0001414932-18-000004.txt : 20180208 0001414932-18-000004.hdr.sgml : 20180208 20180207200115 ACCESSION NUMBER: 0001414932-18-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20171231 FILED AS OF DATE: 20180208 DATE AS OF CHANGE: 20180207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Oaktree Specialty Lending Corp CENTRAL INDEX KEY: 0001414932 IRS NUMBER: 261219283 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 814-00755 FILM NUMBER: 18582477 BUSINESS ADDRESS: STREET 1: 333 SOUTH GRAND AVENUE STREET 2: 28TH FLOOR CITY: LOS ANGLES STATE: CA ZIP: 90071 BUSINESS PHONE: (213) 830-6300 MAIL ADDRESS: STREET 1: 333 SOUTH GRAND AVENUE STREET 2: 28TH FLOOR CITY: LOS ANGLES STATE: CA ZIP: 90071 FORMER COMPANY: FORMER CONFORMED NAME: Fifth Street Finance Corp. DATE OF NAME CHANGE: 20130926 FORMER COMPANY: FORMER CONFORMED NAME: Fifth Street Finance Corp DATE OF NAME CHANGE: 20071012 10-Q 1 ocsl-123117x10xq.htm 10-Q Document
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
 
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2017
OR
 
 
¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
COMMISSION FILE NUMBER: 1-33901
Oaktree Specialty Lending Corporation

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 
DELAWARE
(State or jurisdiction of
incorporation or organization)
 
26-1219283
(I.R.S. Employer
Identification No.)
 
 
 
333 South Grand Avenue, 28th Floor
Los Angeles, CA
(Address of principal executive office)
 
90071
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(213) 830-6300
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   þ     NO   ¨
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   ¨   NO   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  þ
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
 
 
 
 
(Do not check if a 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 is a shell company (as defined in Rule 12b-2 of the Act)    YES  ¨     NO  þ
The registrant had 140,960,651 shares of common stock outstanding as of February 7, 2018.





OAKTREE SPECIALTY LENDING CORPORATION
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2017

TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 3.
Item 4.
Item 5.


 




 



PART I — FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements.
Oaktree Specialty Lending Corporation
Consolidated Statements of Assets and Liabilities
(in thousands, except per share amounts)
 
 
December 31, 2017 (unaudited)
 
September 30, 2017
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost December 31, 2017: $438,415; cost September 30, 2017: $444,826)
 
$
297,534

 
$
305,271

Affiliate investments (cost December 31, 2017: $33,397; cost September 30, 2017: $33,743)
 
36,469

 
36,983

Non-control/Non-affiliate investments (cost December 31, 2017: $1,204,629; cost September 30, 2017: $1,279,096)
 
1,081,401

 
1,199,501

Total investments at fair value (cost December 31, 2017: $1,676,441; cost September 30, 2017: $1,757,665)
 
1,415,404

 
1,541,755

Cash and cash equivalents
 
45,435

 
53,018

Restricted cash
 
319

 
6,895

Interest, dividends and fees receivable
 
9,082

 
6,892

Due from portfolio companies
 
5,368

 
5,670

Receivables from unsettled transactions
 
8,869

 

Deferred financing costs
 
6,443

 
1,304

Other assets
 
3,260

 
514

Total assets
 
$
1,494,180

 
$
1,616,048

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
3,490

 
$
2,417

Base management fee and Part I incentive fee payable
 
6,286

 
6,750

Due to affiliate
 
1,534

 
1,815

Interest payable
 
6,547

 
3,167

Amounts payable to syndication partners
 

 
1

Director fees payable
 
176

 
184

Payables from unsettled transactions
 
33,465

 
58,691

Credit facilities payable
 
205,000

 
255,995

Unsecured notes payable (net of $4,432 and $4,737 of unamortized financing costs as of December 31, 2017 and September 30, 2017, respectively)
 
406,486

 
406,115

Secured borrowings at fair value (proceeds of $13,489 as of December 31, 2017 and September 30, 2017)
 
11,601

 
13,256

Total liabilities
 
674,585

 
748,391

Commitments and contingencies (Note 15)
 

 
 
Net assets:
 
 
 
 
Common stock, $0.01 par value, 250,000 shares authorized; 140,961 shares issued and outstanding as of December 31, 2017 and September 30, 2017
 
1,409

 
1,409

Additional paid-in-capital
 
1,579,278

 
1,579,278

Net unrealized depreciation on investments and secured borrowings
 
(259,149
)
 
(215,677
)
Net realized loss on investments and secured borrowings
 
(478,301
)
 
(478,010
)
Accumulated overdistributed net investment income
 
(23,642
)
 
(19,343
)
Total net assets (equivalent to $5.81 and $6.16 per common share as of December 31, 2017 and September 30, 2017, respectively) (Note 12)
 
819,595

 
867,657

Total liabilities and net assets
 
$
1,494,180

 
$
1,616,048

See notes to Consolidated Financial Statements.

