class B Notes | Class C Notes | Subordinated Notes | ||||||
Type | Senior Secured Floating Rate Term Debt | Senior Secured Floating Rate Term Debt | Senior Secured Floating Rate Revolver | Senior Secured Floating Rate Term Debt | Senior Secured Floating Rate Term Debt | Subordinated Term Notes | ||||||
Amount Outstanding | $126,000,000 | $29,000,000 | $— | $25,000,000 | $22,575,680 | $86,400,000 | ||||||
Moody's Rating | "Aaa" | "Aaa" | "Aaa" | "Aa2" | "Aa2" | NR | ||||||
S&P Rating | "AAA" | "AAA" | "AAA" | NR | NR | NR | ||||||
Interest Rate | LIBOR + 1.80% | LIBOR + 2.10%* | CP + 1.80% ** | LIBOR + 2.65% | LIBOR + 3.25% | NA | ||||||
Stated Maturity | May 28, 2025 | May 28, 2025 | May 28, 2025 | May 28, 2025 | May 28, 2025 | May 28, 2025 |
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Principal Payments
Scheduled principal payments for debt obligations atas of September 30, 20172020 are as follows:
Payments due during fiscal years ended September 30, | ||||||||||||||||||||||||
Total | 2018 | 2019 | 2020 | 2021 | 2022 and Thereafter | |||||||||||||||||||
Citibank facility | $ | 76,456,800 | $ | — | $ | — | $ | 76,456,800 | $ | — | $ | — | ||||||||||||
Notes Payable | 180,000,000 | — | — | — | — | 180,000,000 | ||||||||||||||||||
East West Bank facility | 6,500,000 | — | — | — | 6,500,000 | — | ||||||||||||||||||
Total | $ | 262,956,800 | $ | — | $ | — | $ | 76,456,800 | $ | 6,500,000 | $ | 180,000,000 |
Payments due during fiscal years ended September 30, | ||||||||||||||||
Total | 2021 | 2022 | 2023 | |||||||||||||
Citibank Facility | $ | 119,056,800 | $ | — | $ | — | $ | 119,056,800 | ||||||||
Deutsche Bank Facility | 137,600,000 | — | 137,600,000 | — | ||||||||||||
Secured Borrowings | 10,929,578 | 10,929,578 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 267,586,378 | $ | 10,929,578 | $ | 137,600,000 | $ | 119,056,800 | ||||||||
|
|
|
|
|
|
|
|
Note 7. Interest and Dividend Income
Year ended September 30, 2017 | Year ended September 30, 2016 | |||||||
PIK balance at beginning of period | $ | 88,839 | $ | — | ||||
Gross PIK interest accrued | 759,744 | 167,065 | ||||||
PIK income reserves (1) | (351,323 | ) | — | |||||
PIK interest received in cash | — | (78,226 | ) | |||||
PIK balance at end of period | $ | 497,260 | $ | 88,839 |
As of September 30, 2017, September 30, 2016 and September 30, 2015,2020, there were three,was one and one investments, respectively,investment on which the Company had stopped accruing cash and/or PIK interest or OID income.
September 30, 2017 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||||||||||||||||||||||||
Cost | % of Debt Portfolio | Fair Value | % of Debt Portfolio | Cost | % of Debt Portfolio | Fair Value | % of Debt Portfolio | Cost | % of Debt Portfolio | Fair Value | % of Debt Portfolio | |||||||||||||||||||||||||||||||
Accrual | $ | 564,231,285 | 96.02 | % | $ | 553,084,120 | 98.88 | % | $ | 563,757,229 | 96.74 | % | $ | 552,114,644 | 98.72 | % | $ | 619,529,324 | 98.79 | % | $ | 613,701,960 | 99.28 | % | ||||||||||||||||||
PIK non-accrual (paying) (1) | — | — | — | — | — | — | — | — | 7,605,257 | 1.21 | 4,427,839 | 0.72 | ||||||||||||||||||||||||||||||
Cash non-accrual (nonpaying) (2) | 23,381,863 | 3.98 | 6,292,551 | 1.12 | 19,027,017 | 3.26 | 7,156,160 | 1.28 | — | — | — | — | ||||||||||||||||||||||||||||||
Total | $ | 587,613,148 | 100.00 | % | $ | 559,376,671 | 100.00 | % | $ | 582,784,246 | 100.00 | % | $ | 559,270,804 | 100.00 | % | $ | 627,134,581 | 100.00 | % | $ | 618,129,799 | 100.00 | % |
September 30, 2020 | ||||||||||||||||
Cost | % of Debt Portfolio | Fair Value | % of Debt Portfolio | |||||||||||||
Accrual | $ | 464,459,378 | 87.72 | % | $ | 450,508,104 | 90.12 | % | ||||||||
Cash non-accrual (1) | 65,045,551 | 12.28 | 49,409,901 | 9.88 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 529,504,929 | 100.00 | % | $ | 499,918,005 | 100.00 | % | ||||||||
|
|
|
|
|
|
|
|
(1) |
Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable. |
As of September 30, 2017, 2016 and 2015 was as follows:
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | ||||||||||
Cash interest income | $ | 1,291,399 | $ | 1,136,652 | $ | — | ||||||
PIK interest income | 351,323 | — | — | |||||||||
OID income | 89,553 | 57,735 | 13,816 | |||||||||
Total | $ | 1,732,275 | $ | 1,194,387 | $ | 13,816 |
Note 8. Taxable/Distributable Income and Dividend Distributions
Taxable income differs from net increase (decrease) in net assets resulting from operations primarily due to: (1) unrealized appreciation (depreciation) on investments and secured borrowings,foreign currency, as gains and losses are not included in taxable income until they are realized; (2) exit fees received in connection with investments in portfolio companies; (3) origination fees received in connection with investments in portfolio companies; (3)(4) recognition of interest income on certain loans; and (4)(5) income or loss recognition on exited investments.
52
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Listed below is a reconciliation of net decreaseincrease (decrease) in net assets resulting from operations to taxable income for the years ended September 30, 20172020, 2019 and September 30, 2016:
Year ended September 30, 2017 | Year ended September 30, 2016 | |||||||
Net decrease in net assets resulting from operations | $ | (8,766,879 | ) | $ | (4,457,617 | ) | ||
Net unrealized depreciation on investments and secured borrowings | 17,803,657 | 16,980,524 | ||||||
Book/tax difference due to deferred loan fees | (1,438,850 | ) | (94,659 | ) | ||||
Book/tax difference due to interest income on certain loans | 1,642,722 | 1,136,652 | ||||||
Book/tax difference due to capital losses not recognized | 13,384,915 | 12,769,777 | ||||||
Other book/tax differences | 557,519 | (79,467 | ) | |||||
Taxable/Distributable Income (1) | $ | 23,183,084 | $ | 26,255,210 |
Year ended September 30, 2020 | Year ended September 30, 2019 | Year ended September 30, 2018 | ||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (1,267,203 | ) | $ | 6,973,982 | $ | 20,673,049 | |||||
Net unrealized (appreciation) depreciation | 7,158,267 | 13,705,282 | (28,615,535 | ) | ||||||||
Book/tax difference due to capital losses not recognized (recognized) | 11,957,395 | (1,511,618 | ) | 23,225,073 | ||||||||
Other book/tax differences | 259,242 | 614,614 | — | |||||||||
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|
| |||||||
Taxable/Distributable Income (1) | $ | 18,107,701 | $ | 19,782,260 | $ | 15,282,587 | ||||||
|
|
|
|
|
|
(1) | The |
As of September 30, 2017, the components of accumulated undistributed income on a tax basis were as follows:
Undistributed ordinary income, net | $ | 2,808,747 | |
Net realized capital losses | 28,564,899 | ||
Unrealized losses, net | (46,826,393 | ) |
For the year ended September 30, 2019, the Company is also subjectreclassified $1.6 million, respectively, of additional paid-in-capital to accumulated overdistributed earnings on the Consolidated Statement of Assets and Liabilities to reflect distributions that occurred prior to September 30, 2018, that were deemed to be a U.S. federal excisereturn of capital for income tax based on distribution requirementspurposes. These reclassification entries did not impact total net assets.
As of its taxable incomeSeptember 30, 2020, the Company’s last tax year end, the components of accumulated overdistributed earnings on a calendar year basis. The Company anticipates timely distribution of its taxable income in accordance with tax rules. The Company did not incur a U.S. federal excise tax for calendar years 2015 and 2016 and does not expect to incur a U.S. federal excise tax for calendar year 2017.
Undistributed ordinary income, net | $ | 3,138,670 | ||
Net realized capital losses | (72,740,041 | ) | ||
Unrealized losses, net | (33,211,216 | ) |
The aggregate cost of investments for income tax purposes was $607.3 million$531,725,323 as of September 30, 2017. For the year ended2020. As of September 30, 2017,2020, the aggregate gross unrealized appreciation for all investments in which there was an excess of value over cost for income tax purposes was $4.6 million. For the year ended$41,676,913. As of September 30, 2017,2020, the aggregate gross unrealized depreciation for all investments in which there was an excess of cost for income tax purposes over value was $51.4 million.$74,888,129. Net unrealized depreciation based on the aggregate cost of investments for income tax purposes was $46.8 million.
Note 9. Realized Gains or Losses and Net Unrealized Appreciation or Depreciation on Investments
Realized Gains or Losses
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption and the cost basis of the investment without regard to unrealized appreciation or depreciation previously recognized, and include investments written-off during the period, net of recoveries. Realized losses may also be recorded in connection with the Company'sCompany’s determination that certain investments are considered worthless securities and/or meet the conditions for loss recognition per the applicable tax rules.
53
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the year ended September 30, 2020, the Company recorded an aggregate net realized loss of $10.3 million, which consisted of the following:
($ in millions) | ||||
Portfolio Company | Net Realized Gain (Loss) | |||
Woodford Express LLC | $ | (5.1 | ) | |
Curvature, Inc. | (1.9 | ) | ||
Zephyr Bidco Ltd | (1.7 | ) | ||
Tallgrass Energy | (1.1 | ) | ||
Other, net | (0.5 | ) | ||
|
| |||
Total, net | $ | (10.3 | ) | |
|
|
During the year ended September 30, 2019, the Company recorded an aggregate net realized loss of $0.5 million in connection with the exit of various investments.
During the year ended September 30, 2018, the Company recorded an aggregate net realized loss of $27.7 million, which consisted of the following:
($ in millions) | ||||
Portfolio Company | Net Realized Gain (Loss) | |||
Ameritox, Ltd. | $ | (15.9 | ) | |
Metamorph US 3, LLC | (8.9 | ) | ||
Other, net | (2.9 | ) | ||
|
| |||
Total, net | $ | (27.7 | ) | |
|
|
Net Unrealized Appreciation or Depreciation
Net unrealized appreciation or depreciation reflects the net change in the valuation of the portfolio pursuant to the Company'sCompany’s valuation guidelines and the reclassification of any prior period unrealized appreciation or depreciation.
During the Company's recorded investment realization events, excluding syndications of debt investments and sales of debt investments in the open market, for the yearyears ended September 30, 2017 is shown in the table below:
Note 10. Concentration of Credit Risks
The Company deposits its cash with financial institutions and at times such balances may be in excess of the FDIC insurance limit. The Company limits its exposure to credit loss by depositing its cash with high credit quality financial institutions and monitoring their financial stability.
Note 11. Related Party Transactions
As of September 30, 2017, the Company was party to an investment advisory agreement with FSM (the “Former Investment Advisory Agreement”), which was the Company’s investment adviser through the closing of the Transaction. Under the Former Investment Advisory Agreement, the Company paid FSM a fee for its services consisting of two components: a base management fee and an incentive fee.
