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10-Q
OAKTREE SPECIALTY LENDING CORP filed this Form 10-Q on 02/07/2019
Entire Document
 
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, 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 period that 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 every Interactive Data File required to be submitted 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 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.
Large accelerated filer  ¨
 
Accelerated filer  þ
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
 
 
 
 
 
 
 
Emerging growth company  ¨

 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    YES  ¨     NO  þ
The registrant had 140,960,651 shares of common stock outstanding as of February 5, 2019.





OAKTREE SPECIALTY LENDING CORPORATION
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 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)
 
 
December 31, 2018 (unaudited)
 
September 30, 2018
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost December 31, 2018: $212,583; cost September 30, 2018: $213,470)
 
$
190,167

 
$
196,874

Affiliate investments (cost December 31, 2018: $2,659; cost September 30, 2018: $1,080)
 
3,740

 
2,161

Non-control/Non-affiliate investments (cost December 31, 2018: $1,372,068; cost September 30, 2018: $1,392,383)
 
1,270,978

 
1,292,166

Total investments at fair value (cost December 31, 2018: $1,587,310; cost September 30, 2018: $1,606,933)
 
1,464,885

 
1,491,201

Cash and cash equivalents
 
56,186

 
13,380

Restricted cash
 
470

 
109

Interest, dividends and fees receivable
 
9,981

 
10,272

Due from portfolio companies
 
2,122

 
1,357

Receivables from unsettled transactions
 

 
26,760

Deferred financing costs
 
4,798

 
5,209

Derivative asset at fair value
 

 
162

Other assets
 
3,082

 
3,008

Total assets
 
$
1,541,524

 
$
1,551,458

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
2,362

 
$
3,581

Base management fee and incentive fee payable
 
8,370

 
8,223

Due to affiliate
 
3,553

 
3,274

Interest payable
 
6,233

 
3,365

Payable to syndication partners
 
379

 
109

Director fees payable
 
68

 

Payables from unsettled transactions
 
40,309

 
37,236

Derivative liability at fair value
 
190

 

Deferred tax liability
 
557

 
422

Credit facility payable
 
211,000

 
241,000

Unsecured notes payable (net of $3,196 and $3,483 of unamortized financing costs as of December 31, 2018 and September 30, 2018, respectively)
 
386,839

 
386,485

Secured borrowings at fair value (proceeds December 31, 2018: $11,869; proceeds September 30, 2018: $12,314)
 
9,302

 
9,728

Total liabilities
 
669,162

 
693,423

Commitments and contingencies (Note 16)
 

 
 
Net assets:
 
 
 
 
Common stock, $0.01 par value per share, 250,000 shares authorized; 140,961 shares issued and outstanding as of December 31, 2018 and September 30, 2018
 
1,409

 
1,409

Additional paid-in-capital
 
1,492,739

 
1,492,739

Accumulated overdistributed earnings
 
(621,786
)
 
(636,113
)
Total net assets (equivalent to $6.19 and $6.09 per common share as of December 31, 2018 and September 30, 2018, respectively) (Note 12)
 
872,362

 
858,035

Total liabilities and net assets
 
$
1,541,524

 
$
1,551,458

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, 2018
 
Three months ended
December 31, 2017
Interest income:
 
 
 
 
Control investments
 
$
3,339

 
$
3,203

Affiliate investments
 
13

 
949

Non-control/Non-affiliate investments
 
32,167

 
25,565

Interest on cash and cash equivalents
 
270

 
221

Total interest income
 
35,789

 
29,938

PIK interest income:
 
 
 
 
Control investments
 
67

 
1,191

Affiliate investments
 

 
176

Non-control/Non-affiliate investments
 
765

 
500

Total PIK interest income
 
832

 
1,867

Fee income:
 
 
 
 
Control investments
 
6

 
120

Affiliate investments
 
4

 
4

Non-control/Non-affiliate investments
 
1,192

 
907

Total fee income
 
1,202

 
1,031

Dividend and other income:
 
 
 
 
Control investments
 
453

 
1,040

Total dividend and other income
 
453

 
1,040

Total investment income
 
38,276

 
33,876

Expenses:
 
 
 
 
Base management fee
 
5,568

 
5,590

Part I incentive fee
 
3,728

 
830

Part II incentive fee
 
1,820

 