1


Oaktree Specialty Lending Corporation
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
 
Three months ended
December 31, 2017
 
Three months ended
December 31, 2016
Interest income:
 
 
 
 
Control investments
 
$
3,203

 
$
4,445

Affiliate investments
 
949

 
1,008

Non-control/Non-affiliate investments
 
25,565

 
38,301

Interest on cash and cash equivalents
 
221

 
119

Total interest income
 
29,938

 
43,873

PIK interest income:
 
 
 
 
Control investments
 
1,191

 
1,560

Affiliate investments
 
176

 
201

Non-control/Non-affiliate investments
 
500

 
1,076

Total PIK interest income
 
1,867

 
2,837

Fee income:
 
 
 
 
Control investments
 
120

 
309

Affiliate investments
 
4

 
482

Non-control/Non-affiliate investments
 
907

 
2,777

Total fee income
 
1,031

 
3,568

Dividend and other income:
 
 
 
 
Control investments
 
1,040

 
1,462

Non-control/Non-affiliate investments
 

 
20

Total dividend and other income
 
1,040

 
1,482

Total investment income
 
33,876

 
51,760

Expenses:
 
 
 
 
Base management fee
 
5,590

 
8,614

Part I incentive fee
 
830

 
4,063

Professional fees
 
2,898

 
1,064

Board of Directors fees
 
176

 
197

Interest expense
 
9,584

 
13,189

Administrator expense
 
494

 
531

General and administrative expenses
 
1,116

 
1,468

Loss on legal settlements
 

 
3

Total expenses
 
20,688

 
29,129

Fees waived
 
(134
)
 
(61
)
Insurance recoveries
 

 
(602
)
Net expenses
 
20,554

 
28,466

Net investment income
 
13,322

 
23,294

Unrealized appreciation (depreciation) on investments:
 
 
 
 
Control investments
 
(1,326
)
 
1,339

Affiliate investments
 
(168
)
 
26

Non-control/Non-affiliate investments
 
(43,633
)
 
(75,721
)
Net unrealized depreciation on investments
 
(45,127
)
 
(74,356
)
Net unrealized (appreciation) depreciation on secured borrowings
 
1,655

 
(84
)
Realized gain (loss) on investments and secured borrowings:
 
 
 
 
Control investments
 

 
(23,624
)
Non-control/Non-affiliate investments
 
(291
)
 
528

Net realized loss on investments and secured borrowings
 
(291
)
 
(23,096
)
Net decrease in net assets resulting from operations
 
$
(30,441
)
 
$
(74,242
)
Net investment income per common share — basic
 
$
0.09

 
$
0.16

Loss per common share — basic
 
$
(0.22
)
 
$
(0.52
)
Weighted average common shares outstanding — basic
 
140,961

 
142,853

Net investment income per common share — diluted
 
$
0.09

 
$
0.16

Loss per common share — diluted (Note 5)
 
$
(0.22
)
 
$
(0.52
)
Weighted average common shares outstanding — diluted
 
140,961

 
142,853

Distributions per common share
 
$
0.125

 
$
0.18

See notes to Consolidated Financial Statements.

2



Oaktree Specialty Lending Corporation
Consolidated Statements of Changes in Net Assets
(in thousands, except per share amounts)
(unaudited)

 
 
Three months ended
December 31, 2017
 
Three months ended
December 31, 2016
 
Operations:
 
 
 
 
 
Net investment income
 
$
13,322

 
$
23,294

 
Net unrealized depreciation on investments
 
(45,127
)
 
(74,356
)
 
Net unrealized (appreciation) depreciation on secured borrowings
 
1,655

 
(84
)
 
Net realized loss on investments and secured borrowings
 
(291
)
 
(23,096
)
 
Net decrease in net assets resulting from operations
 
(30,441
)
 
(74,242
)
 
Stockholder transactions:
 
 
 
 
 
Distributions to stockholders
 
(17,621
)
 
(25,274
)
 
Net decrease in net assets from stockholder transactions
 
(17,621
)
 
(25,274
)
 
Capital share transactions:
 
