0001414932-18-000007.txt : 20180508 0001414932-18-000007.hdr.sgml : 20180508 20180507183939 ACCESSION NUMBER: 0001414932-18-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20180331 FILED AS OF DATE: 20180508 DATE AS OF CHANGE: 20180507 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: 18812522 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-033118x10xq.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 March 31, 2018
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 May 7, 2018.





OAKTREE SPECIALTY LENDING CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2018

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)
 
 
March 31, 2018 (unaudited)
 
September 30, 2017
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost March 31, 2018: $431,809; cost September 30, 2017: $444,826)
 
$
285,079

 
$
305,271

Affiliate investments (cost March 31, 2018: $10,881; cost September 30, 2017: $33,743)
 
11,890

 
36,983

Non-control/Non-affiliate investments (cost March 31, 2018: $1,219,816; cost September 30, 2017: $1,279,096)
 
1,103,715

 
1,199,501

Total investments at fair value (cost March 31, 2018: $1,662,506; cost September 30, 2017: $1,757,665)
 
1,400,684

 
1,541,755

Cash and cash equivalents
 
7,951

 
53,018

Restricted cash
 
204

 
6,895

Interest, dividends and fees receivable
 
7,771

 
6,892

Due from portfolio companies
 
5,676

 
5,670

Receivables from unsettled transactions
 
12,852

 

Deferred financing costs
 
6,031

 
1,304

Other assets
 
3,346

 
514

Total assets
 
$
1,444,515

 
$
1,616,048

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
2,986

 
$
2,417

Base management fee and Part I incentive fee payable
 
8,594

 
6,750

Due to affiliate
 
1,709

 
1,815

Interest payable
 
3,278

 
3,167

Amounts payable to syndication partners
 
1

 
1

Director fees payable
 
176

 
184

Payables from unsettled transactions
 
21,107

 
58,691

Credit facilities payable
 
183,000

 
255,995

Unsecured notes payable (net of $4,058 and $4,737 of unamortized financing costs as of March 31, 2018 and September 30, 2017, respectively)
 
385,778

 
406,115

Secured borrowings at fair value (proceeds March 31, 2018: $12,948; proceeds September 30, 2017: $13,489)
 
10,652

 
13,256

Total liabilities
 
617,281

 
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 March 31, 2018 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
 
(259,526
)
 
(215,677
)
Net realized loss on investments, secured borrowings and unsecured notes payable
 
(473,567
)
 
(478,010
)
Accumulated overdistributed net investment income
 
(20,360
)
 
(19,343
)
Total net assets (equivalent to $5.87 and $6.16 per common share as of March 31, 2018 and September 30, 2017, respectively) (Note 12)
 
827,234

 
867,657

Total liabilities and net assets
 
$
1,444,515

 
$
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
March 31, 2018
 
Three months ended
March 31, 2017
 
Six months ended
March 31, 2018
 
Six months ended
March 31, 2017
Interest income:
 
 
 
 
 
 
 
 
Control investments
 
$
3,071

 
$
2,949

 
$
6,274

 
$
7,394

Affiliate investments
 
917

 
976

 
1,866

 
1,984

Non-control/Non-affiliate investments
 
22,533

 
34,216

 
48,098

 
72,517

Interest on cash and cash equivalents
 
112

 
164

 
333

 
283

Total interest income
 
26,633

 
38,305

 
56,571

 
82,178

PIK interest income:
 
 
 
 
 
 
 
 
Control investments
 
1,210

 
2,362

 
2,401

 
3,922

Affiliate investments
 
188

 
196

 
364

 
397

Non-control/Non-affiliate investments
 
548

 
997

 
1,048

 
2,073

Total PIK interest income
 
1,946

 
3,555

 
3,813

 
6,392

Fee income:
 
 
 
 
 
 
 
 
Control investments
 
128

 
313

 
248

 
622

Affiliate investments
 
44

 
247

 
48

 
729

Non-control/Non-affiliate investments
 
3,770

 
2,293

 
4,677

 
5,070

Total fee income
 
3,942

 
2,853

 
4,973

 
6,421

Dividend and other income:
 
 
 
 
 
 
 