Professional fees
 
966

 
2,898

Directors fees
 
143

 
176

Interest expense
 
8,904

 
9,584

Administrator expense
 
763

 
494

General and administrative expenses
 
631

 
1,116

Total expenses
 
22,523

 
20,688

Fees waived
 
(1,564
)
 
(134
)
Net expenses
 
20,959

 
20,554

Net investment income
 
17,317

 
13,322

Unrealized appreciation (depreciation):
 
 
 
 
Control investments
 
(5,820
)
 
(1,326
)
Affiliate investments
 

 
(168
)
Non-control/Non-affiliate investments
 
(784
)
 
(43,633
)
Secured borrowings
 
(19
)
 
1,655

Foreign currency forward contracts
 
(352
)
 

Net unrealized appreciation (depreciation)
 
(6,975
)
 
(43,472
)
Realized gains (losses):
 
 
 
 
Non-control/Non-affiliate investments
 
16,761

 
(291
)
Foreign currency forward contracts
 
1,201

 

Net realized gains (losses)
 
17,962

 
(291
)
Provision for income taxes
 
(586
)
 

Net realized and unrealized gains (losses), net of taxes
 
10,401

 
(43,763
)
Net increase (decrease) in net assets resulting from operations
 
$
27,718

 
$
(30,441
)
Net investment income per common share — basic and diluted
 
$
0.12

 
$
0.09

Earnings (loss) per common share — basic and diluted (Note 5)
 
$
0.20

 
$
(0.22
)
Weighted average common shares outstanding — basic and diluted
 
140,961

 
140,961


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, 2018
 
Three months ended
December 31, 2017
Operations:
 
 
 
 
Net investment income
 
$
17,317

 
$
13,322

Net unrealized appreciation (depreciation)
 
(6,975
)
 
(43,472
)
Net realized gains (losses)
 
17,962

 
(291
)
Provision for income taxes
 
(586
)
 

Net increase (decrease) in net assets resulting from operations
 
27,718

 
(30,441
)
Stockholder transactions:
 
 
 
 
Distributions to stockholders
 
(13,391
)
 
(17,621
)
Net decrease in net assets from stockholder transactions
 
(13,391
)
 
(17,621
)
Capital share transactions:
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
384

 
294

Repurchases of common stock under dividend reinvestment program
 
(384
)
 
(294
)
Net increase (decrease) in net assets from capital share transactions
 

 

Total increase (decrease) in net assets
 
14,327

 
(48,062
)
Net assets at beginning of period
 
858,035

 
867,657

Net assets at end of period
 
$
872,362

 
$
819,595

Net asset value per common share
 
$
6.19

 
$
5.81

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, 2018
 
Three months ended
December 31, 2017
Operating activities:
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
$
27,718

 
$
(30,441
)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:
 
 
 
 
Net change in unrealized (appreciation) depreciation
 
6,975

 
43,472

Net realized (gains) losses
 
(17,962
)
 
291

PIK interest income, net of PIK interest income collected
 
(832
)
 
(764
)
Accretion of original issue discount on investments
 
(7,518
)
 
(2,997
)
Accretion of original issue discount on unsecured notes payable
 
66

 
66

Amortization of deferred financing costs
 
699

 
1,341

Deferred taxes
 
135

 

Purchases of investments and net revolver activity
 
(162,422
)
 
(200,166
)
Principal payments received on investments (scheduled payments)
 
5,701

 
14,149

Principal payments received on investments (payoffs)
 
98,842

 
196,415

Proceeds from the sale of investments
 
103,783

 
74,296

Changes in operating assets and liabilities:
 
 
 
 
(Increase) decrease in interest, dividends and fees receivable
 
291

 
(2,190
)
(Increase) decrease in due from portfolio companies
 
(765
)
 
302

(Increase) decrease in receivables from unsettled transactions
 
26,760

 
(8,869
)
(Increase) decrease in other assets
 
(74
)
 
(2,746
)
Increase (decrease) in accounts payable, accrued expenses and other liabilities
 
(1,219
)
 
1,073

Increase (decrease) in base management fee and incentive fee payable
 
147

 
(464
)
Increase (decrease) in due to affiliate
 
279

 
(281
)
Increase (decrease) in interest payable
 
2,868

 
3,380

Increase (decrease) in payables from unsettled transactions
 
3,073

 
(25,226
)
Increase (decrease) in director fees payable
 
68

 
(8
)
Increase (decrease) in amounts payable to syndication partners
 
270

 
(1
)
Net cash provided by operating activities
 
86,883

 
60,632

Financing activities:
 