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
294

 
1,250

 
Repurchases of common stock under stock repurchase program
 

 
(12,500
)
 
Repurchases of common stock under dividend reinvestment program
 
(294
)
 
(1,250
)
 
Net decrease in net assets from capital share transactions
 

 
(12,500
)
 
Total decrease in net assets
 
(48,062
)
 
(112,016
)
 
Net assets at beginning of period
 
867,657

 
1,142,288

 
Net assets at end of period
 
$
819,595

 
$
1,030,272

 
Net asset value per common share
 
$
5.81

 
$
7.31

 
Common shares outstanding at end of period
 
140,961

 
140,961

 



See notes to Consolidated Financial Statements.

3

Oaktree Specialty Lending Corporation
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 
 
Three months ended
December 31, 2017
 
Three months ended
December 31, 2016
 
Operating activities:
 
 
 
 
 
Net decrease in net assets resulting from operations
 
$
(30,441
)
 
$
(74,242
)
 
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities:
 
 
 
 
 
Net unrealized depreciation on investments
 
45,127

 
74,356

 
Net unrealized appreciation (depreciation) on secured borrowings
 
(1,655
)
 
84

 
Net realized loss on investments and secured borrowings
 
291

 
23,096

 
PIK interest income
 
(1,867
)
 
(2,837
)
 
Recognition of fee income
 
(1,031
)
 
(3,568
)
 
Accretion of original issue discount on investments
 
(2,997
)
 
(2,201
)
 
Accretion of original issue discount on unsecured notes payable
 
66

 
66

 
Amortization of deferred financing costs
 
1,341

 
999

 
Changes in operating assets and liabilities:
 
 
 
 
 
Fee income received
 
1,031

 
3,583

 
Decrease in restricted cash
 
6,576

 
11,315

 
(Increase) decrease in interest, dividends and fees receivable
 
(2,190
)
 
3,285

 
Decrease in due from portfolio companies
 
302

 
958

 
(Increase) decrease in receivables from unsettled transactions
 
(8,869
)
 
5,346

 
Decrease in insurance recoveries receivable
 

 
759

 
(Increase) decrease in other assets
 
(2,746
)
 
372

 
Increase in accounts payable, accrued expenses and other liabilities
 
1,073

 
1,534

 
Decrease in base management fee and Part I incentive fee payable
 
(464
)
 
(3,557
)
 
Decrease in due to affiliate
 
(281
)
 
(145
)
 
Increase in interest payable
 
3,380

 
5,148

 
Increase (decrease) in payables from unsettled transactions
 
(25,226
)
 
13,269

 
Decrease in director fees payable
 
(8
)
 
(369
)
 
Decrease in legal settlements payable
 

 
(530
)
 
Increase (decrease) in amounts payable to syndication partners
 
(1
)
 
1,030

 
Purchases of investments and net revolver activity
 
(200,166
)
 
(104,153
)
 
Principal payments received on investments (scheduled payments)
 
14,149

 
6,371

 
Principal payments received on investments (payoffs)
 
196,415

 
209,241

 
PIK interest income received in cash
 
1,103

 
3,434

 
Proceeds from the sale of investments
 
74,296

 
6,427

 
Net cash provided by operating activities
 
67,208

 
179,071

 
Financing activities:
 
 
 
 
 
Distributions paid in cash
 
(17,327
)
 
(24,024
)
 
Borrowings under credit facilities
 
35,000

 
84,000

 
Repayments of borrowings under credit facilities
 
(85,995
)
 
(158,882
)
 
Repayments of secured borrowings
 

 
(4,503
)
 
Repurchases of common stock under stock repurchase program
 

 
(12,500
)
 
Repurchases of common stock under dividend reinvestment plan
 
(294
)
 
(1,250
)
 
Deferred financing costs paid
 
(6,175
)
 

 
Net cash used by financing activities
 
(74,791
)
 
(117,159
)
 
Net increase (decrease) in cash and cash equivalents
 
(7,583
)
 
61,912

 
Cash and cash equivalents, beginning of period
 
53,018

 
117,923

 
Cash and cash equivalents, end of period
 
$
45,435

 
$
179,835

 
Supplemental information:
 
 
 
 
 
Cash paid for interest
 
$
4,797

 
$
6,976

 
Non-cash operating activities:
 
 
 
 
 
Purchases of investments from restructurings
 
$

 
$
(125,693
)
 
Proceeds from investment restructurings
 
$

 
$
125,693

 
Non-cash financing activities:
 
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
294

 
$
1,250

 
See notes to Consolidated Financial Statements.

