10-Q 1 ocsl-063018x10xq.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 June 30, 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 August 7, 2018.





OAKTREE SPECIALTY LENDING CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 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)
 
 
June 30, 2018 (unaudited)
 
September 30, 2017
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost June 30, 2018: $266,097; cost September 30, 2017: $444,826)
 
$
223,421

 
$
305,271

Affiliate investments (cost June 30, 2018: $1,080; cost September 30, 2017: $33,743)
 
2,161

 
36,983

Non-control/Non-affiliate investments (cost June 30, 2018: $1,416,632; cost September 30, 2017: $1,279,096)
 
1,294,936

 
1,199,501

Total investments at fair value (cost June 30, 2018: $1,683,809; cost September 30, 2017: $1,757,665)
 
1,520,518

 
1,541,755

Cash and cash equivalents
 
56,615

 
53,018

Restricted cash
 
499

 
6,895

Interest, dividends and fees receivable
 
8,102

 
6,892

Due from portfolio companies
 
15,757

 
5,670

Receivables from unsettled transactions
 
22,538

 

Deferred financing costs
 
5,620

 
1,304

Other assets
 
3,108

 
514

Total assets
 
$
1,632,757

 
$
1,616,048

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
2,714

 
$
2,417

Base management fee and Part I incentive fee payable
 
7,094

 
6,750

Due to affiliate
 
4,230

 
1,815

Interest payable
 
6,338

 
3,167

Amounts payable to syndication partners
 
301

 
1

Director fees payable
 

 
184

Payables from unsettled transactions
 
166,903

 
58,691

Credit facilities payable
 
211,000

 
255,995

Unsecured notes payable (net of $3,851 and $4,737 of unamortized financing costs as of June 30, 2018 and September 30, 2017, respectively)
 
386,132

 
406,115

Secured borrowings at fair value (proceeds June 30, 2018: $12,623; proceeds September 30, 2017: $13,489)
 
9,950

 
13,256

Total liabilities
 
794,662

 
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 June 30, 2018 and September 30, 2017
 
1,409

 
1,409

Additional paid-in-capital
 
1,579,278

 
1,579,278

Net unrealized depreciation on investments, secured borrowings and foreign currency
 
(160,267
)
 
(215,677
)
Net realized loss on investments, secured borrowings and unsecured notes payable
 
(563,004
)
 
(478,010
)
Accumulated overdistributed net investment income
 
(19,321
)
 
(19,343
)
Total net assets (equivalent to $5.95 and $6.16 per common share as of June 30, 2018 and September 30, 2017, respectively) (Note 12)
 
838,095

 
867,657

Total liabilities and net assets
 
$
1,632,757

 
$
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
June 30, 2018
 
Three months ended
June 30, 2017
 
Nine months ended
June 30, 2018
 
Nine months ended
June 30, 2017
Interest income:
 
 
 
 
 
 
 
 
Control investments
 
$
2,737

 
$
3,710

 
$
9,011

 
$
11,104

Affiliate investments
 
161

 
977

 
2,027

 
2,961

Non-control/Non-affiliate investments
 
23,629

 
33,892

 
71,727

 
106,409

Interest on cash and cash equivalents
 
107

 
214

 
440

 
497

Total interest income
 
26,634

 
38,793

 
83,205

 
120,971

PIK interest income:
 
 
 
 
 
 
 
 
Control investments
 
1,045

 
1,523

 
3,446

 
5,445

Affiliate investments
 
52

 
195

 
416

 
592

Non-control/Non-affiliate investments
 
360

 
855

 
1,408

 
2,928

Total PIK interest income
 
1,457

 
2,573

 
5,270

 
8,965

Fee income:
 
 
 
 
 
 
 
 
Control investments
 
697

 
307

 
945

 
929

Affiliate investments
 

 
12

 
48

 
741

Non-control/Non-affiliate investments
 
1,728

 
2,085

 
6,405

 
7,155

Total fee income
 
2,425

 
2,404

 
7,398

 
8,825

Dividend and other income:
 
 
 
 
 
 
 
 
Control investments
 
1,331

 
1,080

 
4,629

 
3,384

Non-control/Non-affiliate investments
 

 
67

 

 
87

Total dividend and other income
 
1,331

 
1,147

 
4,629

 
3,471

Total investment income
 
31,847

 
44,917

 
100,502

 
142,232

Expenses:
 
 
 
 
 
 
 