54
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended September 30, 2017 | Year ended September 30, 2016 | Year ended September 30, 2015 | Year ended September 30, 2014 | Period from June 29, 2013 (commencement of operations) through September 30, 2013 | ||||||||||||||||
Net asset value at beginning of period | $ | 11.06 | $ | 12.11 | $ | 12.65 | $ | 15.11 | $ | — | ||||||||||
Net investment income (5) | 0.76 | 0.86 | 0.96 | 0.62 | — | |||||||||||||||
Net unrealized appreciation (depreciation) on investments and secured borrowings (5) | (0.60 | ) | (0.58 | ) | (0.43 | ) | 0.24 | 0.12 | ||||||||||||
Net realized gain (loss) on investments (5) | (0.45 | ) | (0.43 | ) | 0.01 | 0.14 | 0.01 | |||||||||||||
Distributions to stockholders (5) | (0.80 | ) | (0.90 | ) | (1.07 | ) | (0.62 | ) | — | |||||||||||
Tax return of capital (5) | — | — | — | (0.39 | ) | — | ||||||||||||||
Net issuance of common stock (5) | — | — | (0.01 | ) | (2.45 | ) | 14.98 | |||||||||||||
Net asset value at end of period | $ | 9.97 | $ | 11.06 | $ | 12.11 | $ | 12.65 | $ | 15.11 | ||||||||||
Per share market value at beginning of period | $ | 8.56 | $ | 8.73 | $ | 11.82 | $ | 13.54 | $ | 15.00 | ||||||||||
Per share market value at end of period | $ | 8.80 | $ | 8.56 | $ | 8.73 | $ | 11.82 | $ | 13.54 | ||||||||||
Total return (1) | 12.51 | % | 9.44 | % | (15.76 | )% | (8.20 | )% | (9.73 | )% | ||||||||||
Common shares outstanding at beginning of period | 29,466,768 | 29,466,768 | 29,466,768 | 6,666,768 | 100 | |||||||||||||||
Common shares outstanding at end of period | 29,466,768 | 29,466,768 | 29,466,768 | 29,466,768 | 6,666,768 | |||||||||||||||
Net assets at beginning of period | $ | 325,829,394 | $ | 356,807,103 | $ | 372,677,678 | $ | 100,705,269 | $ | 1,500 | ||||||||||
Net assets at end of period | $ | 293,636,434 | $ | 325,829,394 | $ | 356,807,103 | $ | 372,677,678 | $ | 100,705,269 | ||||||||||
Average net assets (2) | $ | 316,440,902 | $ | 332,486,362 | $ | 368,839,422 | $ | 132,873,801 | $ | 80,133,138 | ||||||||||
Ratio of net investment income to average net assets (3) | 7.09 | % | 7.59 | % | 7.67 | % | 4.34 | % | 0.08 | % | ||||||||||
Ratio of total expenses to average net assets (3) | 7.71 | % | 8.44 | % | 6.29 | % | 5.20 | % | 2.14 | % | ||||||||||
Ratio of base management fee waiver to average net assets (3) | — | % | — | % | — % | (0.12 | )% | — % | ||||||||||||
Ratio of insurance recoveries to average net assets (3) | (0.08 | )% | — | % | — | % | — | % | — | % | ||||||||||
Ratio of net expenses to average net assets (3) | 7.63 | % | 8.44 | % | 6.29 | % | 5.08 | % | 2.14 | % | ||||||||||
Ratio of portfolio turnover to average investments at fair value | 46.80 | % | 28.02 | % | 21.48 | % | 78.96 | % | 16.44 | % | ||||||||||
Weighted average outstanding debt (4) | $ | 267,608,526 | $ | 303,204,218 | $ | 243,240,691 | $ | 49,833,018 | $ | — | ||||||||||
Average debt per share (5) | $ | 9.08 | $ | 10.29 | $ | 8.25 | $ | 5.36 | $ | — |
Investment Advisers Act of 1940, as amended (the “Advisers Act”), (vi) statements and/or potential omissions in the entities’ SEC filings, (vii) the entities’ books, records, and accounts and whether they fairly and accurately reflected the entities’ transactions and dispositions of assets, and (viii) several other issues relating to corporate books and records. The formal order cites various provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Advisers Act, as well as rules promulgated under those Acts, as the bases of the investigation. Advisory Agreement
The Company is cooperating with the Division of Enforcement investigation, has produced requested documents, and has been communicating with Division of Enforcement personnel. The Investment Adviser is not subject to these subpoenas.
September 30, 2017 | September 30, 2016 | |||||||
FSFR Glick JV LLC | $ | 16,159,368 | $ | 16,382,494 | ||||
MHE Intermediate Holdings | 6,749,698 | — | ||||||
Triple Point Group Holdings, Inc. | 4,968,590 | 4,968,590 | ||||||
BeyondTrust Software, Inc. | 3,605,000 | 3,605,000 | ||||||
Motion Recruitment Partners LLC | 2,900,000 | 2,900,000 | ||||||
PowerPlan, Inc. | 2,100,000 | 2,100,000 | ||||||
Ministry Brands, LLC | 1,857,967 | — | ||||||
Impact Sales, LLC | 1,078,125 | — | ||||||
Valet Merger Sub, Inc. | 833,333 | 333,333 | ||||||
Executive Consulting Group, Inc. | 800,000 | 800,000 | ||||||
Internet Pipeline, Inc. | 800,000 | 800,000 | ||||||
Metamorph US 3, LLC (1) | 720,000 | 1,800,000 | ||||||
Systems, Inc. | 600,000 | — | ||||||
Sailpoint Technologies, Inc. | 300,000 | 200,000 | ||||||
4 Over International, LLC | 68,452 | 68,452 | ||||||
TIBCO Software, Inc. | — | 5,300,000 | ||||||
All Web Leads, Inc. | — | 3,458,537 | ||||||
Legalzoom.com, Inc. | — | 2,607,018 | ||||||
Teaching Strategies, LLC | — | 2,400,000 | ||||||
Dynatect Group Holdings, Inc. | — | 1,800,000 | ||||||
My Alarm Center, LLC | — | 1,212,472 | ||||||
Baart Programs, Inc. | — | 1,000,000 | ||||||
TrialCard Incorporated | — | 850,000 | ||||||
OBHG Management Services, LLC | — | 100,000 | ||||||
Accruent, LLC | — | 85,000 | ||||||
Total | $ | 43,540,533 | $ | 52,770,896 |
For the three months ended | ||||||||||||||||||||||||||||||||||||
(dollars in thousands, except per share amounts) | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | ||||||||||||||||||||||||
Total investment income | $ | 11,820 | $ | 12,171 | $ | 11,020 | $ | 11,561 | $ | 13,203 | $ | 13,114 | $ | 13,195 | $ | 13,914 | $ | 14,068 | $ | 14,140 | $ | 11,341 | $ | 11,923 | ||||||||||||
Net investment income | 5,521 | 5,930 | 5,086 | 5,884 | 6,342 | 6,164 | 5,785 | 7,002 | 7,402 | 7,086 | 6,294 | 7,496 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) | (19,984 | ) | (5,791 | ) | (254 | ) | (5,159 | ) | 2,251 | (5,248 | ) | (6,445 | ) | (20,308 | ) | (7,115 | ) | (4,632 | ) | 393 | (1,012 | ) | ||||||||||||||
Net increase (decrease) in net assets resulting from operations | (14,463 | ) | 139 | 4,832 | 725 | 8,593 | 916 | (660 | ) | (13,306 | ) | 287 | 2,454 | 6,687 | 6,484 | |||||||||||||||||||||
Net assets | 293,636 | 313,698 | 319,158 | 319,924 | 325,829 | 323,866 | 329,580 | 334,661 | 356,807 | 361,782 | 368,168 | 370,322 | ||||||||||||||||||||||||
Total investment income per common share | $ | 0.40 | $ | 0.41 | $ | 0.37 | $ | 0.39 | $ | 0.45 | $ | 0.45 | $ | 0.45 | $ | 0.47 | $ | 0.48 | $ | 0.48 | $ | 0.38 | $ | 0.40 | ||||||||||||
Net investment income per common share | 0.19 | 0.20 | 0.17 | 0.20 | 0.22 | 0.21 | 0.20 | 0.24 | 0.25 | 0.24 | 0.21 | 0.25 | ||||||||||||||||||||||||
Earnings (loss) per common share | (0.49 | ) | — | 0.16 | 0.02 | 0.29 | 0.03 | (0.02 | ) | (0.45 | ) | 0.01 | 0.08 | 0.23 | 0.22 | |||||||||||||||||||||
Net asset value per common share at period end | 9.97 | 10.65 | 10.83 | 10.86 | 11.06 | 10.99 | 11.18 | 11.36 | 12.11 | 12.28 | 12.49 | 12.57 |
From October 17, 2017 through May 3, 2020, the Company was externally managed by OCM pursuant to an investment advisory agreement. On May 4, 2020, OCM effected the novation of such investment advisory agreement to Oaktree. Immediately following such novation, the Company and Oaktree entered into a new investment advisory agreement with the same terms, including fee structure, as the investment advisory agreement with OCM. The term “Investment Advisory Agreement” refers collectively to the agreements with Oaktree and, prior to its novation, with OCM. Prior to October 17, 2017, the Company was externally managed by Fifth Street Management LLC (the “Former Adviser”), an indirect, partially-owned subsidiary of Fifth Street Asset Management Inc., pursuant to an investment advisory agreement between the Company and the Former Adviser (the “Former Investment Advisory Agreement”), which was terminated on October 17, 2017.
Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect until September 30, 2021 and thereafter from year-to-year if approved annually by the Company’s Board of Directors or by the affirmative vote of the holders of a majority of the outstanding voting securities of the Company, including, in either case, approval by a majority of the directors of the Company who are not interested persons. The Investment Advisory Agreement will automatically terminate in the event of its assignment. The Investment Advisory Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other. The Investment Advisory Agreement may also be terminated, without penalty, upon the vote of a majority of the outstanding voting securities of the Company.
Base Management Fee
Under the New Investment Advisory Agreement, the base management fee onis calculated at an annual rate of 1.00% of total gross assets, including any investment made with borrowings, but excluding cash and cash equivalents,equivalents. The base management fee is 1.00%.
For the years ended September 30, 2020, and 2019 the base management fee incurred under the Investment Advisory Agreement was $5.6 million and $5.9 million, respectively. For the period from October 17, 2017 to September 30, 2018, the base management fee incurred under the Investment Advisory Agreement was $5.4 million, which was payable to OCM. For the period from October 1, 2017 to October 17, 2017, the base management fee (net of waivers) incurred under the Former Investment Advisory Agreement with the Former Adviser was $0.2 million, which was payable to the Former Adviser.
Incentive Fee
The incentive fee consists of two parts. Under the New Investment Advisory Agreement, the first part of the incentive fee (the “incentive fee on income” or “Part I incentive fee”) is calculated and payable quarterly in arrears based upon the “pre-incentive fee net investment income” of the Company for the immediately preceding quarter. The payment of the incentive fee on income is subject to payment of a preferred return to investors each quarter (i.e., a “hurdle rate”), expressed as a rate of return on the value of the Company’s net assets at the end of the most recently completed quarter, of 1.50%, subject to a “catch up” feature.
For this purpose, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies, other than fees for providing managerial assistance) accrued during the fiscal quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the New Administration Agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discountOID, debt instruments with payment-in-kindPIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
55
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under the New Investment Advisory Agreement, the calculation of the incentive fee on income for each quarter is as follows:
No incentive fee is payable to Oaktree in any quarter in which the Company’s pre-incentive fee net investment income does not exceed the preferred return rate of 1.50% (the “preferred return”) on net assets.assets;
100% of the Company’s pre-incentive fee net investment income, if any, that exceeds the preferred return but is less than or equal to 1.8182% in any fiscal quarter is payable to Oaktree. This portion of the incentive fee on income is referred to as the “catch-up” provision, and it is intended to provide Oaktree with an incentive fee of 17.5% on all of the Company’s pre-incentive fee net investment income when the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets in any fiscal quarter.quarter; and
For any quarter in which the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets, the subordinated incentive fee on income is equal to 17.5% of the amount of the Company’s pre-incentive fee net investment income, as the preferred return and catch-up will have been achieved.
There is no accumulation of amounts on the hurdle rate from quarter to quarter and accordingly there is no clawback of amounts previously paid if subsequent quarters are below the quarterly hurdle.
OCM permanently waived $0.3 million of Part I incentive fees incurred during the three months ended March 31, 2020. For the years ended September 30, 2020 and 2019, the Part I incentive fee (net of waivers) incurred under the Investment Advisory Agreement was $1.6 million and $3.8 million, respectively. For the period from October 17, 2017 to September 30, 2018, the Part I incentive fee (net of waivers) incurred under the Investment Advisory Agreement was $2.2 million. For the period from October 1, 2017 to October 17, 2017, incentive fees incurred under the Former Investment Advisory Agreement with the Former Adviser were $0.1 million.
Under the New Investment Advisory Agreement, the second part of the incentive fee will be(the “capital gains incentive fee”) is determined and payable in arrears as of the end of each fiscal year (or upon termination of the New Investment Advisory Agreement, as of the termination date) commencing with the fiscal year endingended September 30, 2019 and will equalequals 17.5% of the Company’s realized capital gains, if any, on a cumulative basis from the beginning of the fiscal year endingended September 30, 2019 through the end of each subsequent fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gaingains incentive fees under the New Investment Advisory Agreement. Any realized capital gains, realized capital losses, unrealized capital appreciation and unrealized capital depreciation with respect to the Company’s portfolio as of the end of the fiscal year endingended September 30, 2018 will beare excluded from the calculations of the second part of the incentive fee.
GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized on a theoretical “liquidation basis.” A fee so calculated and accrued would not be payable under applicable law and may never be paid based upon the computation of capital gains incentive fees in subsequent periods. Amounts ultimately paid under the Investment Advisory Agreement will be consistent with the formula reflected in the Investment Advisory Agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains incentive fee plus the aggregate cumulative unrealized capital appreciation. Any realized capital gains and losses and cumulative unrealized capital appreciation and depreciation with respect to Fifth Street Managementthe Company’s portfolio as of the end of the fiscal year ended September 30, 2018 are excluded from the GAAP accrual. If such amount is positive at the end of a period, then GAAP requires the Company to record a capital gains incentive fee equal to 17.5% of such cumulative amount, less the aggregate amount of actual capital gains incentive fees paid or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future or any accrued capital gains incentive fee will become payable under the Investment Advisory Agreement. For the years ended September 30, 2020 and 2019, the Company did not accrue, and cumulatively has not accrued, any capital gains incentive fees.