4

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2017
(dollar amounts in thousands)
(unaudited)



Portfolio Company/Type of Investment (1)(2)(5)(9)(14)
 
 Cash Interest Rate (13)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value
Control Investments (3)(15)
 
 
 
 
 
 
 
 
 
 
Traffic Solutions Holdings, Inc.
 
 
 
Construction and engineering
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash 2% PIK due 4/1/2021 (13)
 
8.70
%
 
 
 
$
36,661

 
$
36,637

 
$
36,662

 First Lien Revolver, LIBOR+6% (1% floor) cash due 4/1/2021 (13)
 
7.70
%
 
 
 
2,000

 
1,997

 
2,000

 LC Facility, 6% cash due 4/1/2021
 


 
 
 
4,752

 
4,748

 
4,752

 746,114 Series A Preferred Units, 10%
 
 
 
 
 
 
 
20,029

 
7,700

 746,114 Shares of Common Stock
 
 
 
 
 
 
 
5,316

 

 
 
 
 
 
 
 
 
68,727

 
51,114

 TransTrade Operators, Inc.
 
 
 
Air freight & logistics
 
 
 
 
 
 
 First Lien Term Loan, 5% cash due 12/31/2017 (22)(24)
 


 
 
 
15,973

 
15,574

 
1,810

 First Lien Revolver, 8% cash due 12/31/2017 (22)(24)
 


 
 
 
7,757

 
7,757

 

 596.67 Series A Common Units
 
 
 
 
 
 
 

 

 4,000 Series A Preferred Units in TransTrade Holdings LLC
 
 
 
 
 
 
 
4,000

 

 5,200,000 Series B Preferred Units in TransTrade Holdings LLC
 
 
 
 
 
 
 
5,200

 

 
 
 
 
 
 
 
 
32,531

 
1,810

 First Star Speir Aviation Limited (11)(16)
 
 
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash due 12/15/2020
 


 
 
 
32,510

 
25,194

 
32,511

 100% equity interest (6)
 
 
 
 
 
 
 
8,500

 
6,937

 
 
 
 
 
 
 
 
33,694

 
39,448

 First Star Bermuda Aviation Limited (11)(16)
 
 
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 8/19/2018
 


 
 
 
11,868

 
11,868

 
11,868

 100% equity interest (6)
 
 
 
 
 
 
 
5,192

 
7,316

 
 
 
 
 
 
 
 
17,060

 
19,184

 Eagle Hospital Physicians, LLC
 
 
 
Healthcare services
 
 
 
 
 
 
 Earn-out (19)
 
 
 
 
 
 
 
7,851

 
5,083

 
 
 
 
 
 
 
 
7,851

 
5,083

 Senior Loan Fund JV I, LLC (11)(17)(18)
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 Class A Mezzanine Secured Deferrable Floating Rate Notes due 2036 in SLF Repack Issuer 2016 LLC (13)
 
6.52
%
 
 
 
100,804

 
100,804

 
100,804

 Class B Mezzanine Secured Deferrable Fixed Rate Notes, 15% PIK due 2036 in SLF Repack Issuer 2016 LLC
 
 
 
 
 
27,463

 
27,463

 
27,463

 87.5% LLC equity interest (25)
 
 
 
 
 
 
 
16,172

 
4,880

 
 
 
 
 
 
 
 
144,439

 
133,147

 Ameritox Ltd.
 
 
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 (13)(22)
 
6.69
%
 
 
 
39,438

 
37,533

 
4,800

 14,090,126.4 Class A Preferred Units in Ameritox Holdings II, LLC
 
 
 
 
 
 
 
14,090

 

 1,602,260.83 Class B Preferred Units in Ameritox Holdings II, LLC
 
 
 
 
 
 
 
1,602

 

 4,930.03 Class A Units in Ameritox Holdings II, LLC
 
 
 
 
 
 
 
29,049

 

 
 
 
 
 
 
 
 
82,274

 
4,800

 New IPT, Inc.
 
 
 
 Oil & gas equipment services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 3/17/2021 (13)
 
6.69
%
 
 
 
4,107

 
4,107

 
4,107

 Second Lien Term Loan, LIBOR+5.1% (1% floor) cash due 9/17/2021 (13)
 
6.79
%
 
 
 
2,504

 
2,504

 
2,504

 First Lien Revolver, LIBOR+5% (1% floor) cash due 3/17/2021 (13)
 
6.69
%
 
 
 
1,009

 
1,009

 
1,009

 50.087 Class A Common Units in New IPT Holdings, LLC
 
 
 
 
 
 
 

 
963

 
 
 
 
 
 
 
 
7,620

 
8,583

 AdVenture Interactive, Corp.
 