 
 
 
Distributions paid in cash
 
(13,007
)
 
(17,327
)
Borrowings under credit facilities
 

 
35,000

Repayments of borrowings under credit facilities
 
(30,000
)
 
(85,995
)
Repayments of secured borrowings
 
(325
)
 

Repurchases of common stock under dividend reinvestment plan
 
(384
)
 
(294
)
Deferred financing costs paid
 

 
(6,175
)
Net cash used in financing activities
 
(43,716
)
 
(74,791
)
Net increase (decrease) in cash and cash equivalents and restricted cash
 
43,167

 
(14,159
)
Cash and cash equivalents and restricted cash, beginning of period
 
13,489

 
59,913

Cash and cash equivalents and restricted cash, end of period
 
$
56,656

 
$
45,754

Supplemental information:
 
 
 
 
Cash paid for interest
 
$
5,272

 
$
4,797

Non-cash financing activities:
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
384

 
$
294

 
 
 
 
 
Reconciliation to the Consolidated Statements of Assets and Liabilities
 
December 31, 2018
 
September 30, 2018
Cash and cash equivalents
 
$
56,186

 
$
13,380

Restricted cash
 
470

 
109

Total cash and cash equivalents and restricted cash
 
$
56,656

 
$
13,489


See notes to Consolidated Financial Statements.

4

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2018
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
 
 Cash Interest Rate (6)
 
Industry
 
Principal (7)

 
Cost
 
Fair Value
Control Investments (8)(9)
 
 
 
 
 
 
 
 
 
 
 First Star Speir Aviation Limited (10)
 
 
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash due 12/15/2020 (11)
 
 
 
 
 
$
32,510

 
$
23,699

 
$
32,510

 100% equity interest (11)(12)
 
 
 
 
 
 
 
8,500

 
967

 
 
 
 
 
 
 
 
32,199

 
33,477

 Keypath Education, Inc.
 
 
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 4/3/2022 (6)
 
9.80
%
 
 
 
18,146

 
18,146

 
18,146

 First Lien Revolver, LIBOR+7.75% (1% floor) cash due 4/3/2022 (6)(19)
 


 
 
 

 

 

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

 
7,984

 
 
 
 
 
 
 
 
28,794

 
26,130

 New IPT, Inc.
 
 
 
 Oil & gas equipment services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 3/17/2021 (6)
 
7.80
%
 
 
 
4,107

 
4,107

 
4,107

 Second Lien Term Loan, LIBOR+5.1% (1% floor) cash due 9/17/2021 (6)
 
7.90
%
 
 
 
902

 
902

 
903

 First Lien Revolver, LIBOR+5% (1% floor) cash due 3/17/2021 (6)(19)
 
7.80
%
 
 
 
1,009

 
1,009

 
1,009

 50.087 Class A Common Units in New IPT Holdings, LLC
 
 
 
 
 
 
 

 
2,291

 
 
 
 
 
 
 
 
6,018

 
8,310

 Senior Loan Fund JV I, LLC (14)(15)
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 Subordinated Note, LIBOR+7% cash due 12/29/2028 (6)(11)
 
9.45
%
 
 
 
96,250

 
96,250

 
96,250

 87.5% LLC equity interest (11)(16)(19)
 
 
 
 
 
 
 
49,322

 
26,000

 
 
 
 
 
 
 
 
145,572

 
122,250

 Total Control Investments (21.8% of net assets)
 
 
 
 
 
 
 
$
212,583

 
$
190,167

 
 
 
 
 
 
 
 
 
 
 
 Affiliate Investments (17)
 
 
 
 
 
 
 
 
 
 
 Assembled Brands Capital LLC
 
 
 
 Specialized finance
 
 
 
 
 
 
 First Lien Delayed Draw Term Loan, LIBOR+6% cash due 10/17/2023 (6)(19)
 
8.80
%
 
 
 
$
815

 
$
815

 
$
815

 764,376.60 Class A Units
 
 
 
 
 
 
 
764

 
764

 583,190.81 Class B Units
 
 
 
 
 
 
 

 

 
 
 
 
 
 
 
 
1,579

 
1,579

 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 (0.4% of net assets)
 
 
 
 
 
 
 
$
2,659

 
$
3,740

 
 
 
 
 
 
 
 
 
 
 
 Non-Control/Non-Affiliate Investments (18)
 
 
 
 
 
 
 
 
 