 
Base management fee
 
5,909

 
7,912

 
16,885

 
24,561

Part I incentive fee
 
2,733

 
3,482

 
6,810

 
10,713

Professional fees
 
924

 
952

 
4,837

 
3,739

Board of Directors fees
 
154

 
205

 
507

 
595

Interest expense
 
8,291

 
11,262

 
26,405

 
37,163

Administrator expense
 
466

 
407

 
1,351

 
1,557

General and administrative expenses
 
488

 
1,367

 
2,326

 
4,154

Loss on legal settlements
 

 

 

 
3

Total expenses
 
18,965

 
25,587

 
59,121

 
82,485

Fees waived
 
(1,548
)
 
(60
)
 
(1,634
)
 
(182
)
Insurance recoveries
 

 

 

 
(1,259
)
Net expenses
 
17,417

 
25,527

 
57,487

 
81,044

Net investment income
 
14,430

 
19,390

 
43,015

 
61,188

Unrealized appreciation (depreciation) on investments and foreign currency:
 
 
 
 
 
 
 
 
Control investments
 
97,000

 
(2,479
)
 
89,825

 
12,030

Affiliate investments
 
72

 
(839
)
 
(2,159
)
 
(1,501
)
Non-control/Non-affiliate investments
 
1,810

 
(9,953
)
 
(34,696
)
 
8,368

Net unrealized appreciation (depreciation) on investments and foreign currency
 
98,882

 
(13,271
)
 
52,970

 
18,897

Net unrealized (appreciation) depreciation on secured borrowings
 
377

 
124

 
2,440

 
(294
)
Realized gain (loss) on investments and secured borrowings:
 
 
 
 
 
 
 
 
Control investments
 
(91,470
)
 
(13,058
)
 
(91,470
)
 
(58,994
)
Affiliate investments
 

 

 
2,048

 

Non-control/Non-affiliate investments
 
2,033

 
758

 
4,548

 
(92,295
)
Net realized loss on investments and secured borrowings
 
(89,437
)
 
(12,300
)
 
(84,874
)
 
(151,289
)
Redemption premium on unsecured notes payable
 

 

 
(120
)
 

Net increase (decrease) in net assets resulting from operations
 
$
24,252

 
$
(6,057
)
 
$
13,431

 
$
(71,498
)
Net investment income per common share — basic and diluted
 
$
0.10

 
$
0.14

 
$
0.31

 
$
0.43

Earnings (loss) per common share — basic and diluted (Note 5)
 
$
0.17

 
$
(0.04
)
 
$
0.10

 
$
(0.50
)
Weighted average common shares outstanding — basic and diluted
 
140,961

 
140,961

 
140,961

 
141,599

Distributions per common share
 
$
0.095

 
$
0.02

 
$
0.305

 
$
0.34

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)

 
 
Nine months ended
June 30, 2018
 
Nine months ended
June 30, 2017
Operations:
 
 
 
 
Net investment income
 
$
43,015

 
$
61,188

Net unrealized appreciation on investments
 
52,970

 
18,897

Net unrealized (appreciation) depreciation on secured borrowings
 
2,440

 
(294
)
Net realized loss on investments and secured borrowings
 
(84,874
)
 
(151,289
)
Redemption premium on unsecured notes payable

 
(120
)
 

Net increase (decrease) in net assets resulting from operations
 
13,431

 
(71,498
)
Stockholder transactions:
 
 
 
 
Contributions from stockholders
 

 
287

Distributions to stockholders
 
(42,993
)
 
(47,827
)
Net decrease in net assets from stockholder transactions
 
(42,993
)
 
(47,540
)
Capital share transactions:
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
1,239

 
2,264

Repurchases of common stock under dividend reinvestment program
 
(1,239
)
 
(2,264
)
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
 
(29,562
)
 
(131,538
)
Net assets at beginning of period
 
867,657

 
1,142,288

Net assets at end of period
 
$
838,095

 
$
1,010,750

Net asset value per common share
 
$
5.95

 
$
7.17

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)

 
 
Nine months ended
June 30, 2018
 
Nine months ended
June 30, 2017
 
Operating activities:
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
$
13,431

 
$
(71,498
)
 
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:
 
 
 
 
 
Net unrealized appreciation on investments
 
(52,970
)
 
(18,897
)
 
Net unrealized appreciation (depreciation) on secured borrowings
 
(2,440
)
 
294

 
Net realized loss on investments and secured borrowings
 
84,874

 
151,289

 
Redemption premium on unsecured notes payable
 
120

 

 
PIK interest income, net of PIK interest income collected
 
(3,977
)
 