56
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
To ensure compliance with Section 15(f) of the Investment Company Act, OCM entered into a two-year contractual fee waiver with the Company, which ended on October 17, 2019, pursuant to which OCM waived any management or incentive fees payable under the Investment Advisory Agreement that exceeded what would have been paid to the Former Adviser in the aggregate under the Former Investment Advisory Agreement, both the base management fee and incentive fee on income were calculated and paid to FSM atAgreement. At the end of each quarter. In order to ensure that FSM receives any compensation earned during the quarter ending December 31, 2017,two-year period, OCM permanently waived $1.2 million, of which $0.1 million was recorded for the initial payment of the base management fee and incentive fee on income under the Newyear ended September 30, 2020.
Indemnification
The Investment Advisory Agreement will coverprovides that, absent willful misfeasance, bad faith or gross negligence in the entire quarterperformance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, Oaktree and its officers, managers, partners, members (and their members, including the owners of their members), agents, employees, controlling persons and any other person or entity affiliated with it, are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in whichsettlement) arising from the Newrendering of Oaktree’s services under the Investment Advisory Agreement became effective, and be calculated at a
Administrative Services
The Company entered intois party to the New Administration Agreement with Oaktree Administrator on October 17, 2017.Administrator. Pursuant to the New Administration Agreement, Oaktree Administrator provides administrative services to the Company necessary for the operations of the Company, which include providing office facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and such other services as Oaktree Administrator, subject to review by the Company’s Board of Directors, shall from time to time deem to be necessary or useful to perform its obligations under the New Administration Agreement. Oaktree Administrator may, on behalf of the Company, conduct relations and negotiate agreements with custodians, trustees, depositories, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. Oaktree Administrator will makemakes reports to the Company’s Board of Directors of its performance of obligations under the New Administration Agreement and furnishfurnishes advice and recommendations with respect to such other aspects of the Company’s business and affairs, of the Company, in each case, as it shall determine to be desirable or as reasonably required by the Board;Company’s Board of Directors; provided that the Oaktree Administrator shall not provide any investment advice or recommendation.
Oaktree Administrator will also provideprovides portfolio collection functions for interest income, fees and warrants and is responsible for the financial and other records that the Company is required to maintain and prepares, prints and disseminates reports to the Company’s stockholders and all other materials filed with the U.S. Securities and Exchange Commission, or the SEC. In addition, Oaktree Administrator will assistassists the Company in determining and publishing the Company’s net asset value, overseeing the preparation and filing of the Company’s tax returns, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Oaktree Administrator may also offer to provide, on the Company’s behalf, managerial assistance to the Company’s portfolio companies.
For providing these services, facilities and personnel, the Company will reimbursereimburses Oaktree Administrator the allocable portion of overhead and other expenses incurred by Oaktree Administrator in performing its obligations under the New Administration Agreement, including the Company’s allocable portion of the rent of the Company’s principal executive offices (which are located in a building owned by a Brookfield affiliate) at market rates and the Company’s allocable portion of the costs of compensation and related expenses of its Chief Financial Officer, Chief Compliance Officer, their staffs and other non-investment professionals at Oaktree that perform duties for the Company. Such reimbursement is at cost, with no profit to, or markup by, Oaktree Administrator. Oaktree Administrator may also offer to provide, on the Company’s behalf, managerial assistance to the Company’s portfolio companies. The New Administration Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, Oaktree Administrator and its officers, managers, partners, agents, employees, controlling persons, members (or their owners) and any other person or entity affiliated with it, are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of Oaktree Administrator’s services under the New Administration Agreement or otherwise as the Company’s administrator. Unless earlier terminated as described below, the New Administration Agreement will remain in effect until October 17, 2019 and thereafter from year-to-year if approved annually by the Company’s Board of Directors or by the affirmative vote of the holders of a majority of the Company’s outstanding voting securities, including, in either case, approval by a majority of the Company’s directors who are not interested persons. The New Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other. The New Administration Agreement may also be terminated, without penalty, upon the vote of a majority of the Company’s outstanding voting securities.
57
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended September 30, 2020, the Company accrued administrative expenses of $1.1 million, including $0.2 million of general and administrative expenses. For each of the years ended September 30, 2019 and 2018, the Company accrued administrative expenses of $1.3 million, including $0.2 million of general and administrative expenses. Of the amount accrued for the year ended September 30, 2018, $0.1 million was due to the Former Administrator for administrative expenses incurred prior to October 17, 2017 and $1.2 million was due to Oaktree Administrator.
As of September 30, 2020 and September 30, 2019, $1.2 million and $1.5 million, respectively, was included in connection with“Due to affiliate” in the Purchase Agreement,Consolidated Statements of Assets and Liabilities, reflecting the unpaid portion of administrative expenses and other reimbursable expenses payable to Oaktree Administrator.
58
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Financial Highlights
Year ended September 30, 2020 | Year ended September 30, 2019 | Year ended September 30, 2018 (1) | Year ended September 30, 2017 | Year ended September 30, 2016 | ||||||||||||||||
Net asset value per share at beginning of period | $ | 9.65 | $ | 10.04 | $ | 9.97 | $ | 11.06 | $ | 12.11 | ||||||||||
Net investment income (2) | 0.55 | 0.72 | 0.67 | 0.76 | 0.86 | |||||||||||||||
Net unrealized appreciation (depreciation) (2) | (0.24 | ) | (0.47 | ) | 0.97 | (0.60 | ) | (0.58 | ) | |||||||||||
Net realized gains (losses) (2) | (0.35 | ) | (0.02 | ) | (0.94 | ) | (0.45 | ) | (0.43 | ) | ||||||||||
Distributions of net investment income to stockholders | (0.56 | ) | (0.62 | ) | (0.56 | ) | (0.80 | ) | (0.90 | ) | ||||||||||
Tax return of capital | — | — | (0.07 | ) | — | — | ||||||||||||||
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| |||||||||||
Net asset value per share at end of period | $ | 9.05 | $ | 9.65 | $ | 10.04 | $ | 9.97 | $ | 11.06 | ||||||||||
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| |||||||||||
Per share market value at beginning of period | $ | 8.25 | $ | 8.65 | $ | 8.80 | $ | 8.56 | $ | 8.73 | ||||||||||
Per share market value at end of period | $ | 6.51 | $ | 8.25 | $ | 8.65 | $ | 8.80 | $ | 8.56 | ||||||||||
Total return (3) | (13.98 | )% | 2.83 | % | 5.90 | % | 12.51 | % | 9.44 | % | ||||||||||
Common shares outstanding at beginning of period | 29,466,768 | 29,466,768 | 29,466,768 | 29,466,768 | 29,466,768 | |||||||||||||||
Common shares outstanding at end of period | 29,466,768 | 29,466,768 | 29,466,768 | 29,466,768 | 29,466,768 | |||||||||||||||
Net assets at beginning of period | $ | 284,450,006 | $ | 295,745,420 | $ | 293,636,434 | $ | 325,829,394 | $ | 356,807,103 | ||||||||||
Net assets at end of period | $ | 266,681,411 | $ | 284,450,006 | $ | 295,745,420 | $ | 293,636,434 | $ | 325,829,394 | ||||||||||
Average net assets (4) | $ | 257,184,310 | $ | 286,712,068 | $ | 294,285,497 | $ | 316,440,902 | $ | 332,486,362 | ||||||||||
Ratio of net investment income to average net assets | 6.30 | % | 7.37 | % | 6.72 | % | 7.09 | % | 7.59 | % | ||||||||||
Ratio of total expenses to average net assets | 9.20 | % | 10.11 | % | 9.72 | % | 7.71 | % | 8.44 | % | ||||||||||
Ratio of net expenses to average net assets | 9.07 | % | 9.94 | % | 9.48 | % | 7.63 | % | 8.44 | % | ||||||||||
Ratio of portfolio turnover to average investments at fair value | 41.25 | % | 34.11 | % | 74.88 | % | 46.80 | % | 28.02 | % | ||||||||||
Weighted average outstanding debt (5) | $ | 306,450,172 | $ | 290,086,937 | $ | 269,760,689 | $ | 267,608,526 | $ | 303,204,218 | ||||||||||
Average debt per share (2) | $ | 10.40 | $ | 9.84 | $ | 9.15 | $ | 9.08 | $ | 10.29 | ||||||||||
Asset coverage ratio at end of period (6) | 199.66 | % | 196.54 | % | 207.52 | % | 211.67 | % | 211.43 | % |
(1) | Beginning on October 17, 2017, the Company is externally managed by Oaktree or its affiliates. Prior to October 17, 2017, the Company was externally managed by the Former Adviser. |
(2) | Calculated based upon weighted average shares outstanding for the period. |
(3) | Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company’s DRIP. Total return does not include sales load. |
(4) | Calculated based upon the weighted average net assets for the period. |
(5) | Calculated based upon the weighted average outstanding debt for the period. |
(6) | Based on outstanding senior securities of $267.6 million, $294.7 million, $275.1 million, $263.0 million and $292.4 million as of September 30, 2020, 2019, 2018, 2017 and 2016, respectively. |
59
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Senior Securities
Information about our senior securities (including debt securities and other indebtedness) is shown in the following table as of the fiscal years ended September 30 for the years indicated below. We had no senior securities outstanding as of September 30 of any prior fiscal years prior to those indicated below.
Class and Year | Total Amount Outstanding Exclusive of Treasury Securities(1) | Asset Coverage Per Unit(2) | Involuntary Liquidating Preference Per Unit(3) | Average Market Value Per Unit | ||||||||||||
Citibank Facility | ||||||||||||||||
Fiscal 2015 | $ | 136,659,800 | $ | 2,105 | — | N/A | ||||||||||
Fiscal 2016 | 107,426,800 | 2,114 | — | N/A | ||||||||||||
Fiscal 2017 | 76,456,800 | 2,117 | — | N/A | ||||||||||||
Fiscal 2018 | 110,056,800 | 2,075 | — | N/A | ||||||||||||
Fiscal 2019 | 126,056,800 | 1,965 | — | N/A | ||||||||||||
Fiscal 2020 | 119,056,800 | 1,997 | — | N/A | ||||||||||||
East West Bank Facility | ||||||||||||||||
Fiscal 2017 | $ | 6,500,000 | $ | 2,117 | — | N/A | ||||||||||
Fiscal 2018 | 8,000,000 | 2,075 | — | N/A | ||||||||||||
Fiscal 2019 | 11,000,000 | 1,965 | — | N/A | ||||||||||||
Deutsche Bank Facility | ||||||||||||||||
Fiscal 2018 | $ | 157,000,000 | $ | 2,075 | — | N/A | ||||||||||
Fiscal 2019 | 157,600,000 | 1,965 | — | N/A | ||||||||||||
Fiscal 2020 | 137,600,000 | 1,997 | — | N/A | ||||||||||||
Notes Payable | ||||||||||||||||
Fiscal 2015 | $ | 186,366,000 | $ | 2,105 | — | N/A | ||||||||||
Fiscal 2016 | 180,000,000 | 2,114 | — | N/A | ||||||||||||
Fiscal 2017 | 180,000,000 | 2,117 | — | N/A | ||||||||||||
Secured Borrowings | ||||||||||||||||
Fiscal 2016 | $ | 5,000,000 | $ | 2,114 | — | N/A | ||||||||||
Fiscal 2020 | 10,929,578 | 1,997 | — | N/A | ||||||||||||
Total Senior Securities | ||||||||||||||||
Fiscal 2015 | $ | 323,025,800 | $ | 2,105 | — | N/A | ||||||||||
Fiscal 2016 | 292,426,800 | 2,114 | — | N/A | ||||||||||||
Fiscal 2017 | 262,956,800 | 2,117 | — | N/A | ||||||||||||
Fiscal 2018 | 275,056,800 | 2,075 | — | N/A | ||||||||||||
Fiscal 2019 | 294,656,800 | 1,965 | — | N/A | ||||||||||||
Fiscal 2020 | 267,586,378 | 1,997 | — | N/A |
(1) | Total amount of each class of senior securities outstanding at the end of the periods. |
(2) | The asset coverage ratio for a class of senior securities representing indebtedness is calculated as the Company’s consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the “Asset Coverage Per Unit.” |
(3) | The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The “-” indicates information that the Securities and Exchange Commission expressly does not require to be disclosed for certain types of senior securities. |
60
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Derivative Instruments
The Company enters into forward currency contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies.
In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company entered into a pledge agreement (the “Pledgean International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) with FSHits derivative counterparty, JPMorgan Chase Bank, N.A. The ISDA Master Agreement permits a single net payment in the event of a default or similar event. As of September 30, 2020, $0.3 million has been pledged to cover obligations and no cash collateral has been received from the counterparty with respect to 1,131,991the Company’s forward currency contracts.
Net unrealized gains or losses on foreign currency contracts are included in “net unrealized appreciation (depreciation)” and net realized gains or losses on forward currency contracts are included in “net realized gains (losses)” in the accompanying Consolidated Statements of Operations. Forward currency contracts are considered undesignated derivative instruments.
Certain information related to the Company’s foreign currency forward contracts is presented below as of September 30, 2020.
Description | Notional Amount Purchased / (Sold) in U.S. Dollars | Notional Amount Purchased / (Sold) in Local Currency | Maturity Date | Gross Amount | Gross Amount of Recognized Liabilities | Balance Sheet Location of Net Amounts | ||||||||||||||||
Foreign currency forward contract | $ | 529,015 | € | (465,600 | ) | 11/12/2020 | $ — | $ | 17,450 | Derivative liability | ||||||||||||
Foreign currency forward contract | $ | 4,613,133 | £ | (3,654,546 | ) | 11/12/2020 | $ — | $ | 112,486 | Derivative liability | ||||||||||||
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|
| ||||||||||||||||||||
$ — | $ | 129,936 | ||||||||||||||||||||
|
|
|
Certain information related to the Company’s foreign currency forward contracts is presented below as of September 30, 2019.