 
Control investments
 
2,258

 
842

 
3,298

 
2,304

Non-control/Non-affiliate investments
 

 

 

 
20

Total dividend and other income
 
2,258

 
842

 
3,298

 
2,324

Total investment income
 
34,779

 
45,555

 
68,655

 
97,315

Expenses:
 
 
 
 
 
 
 
 
Base management fee
 
5,386

 
8,035

 
10,976

 
16,649

Part I incentive fee
 
3,247

 
3,168

 
4,077

 
7,231

Professional fees
 
1,015

 
1,723

 
3,913

 
2,787

Board of Directors fees
 
177

 
193

 
353

 
390

Interest expense
 
8,530

 
12,712

 
18,114

 
25,901

Administrator expense
 
391

 
619

 
885

 
1,150

General and administrative expenses
 
722

 
1,319

 
1,838

 
2,787

Loss on legal settlements
 

 

 

 
3

Total expenses
 
19,468

 
27,769

 
40,156

 
56,898

Fees waived
 
48

 
(61
)
 
(86
)
 
(122
)
Insurance recoveries
 

 
(657
)
 

 
(1,259
)
Net expenses
 
19,516

 
27,051

 
40,070

 
55,517

Net investment income
 
15,263

 
18,504

 
28,585

 
41,798

Unrealized appreciation (depreciation) on investments:
 
 
 
 
 
 
 
 
Control investments
 
(5,849
)
 
13,172

 
(7,175
)
 
14,509

Affiliate investments
 
(2,063
)
 
(687
)
 
(2,231
)
 
(662
)
Non-control/Non-affiliate investments
 
7,127

 
94,039

 
(36,506
)
 
18,321

Net unrealized appreciation (depreciation) on investments
 
(785
)
 
106,524

 
(45,912
)
 
32,168

Net unrealized (appreciation) depreciation on secured borrowings
 
408

 
(334
)
 
2,063

 
(418
)
Realized gain (loss) on investments and secured borrowings:
 
 
 
 
 
 
 
 
Control investments
 

 
(22,312
)
 

 
(45,936
)
Affiliate investments
 
2,048

 

 
2,048

 

Non-control/Non-affiliate investments
 
2,806

 
(93,581
)
 
2,515

 
(93,053
)
Net realized gain (loss) on investments and secured borrowings
 
4,854

 
(115,893
)
 
4,563

 
(138,989
)
Redemption premium on unsecured notes payable
 
(120
)
 

 
(120
)
 

Net increase (decrease) in net assets resulting from operations
 
$
19,620

 
$
8,801

 
$
(10,821
)
 
$
(65,441
)
Net investment income per common share — basic
 
$
0.11

 
$
0.13

 
$
0.20

 
$
0.29

Earnings (loss) per common share — basic
 
$
0.14

 
$
0.06

 
$
(0.08
)
 
$
(0.46
)
Weighted average common shares outstanding — basic
 
140,961

 
140,961

 
140,961

 
141,917

Net investment income per common share — diluted
 
$
0.11

 
$
0.13

 
$
0.20

 
$
0.29

Earnings (loss) per common share — diluted (Note 5)
 
$
0.14

 
$
0.06

 
$
(0.08
)
 
$
(0.46
)
Weighted average common shares outstanding — diluted
 
140,961

 
140,961

 
140,961

 
141,917

Distributions per common share
 
$
0.085

 
$
0.14

 
$
0.21

 
$
0.32

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)

 
 
Six months ended
March 31, 2018
 
Six months ended
March 31, 2017
Operations:
 
 
 
 
Net investment income
 
$
28,585

 
$
41,798

Net unrealized appreciation (depreciation) on investments
 
(45,912
)
 
32,168

Net unrealized (appreciation) depreciation on secured borrowings
 
2,063

 
(418
)
Net realized gain (loss) on investments and secured borrowings
 
4,563

 
(138,989
)
Redemption premium on unsecured notes payable

 
(120
)
 

Net decrease in net assets resulting from operations
 
(10,821
)
 
(65,441
)
Stockholder transactions:
 
 
 
 
Contributions from stockholders
 

 
287

Distributions to stockholders
 
(29,602
)
 
(45,008
)
Net decrease in net assets from stockholder transactions
 
(29,602
)
 