(4,966
)
 
Non-cash fee income
 

 
(189
)
 
Accretion of original issue discount on investments
 
(4,779
)
 
(10,077
)
 
Accretion of original issue discount on unsecured notes payable
 
198

 
200

 
Amortization of deferred financing costs
 
2,745

 
3,234

 
Purchases of investments and net revolver activity
 
(836,885
)
 
(400,295
)
 
Principal payments received on investments (scheduled payments)
 
28,222

 
21,326

 
Principal payments received on investments (payoffs)
 
594,379

 
577,909

 
Proceeds from the sale of investments
 
212,374

 
58,853

 
Changes in operating assets and liabilities:
 
 
 
 
 
(Increase) decrease in restricted cash
 
6,396

 
(2,614
)
 
(Increase) decrease in interest, dividends and fees receivable
 
(1,210
)
 
7,410

 
Increase in due from portfolio companies
 
(10,087
)
 
(2,410
)
 
(Increase) decrease in receivables from unsettled transactions
 
(22,538
)
 
5,346

 
Decrease in insurance recoveries receivable
 

 
19,729

 
Increase in other assets
 
(2,594
)
 
(1,463
)
 
Increase in accounts payable, accrued expenses and other liabilities
 
297

 
450

 
Increase (decrease) in base management fee and Part I incentive fee payable
 
344

 
(6,873
)
 
Increase (decrease) in due to affiliate
 
2,415

 
(834
)
 
Increase in interest payable
 
3,171

 
4,317

 
Increase in payables from unsettled transactions
 
108,212

 
17,515

 
Decrease in director fees payable
 
(184
)
 
(362
)
 
Decrease in legal settlements payable
 

 
(19,500
)
 
Increase (decrease) in amounts payable to syndication partners
 
300

 
(754
)
 
Net cash provided by operating activities
 
119,814

 
327,140

 
Financing activities:
 
 
 
 
 
Contributions received in cash
 

 
287

 
Distributions paid in cash
 
(41,754
)
 
(45,563
)
 
Repayments of borrowings under SBA debentures payable
 

 
(65,300
)
 
Borrowings under credit facilities
 
309,000

 
219,082

 
Repayments of borrowings under credit facilities
 
(353,995
)
 
(389,882
)
 
Repurchase of unsecured notes
 
(21,188
)
 

 
Repayments of secured borrowings
 
(866
)
 
(5,119
)
 
Repurchases of common stock under stock repurchase program
 

 
(12,500
)
 
Repurchases of common stock under dividend reinvestment plan
 
(1,239
)
 
(2,264
)
 
Deferred financing costs paid
 
(6,175
)
 
(182
)
 
Net cash used by financing activities
 
(116,217
)
 
(301,441
)
 
Net increase in cash and cash equivalents
 
3,597

 
25,699

 
Cash and cash equivalents, beginning of period
 
53,018

 
117,923

 
Cash and cash equivalents, end of period
 
$
56,615

 
$
143,622

 
Supplemental information:
 
 
 
 
 
Cash paid for interest
 
$
20,291

 
$
29,413

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

 
$
(165,759
)
 
Proceeds from investment restructurings
 
$

 
$
165,759

 
Non-cash financing activities:
 
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
1,239

 
$
2,264

 
See notes to Consolidated Financial Statements.

4

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 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)
 
 
 
 
 
 
 
 
 
 
 First Star Bermuda Aviation Limited (11)(16)
 
 
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 8/19/2018
 
 
 
 
 
$
11,868

 
$
11,563

 
$
11,868

 100% equity interest (6)
 
 
 
 
 
 
 
5,192

 
5,646

 
 
 
 
 
 
 
 
16,755

 
17,514

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

 
24,686

 
32,510

 100% equity interest (6)
 
 
 
 
 
 
 
8,500

 
4,385

 
 
 
 
 
 
 
 
33,186

 
36,895

 Keypath Education, Inc. (26)
 
 
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 4/3/2022 (13)
 
9.33
%
 
 
 
19,960

 
19,960

 
19,960

 First Lien Revolver, LIBOR+7% (1% floor) cash due 4/3/2022 (13)
 
9.33
%
 
 
 

 

 

 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)
 
7.33
%
 
 
 
4,107

 
4,107

 
4,107

 Second Lien Term Loan, LIBOR+5.1% (1% floor) cash due 9/17/2021 (13)
 
7.43
%
 
 
 
1,753

 
1,753

 
1,753

 First Lien Revolver, LIBOR+5% (1% floor) cash due 3/17/2021 (13)
 