Description | Notional Amount Purchased / (Sold) in U.S. Dollars | Notional Amount Purchased / (Sold) in Local Currency | Maturity Date | Gross Amount | Gross Amount of Recognized Liabilities | Balance Sheet Location of Net Amounts | ||||||||||||||
Foreign currency forward contract | $ | 6,106,199 | £ | (4,934,900 | ) | 10/15/2019 | $ 20,876 | $ | — | Derivative asset |
Note 14. Commitments and Contingencies
Off-Balance Sheet Arrangements
The Company may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its portfolio companies. As of September 30, 2020 and September 30, 2019, off-balance sheet arrangements consisted of $33.7 million and $24.2 million, respectively, of unfunded commitments to provide debt and equity financing to certain of the Company’s portfolio companies. Such commitments are subject to the portfolio companies’ satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Consolidated Statements of Assets and Liabilities.
61
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A list of unfunded commitments by investment (consisting of revolvers, term loans and the OCSI Glick JV Subordinated Notes and LLC equity interests) as of September 30, 2020 and September 30, 2019 is shown in the table below:
September 30, 2020 | September 30, 2019 | |||||||
OCSI Glick JV LLC (1) | $ | 13,998,029 | $ | 13,998,029 | ||||
Athenex, Inc. | 5,316,815 | — | ||||||
MHE Intermediate Holdings, LLC | 5,254,516 | 4,466,338 | ||||||
MRI Software LLC | 2,721,132 | — | ||||||
NeuAG, LLC | 1,059,000 | — | ||||||
Ardonagh Midco 3 PLC | 1,002,320 | — | ||||||
Mindbody, Inc. | 952,381 | 952,381 | ||||||
Accupac, Inc. | 716,984 | — | ||||||
Apptio, Inc. | 692,308 | 692,308 | ||||||
OEConnection LLC | 501,353 | 731,183 | ||||||
Olaplex, Inc. | 486,000 | — | ||||||
Coyote Buyer, LLC | 391,267 | — | ||||||
iCIMs, Inc. | 294,118 | 294,118 | ||||||
Immucor, Inc. | 189,438 | — | ||||||
GKD Index Partners, LLC | 88,889 | 444,444 | ||||||
Ministry Brands, LLC | 42,500 | 80,000 | ||||||
PaySimple, Inc. | — | 2,450,000 | ||||||
4 Over International, LLC | — | 60,629 | ||||||
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|
|
| |||||
Total | $ | 33,707,050 | $ | 24,169,430 | ||||
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|
(1) | This investment was on cash non-accrual status as of September 30, 2020. |
Note 15. Selected Quarterly Financial Data (unaudited)
Selected unaudited quarterly financial data for Oaktree Strategic Income Corporation for the years ended September 30, 2020 and 2019 are below:
For or as of the three months ended | ||||||||||||||||||||||||||||||||
(dollars in thousands, | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||||
Total investment income (1) | $ | 8,952 | $ | 8,636 | $ | 10,343 | $ | 11,603 | $ | 12,078 | $ | 13,809 | $ | 12,482 | $ | 11,259 | ||||||||||||||||
Net investment income (1) | 3,746 | 3,169 | 4,562 | 4,728 | 5,142 | 5,918 | 5,217 | 4,864 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) (1) | 16,910 | �� | 38,990 | (74,777 | ) | 1,407 | (2,145 | ) | (2,435 | ) | 8,479 | (18,064 | ) | |||||||||||||||||||
Net increase (decrease) in net assets resulting from operations (1) | 20,656 | 42,159 | (70,215 | ) | 6,134 | 2,996 | 3,483 | 13,695 | (13,201 | ) | ||||||||||||||||||||||
Net assets | 266,681 | 249,709 | 211,234 | 286,017 | 284,450 | 286,021 | 287,105 | 277,977 | ||||||||||||||||||||||||
Total investment income per common share (1) | $ | 0.30 | $ | 0.29 | $ | 0.35 | $ | 0.39 | $ | 0.41 | $ | 0.47 | $ | 0.42 | $ | 0.38 | ||||||||||||||||
Net investment income per common share (1) | 0.13 | 0.11 | 0.15 | 0.16 | 0.17 | 0.20 | 0.18 | 0.17 | ||||||||||||||||||||||||
Earnings (loss) per common share (1) | 0.70 | 1.43 | (2.38 | ) | 0.21 | 0.10 | 0.12 | 0.46 | (0.45 | ) | ||||||||||||||||||||||
Net asset value per common share at period end (1) | 9.05 | 8.47 | 7.17 | 9.71 | 9.65 | 9.71 | 9.74 | 9.43 |
(1) | The sum of quarterly amounts may not equal annual amounts due to rounding. |
62
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 16. Subsequent Events
The Company’s management evaluated subsequent events through the date of issuance of the Consolidated Financial Statements. There have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in, the Consolidated Financial Statements as of and for the year ended September 30, 2020, except as discussed below.
Distribution Declaration
On November 13, 2020, the Company’s Board of Directors declared a quarterly distribution of $0.145 per share, payable in cash on December 31, 2020 to stockholders of record on December 15, 2020.
63
OAKTREE STRATEGIC INCOME CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Merger Agreement
On October 28, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Oaktree Specialty Lending Corporation, a Delaware corporation (“OCSL”), Lion Merger Sub, Inc., a Delaware corporation and OCSL’s wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, Oaktree. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving company and as OCSL’s wholly-owned subsidiary (the “Merger”), and, immediately thereafter, the Company will merge with and into OCSL, with OCSL continuing as the surviving company (together with the Merger, the “Mergers”). Both the Company’s Board of Directors and the Board of Directors of OCSL, including all of the respective independent directors, in each case, on the recommendation of a special committee comprised solely of certain independent directors of the Company or OCSL, as applicable, have approved the Merger Agreement and the transactions contemplated thereby.
At the effective time of the Merger (the “Effective Time”), each share of the Company’s common stock issued and outstanding immediately prior to the Effective Time (other than shares owned by OCSL or any of its consolidated subsidiaries (the “Cancelled Shares”)) will be converted into the right to receive a number of shares of common stock, par value $0.01 per share, of OCSL (“OCSL Common Stock”) equal to the Exchange Ratio (as defined below), plus any cash (without interest) in lieu of fractional shares.
As of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the Effective Time (such date, the “Determination Date”), each of the Company and OCSL will deliver to the other a calculation of its net asset value as of such date (such calculation with respect to the Company, the “Closing OCSI Net Asset Value” and such calculation with respect to OCSL, the “Closing OCSL Net Asset Value”), in each case using a pre-agreed set of assumptions, methodologies and adjustments. Based on such calculations, the parties will calculate the “OCSI Per Share NAV”, which will be equal to (i) the Closing OCSI Net Asset Value divided by (ii) the number of shares of the Company’s common stock ownedissued and outstanding as of the Determination Date (excluding any Cancelled Shares), and the “OCSL Per Share NAV”, which will be equal to (A) the Closing OCSL Net Asset Value divided by FSH, pursuant(B) the number of shares of OCSL Common Stock issued and outstanding as of the Determination Date. The “Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the OCSI Per Share NAV divided by (ii) the OCSL Per Share NAV.
The Company and OCSL will update and redeliver the Closing OCSI Net Asset Value or the Closing OCSL Net Asset Value, respectively, in the event of a material change to such calculation between the Determination Date and the closing of the Mergers and if needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the Effective Time.
The Merger Agreement contains customary representations and warranties by each of the Company, OCSL and Oaktree. The Merger Agreement also contains customary covenants, including, among others, covenants relating to the operation of each of the Company’s and OCSL’s businesses during the period prior to the closing of the Mergers.
Consummation of the Mergers, which FSH pledged such sharesis currently anticipated to occur during the first half of calendar year 2021, is subject to certain closing conditions, including requisite approvals of the Company’s and OCSL’s stockholders and certain other closing conditions.
The Merger Agreement also contains certain termination rights in favor of the Company and OCSL, including if the Mergers are not completed on or before July 28, 2021 or if the requisite approvals of the Company’s or OCSL’s stockholders are not obtained. The Merger Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring the Company may be required to pay to OCSL a termination fee of approximately $5.7 million. The Merger Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring OCSL may be required to pay to the Company to secure indemnification obligationsa termination fee of FSM and FSH under the Purchase Agreement relating to certain SEC investigation-related legal costs and expenses, if any, and certain fees, fines, monetary penalties, deductibles and
Citibank Facility Amendment
On November 17, 2017, the Company mailed notices to its stockholders that the Board of Directors of the Company approved a change toOctober 27, 2020, OCSI Senior Funding II LLC, the Company’s investment policies and, effective January 19, 2018, the Company will no longer be subject to its current policy to invest, under normal market conditions, at least 80% of the value of its net assets (plus borrowings for investment purposes) in floating rate senior loans.
Deutsche Bank Facility Amendment
On October 27, 2020, OCSI Senior Funding Ltd., our wholly owned subsidiary, entered into an amendment to the documents governing the Deutsche Bank Facility that provides that consummation of the Mergers will not cause a change as a result of this amendment.control under the Deutsche Bank Facility or violate the no merger covenant in the Deutsche Bank Facility. The other material terms of the Deutsche Bank Facility were unchanged.
64
Schedule 12-14
Oaktree Strategic Income Corporation
Schedule of Investments in and Advances to Affiliates
Year ended September 30, 2017
Portfolio Company/Type of Investment (1) | Cash Interest Rate | Industry | Principal | Net Realized Gain (Loss) | Net Unrealized Appreciation (Depreciation) | Amount of Interest, Fees or Dividends Credited in Income (2) | Fair Value at October 1, 2016 | Gross Additions (3) | Gross Reductions (4) | Fair Value at September 30, 2017 | % of Total Net Assets | |||||||||||||||||||||||||||
Control Investments | ||||||||||||||||||||||||||||||||||||||
FSFR Glick JV LLC | Multi-sector holdings | |||||||||||||||||||||||||||||||||||||
Subordinated Note, LIBOR+8% cash due 10/20/2021 | 9.23% | $ | 64,228,881 | $ | — | $ | 497,902 | $ | 5,764,424 | $ | 56,885,646 | $ | 5,186,507 | $ | (4,465,479 | ) | $ | 57,606,674 | 19.6% | |||||||||||||||||||
87.5% LLC equity interest (5) | — | (6,431,021 | ) | (576,044 | ) | 6,431,021 | — | (6,431,021 | ) | — | —% | |||||||||||||||||||||||||||
Total Control Investments | $ | 64,228,881 | $ | — | $ | (5,933,119 | ) | $ | 5,188,380 | $ | 63,316,667 | $ | 5,186,507 | $ | (10,896,500 | ) | $ | 57,606,674 | 19.6% | |||||||||||||||||||
Affiliate Investments | ||||||||||||||||||||||||||||||||||||||
Ameritox Ltd. (6) | Healthcare services | |||||||||||||||||||||||||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 | 6.33% | $ | 8,071,313 | $ | — | $ | (6,931,628 | ) | $ | 505,782 | $ | 6,342,286 | $ | 2,118,166 | $ | (7,524,539 | ) | $ | 935,913 | 0.3% | ||||||||||||||||||
3,309,873.6 Class A Preferred Units | — | (3,626,150 | ) | — | 3,626,150 | 169,172 | (3,795,322 | ) | — | —% | ||||||||||||||||||||||||||||
327,393.6 Class B Preferred Units | — | (358,679 | ) | — | 358,679 | 198,597 | (557,276 | ) | — | —% | ||||||||||||||||||||||||||||
1,007.36 Class A Units | — | (2,679,343 | ) | — | 2,679,343 | — | (2,679,343 | ) | — | —% | ||||||||||||||||||||||||||||
Total Affiliate Investments | $ | 8,071,313 | $ | — | $ | (13,595,800 | ) | $ | 505,782 | $ | 13,006,458 | $ | 2,485,935 | $ | (14,556,480 | ) | $ | 935,913 | 0.3% | |||||||||||||||||||
Total Control & Affiliate Investments | $ | 72,300,194 | $ | — | $ | (19,528,919 | ) | $ | 5,694,162 | $ | 76,323,125 | $ | 7,672,442 | $ | (25,452,980 | ) | $ | 58,542,587 | 19.9% |
Portfolio Company/Type of Investment (1) | Cash Interest Rate | Industry | Principal | Net Realized Gain (Loss) | Amount of Interest, Fees or Dividends Credited in Income (2) | Fair Value at October 1, 2019 | Gross Additions (3) | Gross Reductions (4) | Fair Value at September 30, 2020 | % of Total Net Assets | ||||||||||||||||||||||||||||||
Control Investments | ||||||||||||||||||||||||||||||||||||||||
OCSI Glick JV LLC | | Multi-sector holdings | | |||||||||||||||||||||||||||||||||||||
Subordinated Note, LIBOR+4.50% cash due 10/20/2028 (5) | $ | 65,045,551 | $ | — | $ | 1,436,726 | $ | 54,326,418 | $ | — | $ | (4,916,517 | ) | $ | 49,409,901 | 18.5 | % | |||||||||||||||||||||||
87.5% LLC equity interest (6) | — | — | — | — | — | — | — | % | ||||||||||||||||||||||||||||||||
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Total Control Investments | $ | 65,045,551 | $ | — | $ | 1,436,726 | $ | 54,326,418 | $ | — | $ | (4,916,517 | ) | $ | 49,409,901 | 18.5 | % | |||||||||||||||||||||||
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This schedule should be read in connection with the Company'sCompany’s Consolidated Financial Statements, including the Consolidated Schedules of Investments and Notes to the Consolidated Financial Statements.