 
 4 Over International, LLC
 
 
 
 Commercial printing
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 6/7/2022 (6)
 
8.52
%
 
 
 
$
5,891

 
$
5,846

 
$
5,891

 First Lien Revolver, LIBOR+6% (1% floor) cash due 6/7/2021 (6)(19)
 
 
 
 
 

 
(17
)
 

 
 
 
 
 
 
 
 
5,829

 
5,891

 99 Cents Only Stores LLC
 
 
 
 General merchandise stores
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% cash 1.5% PIK due 1/13/2022 (6)(20)
 
7.75
%
 
 
 
23,865

 
23,059

 
20,763

 
 
 
 
 
 
 
 
23,059

 
20,763

 Access CIG, LLC
 
 
 
Diversified support services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025 (6)(20)
 
6.46
%
 
 
 
5,873

 
5,880

 
5,722

 First Lien Delayed Draw Term Loan, LIBOR+3.75% cash due 2/27/2025 (6)(19)(20)
 


 
 
 

 

 
(13
)
 Second Lien Term Loan, LIBOR+7.75% cash due 2/27/2026 (6)(20)
 
10.46
%
 
 
 
15,000

 
14,879

 
14,863

 
 
 
 
 
 
 
 
20,759

 
20,572

 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 2/28/2019 (6)(21)
 


 
 
 
25,957

 
22,596

 

 
 
 
 
 
 
 
 
22,596

 

See notes to Consolidated Financial Statements.


5

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2018
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
 
 Cash Interest Rate (6)
 
Industry
 
Principal (7)

 
Cost
 
Fair Value
 AdVenture Interactive, Corp.
 
 
 
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 7/9/2025 (6)(11)(20)
 
7.02
%
 
 
 
$
22,036

 
21,416

 
21,857

 
 
 
 
 
 
 
 
21,416

 
21,857

 AI Sirona (Luxembourg) Acquisition S.a.r.l.
 
 
 
 Pharmaceuticals
 
 
 
 
 
 
 Second Lien Term Loan, EURIBOR+7.25% (0% floor) cash due 7/10/2026 (6)(11)(20)
 
7.25
%
 
 
 
17,500

 
20,035

 
19,780

 
 
 
 
 
 
 
 
20,035

 
19,780

 Air Medical Group Holdings, Inc.
 
 
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.25% (1% floor) cash due 3/14/2025 (6)(20)
 
6.75
%
 
 
 
$
6,369

 
6,221

 
5,950

 
 
 
 
 
 
 
 
6,221

 
5,950

 AirStrip Technologies, Inc.
 
 
 
 Application software
 
 
 
 
 
 
 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 (6)(20)
 
7.02
%
 
 
 
7,960

 
7,888

 
7,522

 
 
 
 
 
 
 
 
7,888

 
7,522

 Algeco Scotsman Global Finance Plc
 
 
 
 Construction & engineering
 
 
 
 
 
 
 Fixed Rate Bond 10% cash due 8/15/2023 (11)(20)
 
 
 
 
 
2,561

 
2,602

 
2,388

 Fixed Rate Bond 8% cash due 2/15/2023 (11)(20)
 
 
 
 
 
23,915

 
23,356

 
22,420

 
 
 
 
 
 
 
 
25,958

 
24,808

 Allen Media, LLC
 
 
 
 Movies & entertainment
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+6.5% (1% floor) cash due 8/30/2023 (6)
 
9.21
%
 
 
 
20,000

 
19,529

 
19,426

 
 
 
 
 
 
 
 
19,529

 
19,426

 Allied Universal Holdco LLC
 
 
 
 Security & alarm services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+3.75% (1% floor) cash due 7/28/2022 (6)(20)
 
6.27
%
 
 
 
9,828

 
9,875

 
9,351

 Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 7/28/2023 (6)(20)
 
11.02
%
 
 
 
1,149

 
1,166

 
1,094

 
 
 
 
 
 
 
 
11,041

 
10,445

 Altice France S.A.
 
 
 
 Integrated telecommunication services
 
 
 
 
 
 
 Fixed Rate Bond 8.125% cash due 1/15/2024 (11)(20)
 
 
 
 
 
3,000

 
3,052

 
2,805

 Fixed Rate Bond 7.625% cash due 2/15/2025 (11)(20)
 
 
 
 
 
2,000

 
2,014

 
1,668

 
 
 
 
 
 
 
 
5,066

 
4,473

 Alvotech Holdings S.A.
 