7.33
%
 
 
 
1,009

 
1,009

 
1,009

 50.087 Class A Common Units in New IPT Holdings, LLC
 
 
 
 
 
 
 

 
2,291

 
 
 
 
 
 
 
 
6,869

 
9,160

 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)
 
7.93
%
 
 
 
100,444

 
100,444

 
100,444

 Class B Mezzanine Secured Deferrable Fixed Rate Notes, 10% cash due 2036 in SLF Repack Issuer 2016 LLC
 
 
 
 
 
29,532

 
29,532

 
29,532

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

 
1,932

 
 
 
 
 
 
 
 
146,148

 
131,908

 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 (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

 

 Total Control Investments (26.7% of net assets)
 
 
 
 
 
 
 
$
266,097

 
$
223,421

 
 
 
 
 
 
 
 
 
 
 
 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
 
 
Healthcare services
 
 
 
 
 
 
 1,080,399 Shares of Series A Preferred Stock, 10%
 
 
 
 
 
 
 
$
1,080

 
$
2,161

 
 
 
 
 
 
 
 
1,080

 
2,161

 Total Affiliate Investments (0.3% of net assets)
 
 
 
 
 
 
 
$
1,080

 
$
2,161

See notes to Consolidated Financial Statements.


5

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 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

 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)
 
7.98
%
 
 
 
$
5,953

 
$
5,900

 
$
5,952

 First Lien Revolver, LIBOR+6% (1% floor) cash due 6/7/2021 (10)(13)
 
7.98
%
 
 
 
 
 
(17
)
 

 
 
 
 
 
 
 
 
5,883

 
5,952

 99 Cents Only Stores LLC
 
 
 
 General merchandise stores
 
 
 
 
 
 
 First Lien Term Loan LIBOR+5% cash 1.5% PIK due 1/13/2022 (13)(21)
 
7.32
%
 
 
 
23,801

 
22,861

 
22,631

 
 
 
 
 
 
 
 
22,861

 
22,631

 Access CIG LLC
 
 
 
Diversified support services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.75% cash due 2/14/2026 (13)(21)
 
9.84
%
 
 
 
14,235

 
14,114

 
14,283

 Second Lien Delayed Draw Term Loan, LIBOR+7.75% cash due 2/14/2026 (13)(21)
 
9.84
%
 
 
 
 
 

 
2

 
 
 
 
 
 
 
 
14,114

 
14,285

 ACON Equity Partners III, LP
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 0.13% limited partnership interest (11)(25)
 
 
 
 
 
 
 
653

 
680

 
 
 
 
 
 
 
 
653

 
680

 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 8/31/2018 (13)(22)
 
10.67
%
 
 
 
24,654

 
22,596

 

 
 
 
 
 
 
 
 
22,596

 

 AdVenture Interactive, Corp. (26)
 
 
 
Advertising
 
 
 
 
 
 
 9,073 shares of common stock
 
 
 
 
 
 
 
13,611

 
6,557

 
 
 
 
 
 
 
 
13,611

 
6,557

AI Ladder (Luxembourg) Subco S.a.r.l
 
 
 
 Electrical components & equipment
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.5% cash due 5/4/2025 (11)(13)(21)
 
6.82
%
 
 
 
40,000

 
38,800

 
39,933

 
 
 
 
 
 
 
 
38,800

 
39,933

 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

 

 Airxcel, Inc.
 
 
 
 Household appliances
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+4.5% cash due 4/28/2025 (13)(21)
 
6.59
%
 
 
 
8,000

 
7,922

 
7,990

 
 
 
 
 
 
 
 
7,922

 
7,990

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

 
14,522

 
15,188

 Fixed Rate Bond 8% cash due 2/15/2023 (11)(21)
 
 
 
 
 
16,000

 
15,893

 
16,320

 
 
 
 
 
 
 
 
30,415

 
31,508

 Allen Media LLC
 
 
 
 Movies & entertainment
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+9.25% (1% floor) cash due 3/22/2025 (13)
 
11.34
%
 
 
 
63,015

 
61,502

 
61,755

 
 
 
 
 
 
 
 
61,502

 
61,755

 Allied Universal Holdco LLC
 
 
 
 Security & alarm services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+3.75% (1% floor) cash due 7/28/2022 (13)(21)
 
5.84
%
 
 
 
11,878

 
11,944

 
11,724

 Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 7/28/2023 (13)(21)
 
10.60
%
 
 
 
1,149

 
1,168

 
1,143

 
 
 
 
 
 
 
 
13,112

 
12,867


See notes to Consolidated Financial Statements.