(1) | The principal amount and ownership detail are shown in the |
(2) | Represents the total amount of interest (net of non-accrual amounts), fees and dividends credited to income for the portion of the |
(3) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest (net of non-accrual amounts), and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category. |
(4) | Gross reductions include decreases in the cost basis of |
(5) | This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual is inclusive of PIK and other non-cash income, where applicable. |
(6) | Together with GF Equity Funding, the Company co-invests through |
65
Schedule 12-14
Oaktree Strategic Income Corporation
Schedule of Investments in and Advances to Affiliates
Year ended September 30, 2016
Portfolio Company/Type of Investment (1) | Cash Interest Rate | Industry | Principal | Net Realized Gain (Loss) | Net Unrealized Appreciation (Depreciation) | Amount of Interest, Fees or Dividends Credited in Income (2) | Fair Value at October 1, 2015 | Gross Additions (3) | Gross Reductions (4) | Fair Value at September 30, 2016 | % of Total Net Assets | |||||||||||||||||||||||||||
Control Investments | ||||||||||||||||||||||||||||||||||||||
FSFR Glick JV LLC | Multi-sector holdings | |||||||||||||||||||||||||||||||||||||
Subordinated Note, LIBOR+8% cash due 10/20/2021 | 8.47% | $ | 64,005,755 | $ | — | $ | (6,627,858 | ) | $ | 5,065,350 | $ | 52,603,346 | $ | 10,910,158 | $ | (6,627,858 | ) | $ | 56,885,646 | 17.5% | ||||||||||||||||||
87.5% LLC equity interest (5) | — | 648,071 | 2,712,500 | 4,553,575 | 4,902,020 | (3,024,574 | ) | 6,431,021 | 2.0% | |||||||||||||||||||||||||||||
Total Control Investments | $ | 64,005,755 | $ | — | $ | (5,979,787 | ) | $ | 7,777,850 | $ | 57,156,921 | $ | 15,812,178 | $ | (9,652,432 | ) | $ | 63,316,667 | 19.4% | |||||||||||||||||||
Affiliate Investments | ||||||||||||||||||||||||||||||||||||||
Ameritox Ltd. | Healthcare services | |||||||||||||||||||||||||||||||||||||
First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 | 6.00% | $ | 6,387,128 | $ | — | $ | (38,546 | ) | $ | 279,587 | $ | — | $ | 6,402,868 | $ | (60,582 | ) | $ | 6,342,286 | 1.9% | ||||||||||||||||||
3,309,873.6 Class A Preferred Units | — | 316,276 | — | — | 3,626,150 | — | 3,626,150 | 1.1% | ||||||||||||||||||||||||||||||
327,393.6 Class B Preferred Units | — | 31,285 | — | — | 358,679 | — | 358,679 | 0.1% | ||||||||||||||||||||||||||||||
1,007.36 Class A Units | — | (3,256,355 | ) | — | — | 5,935,698 | (3,256,355 | ) | 2,679,343 | 0.8% | ||||||||||||||||||||||||||||
Total Affiliate Investments | $ | 6,387,128 | $ | — | $ | (2,947,340 | ) | $ | 279,587 | $ | — | $ | 16,323,395 | $ | (3,316,937 | ) | $ | 13,006,458 | 4.0% | |||||||||||||||||||
Total Control & Affiliate Investments | $ | 70,392,883 | $ | — | $ | (8,927,127 | ) | $ | 8,057,437 | $ | 57,156,921 | $ | 32,135,573 | $ | (12,969,369 | ) | $ | 76,323,125 | 23.4% |
Portfolio Company/Type of Investment (1) | Cash Interest Rate | Industry | Principal | Net Realized Gain (Loss) | Amount of Interest, Fees or Dividends Credited in Income (2) | Fair Value at October 1, 2018 | Gross Additions (3) | Gross Reductions (4) | Fair Value at June 30, 2019 | % of Total Net Assets | ||||||||||||||||||||||||||||||
Control Investments | ||||||||||||||||||||||||||||||||||||||||
OCSI Glick JV LLC | | Multi-sector holdings | | |||||||||||||||||||||||||||||||||||||
Subordinated Note, LIBOR+6.50% cash due 10/20/2021 | 8.89 | % | $ | 66,077,912 | $ | — | $ | 5,945,194 | $ | 58,512,170 | $ | — | $ | (4,185,752 | ) | $ | 54,326,418 | 19.1 | % | |||||||||||||||||||||
87.5% LLC equity interest (5) | — | — | — | — | — | — | — | % | ||||||||||||||||||||||||||||||||
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Total Control Investments | $ | 66,077,912 | $ | — | $ | 5,945,194 | $ | 58,512,170 | $ | — | $ | (4,185,752 | ) | $ | 54,326,418 | 19.1 | % | |||||||||||||||||||||||
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This schedule should be read in connection with the Company'sCompany’s Consolidated Financial Statements, including the Consolidated Schedules of Investments and Notes to the Consolidated Financial Statements.
(1) | The principal amount and ownership detail are shown in the |
(2) | Represents the total amount of interest (net of non-accrual amounts), fees and dividends credited to income for the portion of the |
(3) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest (net of non-accrual amounts), and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category. |
(4) | Gross reductions include decreases in the cost basis of investment resulting from principal payments or sales and exchanges of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. |
(5) | Together with GF Equity Funding, the Company co-invests through |
66
PART III
Item 9.
Directors
Information regarding our current directors is set forth below. The directors are divided into two groups — interested director and directors who are not “interested persons” of us (the “Independent Directors”), as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “Investment Company Act”). The interested director is an “interested person” of us, as defined in Section 2(a)(19) of the Investment Company Act.
Name, Address, and | Length of Time Served; | Principal Occupation(s) | Number of Portfolios in the | Other Directorships Held by | ||||
Interested Director | ||||||||
John B. Frank (64) | Director since 2017; term expires in 2023 | Vice Chairman of Oaktree Capital Management, L.P. (“OCM”) since 2014. | 2 | A member of the board of directors of Oaktree Capital Group, LLC (“OCG”) since 2007 and Chevron Corporation since October 2017. | ||||
Independent Directors | ||||||||
Deborah Gero (60) | Director since 2019; term expires in 2021 | Director and Secretary of The Friends of the Brentwood Art Center since September 2016. Ms. Gero also held various positions with American International Group, Inc. and its affiliates (collectively, “AIG”) from 2009 to 2018. | 3 | Member of the board of directors of Newport Re, Ltd. since May 2019 and The Friends of the Brentwood Art Center since September 2016. |
Name, Address, and Age(1) | Length of Time Served; | Principal Occupation(s) | Number of Portfolios in the | Other Directorships Held | ||||
Craig Jacobson (68) | Director since 2017; term expires in 2021 | Partner of the law firm of Hansen, Jacobson, Teller, Hoberman, Newman, Warran, Richman, Rush, Kaller & Gellman LLP since 1987; Founder at Whisper Advisors LLC since 2015; Founder at New Form Digital from 2014 to January 2019. | 2 | Member of the board of directors of Expedia and Charter Communications; previously a member of the board of directors of Tribune Entertainment. | ||||
Richard G. Ruben (65) | Director since 2017; term expires in 2022 | Chief Executive Officer of the Ruben Companies, a real estate development and management business, since 1982. | 2 | Member of the board of overseers of Weill Cornell Medicine. | ||||
Bruce Zimmerman (63) | Director since 2017; term expires in 2023 | Chief Investment Officer of Dalio Family Office since July 2019; Chief Executive Officer and Chief Investment Officer of the University of Texas Investment Management Company from 2007 to October 2016. | 2 | Member of the board of directors of Vistra Energy Corp.; previously Vice Chairman of the Board of Trustees for the CommonFund; previously a member of the board of directors of the Beneficient Management, LLC. |
(1) | The address of all directors is c/o Oaktree Strategic Income Corporation, 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071. |
(2) | “Fund Complex” includes us, Oaktree Specialty Lending Corporation (“OCSL”) and Oaktree Strategic Income II, Inc. (“OSI II”), a company that has elected to be regulated as a Business Development Company under the Investment Company Act and has the same investment adviser, Oaktree Fund Advisors, LLC (“Oaktree”), and administrator, Oaktree Fund Administration, LLC (“Oaktree Administrator”), as us. |
(3) | Except as set forth in this table, none of our current directors otherwise serves, or has served during the past five years, as a director of an investment company registered under the Investment Company Act or of a company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act. |
Executive Officers
The following persons serve in the following capacities for us:
Name | Age | Position | ||
Armen Panossian | 44 | Chief Executive Officer and Chief Investment Officer | ||
Mathew Pendo | 57 | President and Chief Operating Officer | ||
Mel Carlisle | 52 | Chief Financial Officer and Treasurer | ||
Kimberly Larin | 52 | Chief Compliance Officer |
Biographical Information
Additional biographical information regarding our current directors and Disagreementsexecutive officers is set forth below.
Interested Director
John B. Frank. Mr. Frank has been a member of our Board of Directors (the “Board”) since October 2017. Mr. Frank has also been a member of the board of directors of OCSL since October 2017. Mr. Frank has been OCM’s Vice Chairman since 2014 and has served on the board of directors of OCG since 2007. Prior to holding this position, Mr. Frank served as OCM’s Managing Principal from 2006 to 2014 and served as OCM’s General Counsel from 2001 to 2006. As Managing Principal of OCM, Mr. Frank was the firm’s principal executive officer and was responsible for all aspects of the firm’s management. Prior to joining OCM, Mr. Frank was a partner of the law firm Munger, Tolles & Olson LLP, where he managed a number of notable mergers and acquisitions transactions. While at that firm, he served as primary outside counsel to public and privately-held corporations and as special counsel to various boards of directors and special board committees. Prior to joining Munger, Tolles & Olson LLP in 1984, Mr. Frank served as a law clerk to the Honorable Frank M. Coffin of the United States Court of Appeals for the First Circuit. He is a member of the State Bar of California and, while in private practice, was listed in Woodward & White’s Best Lawyers in America. Mr. Frank is a member of the Board of Directors of Chevron Corporation, ADRx, Inc. and Urban 626 LLC and a Trustee of Wesleyan University, the XPRIZE Foundation and The James Irvine Foundation. Mr. Frank holds a B.A. with Accountantshonors from Wesleyan University and a J.D. magna cum laude from the University of Michigan Law School where he was Managing Editor of the Michigan Law Review and a member of the Order of the Coif.
Mr. Frank’s position as OCM’s Vice Chairman and member of the board of directors of OCG and prior positions as OCM’s Managing Principal and General Counsel gives him deep knowledge of Oaktree’s operations, capabilities and business relationships. Mr. Frank’s experience as counsel to boards of directors and special board committees brings valuable legal insight to the Board. The foregoing qualifications led to the conclusion of the Board that Mr. Frank should serve as a member of the Board.
Independent Directors
Deborah Gero. Ms. Gero has been a member of the Board since March 2019. Ms. Gero has also been a member of the board of directors of OCSL since March 2019 and a member of the board of directors of OSI II since September 2019. Ms. Gero has held various positions with AIG, including as a Senior Managing Director and Deputy Chief Investment Officer of AIG Asset Management, where she was responsible for developing the firm’s investment strategy for approximately $300 billion of insurance company portfolios from 2012 to 2018. She joined AIG in 2009 and served as Chief Risk Officer for the Life and Retirement division until 2012. Before joining AIG, Ms. Gero was a consultant from 2003 to 2009, focusing on Accountingcollateralized debt obligation investment management and Financial Disclosure
Through her experience in insurance and financial services, Ms. Gero brings extensive experience in risk management, strategic planning and mergers and acquisitions to the Board. Due to such experience and Ms. Gero’s knowledge of and experience in finance and accounting, the Board determined that Ms. Gero is an “audit committee financial expert” as defined under SEC rules. Ms. Gero’s many experiences also make her skilled in leading committees requiring substantive expertise, including serving as the chair of the Audit Committee of the Board. The foregoing qualifications led to the conclusion of the Board that Mr. Gero should serve as a member of the Board.
Craig Jacobson. Mr. Jacobson has been a member of the Board since October 2017. Mr. Jacobson has also been a member of the board of directors of OCSL since October 2017. Mr. Jacobson is a founder and partner with the participationlaw firm of Hansen, Jacobson, Teller, Hoberman, Newman, Warran, Richman, Rush, Kaller & Gellman LLP where he practices in the area of media business. Mr. Jacobson founded New Form Digital, a venture with Discovery Media and ITV Studios which produces scripted short form online content, which he operated from 2014 to January 2019. In addition, Mr. Jacobson founded and operates Whisper Advisors, a boutique investment banking and advisory company. Mr. Jacobson serves on the Board of Directors of Expedia and Charter Communications. He chairs the Nominating Committee and is a member of the Company’sAudit and Compensation Committees of Expedia and is a member of the Nominating Committee of Charter Communications. Mr. Jacobson has previously served as a director of Tribune Media Company, TicketMaster, Eventful and Aver Media. Mr. Jacobson received a J.D. from the George Washington University Law School and holds a B.A. from Brown University.