(44,721
)
Capital share transactions:
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
827

 
2,166

Repurchases of common stock under dividend reinvestment program
 
(827
)
 
(2,166
)
Repurchases of common stock under stock repurchase program
 

 
(12,500
)
Net decrease in net assets from capital share transactions
 

 
(12,500
)
Total decrease in net assets
 
(40,423
)
 
(122,662
)
Net assets at beginning of period
 
867,657

 
1,142,288

Net assets at end of period
 
$
827,234

 
$
1,019,626

Net asset value per common share
 
$
5.87

 
$
7.23

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)

 
 
Six months ended
March 31, 2018
 
Six months ended
March 31, 2017
 
Operating activities:
 
 
 
 
 
Net decrease in net assets resulting from operations
 
$
(10,821
)
 
$
(65,441
)
 
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities:
 
 
 
 
 
Net unrealized (appreciation) depreciation on investments
 
45,912

 
(32,168
)
 
Net unrealized appreciation (depreciation) on secured borrowings
 
(2,063
)
 
418

 
Net realized (gain) loss on investments and secured borrowings
 
(4,563
)
 
138,989

 
Redemption premium on unsecured notes payable
 
120

 

 
PIK interest income, net of PIK interest income collected
 
(2,614
)
 
(2,677
)
 
Non-cash fee income
 

 
(135
)
 
Accretion of original issue discount on investments
 
(4,033
)
 
(5,270
)
 
Accretion of original issue discount on unsecured notes payable
 
132

 
132

 
Amortization of deferred financing costs
 
2,046

 
2,483

 
Purchases of investments and net revolver activity
 
(427,931
)
 
(208,020
)
 
Principal payments received on investments (scheduled payments)
 
19,965

 
11,093

 
Principal payments received on investments (payoffs)
 
374,178

 
416,912

 
Proceeds from the sale of investments
 
140,158

 
58,081

 
Changes in operating assets and liabilities:
 
 
 
 
 
Decrease in restricted cash
 
6,691

 
4,189

 
(Increase) decrease in interest, dividends and fees receivable
 
(879
)
 
3,275

 
Increase in due from portfolio companies
 
(6
)
 
(2,804
)
 
Increase in receivables from unsettled transactions
 
(12,852
)
 
(20,213
)
 
Decrease in insurance recoveries receivable
 

 
19,729

 
Increase in other assets
 
(2,832
)
 
(1,229
)
 
Increase in accounts payable, accrued expenses and other liabilities
 
569

 
345

 
Increase (decrease) in base management fee and Part I incentive fee payable
 
1,844

 
(5,058
)
 
Decrease in due to affiliate
 
(106
)
 
(801
)
 
Increase (decrease) in interest payable
 
111

 
(152
)
 
Decrease in payables from unsettled transactions
 
(37,584
)
 
(4,830
)
 
Decrease in director fees payable
 
(8
)
 
(248
)
 
Decrease in legal settlements payable
 

 
(19,500
)
 
Increase in amounts payable to syndication partners
 

 
762

 
Net cash provided by operating activities
 
85,434

 
287,862

 
Financing activities:
 
 
 
 
 
Contributions received in cash
 

 
287

 
Distributions paid in cash
 
(28,775
)
 
(42,842
)
 
Repayments of borrowings under SBA debentures payable
 

 
(65,300
)
 
Borrowings under credit facilities
 
183,000

 
148,000

 
Repayments of borrowings under credit facilities
 
(255,995
)
 
(341,882
)
 
Repurchase of unsecured notes
 
(21,188
)
 

 
Repayments of secured borrowings
 
(541
)
 
(4,810
)
 
Repurchases of common stock under stock repurchase program
 

 
(12,500
)
 
Repurchases of common stock under dividend reinvestment plan
 
(827
)
 
(2,166
)
 
Deferred financing costs paid
 
(6,175
)
 

 
Net cash used by financing activities
 
(130,501
)
 
(321,213
)
 
Net decrease in cash and cash equivalents
 
(45,067
)
 
(33,351
)
 
Cash and cash equivalents, beginning of period
 
53,018

 
117,923

 
Cash and cash equivalents, end of period
 
$
7,951

 
$
84,572

 
Supplemental information:
 
 
 
 
 
Cash paid for interest
 
$
15,825

 
$
23,438

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

 
$
(157,903
)
 
Proceeds from investment restructurings
 
$

 
$
157,903

 
Non-cash financing activities:
 
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
827

 
$
2,166

 
See notes to Consolidated Financial Statements.