 
 
Advertising
 
 
 
 
 
 
 9,073 shares of common stock
 
 
 
 
 
 
 
13,611

 
6,421

 
 
 
 
 
 
 
 
13,611

 
6,421

 Keypath Education, Inc.
 
 
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 4/3/2022 (13)
 
8.69
%
 
 
 
19,960

 
19,960

 
19,960

 First Lien Revolver, LIBOR+7% (1% floor) cash due 4/3/2022 (13)
 
8.69
%
 
 
 

 

 

 9,073 Class A Units in FS AVI Holdco, LLC
 
 
 
 
 
 
 
10,648

 
7,984

 
 
 
 
 
 
 
 
30,608

 
27,944

 Total Control Investments (36.3% of net assets)
 
 
 
 
 
 
 
$
438,415

 
$
297,534

See notes to Consolidated Financial Statements.


5

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2017
(dollar amounts in thousands)
(unaudited)



Portfolio Company/Type of Investment (1)(2)(5)(9)(14)
 
 Cash Interest Rate (13)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
 
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 


 
 
 
$
9,752

 
$
9,751

 
$
9,708

 1,080,399 Shares of Series A Preferred Stock, 10%
 
 
 
 
 
 
 
1,080

 
2,161

 
 
 
 
 
 
 
 
10,831

 
11,869

 AmBath/ReBath Holdings, Inc.
 
 
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan B, 12.5% cash 2.5% PIK due 8/31/2018
 


 
 
 
22,552

 
22,566

 
22,552

 4,668,788 Shares of Preferred Stock
 
 
 
 
 
 
 

 
2,048

 
 
 
 
 
 
 
 
22,566

 
24,600

 Total Affiliate Investments (4.4% of net assets)
 
 
 
 
 
 
 
$
33,397

 
$
36,469

 
 
 
 
 
 
 
 
 
 
 
 Non-Control/Non-Affiliate Investments (7)
 
 
 
 
 
 
 
 
 
 
 Cenegenics, LLC
 
 
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash 2% PIK due 9/30/2019 (22)
 


 
 
 
28,746

 
$
27,738

 
$
15,812

 First Lien Revolver, 15% cash due 9/30/2019 (22)
 


 
 
 
2,203

 
2,203

 
1,085

 452,914.87 Common Units in Cenegenics, LLC
 
 
 
 
 
 
 
598

 

 345,380.141 Preferred Units in Cenegenics, LLC
 
 
 
 
 
 
 
300

 

 
 
 
 
 
 
 
 
30,839

 
16,897

 Riverlake Equity Partners II, LP
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 1.92% limited partnership interest (11)(25)
 
 
 
 
 
 
 
871

 
588

 
 
 
 
 
 
 
 
871

 
588

 Riverside Fund IV, LP
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.34% limited partnership interest (11)(25)
 
 
 
 
 
 
 
153

 
356

 
 
 
 
 
 
 
 
153

 
356

 Bunker Hill Capital II (QP), L.P.
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.51% limited partnership interest (11)(25)
 
 
 
 
 
 
 
638

 
808

 
 
 
 
 
 
 
 
638

 
808

 Maverick Healthcare Group, LLC (20)
 
 
 
Healthcare equipment
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.5% cash (1.75% floor) cash due 1/15/2018 (13)(22)
 
9.25
%
 
 
 
16,558

 
16,204

 
12,415

 First Lien Term Loan B, LIBOR+11% cash (1.75% floor) cash due 1/15/2018 (13)(22)
 
12.75
%
 
 
 
46,030

 
39,110

 

 CapEx Line, LIBOR+7.75% (1.75% floor) cash due 1/15/2018 (13)(22)
 
10.25
%
 
 
 
1,272

 
1,261

 
1,121

 First Lien Revolver, PRIME+6.5% cash due 1/15/2018 (13)(22)
 
10.75
%
 
 
 
56

 
41

 
50

 
 
 
 
 
 
 
 
56,616

 
13,586

 Refac Optical Group
 
 
 
Specialty stores
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+8% cash due 9/30/2018 (13)
 
9.56
%
 
 
 
3,581

 
3,552

 
3,581

 First Lien Term Loan B, LIBOR+9% cash, 1.75% PIK due 9/30/2018 (13)
 
10.56
%
 
 
 
34,701

 
34,617

 
34,665

 First Lien Term Loan C, 12.5% cash due 9/30/2018
 


 
 
 
3,416

 
3,416

 
3,346

 First Lien Revolver, LIBOR+8% cash due 9/30/2018 (13)
 
9.56
%
 
 
 
3,520

 
3,516

 
3,520

 1,550.9435 Shares of Common Stock in Refac Holdings, Inc.
 
