Item 1.01 – Entry into a Material Definitive Agreement
On August 24, 2022 (the “Closing Date”), ORCIC JV WH LLC, a Delaware limited liability company (the “Borrower”) entered into a $400 million credit facility (the “Credit Agreement”) among the lenders party thereto (the “Lenders”), Bank of America, N.A., as administrative agent (in such capacity, the “Administrative Agent”) and BofA Securities, Inc., as sole lead arranger and sole book manager. The Borrower is a wholly owned subsidiary of ORCIC BC 9 LLC, a Delaware limited liability company (the “Collateral Manager”) and the Collateral Manager is a wholly owned subsidiary of Owl Rock Core Income Corp., a Maryland corporation (the “Company,” “we” or “us”). The proceeds of the loans under the Credit Agreement are to be used for, subject to certain restrictions, acquiring and funding collateral assets, payment of government fees and administrative expenses, the funding of certain accounts and making distributions, contributions and investments.
The maximum principal amount of the revolving loans under the Credit Agreement is $400 million, which can be drawn and redrawn subject to certain conditions, including the borrowing base, which is determined on the basis of the value of the assets from time to time, and an advance rate, for a period of up to three years (less 30 days) after the Closing Date unless the commitments are terminated sooner, as provided in the Credit Agreement. The loans under the Credit Agreement will mature on August 25, 2025 (the “Stated Maturity Date”) and may be accelerated upon the occurrence of an event of default.
All loans under the Credit Agreement may be prepaid and reborrowed without penalty or premium at any time, subject to certain restrictions. A make-whole fee is due in connection with any reduction or termination of any portion of the commitments under the Credit Agreement within 18 months of the Closing Date. The outstanding principal balance, interest and all other amounts outstanding for all loans are due and payable on the Stated Maturity Date.
The interest rate on outstanding loans under the Credit Agreement is, at the option of the Borrower, (A) Term SOFR (which is the one month Term SOFR Screen Rate plus the Applicable Margin or (B) Base Rate (which is the highest of (i) the Federal Funds rate plus .50%, (ii) the Prime Rate in effect for such day, (iii) Term SOFR plus 1.00%, and (iv) 1.00%) plus the Applicable Margin, and in each case, subject to interest rate floors set forth in the Credit Agreement. The “Applicable Margin” is 1.45%. Liabilities under the Credit Agreement are limited recourse to the Borrower. The Borrower is required to pay a quarterly commitment fee ranging from 0.25% to 1.55%, based on the daily amount of the undrawn portion of the commitments under the Credit Agreement. The commitment fee will initially be set at 0.25%. The Borrower shall pay the Administrative Agent a customary fee as well as other customary closing fees.
The Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Borrower to, among other things, grant liens, incur incremental indebtedness, effect certain mergers, make investments, dispose of assets, pay dividends or distributions on capital stock and enter into transactions with affiliates, in each case subject to customary exceptions.
The Credit Agreement contains customary events of default (with customary grace periods, as applicable), including payment defaults, breaches of covenants, defaults under the related loan documentation, material misstatements, insolvency events, judgement defaults, the invalidity of the Credit Agreement or the related loan documents and certain events related to plans subject to the Employee Retirement Income Security Act of 1974, as amended.
Pursuant to the Security Agreement (as defined below), the obligations of the Borrower under the Credit Agreement are secured by a perfected first priority security interest in all of the assets of the Borrower and on any payments received by the Borrower in respect of such assets. Assets pledged to the Lenders will not be available to pay the Company’s obligations.
In connection with the Credit Agreement, the Borrower (a) entered into a security agreement dated as of the Closing Date (the “Security Agreement”) among the Borrower and the Administrative Agent, pursuant to which the Borrower granted to the Administrative Agent a first priority lien on all of the collateral assets of the Borrower, (b) entered into a collateral management agreement among the Borrower and the Collateral Manager, pursuant to which the Collateral Manager provides collateral management services to the Borrower with respect to the collateral assets and (c) entered into a master sale and participation agreement among the Borrower and the Company, pursuant to which the Borrower intends to purchase from the Company participation interests in certain collateral assets (in anticipation of elevating such interests into assignments after the closing date) that, upon such purchase, will become collateral under the Credit Agreement and will be subject to the first priority lien granted by the Borrower pursuant to the Security Agreement.