4

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
March 31, 2018
(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)
 
 
 
 
 
 
 
 
 
 
 AdVenture Interactive, Corp. (26)
 
 
 
Advertising
 
 
 
 
 
 
 9,073 shares of common stock
 
 
 
 
 
 
 
$
13,611

 
$
6,557

 
 
 
 
 
 
 
 
13,611

 
6,557

 Ameritox Ltd.
 
 
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 (13)(22)
 
6.88
%
 
 
 
$
34,921

 
32,089

 

 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

 

 
 
 
 
 
 
 
 
76,830

 

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

 
4,932

 
 
 
 
 
 
 
 
7,851

 
4,932

 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

 
5,096

 
 
 
 
 
 
 
 
17,060

 
16,964

 First Star Speir Aviation Limited (11)(16)
 
 
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash due 12/15/2020
 
 
 
 
 
32,510

 
24,685

 
32,511

 100% equity interest (6)
 
 
 
 
 
 
 
8,500

 
3,849

 
 
 
 
 
 
 
 
33,185

 
36,360

 Keypath Education, Inc. (26)
 
 
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 4/3/2022 (13)
 
9.30
%
 
 
 
19,960

 
19,960

 
19,960

 First Lien Revolver, LIBOR+7% (1% floor) cash due 4/3/2022 (13)
 
9.30
%
 
 
 

 

 

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

 
7,984

 
 
 
 
 
 
 
 
30,608

 
27,944

 New IPT, Inc.
 
 
 
 Oil & gas equipment services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 3/17/2021 (13)
 
7.31
%
 
 
 
4,107

 
4,107

 
4,107

 Second Lien Term Loan, LIBOR+5.1% (1% floor) cash due 9/17/2021 (13)
 
7.41
%
 
 
 
2,003

 
2,003

 
2,003

 First Lien Revolver, LIBOR+5% (1% floor) cash due 3/17/2021 (13)
 
7.31
%
 
 
 
1,009

 
1,009

 
1,009

 50.087 Class A Common Units in New IPT Holdings, LLC
 
 
 
 
 
 
 

 
2,158

 
 
 
 
 
 
 
 
7,119

 
9,277

 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)
 
6.81
%
 
 
 
100,804

 
100,804

 
100,804

 Class B Mezzanine Secured Deferrable Fixed Rate Notes, 15% PIK due 2036 in SLF Repack Issuer 2016 LLC
 
 
 
 
 
27,691

 
27,691

 
27,691

 87.5% LLC equity interest (6)(25)
 
 
 
 
 
 
 
16,172

 
4,244

 
 
 
 
 
 
 
 
144,667

 
132,739

Traffic Solutions Holdings, Inc.
 
 
 
Construction and engineering
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash 2% PIK due 4/1/2021 (13)
 
9.32
%
 
 
 
36,759

 
36,757

 
36,759

 First Lien Revolver, LIBOR+6% (1% floor) cash due 4/1/2021 (13)
 
8.32
%
 
 
 
1,500

 
1,497

 
1,500

 LC Facility, 6% cash due 4/1/2021
 
 
 
 
 
4,752

 
4,748

 
4,752

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

 
8,035

 746,114 Shares of Common Stock
 
 
 
 
 
 
 
5,316

 

 
 
 
 
 
 
 
 
68,347

 
51,046

 TransTrade Operators, Inc.
 
 
 
Air freight & logistics
 
 
 
 
 
 
 First Lien Term Loan, 5% cash due 12/31/2017 (22)(24)
 
 
 
 
 
15,973

 
15,574

 

 First Lien Revolver, 8% cash due 12/31/2017 (10)(22)(24)
 
 
 
 
 
7,757

 
7,757

 
(740
)
 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

 
(740
)
 Total Control Investments (34.5% of net assets)
 
 
 
 
 
 
 
$
431,809

 
$
285,079

See notes to Consolidated Financial Statements.