 
 
 
 
 
 
1

 

 550.9435 Shares of Series A-2 Preferred Stock in Refac Holdings, Inc., 10%
 
 
 
 
 
 
 
305

 

 1,000 Shares of Series A Preferred Stock Units in Refac Holdings, Inc., 10%
 
 
 
 
 
 
 
999

 
397

 
 
 
 
 
 
 
 
46,406

 
45,509

 Baird Capital Partners V, LP
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.4% limited partnership interest (11)(25)
 
 
 
 
 
 
 
994

 
634

 
 
 
 
 
 
 
 
994

 
634

 Milestone Partners IV, L.P.
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.82% limited partnership interest (11)(25)
 
 
 
 
 
 
 
1,030

 
1,716

 
 
 
 
 
 
 
 
1,030

 
1,716


See notes to Consolidated Financial Statements.

6

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2017
(dollar amounts in thousands)
(unaudited)



Portfolio Company/Type of Investment (1)(2)(5)(9)(14)
 
 Cash Interest Rate (13)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 RCPDirect, L.P.
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.9% limited partnership interest (11)(25)
 
 
 
 
 
 
 
$
295

 
$
575

 
 
 
 
 
 
 
 
295

 
575

 Riverside Fund V, L.P.
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.48% limited partnership interest (11)(25)
 
 
 
 
 
 
 
1,452

 
1,481

 
 
 
 
 
 
 
 
1,452

 
1,481

 ACON Equity Partners III, LP
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.13% limited partnership interest (11)(25)
 
 
 
 
 
 
 
785

 
837

 
 
 
 
 
 
 
 
785

 
837

 BMC Acquisition, Inc.
 
 
 
Other diversified financial services
 
 
 
 
 
 
 500 Series A Preferred Shares, 8%
 
 
 
 
 
 
 
500

 
774

 50,000 Common Shares (6)
 
 
 
 
 
 
 
1

 
59

 
 
 
 
 
 
 
 
501

 
833

 Edmentum, Inc.
 
 
 
Education services
 
 
 
 
 
 
 Unsecured Senior PIK Note, 8.5% PIK due 6/9/2020 (23)
 
 
 
 
 
$
2,487

 
2,434

 

 Unsecured Junior PIK Note, 10% PIK due 6/9/2020 (23)
 
 
 
 
11,593

 
10,227

 

 Unsecured Revolver, 5% cash due 6/9/2020 (10)(22)
 


 
 
 
1,731

 
1,720

 
(400
)
 126,127.80 Class A Common Units
 
 
 
 
 
 
 
126

 

 
 
 
 
 
 
 
 
14,507

 
(400
)
 I Drive Safely, LLC
 
 
 
Education services
 
 
 
 
 
 
125,079 Class A Common Units of IDS Investments, LLC
 
 
 
 
 
 
 
1,000

 

 
 
 
 
 
 
 
 
1,000

 

 Yeti Acquisition, LLC
 
 
 
Leisure products
 
 
 
 
 
 
 3,000,000 Common Stock Units of Yeti Holdings, Inc.
 
 
 
 
 
 
 

 
5,900

 
 
 
 
 
 
 
 

 
5,900

 Vitalyst Holdings, Inc.
 
 
 
IT consulting & other services
 
 
 
 
 
 
 675 Series A Preferred Units of PCH Support Holdings, Inc., 10%
 
 
 
 
 
 
 
675

 
521

 7,500 Class A Common Stock Units of PCH Support Holdings, Inc.
 
 
 
 
 
 
 
75

 

 
 
 
 
 
 
 
 
750

 
521

 Beecken Petty O'Keefe Fund IV, L.P.
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.5% limited partnership interest (11)(25)
 
 
 
 
 
 
 
973

 
1,398

 
 
 
 
 
 
 
 
973

 
1,398

 Comprehensive Pharmacy Services LLC
 
 
 
Pharmaceuticals
 
 
 
 
 
 
 20,000 Common Shares in MCP CPS Group Holdings, Inc.
 