Through his membership of the Board of Directors of several companies, Mr. Jacobson brings extensive experience as the director of both private and public companies to the Board. Mr. Jacobson’s services on the Audit and Compensation Committees of Expedia and Tribune Entertainment provides Mr. Jacobson with the knowledge and skills to significantly contribute to the committees of the Board. The foregoing qualifications led to the conclusion of the Board that Mr. Jacobson should serve as a member of the Board.
Richard G. Ruben. Mr. Ruben has been a member of the Board since October 2017. Mr. Ruben has also been a member of the board of directors of OCSL since October 2017. Mr. Ruben has over 25 years of experience as the Chief Executive Officer of Ruben Companies. Ruben Companies develops, manages and invests in commercial and residential properties in New York, Washington D.C. and Boston. Mr. Ruben also founded Workspeed Holdings, LLC, which developed internet-based applications for property management workflow. Mr. Ruben is a member of the Board of Overseers of Weill Cornell Medicine and has previously served on the boards of Prep for Prep, the National Building Museum and Horace Mann School. Mr. Ruben served for five years on the Real Estate Advisory Committee of the New York State Common Retirement Fund. Mr. Ruben is a graduate of Amherst College and Harvard Law School.
Through his extensive executive experience with the Ruben Companies and Workspeed Holdings, LLC, Mr. Ruben brings valuable business, investment and leadership experience to the Board. The foregoing qualifications led to the conclusion of the Board that Mr. Ruben should serve as a member of the Board.
Bruce Zimmerman. Mr. Zimmerman has been a member of the Board since October 2017. Mr. Zimmerman has also been a member of the board of directors of OCSL since October 2017. Mr. Zimmerman has served as Chief Investment Officer of Dalio Family Office since July 2019 and was the Chief Executive Officer and Chief Investment Officer of the University of Texas Investment Management Company (“UTIMCO”) from 2007 until 2016. UTIMCO is the second largest investor of discretionary university assets worldwide. Before joining UTIMCO, Mr. Zimmerman was Chief Investment Officer and Global Head of Pension Investments at Citigroup. Mr. Zimmerman also served as Chief Financial Officer evaluatedand Chief Administrative Officer of Citigroup Alternate Investments, which invests proprietary and client capital across a range of hedge fund, private equity, real estate and structured credit vehicles. Prior to his work at Citigroup, Mr. Zimmerman spent thirteen years at Texas Commerce Bank/JP Morgan Chase in a variety of capacities including Merger & Acquisition Investment Banking, Internet and ATM Retail Management, Consumer Marketing and Financial Planning, Strategy and Corporate Department. Mr. Zimmerman previously served as a member of the effectivenessBoard of our disclosure controlsDirectors and proceduresAudit Committee of Vistra Energy Corp., an integrated power company, as Vice Chairman of September 30, 2017. The term “disclosure controlsthe Board of Trustees for the CommonFund, a nonprofit asset management firm, as a member of the Board of Directors of the Beneficient Management LLC, a service provider for alternative assets, and procedures,”on the Investment Committee for the Houston Endowment. Mr. Zimmerman was previously the International President of the B’nai B’rith Youth Organization. Mr. Zimmerman received an MBA from Harvard Business School and graduated Magna Cum Laude from Duke University.
Mr. Zimmerman’s executive experience brings extensive business, investment and management expertise to his Board service. His previous positions as defined in Rules 13a-15(e)Chief Financial Officer and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicatedChief Accounting Officer bring valuable financial oversight skills to the company’s management, including its chief executive officer and chief financial officer,Board. The foregoing qualifications led to the conclusion of the Board that Mr. Zimmerman should serve as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurancea member of achieving their objectives. Based on the evaluation of our disclosure controls and proceduresBoard.
Executive Officers
Armen Panossian. Mr. Panossian has served as of September 30, 2017, our Chief Executive Officer and Chief Investment Officer since September 2019. Mr. Panossian has also served as Chief Executive Officer and Chief Investment Officer of OCSL since September 2019 and as Chairman, Chief Executive Officer and Chief Investment Officer of OSI II since September 2019. Mr. Panossian serves as a Managing Director and Head of Liquid Credit at OCM, as well as portfolio manager for OCM’s U.S. Senior Loan strategy. He also oversees OCM’s Structured Credit, U.S., European and Global High Yield Bond, European Senior Loan, and U.S., Non-U.S. and High Income Convertibles strategies. In January 2014, Mr. Panossian joined OCM’s U.S. Senior Loan team to assume co-portfolio management responsibilities and lead the development of OCM’s CLO business. Mr. Panossian joined OCM in 2007 as a senior member of its Distressed Debt investment team.
Mathew Pendo. Mr. Pendo has served as our Chief Operating Officer since October 2017, as Chief Operating Officer of OCSL since October 2017, as Chief Operating Officer of OSI II since July 2018 and as President of OCSL, OCSI and OSI II since August 2019 and currently serves as Managing Director, Head of Corporate Development and Capital Markets for OCM, which he joined in 2015. Prior to joining OCM, Mr. Pendo was at the investment banking boutique of Sandler O’Neill Partners, where he was a managing director focused on the financial services industry. Prior thereto, Mr. Pendo was the chief investment officer of the Troubled Asset Relief Program (TARP) of the U.S. Department of the Treasury, where he was honored with the Distinguished Service Award. There, he built and managed a team of 20 professionals overseeing the Treasury’s $200 billion TARP investment activities across multiple industries including AIG, GM and the banks, and all levels of the capital structure. Mr. Pendo began his career at Merrill Lynch, where he spent 18 years, starting in their investment banking division before becoming managing director of the technology industry group. Subsequently, Mr. Pendo was a managing director at Barclays Capital, first serving as co-head of U.S. Investment Banking and then co-head of Global Industrials group. Mr. Pendo previously served as a member of the Board of Directors of Keypath Education, Inc. and currently serves as a member of the Board of Directors of New IPT Holdings, LLC. He received a bachelor’s degree in economics from Princeton University, cum laude, and previously served as a board member of SuperValu Inc.
Mel Carlisle. Mr. Carlisle has served as our Chief Financial Officer concludedsince October 2017 and as our Treasurer since November 2017. He has also served as Chief Financial Officer of OCSL since October 2017, as Treasurer of OCSL since November 2017, and as Chief Financial Officer and Treasurer of OSI II since July 2018. Mr. Carlisle has been a Managing Director and Head of the Distressed Debt fund accounting team within the Closed-end Funds accounting group at OCM since 2006. He joined OCM in 1995. Prior thereto, Mr. Carlisle was a manager in the Client and Fund Reporting Department of The TCW Group, Inc. Previously, he was employed in the Financial Services Group in Price Waterhouse’s Los Angeles office. Mr. Carlisle received a B.A. degree in economics and accounting from Claremont McKenna College. He is a Certified Public Accountant (inactive).
Kimberly Larin. Ms. Larin became our Chief Compliance Officer in October 2017. She also became Chief Compliance Officer of OCSL in October 2017 and of OSI II in July 2018 and currently serves as a Managing Director and Deputy Chief Compliance Officer for OCM Prior to joining OCM in 2002, Ms. Larin spent six years at Western Asset Management Company as a compliance officer. Ms. Larin received a B.S. degree in business administration with an emphasis in marketing from Oklahoma State University.
Board Leadership Structure
The Board monitors and performs oversight roles with respect to the our business and affairs, including with respect to investment practices and performance, compliance with regulatory requirements and the services, expenses and performance of service providers. Among other things, the Board approves the appointment of our investment adviser and officers, reviews and monitors the services and activities performed by our investment adviser and officers and approves the engagement of, and reviews the performance of, the independent registered public accounting firm.
Under our bylaws, the Board may designate a chairman to preside over the meetings of the Board and meetings of stockholders and to perform such other duties as may be assigned to him or her by the Board. We do not have a fixed policy as to whether the chairman of the Board should be an Independent Director; we believe that we should maintain the flexibility to select the chairman and reorganize our leadership structure, from time to time, based on the criteria that is in our best interests and the best interests of our stockholders at such times. The Board has established corporate governance procedures to guard against, among other things, an improperly constituted Board. Pursuant to our Corporate Governance Policy, whenever the chairman of the Board is not an Independent Director, the chairman of our Nominating and Corporate Governance Committee or, if there has been appointed a lead Independent Director, the lead Independent Director will act as the presiding Independent Director at meetings of the “Non-Management Directors” (which will include the Independent Directors and other directors who are not our officers even though they may have another relationship with us or our management that prevents them from being Independent Directors). Currently, Mr. Zimmerman serves as the designated lead Independent Director of the Board.
Presently, Mr. Frank serves as the Chairman of the Board. Mr. Frank’s familiarity with Oaktree’s investment platform and extensive knowledge of the financial services industry qualify him to serve as the Chairman of the Board. We believe that we are best served through this existing leadership structure, as Mr. Frank’s relationship with Oaktree provides an effective bridge and encourages an open dialogue between Oaktree and the Board.
Our corporate governance practices include regular meetings of the Independent Directors in executive session without the presence of interested directors and management, the establishment of an Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee comprised solely of Independent Directors and the appointment of a chief compliance officer, with whom the Independent Directors meet with in executive session at least once a year, for administering our compliance policies and procedures. While certain non-management members of the Board may participate on the boards of directors of other public companies, we monitor such participation to ensure it is not excessive and does not interfere with their duties to us.
Board’s Role in Risk Oversight
The Board performs its risk oversight function primarily through (i) four standing committees, which report to the Board and, with the exception of the Co-Investment Committee, are comprised solely of Independent Directors, and (ii) active monitoring by our chief compliance officer and our compliance policies and procedures.
As described below in more detail, the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Co-Investment Committee assist the Board in fulfilling its risk oversight responsibilities. The Audit Committee’s risk oversight responsibilities include overseeing the our accounting and financial reporting processes, systems of internal controls regarding finance and accounting, and audits of our financial statements, as well as the establishment of guidelines and making recommendations to the Board regarding the valuation of our loans and investments. The Compensation Committee’s risk oversight responsibilities include reviewing and approving the reimbursement by us of the compensation of our chief financial officer and chief compliance officer and their respective staffs and other non-investment professionals at Oaktree that perform duties for us. The Nominating and Corporate Governance Committee’s risk oversight responsibilities include selecting, researching and nominating directors for election by our stockholders, developing and recommending to the Board a set of corporate governance principles and overseeing the evaluation of the Board and management. The Co-Investment Committee’s risk oversight responsibilities include reviewing and approving certain co-investment transactions in accordance with the conditions of the exemptive order we have received from the SEC.
The Board also performs its risk oversight responsibilities with the assistance of our chief compliance officer. The Board annually reviews a written report from our chief compliance officer discussing the adequacy and effectiveness of our compliance policies and procedures. The chief compliance officer’s annual report addresses: (i) the operation of our compliance policies and procedures, our investment adviser and certain other entities since the last report; (ii) any material changes to such policies and procedures since the last report; (iii) any recommendations for material changes to such policies and procedures as a result of the material weaknesschief compliance officer’s annual review; and (iv) any compliance matter that has occurred since the date of the last report about which the Board would reasonably need to know to oversee compliance. In addition, our chief compliance officer meets in internalexecutive session with the Independent Directors at least once a year.
We believe that the role of the Board in risk oversight is effective and appropriate given the extensive regulation to which it is already subject as a Business Development Company. As a Business Development Company, we are required to comply with certain regulatory requirements that control over financial reportingthe levels of risk in our businesses and operations.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own 10% or more of our common stock, to file reports of ownership and changes in ownership of its equity securities with the SEC. Based solely on a review of the copies of those forms filed with the SEC, or written representations that is described below,no such forms were required, except for one Form 4 (reporting one transaction) filed late by Leonard Tannenbaum on May 7, 2020, we believe that our disclosuredirectors, executive officers and 10% or more beneficial owners complied with all Section 16(a) filing requirements during the fiscal year ended September 30, 2020.
Corporate Governance
Corporate Governance Documents
We maintain a corporate governance webpage under the “Investors” link at www.oaktreestrategicincome.com.
Our Corporate Governance Policy, Code of Business Conduct, Joint Code of Ethics, Securities Trading Policy, Audit Committee Charter, Nominating and Corporate Governance Committee Charter and Compensation Committee Charter are available at www.oaktreestrategicincome.com and are also available to any stockholder who requests them by writing to Oaktree Strategic Income Corporation, 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071, Attention: Secretary.
Evaluation
Our directors perform an evaluation, no less frequently than annually, of the effectiveness of the Board and its committees. This evaluation includes Board and Board committee discussions.
Communications with Directors
Stockholders and other interested parties may contact any member (or all members) of the Board by mail. To communicate with the Board, any individual director or any group or committee of directors, correspondence should be addressed to the Board or any such individual director or group or committee of directors by either name or title. All such correspondence should be sent to Oaktree Strategic Income Corporation, 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071, Attention: Secretary. Any communication to report potential issues regarding accounting, internal controls and proceduresother auditing matters will be directed to the Audit Committee. Appropriate personnel will review and sort through communications before forwarding them to the addressee(s).