6

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 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

 
$
3,056

 
$
3,000

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

 
2,014

 
1,793

 
 
 
 
 
 
 
 
5,070

 
4,793

 Ancile Solutions, Inc.
 
 
 
 Internet software & services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 6/30/2021 (13)
 
9.33
%
 
 
 
9,715

 
9,545

 
9,647

 
 
 
 
 
 
 
 
9,545

 
9,647

 Aptos, Inc.
 
 
 
Data processing & outsourced services
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+6.75% (1% floor) cash due 9/1/2022 (13)
 
8.84
%
 
 
 
5,342

 
5,266

 
5,288

 
 
 
 
 
 
 
 
5,266

 
5,288

 APX Group Inc
 
 
 
 Electrical components & equipment
 
 
 
 
 
 
 Fixed Rate Bond 6.375% cash due 12/1/2019 (21)
 
 
 
 
 
6,904

 
6,880

 
6,921

 
 
 
 
 
 
 
 
6,880

 
6,921

 Aretec Group Inc
 
 
 
 Investment banking & brokerage
 
 
 
 
 
 
 Second Lien Exit Term Loan, LIBOR+5.5% (1% Floor) cash due 5/23/2021 (13)(21)
 
6.50
%
 
 
 
15,266

 
15,323

 
15,323

 
 
 
 
 
 
 
 
15,323

 
15,323

 Asset International, Inc.
 
 
 
 Research & consulting services
 
 
 
 
 
 
 Second Lien Term Loan LIBOR+9.25% (1% floor) cash due 6/29/2025 (13)
11.58
%
 
 
 
15,000

 
14,679

 
14,842

 
 
 
 
 
 
 
 
14,679

 
14,842

 Asurion, LLC
 
 
 
 Property & casualty insurance
 
 
 
 
 
 
 First Lien Term Loan B2, LIBOR+6.5% (1% floor) cash due 8/4/2025 (13)(21)
 
8.59
%
 
 
 
22,000

 
21,945

 
22,358

 
 
 
 
 
 
 
 
21,945

 
22,358

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

 
7,982

 
7,934

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

 
2,971

 
3,030

 
 
 
 
 
 
 
 
10,953

 
10,964

 BeyondTrust Holdings LLC
 
 
 
Application software
 
 
 
 
 
 
 3.01% Class A membership interests
 
 
 
 
 
 
 
4,500

 
5,979

 
 
 
 
 
 
 
 
4,500

 
5,979

 Blackhawk Network Holdings, Inc.
 
 
 
Data processing & outsourced services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7% (1% Floor) cash due 6/15/2026 (13)(21)
 
9.13
%
 
 
 
26,250

 
25,969

 
26,524

 
 
 
 
 
 
 
 
25,969

 
26,524

 Blueline Rental Finance Corp
 
 
 
 Industrial machinery
 
 
 
 
 
 
 Fixed Rate Bond 9.25% cash due 3/15/2024 (21)
 
 
 
 
 
5,000

 
5,354

 
5,332

 
 
 
 
 
 
 
 
5,354

 
5,332

 BMC Software Finance, Inc.
 
 
 
 Internet software & services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+3.25% (1% floor) cash due 9/10/2022 (13)(21)
 
5.34
%
 
 
 
16,750

 
16,849

 
16,718

 
 
 
 
 
 
 
 
16,849

 
16,718

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

 
6,983

 
6,813

 
 
 
 
 
 
 
 
6,983

 
6,813

See notes to Consolidated Financial Statements.


7

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 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

 California Pizza Kitchen, Inc.
 
 
 
Restaurants
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 8/23/2022 (13)(21)
 
8.10
%
 
 
 
$
4,913

 
$
4,873

 
$
4,822

 
 
 
 
 
 
 
 
4,873

 
4,822

 Cenegenics, LLC
 
 
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash 2% PIK due 9/30/2019 (22)
 
 
 
 
 
28,988

 
27,738

 
16,027

 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

 
17,112

 CITGO Holding Inc.
 