5

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
March 31, 2018
(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
 
 
 
 
 
$
9,800

 
$
9,801

 
$
9,729

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

 
2,161

 
 
 
 
 
 
 
 
10,881

 
11,890

 Total Affiliate Investments (1.4% of net assets)
 
 
 
 
 
 
 
$
10,881

 
$
11,890

 
 
 
 
 
 
 
 
 
 
 
 Non-Control/Non-Affiliate Investments (7)
 
 
 
 
 
 
 
 
 
 
 4 Over International, LLC
 
 
 
 Commercial printing
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 6/7/2022 (13)
 
7.89
%
 
 
 
5,984

 
$
5,926

 
$
5,983

 First Lien Revolver, LIBOR+6% (1% floor) cash due 6/7/2021 (10)(13)
 
7.89
%
 
 
 
 
 
(17
)
 

 
 
 
 
 
 
 
 
5,909

 
5,983

 99 Cents Only Stores LLC
 
 
 
 General merchandise stores
 
 
 
 
 
 
 First Lien Term Loan LIBOR+5% 1.50% PIK due 1/13/2022 (13)(21)
 
7.16
%
 
 
 
4,611

 
4,236

 
4,467

 
 
 
 
 
 
 
 
4,236

 
4,467

 Access CIG LLC
 
 
 
Diversified support services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.75% cash due 2/14/2026 (13)(21)
 
9.63
%
 
 
 
12,647

 
12,522

 
12,781

 Second Lien Delayed Draw Term Loan, LIBOR+7.75% cash due 2/14/2026 (13)(21)
 
9.63
%
 
 
 
 
 

 
25

 
 
 
 
 
 
 
 
12,522

 
12,806

 ACON Equity Partners III, LP
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.13% limited partnership interest (11)(25)
 
 
 
 
 
 
 
795

 
868

 
 
 
 
 
 
 
 
795

 
868

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

 

 
 
 
 
 
 
 
 
5,165

 

 Advanced Pain Management
 
 
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.5% (1.25% floor) cash due 2/26/2018 (13)(22)
 
10.44
%
 
 
 
24,000

 
22,596

 

 
 
 
 
 
 
 
 
22,596

 

 AirStrip Technologies, Inc.
 
 
 
Internet software & services
 
 
 
 
 
 
 22,858.71 Series C-1 Preferred Stock Warrants (exercise price $34.99757) expiration date 5/11/2025
 
 
 
 
 
 
 
90

 

 
 
 
 
 
 
 
 
90

 

 Algeco Scotsman Global Finance Plc
 
 
 
 Constructing & engineering
 
 
 
 
 
 
 Fixed Rate Bond 10% cash due 8/15/2023 (11)(21)
 
 
 
 
 
10,000

 
9,411

 
10,000

 Fixed Rate Bond 8% cash due 2/15/2023 (11)(21)
 
 
 
 
 
10,000

 
9,804

 
10,000

 
 
 
 
 
 
 
 
19,215

 
20,000

 Allen Media LLC
 
 
 
 Movies & entertainment
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+9.25% (1% floor) cash due 3/22/2025 (13)
 
11.10
%
 
 
 
64,301

 
62,700

 
62,694

 
 
 
 
 
 
 
 
62,700

 
62,694

 Allied Universal Holdco LLC
 
 
 
 Security & alarm services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+3.75% (1% floor) cash due 7/28/2022 (13)(21)
 
6.05
%
 
 
 
11,909

 
11,979

 
11,762

 Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 7/28/2023 (13)(21)
 
10.27
%
 
 
 
1,149

 
1,169

 
1,143

 
 
 
 
 
 
 
 
13,148

 
12,905


See notes to Consolidated Financial Statements.

6

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
March 31, 2018
(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

 Altice Finco SA
 
 
 
 Integrated telecommunication services
 
 
 
 
 
 
 Fixed Rate Bond 8.125% cash due 1/15/2024 (11)(21)
 
 
 
 
 
$
3,000

 
$
3,058

 
$
3,105

 Fixed Rate Bond 7.625% cash due 2/15/2025 (11)(21)
 
 
 
 
 
2,000

 
2,015

 
1,980

 
 
 
 
 
 
 
 
5,073

 
5,085

 Ancile Solutions, Inc.
 