Board Meetings and Committees
The Board met six times during fiscal year 2020. Each director attended at least 75% of the total number of meetings of the Board and committees during fiscal year 2020 on which the director served that were not effective.
Audit Committee
The Audit Committee is responsible for establishingselecting, engaging and maintaining adequate internal control over financial reporting, asdischarging such term is defined in Exchange Act Rules 13a-15(f)our independent accountants, reviewing the plans, scope and 15d-15(f). A company’s internal control over financial reporting is a process designed by, or under the supervision of, its chief executive officer and chief financial officer, and effected by such company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
The current members of the Treadway Commission (COSO). A material weaknessAudit Committee are Ms. Gero and Messrs. Jacobson and Zimmerman, each of whom is a deficiency, or a combinationnot an interested person of deficiencies,us as defined in internal control over financial reporting, such that therethe Investment Company Act and is a reasonable possibility that a material misstatementindependent for purposes of a company's annual or interim financial statements will not be prevented or detected on a timely basis.
Compensation Committee
The Compensation Committee is responsible for reviewing and approving the reimbursement by us of the allocable portion of the compensation of our chief financial officer and chief compliance officer and their respective staffs and other non-investment professionals at Oaktree that perform duties for us.
The current members of the Compensation Committee are Messrs. Jacobson, Ruben and Zimmerman, each of whom is not an interested person of us as defined in the Investment Company hadAct and is independent for purposes of the Nasdaq listing rules. Mr. Jacobson serves as the Chairman of the Compensation Committee. As discussed below, none of our executive officers is directly compensated by us. The Compensation Committee met four times during fiscal year 2020.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for determining criteria for service on the Board, identifying, researching and nominating directors for election by our stockholders, selecting nominees to fill vacancies on the Board or a material weakness becausecommittee of the Board, developing and recommending to the Board a set of corporate governance principles and overseeing the self-evaluation of the Board and its committees and evaluation of management.
The members of the Nominating and Corporate Governance Committee are Messrs. Jacobson, Ruben and Zimmerman, each of whom is not an interested person of us as defined in the Investment Company Act and is independent for purposes of the Nasdaq listing rules. Mr. Ruben serves as the Chairman the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee met four times during fiscal year 2020.
The Nominating and Corporate Governance Committee considers qualified director nominees recommended by our stockholders when such recommendations are submitted in accordance with our bylaws and any other applicable law, rule or regulation regarding director nominations. Our stockholders may submit candidates for nomination for the Board by writing to: Board of Directors, Oaktree Strategic Income Corporation, 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071. When submitting a nomination for consideration, a stockholder must provide certain information about each person whom the stockholder proposes to nominate for election as a director, including: (i) the name, age, business address and residence address of the person; (ii) the principal occupation or employment of the person; (iii) the class or series and number of shares of our common stock owned beneficially or of record by the person; and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder. Such notice must be accompanied by the proposed nominee’s written consent to be named as a nominee and to serve as a director if elected.
In evaluating director nominees, the Nominating and Corporate Governance Committee considers the following factors:
the appropriate size and composition of the Board;
its needs with respect to the particular talents and experience of its directors;
the knowledge, skills and experience of nominees in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;
the capacity and desire to serve as a member of the Board and to represent the balanced, best interests of its stockholders as a whole;
experience with accounting rules and practices; and
the desire to balance the considerable benefit of continuity with the periodic addition of the fresh perspective provided by new members.
The Nominating and Corporate Governance Committee’s goal is to assemble a Board that brings it dida variety of perspectives and skills derived from high quality business and professional experience.
Other than the foregoing, there are no stated minimum criteria for director nominees, although the Nominating and Corporate Governance Committee may also consider such other factors as it may deem are in our best interests and those of our stockholders. The Nominating and Corporate Governance Committee does not designassign specific weights to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees. We believe that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities. The Board does not have a specific diversity policy, but considers diversity of race, religion, national origin, gender, sexual orientation, disability, cultural background and professional experiences as well as applicable legal requirements in evaluating candidates for Board membership.
The Nominating and Corporate Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to the applicable business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board does not wish to continue in service or maintain effective controls if the Nominating and Corporate Governance Committee decides not to internally communicatere-nominate a member for re-election or the Board decides to add a new director to the Board, the Nominating and Corporate Governance Committee would identify the desired skills and experience of a new nominee in light of the criteria above. Current members of the Nominating and Corporate Governance Committee and Board would review and discuss, for nomination, the individuals meeting the criteria of the Nominating and Corporate Governance Committee. Research may also be performed to identify qualified individuals. The Nominating and Corporate Governance Committee has not, but may choose to, engage an independent consultant or other third party to identify or evaluate or assist in identifying potential nominees to the Board.
Co-Investment Committee
The Co-Investment Committee is responsible for reviewing and approving certain co-investment transactions in accordance with the conditions of the exemptive order we received from the SEC. The charter of the Co-Investment Committee is available in print to any stockholder who requests it.
The current members of the Co-Investment Committee are Messrs. Frank, Jacobson, Ruben and Zimmerman and Ms. Gero, each of whom is not an interested person of us as defined in the Investment Company Act and is independent for purposes of the Nasdaq listing rules, with the exception of Mr. Frank who is an interested person as defined in the Investment Company Act. Mr. Zimmerman currently serves as the Chairman of the Co-Investment Committee.
Code of Business Conduct
We have adopted a joint Code of Business Conduct with OCSL which applies to, among others, executive officers, including the principal executive officer, principal financial officer, principal accounting policiesofficer or controller, or persons performing similar functions and procedures includingall other of our officers, employees and directors. If we make any substantive amendment to, or grants a waiver from, a provision of the Code of Business Conduct, we will promptly disclose the nature of supporting documentation requiredthe amendment or waiver on our website at www.oaktreestrategicincome.com.
Securities Trading Policy
We have adopted a Securities Trading Policy that, among other things, prohibits directors, officers and other employees from entering into a short sale transaction or transactions in puts, calls or other derivative securities, on an exchange or in any other organized market, with respect to validate certain portfolio company data.
Item 11. Executive Compensation
Our executive officers do not receive direct compensation from us. The compensation of the principals and other investment professionals of Oaktree is paid by Oaktree or one of its affiliates. Further, we are prohibited under the Investment Company Act from issuing equity incentive compensation, including stock options, stock appreciation rights, restricted stock and stock, to our officers or directors, or any employees we may have in the aggregate, could result in misstatementsfuture. Compensation paid to our chief financial officer and chief compliance officer and their respective staffs and other non-investment professionals at Oaktree that perform duties for us is set by Oaktree Administrator and is subject to reimbursement by us of accounts or disclosures that would each result in a material misstatementan allocable portion of such compensation for services rendered to us.
During fiscal year 2020, $1.1 million was incurred by, and $1.3 million was reimbursed to Oaktree Administrator by, us for the annual or interim consolidatedallocable portion of compensation expenses incurred by Oaktree Administrator on behalf of our chief financial statements that would not be prevented or detectedofficer, chief compliance officer and therefore, management has determined that these control deficiencies constitute a material weakness. This material weakness did not result in a material misstatementother support personnel of us, pursuant to the consolidated annual or interim financial statements inAdministration Agreement.
Director Compensation
The following table sets forth compensation of our directors for the fiscal year ended September 30, 2017. Because of this material weakness, management concluded that the Company did not maintain effective internal control over financial reporting as of September 30, 2017.2020:
Fees Earned or Paid in Cash(1)(2) | Total | |||||||
Name | ||||||||
Interested Directors: | ||||||||
John B. Frank | — | — | ||||||
Independent Directors: | ||||||||
Deborah Gero(3) | $ | 106,648 | $ | 106,648 | ||||
Craig Jacobson | $ | 100,000 | $ | 100,000 | ||||
Richard G. Ruben | $ | 100,000 | $ | 100,000 | ||||
Bruce Zimmerman(3) | $ | 113,352 | $ | 113,352 |
(1) | For a discussion of the Independent Directors’ compensation, see below. |
(2) | We do not maintain a stock or option plan, non-equity incentive plan or pension plan for our directors. |
(3) | Ms. Gero replaced Mr. Zimmerman as the Chair of the Audit Committee on January 31, 2020. |
For fiscal year ending September 30, 2018, we will take a number2020, the Independent Directors received an annual retainer fee of steps to remediate this material weakness, including$100,000. In addition, the formalization of policies and procedureslead Independent Director received $10,000, and the implementationChair of controlsthe Audit Committee also received $10,000. The Board has also adopted a policy which, over the validationa period of portfolio company data. Management is committedtime, requires each Independent Director to improving our internal control processes and believes that the measures described above should be sufficient to remediate the identified material weakness and strengthen our internal control over financial reporting. We cannot assure you, however, that the steps taken will remediate such weakness, nor can we be certain of whether additional actions will be required or the costs of any such actions.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe following table sets forth, as of December 18, 2020, the beneficial ownership information required by Item 12of each of our current directors, as well as our executive officers, each person known to it to beneficially own 5% or more of the outstanding shares of our common stock, and the executive officers and directors as a group. Percentage of beneficial ownership is hereby incorporated by reference frombased on 29,466,768 shares of our definitive Proxy Statement relating to our 2018 Annual Meetingcommon stock outstanding as of Stockholders, to be filedDecember 18, 2020.
Beneficial ownership is determined in accordance with the Securitiesrules of the SEC and Exchange Commission within 120 days followingincludes voting or investment power with respect to the endsecurities. Ownership information for those persons who beneficially own 5% or more of the shares of our fiscal year.common stock is based upon filings by such persons with the SEC and other information obtained from such persons, if available.
Unless otherwise indicated, we believe that each beneficial owner set forth in the table below has sole voting and investment power over the shares beneficially owned by such beneficial owner. The directors are divided into two groups — interested director and Independent Directors. The interested director is an “interested person” of us as defined in Section 2(a)(19) of the Investment Company Act. The address of all executive officers and directors is c/o Oaktree Strategic Income Corporation, 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071.
Name | Number of Shares of Common Stock Owned Beneficially | Percentage of Common Stock Outstanding | ||||||
Interested Director: | ||||||||
John B. Frank (1) | 74,756 | * | ||||||
Independent Directors: | ||||||||
Deborah Gero | 18,500 | * | ||||||
Craig Jacobson | 55,320 | * | ||||||
Richard G. Ruben | 40,667 | * | ||||||
Bruce Zimmerman | 15,250 | * | ||||||
Executive Officers: | ||||||||
Mel Carlisle | 12,500 | * | ||||||
Kimberly Larin | — | — | ||||||
Armen Panossian | 10,000 | * | ||||||
Mathew Pendo | 17,996 | * | ||||||
All Executive Officers and Directors as a Group (2) | 244,989 | * | ||||||
5% Holders | ||||||||
Leonard M. Tannenbaum and affiliates (3) | 6,357,439 | 21.6 | % | |||||
Oaktree Capital Management, L.P. and affiliates(4) | 6,738,564 | 22.9 | % |
* | Represents less than 1% |
(1) | Of the 74,756 shares of our common stock listed as beneficially owned by John B. Frank, (i) 11,876 shares are held directly by Mr. Frank and (ii) 62,880 shares are held by a member of Mr. Frank’s family and he may be deemed to have voting and/or investment power with respect to, but he has no pecuniary interest in, such shares. |
(2) | Amount only includes Section 16(a) reporting persons of us. |
(3) | The address for Leonard M. Tannenbaum is 525 Okeechobee Blvd, Suite 1770, West Palm Beach, FL 33401. As reported on the Schedule 13D/A filed by Mr. Tannenbaum on December 3, 2020 and a Form 4 filed by Mr. Tannenbaum on December 4, 2020, of the 6,357,439 shares of our common stock over which Mr. Tannenbaum has shared voting and dispositive power: (i) 6,011,590 shares of our common stock are held by Mr. Tannenbaum directly; (ii) 239,340 shares of our common stock are held directly by the Leonard M. Tannenbaum 2012 Trust for the benefit of certain members of Mr. Tannenbaum’s family for which Mr. Bernard D. Berman is a trustee, (iii) 95,634 shares of our common stock are held by the Leonard M. Tannenbaum Foundation, for which Mr. Tannenbaum serves as the President and (iv) 10,875 shares of our common stock are held by Mr. Tannenbaum’s children. |
(4) | The address for OCM is 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071. As reported on a Schedule 13D/A filed by OCM on December 3, 2020 and a Form 4 filed by Mr. Tannenbaum on December 4, 2020, of the shares of our common stock over which OCM and its affiliates have shared or sole voting and dispositive power, (i) 392,000 shares of our common stock are held by Oaktree Capital I, L.P. and (ii) OCM may be deemed to beneficially own 6,346,564 shares of our common stock pursuant to a voting agreement by and among OCM, Fifth Street Holdings, L.P., Leonard M. Tannenbaum, the Leonard M. Tannenbaum Foundation and the Tannenbaum Family 2012 Trust. |
Item 13.
Certain Relationships and Related Transactions, and Director IndependenceTransactions with Related Persons
From October 17, 2017 through May 3, 2020, we were externally managed by OCM pursuant to an investment advisory agreement. On May 4, 2020, OCM effected the novation of such investment advisory agreement to Oaktree. Immediately following such novation, we entered into an investment advisory agreement between us and Oaktree (the “Investment Advisory Agreement”). Mr. Frank, an interested member of the Board, has a direct or indirect pecuniary interest in Oaktree. Oaktree is a registered investment adviser under the Advisers Act that is a subsidiary of OCG. In 2019, Brookfield Asset Management, Inc. (“Brookfield”) acquired a majority economic interest in OCG. OCG operates as an independent business within Brookfield, with its own product offerings and investment, marketing and support teams.