 
 
 
 
 
 
2,000

 
2,815

 
 
 
 
 
 
 
 
2,000

 
2,815

 Garretson Firm Resolution Group, Inc.
 
 
 
Diversified support services
 
 
 
 
 
 
 First Lien Revolver, PRIME+5.5% cash due 5/22/2020 (13)
 
9.75
%
 
 
 
711

 
711

 
666

 4,950,000 Preferred Units in GRG Holdings, LP, 8%
 
 
 
 
 
 
 
495

 
196

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
 
 
5

 

 
 
 
 
 
 
 
 
1,211

 
862

 Teaching Strategies, LLC
 
 
 
Education services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.5% (1% floor) cash due 8/27/2023 (13)
 
11.19
%
 
 
 
33,500

 
33,500

 
34,119

 
 
 
 
 
 
 
 
33,500

 
34,119

See notes to Consolidated Financial Statements.


7

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2017
(dollar amounts in thousands)
(unaudited)



Portfolio Company/Type of Investment (1)(2)(5)(9)(14)
 
 Cash Interest Rate (13)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Dominion Diagnostics, LLC
 
 
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 1% PIK due 10/8/2019 (22)
 


 
 
 
$
19,900

 
$
17,262

 
$
1,035

 First Lien Term Loan, LIBOR+5% (1% floor) cash due 4/8/2019 (13)
 
6.35
%
 
 
 
48,669

 
36,830

 
36,877

 First Lien Revolver, LIBOR+5% (1% floor) cash due 4/8/2019 (10)(13)
 
6.35
%
 
 
 
 
 

 
(1,013
)
 
 
 
 
 
 
 
 
54,092

 
36,899

 Sterling Capital Partners IV, L.P.
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.2% limited partnership interest (11)(25)
 
 
 
 
 
 
 
1,640

 
1,188

 
 
 
 
 
 
 
 
1,640

 
1,188

 Advanced Pain Management
 
 
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.5% (1.25% floor) cash due 2/26/2018 (13)(22)
 
10.07
%
 
 
 
24,000

 
22,994

 

 
 
 
 
 
 
 
 
22,994

 

 TravelClick, Inc.
 
 
 
Internet software & services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.75% (1% floor) cash due 11/6/2021 (13)(21)
 
9.32
%
 
 
 
2,697

 
2,482

 
2,710

 
 
 
 
 
 
 
 
2,482

 
2,710

 Pingora MSR Opportunity Fund I-A, LP
 
 
 
Thrift & mortgage finance
 
 
 
 
 
 
 1.86% limited partnership interest (11)(25)
 
 
 
 
 
 
 
6,905

 
5,629

 
 
 
 
 
 
 
 
6,905

 
5,629

 Credit Infonet, Inc.
 
 
 
Data processing & outsourced services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 0.75% PIK due 10/26/2020
 


 
 
 
13,940

 
13,940

 
14,024

 
 
 
 
 
 
 
 
13,940

 
14,024

 HealthEdge Software, Inc.
 
 
 
Application software
 
 
 
 
 
 
 482,453 Series A-3 Preferred Stock Warrants (exercise price $1.450918) expiration date 9/30/2023
 
 
 
 
 
 
 
213

 
772

 
 
 
 
 
 
 
 
213

 
772

 InMotion Entertainment Group, LLC
 
 
 
Consumer electronics
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.25% (1.25% floor) cash due 10/1/2021 (13)
 
8.95
%
 
 
 
12,086

 
12,042

 
12,086

 First Lien Term Loan B, LIBOR+7.25% (1.25% floor) cash due 10/1/2021 (13)
 
8.95
%
 
 
 
5,268

 
5,170

 
5,268

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 10/1/2018 (13)
 
8.45
%
 
 
 
5,904

 
5,897

 
5,904

 CapEx Line, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
9.45
%
 
 
 
787

 
779

 
787

 1,000,000 Class A Units in InMotion Entertainment Holdings, LLC
 
 
 
 
 
 
 
1,000

 
1,855

 
 
 
 
 
 
 
 
24,888

 
25,900

 Thing5, LLC
 
 
 
Data processing & outsourced services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.5% (1% floor) cash 2% PIK due 10/11/2020 (12)(13)
 
9.19
%
 
 
 
47,575

 
47,575

 
40,561

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 10/11/2020 (13)
 
9.19
%
 
 
 
4,000

 
4,000

 
4,000

 2,000,000 Units in T5 Investment Vehicle, LLC
 
 
 
 
 
 
 
2,000

 

 
 
 
 
 
 