 
 
 Internet software & services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 6/30/2021 (13)
 
9.30
%
 
 
 
10,066

 
9,875

 
9,977

 
 
 
 
 
 
 
 
9,875

 
9,977

 Aptos, Inc.
 
 
 
Data processing & outsourced services
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+6.75% (1% floor) cash due 9/1/2022 (13)
 
9.05
%
 
 
 
5,376

 
5,296

 
5,322

 
 
 
 
 
 
 
 
5,296

 
5,322

 Asset International, Inc.
 
 
 
 Research & consulting services
 
 
 
 
 
 
 Second Lien Term Loan LIBOR+9.25% (1% floor) cash due 6/29/2025 (13)
11.55
%
 
 
 
15,000

 
14,667

 
14,657

 
 
 
 
 
 
 
 
14,667

 
14,657

 ATS Consolidated Inc.
 
 
 
 Data processing & outsourced services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.75% cash due 2/27/2026 (13)(21)
 
9.40
%
 
 
 
8,750

 
8,694

 
8,865

 
 
 
 
 
 
 
 
8,694

 
8,865

 Avantor Inc.
 
 
 
 Commodity chemicals
 
 
 
 
 
 
 Fixed Rate Bond 6% cash due 10/1/2024 (11)(21)
 
 
 
 
 
8,000

 
7,982

 
7,980

 Fixed Rate Bond 9% cash due 10/1/2025 (11)(21)
 
 
 
 
 
3,000

 
2,970

 
2,946

 
 
 
 
 
 
 
 
10,952

 
10,926

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

 
650

 
 
 
 
 
 
 
 
994

 
650

 Beecken Petty O'Keefe Fund IV, L.P.
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.5% limited partnership interest (11)(25)
 
 
 
 
 
 
 
1,307

 
1,766

 
 
 
 
 
 
 
 
1,307

 
1,766

 BeyondTrust Software, Inc.
 
 
 
Application software
 
 
 
 
 
 
 4,500,000 Class A membership interests in BeyondTrust Holdings LLC
 
 
 
 
 
 
 
4,500

 
5,811

 
 
 
 
 
 
 
 
4,500

 
5,811

 BMC Software Finance, Inc.
 
 
 
 Internet software & services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+3.25% (1% floor) cash due 9/10/2022 (13)(21)
 
5.13
%
 
 
 
16,792

 
16,897

 
16,896

 
 
 
 
 
 
 
 
16,897

 
16,896

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

 
828

 
 
 
 
 
 
 
 
638

 
828

 Cablevision Systems Corp.
 
 
 
 Integrated telecommunication services
 
 
 
 
 
 
 Fixed Rate Bond 10.875% cash due 10/15/2025 (11)(21)
 
 
 
 
 
5,897

 
7,015

 
6,944

 
 
 
 
 
 
 
 
7,015

 
6,944

 California Pizza Kitchen, Inc.
 
 
 
Restaurants
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 8/23/2022 (13)(21)
 
7.88
%
 
 
 
4,925

 
4,885

 
4,836

 
 
 
 
 
 
 
 
4,885

 
4,836

See notes to Consolidated Financial Statements.


7

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
March 31, 2018
(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

 Cenegenics, LLC
 
 
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash 2% PIK due 9/30/2019 (22)
 
 
 
 
 
$
28,746

 
$
27,738

 
$
15,813

 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

 
16,898

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

 
2,848

 
 
 
 
 
 
 
 
2,000

 
2,848

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

 
452

 
 
 
 
 
 
 
 
105

 
452

 Datto Inc.
 