Under the Investment Advisory Agreement, fees payable to Oaktree equal (a) a base management fee of 1.00% of the average value of our total gross assets at the end of the two most recently completed quarters, including any investment made with borrowings, but excluding cash and cash equivalents, and (b) an incentive fee based on our performance. The informationincentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 17.5% of our “pre-incentive fee net investment income” for the immediately preceding quarter, subject to a preferred return, or “hurdle,” and a “catch up” feature. The second part is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement) and equals 17.5% of our realized capital gains, if any, on a cumulative basis from the beginning of the fiscal year ended September 30, 2019 through the end of each fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees.
For purposes of the Investment Advisory Agreement, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies, other than fees for providing managerial assistance) accrued during the fiscal quarter, minus operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount debt instruments with payment-in-kind interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
The Investment Advisory Agreement may be terminated without penalty, upon 60 days’ written notice, by the vote of a majority of our outstanding voting securities or by the vote of the Board or by Oaktree.
For the two-year period commencing on October 17, 2017, OCM waived management and incentive fees payable to OCM that exceeded what would have been paid during that period to the Former Advise in the aggregate under our investment advisory agreement with the Former Adviser that was in effect prior to October 17, 2017.
We have entered into an administration agreement with Oaktree Administrator, which is a wholly-owned subsidiary of OCM. Pursuant to the Administration Agreement, Oaktree Administrator provides administrative services to us necessary for our operations, which include providing to us office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities and such other services as Oaktree Administrator, subject to review by the Board, shall from time to time deem to be necessary or useful to perform its obligations under the Administration Agreement. Oaktree Administrator also provides to us portfolio collection functions for interest income, fees and warrants and is responsible for the financial and other records that we are required by Item 13 is hereby incorporated by reference from our definitive Proxy Statement relatingto maintain and prepares, prints and disseminates reports to our 2018 Annual Meeting of Stockholders, to bestockholders and reports and all other materials filed with the SecuritiesSEC. In addition, Oaktree Administrator assists us in determining and Exchange Commission within 120 days followingpublishing our NAV, overseeing the endpreparation and filing of our tax returns, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others. Oaktree Administrator may also offer to provide, on our behalf, managerial assistance to our portfolio companies.
For providing these services, facilities and personnel, we reimburse Oaktree Administrator the allocable portion of overhead and other expenses incurred by Oaktree Administrator in performing its obligations under the Administration Agreement, including our allocable portion of the rent of our principal executive offices (which are located in a building owned by a Brookfield affiliate) at market rates and our allocable portion of the costs of compensation and related expenses of our chief financial officer and chief compliance officer and their respective staffs and other non-investment professionals at Oaktree that perform duties for us. Such reimbursement is at cost, with no profit to, or markup by, Oaktree Administrator. The Administration Agreement may be terminated without penalty, upon 60 days’ written notice, by the vote of a majority of our outstanding voting securities or by the vote of the Board or by Oaktree Administrator. For the fiscal year.year ended September 30, 2020, we incurred approximately $1.1 million of administration fees under the Administration Agreement.
Review, Approval or Ratification of Transactions with Related Persons
The Independent Directors are required to review, approve or ratify any transactions with related persons (as such term is defined in Item 404 of Regulation S-K).
Material Conflicts of Interest
Our executive officers, directors and certain members of Oaktree serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by Oaktree or its affiliates. For example, Oaktree presently serves as the investment adviser to us, OCSL and OSI II, a private Business Development Company. All of our executive officers serve in substantially similar capacities for OCSL and OSI II, and all of our Independent Directors serve as Independent Directors of OCSL and one of our Independent Directors also serves as an Independent Director of OSI II. We have historically invested in senior secured loans, including first lien, unitranche and second lien debt instruments that pay interest at rates which are determined periodically on the basis of a floating base lending rate, made to private middle-market companies whose debt is rated below investment grade, similar to those that OCSL targets for investment. OSI II also makes similar investments as either or both of us and OSCL. Oaktree and its affiliates also manage and sub-advise private investment funds and accounts, and may manage other such funds and accounts in the future, which have investment mandates that are similar, in whole and in part, with us. Therefore, there may be certain investment opportunities that satisfy the investment criteria for us, OCSL and OSI II as well as private investment funds and accounts advised or sub-advised by Oaktree or its affiliates. In addition, Oaktree and its affiliates may have obligations to investors in other entities that they advise or sub-advise, the fulfillment of which might not be in the best interests of us or our stockholders. For example, the personnel of Oaktree may face conflicts of interest in the allocation of investment opportunities to us and such other funds and accounts.
Oaktree has investment allocation guidelines that govern the allocation of investment opportunities among the investment funds and accounts managed or sub-advised by Oaktree and its affiliates. To the extent an investment opportunity is appropriate for us, OCSL, OSI II or any other investment fund or account managed or sub-advised by Oaktree or its affiliates, Oaktree will adhere to its investment allocation guidelines in order to determine a fair and equitable allocation.
We may invest alongside funds and accounts managed or sub-advised by Oaktree and its affiliates in certain circumstances where doing so is consistent with applicable law and SEC staff interpretations. For example, we may invest alongside such accounts consistent with guidance promulgated by the staff of the SEC permitting us and such other accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that Oaktree, acting on our behalf and on behalf of other clients, negotiates no term other than price or terms related to price.
In addition, on October 18, 2017, affiliates of Oaktree received exemptive relief from the SEC to allow certain managed funds and accounts, each of whose investment adviser is OCM or an investment adviser controlling, controlled by or under common control with OCM, such as Oaktree, to participate in negotiated co-investment transactions where doing so is consistent with the applicable registered fund’s or Business Development Company’s investment objective and strategies as well as regulatory requirements and other pertinent factors, and pursuant to the conditions of the exemptive relief. Each potential co-investment opportunity that falls under the terms of the exemptive relief and is appropriate for us and any affiliated fund or account, and satisfies the then-current board-established criteria, will be offered to us and such other eligible funds and accounts and reviewed by the Co-Investment Committee. If there is a sufficient amount of securities to satisfy all participants, the securities will be allocated among the participants in accordance with their proposed order size and if there is an insufficient amount of securities to satisfy all participants, the securities will be allocated pro rata based on the investment proposed by the applicable investment adviser to such participant, up to the amount proposed to be invested by each, which is reviewed and approved by an independent committee of legal, compliance and accounting professionals at Oaktree. On December 15, 2020, we, with Oaktree and certain other affiliates, received a modified exemptive order that allows proprietary accounts to participate in co-investment transactions subject to certain conditions. We may also invest alongside funds managed by Oaktree and its affiliates in certain circumstances where doing so is consistent with applicable law and SEC staff interpretations. For example, we may invest alongside such accounts consistent with guidance promulgated by the staff of the SEC permitting us and such other accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that Oaktree, acting on our behalf and on behalf of other clients, negotiates no term other than price.
Although Oaktree will endeavor to allocate investment opportunities in a fair and equitable manner, we and our common stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, its executive officers, directors and members of Oaktree. We might not participate in each individual opportunity, but will, on an overall basis, be entitled to participate equitably with other entities managed by Oaktree and its affiliates. Oaktree is committed to treating all clients fairly and equitably such that none receive preferential treatment vis-à-vis the others over time, in a manner consistent with its fiduciary duty to each of them; however, in some instances, especially in instances of limited liquidity, the factors may not result in pro rata allocations or may result in situations where certain funds or accounts receive allocations where others do not.
Pursuant to the Investment Advisory Agreement, Oaktree’s liability is limited and we are required to indemnify Oaktree against certain liabilities. This may lead Oaktree to act in a riskier manner in performing its duties and obligations under the Investment Advisory Agreement than it would if it were acting for its own account, and creates a potential conflict of interest.
Pursuant to the Administration Agreement, Oaktree Administrator furnishes us with the facilities, including our principal executive office, and administrative services necessary to conduct its day-to-day operations. We pay Oaktree Administrator its allocable portion of overhead and other expenses incurred by Oaktree Administrator in performing its obligations under Administration Agreement, including, without limitation, a portion of the rent at market rates and compensation of our chief financial officer, chief compliance officer, their respective staffs and other non-investment professionals at Oaktree that perform duties for us.
Director Independence
In accordance with rules of Nasdaq, the Board annually determines the independence of each director. No director is considered independent unless the Board has determined that he or she has no material relationship with us. We monitor the status of our directors and officers through the activities of the Nominating and Corporate Governance Committee and through a questionnaire to be completed by each director no less frequently than annually, with updates periodically if information provided in the most recent questionnaire has materially changed.
In order to evaluate the materiality of any such relationship, the Board uses the definition of director independence set forth in the Nasdaq listing rules. Section 5605 provides that a director of a Business Development Company shall be considered to be independent if he or she is not an “interested person” of us, as defined in Section 2(a)(19) of the Investment Company Act. Section 2(a)(19) of the Investment Company Act defines an “interested person” to include, among other things, any person who has, or within the last two years had, a material business or professional relationship with us.
The Board has determined that each of the current directors is independent and has no relationship with us, except as a director and stockholder of us, with the exception of Mr. Frank. Mr. Frank is an interested person of us due to his positions at Oaktree and its affiliates.
Item 14.
Principal Accountant Fees and ServicesIndependent Auditor’s Fees
The informationfollowing table presents fees for professional services rendered by EY for the fiscal years ended September 30, 2020 and 2019.
2020 | 2019 | |||||||||||||||
Audit Fees | $ | 410,000 | $ | 475,000 | ||||||||||||
Audit-Related Fees | $ | — | $ | — | ||||||||||||
Aggregate Non-Audit Fees: | ||||||||||||||||
Tax Fees | $ | 70,000 | $ | 70,000 | ||||||||||||
All Other Fees | — | — | ||||||||||||||
Total Aggregate Non-Audit Fees | $ | 70,000 | (1 | ) | $ | 70,000 | (2 | ) | ||||||||
Total Fees | $ | 480,000 | $ | 545,000 |
(1) | Non-audit fees represent 14.6% of total fees. |
(2) | Non-audit fees represent 12.8% of total fees. |
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings.
Audit-Related Fees. Audit-related services consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by Item 14 is hereby incorporatedstatute or regulation and consultations concerning financial accounting and reporting standards.
Tax Fees. Tax fees consist of fees billed for professional services for tax compliance. These services include assistance regarding federal, state and local tax compliance.
All Other Fees. All other fees would include fees for products and services other than the services reported above.
Aggregate Non-Audit Fees. Aggregate non-audit fees billed by reference from our definitive Proxy Statement relatingEY to our 2018 Annual MeetingOaktree and its affiliates who provide on-going services to us during the fiscal year ended September 30, 2020 was $7,347,860. The Audit Committee does not consider the provision of Stockholders,such services to be filedincompatible with the Securities and Exchange Commission within 120 days following the end of our fiscal year.maintaining EY’s independence.
PART IV
Item 15.
Exhibits and Financial Statement SchedulesThe following documents are filed or incorporated by reference as part of this Annual Report:
1. Consolidated Financial Statements
Consolidated Statements of Assets and Liabilities as of September 30, | 3 | |||
4 | ||||
5 | ||||
6 | ||||
Consolidated Schedule of Investments as of September 30, | 7 | |||
Consolidated Schedule of Investments as of September 30, | 14 | |||
21 |
2. Financial Statement Schedule
The following financial statement schedule is filed herewith:
Schedule 12-14 - Investments in and advances to affiliates
3. Exhibits required to be filed by Item 601 of Regulation S-K
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:
10.3 | Form of Custody Agreement (Incorporated by reference to Exhibit j filed with the Registrant’s Registration Statement on Form N-2 (File No. 333-188904) filed on July 8, 2013). | |
10.4 | Administration Agreement, dated as of | |
99.1* | Audited Financial Statements of OCSI Glick JV LLC as of September 30, 2020 and 2019 and for the years ended September 30, 2020, 2019 and 2018. |
* | Filed herewith. |
^ | Exhibits and schedules to Exhibit 2.1 have been omitted in accordance with Item 601 of Regulation S-K. The registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
OAKTREE STRATEGIC INCOME CORPORATION | ||||
By: | /s/ | |||
Armen Panossian | ||||
Chief Executive Officer | ||||
By: | /s/ Mel Carlisle | |||
Mel Carlisle | ||||
Chief Financial Officer and Treasurer |
Date: December 8, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature | Title | Date | ||||
/s/ Armen Panossian | ||||||
December 18, 2020 | ||||||
Armen Panossian | (principal executive officer) | |||||
/s/ Mel Carlisle | ||||||
Chief Financial Officer and Treasurer | December 18, 2020 | |||||
Mel Carlisle | (principal financial officer and principal accounting officer) | |||||
Director | December | |||||
Deborah Gero | ||||||
* | Director | December | ||||
John B. Frank | ||||||
* | Director | December | ||||
Craig Jacobson | ||||||
* | Director | December | ||||
Richard G. Ruben | ||||||
* | Director | December | ||||
Bruce Zimmerman | ||||||
*By: | ||||
Name: Mel Carlisle Title: Attorney-in-fact |