 
 
53,575

 
44,561

 Kason Corporation
 
 
 
Industrial machinery
 
 
 
 
 
 
 Mezzanine Term Loan, 11.5% cash 1.75% PIK due 10/28/2019
 


 
 
 
6,032

 
6,032

 
5,877

 498.6 Class A Preferred Units in Kason Investment, LLC, 8%
 
 
 
 
 
 
 
499

 
588

 5,540 Class A Common Units in Kason Investment, LLC
 
 
 
 
 
 
 
55

 

 
 
 
 
 
 
 
 
6,586

 
6,465

 SPC Partners V, L.P.
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.571% limited partnership interest (11)(25)
 
 
 
 
 
 
 
1,772

 
1,929

 
 
 
 
 
 
 
 
1,772

 
1,929

See notes to Consolidated Financial Statements.

8

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2017
(dollar amounts in thousands)
(unaudited)



Portfolio Company/Type of Investment (1)(2)(5)(9)(14)
 
 Cash Interest Rate (13)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 P2 Upstream Acquisition Co.
 
 
 
 Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+4% (1% floor) cash due 11/1/2018 (10)(13)(21)
 
5.69
%
 
 
 
 
 
$

 
$
(200
)
 
 
 
 
 
 
 
 

 
(200
)
 OmniSYS Acquisition Corporation
 
 
 
Diversified support services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.5% (1% floor) cash due 11/21/2018 (13)
 
9.19
%
 
 
 
$
5,500

 
5,498

 
5,488

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 11/21/2018 (10)(13)
 
9.19
%
 
 
 
 
 

 
(5
)
 100,000 Common Units in OSYS Holdings, LLC
 
 
 
 
 
 
 
1,000

 
898

 
 
 
 
 
 
 
 
6,498

 
6,381

 Moelis Capital Partners Opportunity Fund I-B, LP
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 1.0% limited partnership interest (11)(25)
 
 
 
 
 
 
 
1,045

 
1,420

 
 
 
 
 
 
 
 
1,045

 
1,420

 Aden & Anais Merger Sub, Inc.
 
 
 
Apparel, accessories & luxury goods
 
 
 
 
 
 
 51,645 Common Units in Aden & Anais Holdings, Inc.
 
 
 
 
 
 
 
5,165

 

 
 
 
 
 
 
 
 
5,165

 

 Lift Brands, Inc.
 
 
 
Leisure facilities
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.5% (1% floor) cash due 12/23/2019 (13)
 
9.19
%
 
 
 
21,222

 
21,211

 
21,222

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 12/23/2019 (10)(13)
 
9.19
%
 
 
 
 
 
(3
)
 

 2,000,000 Class A Common Units in Snap Investments, LLC
 
 
 
 
 
 
 
2,004

 
2,878

 
 
 
 
 
 
 
 
23,212

 
24,100

 Tailwind Capital Partners II, L.P.
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.3% limited partnership interest (11)(25)
 
 
 
 
 
 
 
1,588

 
1,894

 
 
 
 
 
 
 
 
1,588

 
1,894

 Long's Drugs Incorporated
 
 
 
Pharmaceuticals
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+11.25% cash due 2/19/2022 (13)
 
12.63
%
 
 
 
26,909

 
26,909

 
27,447

 50 Series A Preferred Shares in Long's Drugs Incorporated
 
 
 
 
 
 
 
500

 
799

 25 Series B Preferred Shares in Long's Drugs Incorporated
 
 
 
 
 
 
 
313

 
472

 
 
 
 
 
 
 
 
27,722

 
28,718

 Conviva Inc.
 
 
 
Application software
 
 
 
 
 
 
 417,851 Series D Preferred Stock Warrants (exercise price $1.1966) expiration date 2/28/2021
 
 
 
 
 
 
 
105

 
223

 
 
 
 
 
 
 
 
105

 
223

 OnCourse Learning Corporation
 
 
 
Education services
 
 
 
 
 
 
 264,312 Class A Units in CIP OCL Investments, LLC
 
 
 
 
 
 
 
2,726

 
1,878

 
 
 
 
 
 
 
 
2,726

 
1,878

 ShareThis, Inc.
 
 
 
Internet software & services
 
 
 
 
 
 
 345,452 Series C Preferred Stock Warrants (exercise price $3.0395) expiration date 3/4/2024
 
 
 
 
 
 
 
367

 
3

 
 
 
 
 
 
 
 
367

 
3

 ExamSoft Worldwide, Inc.
 
 
 
Internet software & services