 
 
 Technology distributors
 
 
 
 
 
 
 First Lien Term Loan LIBOR+8% (1% floor) cash due 12/7/2022 (13)
 
9.72
%
 
 
 
35,000

 
34,344

 
34,335

 First Lien Revolver LIBOR+8% (1% floor) cash due 12/7/2022 (10)(13)
 
9.72
%
 
 
 

 
(44
)
 
(45
)
 
 
 
 
 
 
 
 
34,300

 
34,290

 DFT Intermediate LLC
 
 
 
 Specialized finance
 
 
 
 
 
 
 First Lien Term Revolver, LIBOR+5.5% (1% floor) cash due 3/1/2022 (13)
 
7.81
%
 
 
 
3,300

 
3,224

 
3,300

 
 
 
 
 
 
 
 
3,224

 
3,300

 Dodge Data & Analytics LLC
 
 
 
Data processing & outsourced services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.75% (1% floor) cash due 10/31/2019 (13)
 
10.50
%
 
 
 
7,128

 
7,128

 
7,092

 500,000 Class A Common Units in Skyline Data, News and Analytics LLC
 
 
 
 
 
 
 
500

 
240

 
 
 
 
 
 
 
 
7,628

 
7,332

 Dominion Diagnostics, LLC
 
 
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 1% PIK due 10/8/2019 (22)
 
 
 
 
 
19,950

 
16,513

 
1,037

 First Lien Term Loan, LIBOR+5% (1% floor) cash due 4/8/2019 (13)
 
6.72
%
 
 
 
47,925

 
36,085

 
36,313

 First Lien Revolver, LIBOR+5% (1% floor) cash due 4/8/2019 (10)(13)
 
6.72
%
 
 
 

 

 
(1,013
)
 
 
 
 
 
 
 
 
52,598

 
36,337

 Edge Fitness, LLC
 
 
 
Leisure facilities
 
 
 
 
 
 
 Delayed Draw Term Loan, LIBOR+7.75% (1% floor) cash due 6/30/2020 (13)
 
10.07
%
 
 
 
5,535

 
5,535

 
5,535

 
 
 
 
 
 
 
 
5,535

 
5,535

 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 (22)
 
 
 
 
 
2,664

 
2,631

 
533

 126,127.80 Class A Common Units
 
 
 
 
 
 
 
126

 

 
 
 
 
 
 
 
 
15,418

 
533

 EOS Fitness Opco Holdings, LLC
 
 
 
Leisure facilities
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.25% (0.75% floor) cash due 12/30/2019 (13)
 
9.92
%
 
 
 
3,601

 
3,601

 
3,637

 First Lien Revolver, LIBOR+8.25% (0.75% floor) cash due 12/30/2019 (13)
 
9.92
%
 
 
 
 
 

 

 487.5 Class A Preferred Units, 12%
 
 
 
 
 
 
 
488

 
716

 12,500 Class B Common Units
 
 
 
 
 
 
 
13

 
655

 
 
 
 
 
 
 
 
4,102

 
5,008

See notes to Consolidated Financial Statements.

8

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
March 31, 2018
(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

 Eton
 
 
 
 
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.5% cash due 3/16/2026 (13)(21)
 
9.51
%
 
 Research & consulting services
 
$
20,000

 
$
19,900

 
$
20,100

 
 
 
 
 
 
 
 
19,900

 
20,100

 ExamSoft Worldwide, Inc.
 
 
 
Internet software & services
 
 
 
 
 
 
 180,707 Class C Units in ExamSoft Investor LLC
 
 
 
 
 
 
 
181

 
128

 
 
 
 
 
 
 
 
181

 
128

 Garretson Firm Resolution Group, Inc.
 
 
 
Diversified support services
 
 
 
 
 
 
 First Lien Revolver, PRIME+5.5% cash due 5/22/2020 (13)
 
10.00
%
 
 
 
711

 
711

 
655

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

 
153

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
 
 
5

 

 
 
 
 
 
 
 
 
1,211

 
808

 GOBP Holdings Inc.
 
 
 
Food retail
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 10/21/2022 (13)(21)
 
10.55
%
 
 
 
4,214

 
4,180

 
4,256

 
 
 
 
 
 
 
 
4,180

 
4,256

 Golden State Medical Supply, Inc.
 
 
 
Pharmaceuticals
 
 
 
 
 
 
 Mezzanine Term Loan, 10% cash 2.5% PIK due 4/24/2021
 
 
 
 
 
15,001

 
15,001

 
14,932

 
 
 
 
 
 
 
 
15,001

 
14,932

 HC2 Holdings Inc.
 
 
 
 Multi-sector holdings
 
 
 
 
 
 
 Fixed Rate Bond 11% cash due 12/1/2019 (11)(21)