 
 
 Oil & gas refining & marketing
 
 
 
 
 
 
 Fixed Rate Bond 10.75% cash due 2/15/2020 (13)(21)
 
 
 
 
 
21,300

 
22,712

 
22,764

 
 
 
 
 
 
 
 
22,712

 
22,764

 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

 
454

 
 
 
 
 
 
 
 
105

 
454

 Covia Holdings Corporation
 
 
 
 Oil & gas equipment & services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+3.75% (1% Floor) cash due 6/1/2025 (11)(13)(21)
 
6.05
%
 
 
 
8,000

 
8,000

 
8,011

 
 
 
 
 
 
 
 
8,000

 
8,011

 DAE Aviation Holdings
 
 
 
Aerospace & Defense
 
 
 
 
 
 
 Fixed Rate Bond 10% cash due 7/15/2023 (21)
 
 
 
 
 
1,500

 
1,621

 
1,626

 
 
 
 
 
 
 
 
1,621

 
1,626

 Datto Inc.
 
 
 
 Technology distributors
 
 
 
 
 
 
 First Lien Term Loan LIBOR+8% (1% floor) cash due 12/7/2022 (13)
 
10.05
%
 
 
 
35,000

 
34,379

 
34,370

 First Lien Revolver LIBOR+8% (1% floor) cash due 12/7/2022 (10)(13)
 
10.05
%
 
 
 
 
 
(42
)
 
(42
)
 
 
 
 
 
 
 
 
34,337

 
34,328

 DFT Intermediate LLC
 
 
 
 Specialized finance
 
 
 
 
 
 
 First Lien Term Revolver, LIBOR+5.5% (1% floor) cash due 3/1/2022 (13)
 
7.83
%
 
 
 
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)
 
11.06
%
 
 
 
7,018

 
7,018

 
6,981

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

 
240

 
 
 
 
 
 
 
 
7,518

 
7,221

 Dominion Diagnostics, LLC
 
 
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 1% PIK due 10/8/2019 (22)
 
 
 
 
 
20,001

 
15,957

 
1,040

 First Lien Term Loan, LIBOR+5% (1% floor) cash due 4/8/2019 (13)
 
7.35
%
 
 
 
47,180

 
35,524

 
38,164

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


 
 
 

 

 
(799
)
 
 
 
 
 
 
 
 
51,481

 
38,405

 Edmentum, Inc.
 
 
 
Education services
 
 
 
 
 
 
 Unsecured Senior PIK Note, 8.5% PIK due 6/9/2020 (23)
 
 
 
 
 
2,594

 
2,434

 

 Unsecured Junior PIK Note, 10% PIK due 6/9/2020 (23)
 
 
 
 
 
12,180

 
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

See notes to Consolidated Financial Statements.

8

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 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

 EOS Fitness Opco Holdings, LLC
 
 
 
Leisure facilities
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.25% (0.75% floor) cash due 12/30/2019 (13)
 
10.24
%
 
 
 
$
3,552

 
$
3,552

 
$
3,587

 First Lien Revolver, LIBOR+8.25% (0.75% floor) cash due 12/30/2019 (13)
 
10.24
%
 
 
 
 
 

 

 487.5 Class A Preferred Units, 12%
 
 
 
 
 
 
 
488

 
737

 12,500 Class B Common Units
 
 
 
 
 
 
 
13

 
829

 
 
 
 
 
 
 
 
4,053

 
5,153

 Eton
 
 
 
 Research & consulting services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.5% cash due 3/16/2026 (13)(21)
 
9.48
%
 
 
 
20,000

 
19,901

 
20,125

 
 
 
 
 
 
 
 
19,901

 
20,125

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

 

 
 
 
 
 
 
 
 
181

 

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


 
 
 
711

 
711

 
625

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

 

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
 
 
5

 

 
 
 
 
 
 
 
 
1,211

 
625

 Gentiva Health Services, Inc.
 
 
 
 Health care services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7% 6/21/2026 (13)(21)
 
9.30
%
 
 
 
14,500

 
14,400

 
14,718

 
 
 
 
 
 
 
 
14,400

 
14,718

 GKD Index Partners LLC
 
 
 
 Specialized finance
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.25% (1% Floor) cash due 6/29/2023 (13)
 
9.58
%
 
 
 
24,844

 
24,597

 
24,596

 First Lien Revolver, LIBOR+7.25% (1% Floor) cash due 6/29/2023 (13)
 
9.58
%
 
 
 
578

 
566

 
566

 
 
 
 
 
 
 
 
25,163

 
25,162

 GOBP Holdings Inc.
 
 
 
Food retail
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 10/21/2022 (13)(21)
 
10.34
%
 
 
 
4,214

 
4,182

 
4,256

 
 
 
 
 
 
 
 
4,182

 
4,256

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

 
15,001

 
14,988

 
 
 
 
 
 
 
 
15,001

 
14,988