 
 
 Biotechnology
 
 
 
 
 
 
 Fixed Rate Bond 15% PIK due 12/13/2023 (11)
 
 
 
 
 
30,000

 
29,404

 
29,404

 
 
 
 
 
 
 
 
29,404

 
29,404

 Ancile Solutions, Inc.
 
 
 
 Application software
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 6/30/2021 (6)
 
9.80
%
 
 
 
9,456

 
9,320

 
9,399

 
 
 
 
 
 
 
 
9,320

 
9,399

 Asset International, Inc.
 
 
 
 Research & consulting services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.25% (1% floor) cash due 6/29/2025 (6)
 
12.05
%
 
 
 
15,000

 
14,702

 
14,669

 
 
 
 
 
 
 
 
14,702

 
14,669

 Asurion, LLC
 
 
 
 Property & casualty insurance
 
 
 
 
 
 
 First Lien Term Loan B4, LIBOR+3% cash due 8/4/2022 (6)(20)
 
5.52
%
 
 
 
1,834

 
1,811

 
1,767

 Second Lien Term Loan B2, LIBOR+6.5% (1% floor) cash due 8/4/2025 (6)(20)
 
9.02
%
 
 
 
22,000

 
21,948

 
21,821

 
 
 
 
 
 
 
 
23,759

 
23,588

See notes to Consolidated Financial Statements.

6

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2018
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
 
 Cash Interest Rate (6)
 
Industry
 
Principal (7)

 
Cost
 
Fair Value
 Avantor Inc.
 
 
 
 Healthcare distributors
 
 
 
 
 
 
 Fixed Rate Bond 9% cash due 10/1/2025 (20)
 
 
 
 
 
$
3,000

 
$
2,972

 
$
3,008

 
 
 
 
 
 
 
 
2,972

 
3,008

 Belk Inc.
 
 
 
 Department stores
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.75% (1% floor) cash due 12/12/2022 (6)(20)
 
7.36
%
 
 
 
660

 
574

 
535

 
 
 
 
 
 
 
 
574

 
535

 Blackhawk Network Holdings, Inc.
 
 
 
Data processing & outsourced services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7% (1% floor) cash due 6/15/2026 (6)(20)
 
9.50
%
 
 
 
26,250

 
25,987

 
25,900

 
 
 
 
 
 
 
 
25,987

 
25,900

 Boxer Parent Company Inc.
 
 
 
 Systems software
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.25% cash due 10/2/2025 (6)(20)
 
7.05
%
 
 
 
11,013

 
10,902

 
10,650

 
 
 
 
 
 
 
 
10,902

 
10,650

 California Pizza Kitchen, Inc.
 
 
 
Restaurants
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 8/23/2022 (6)(20)
 
8.53
%
 
 
 
3,146

 
3,121

 
3,060

 
 
 
 
 
 
 
 
3,121

 
3,060

 Cenegenics, LLC
 
 
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash 2% PIK due 9/30/2019 (21)
 


 
 
 
29,181

 
27,738

 
6,029

 First Lien Revolver, 15% cash due 9/30/2019 (19)(21)
 


 
 
 
2,203

 
2,203

 
219

 452,914.87 Common Units in Cenegenics, LLC
 
 
 
 
 
 
 
598

 

 345,380.141 Preferred Units in Cenegenics, LLC
 
 
 
 
 
 
 
300

 

 
 
 
 
 
 
 
 
30,839

 
6,248

 CITGO Holdings Inc.
 
 
 
 Oil & gas refining & marketing
 
 
 
 
 
 
 Fixed Rate Bond 10.75% cash due 2/15/2020 (20)
 
 
 
 
 
21,300

 
22,272

 
21,779

 
 
 
 
 
 
 
 
22,272

 
21,779

 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

 
433

 
 
 
 
 
 
 
 
105

 
433

 Covia Holdings Corporation
 
 
 
 Oil & gas equipment & services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+3.75% (1% floor) cash due 6/1/2025 (6)(11)(20)
 
6.55
%
 
 
 
7,960

 
7,960

 
5,811

 
 
 
 
 
 
 
 
7,960

 
5,811

 DAE Aviation Holdings
 
 
 
Aerospace & defense
 
 
 
 
 
 
 Fixed Rate Bond 10% cash due 7/15/2023 (20)
 
 
 
 
 
1,500

 
1,611

 
1,605

 
 
 
 
 
 
 
 
1,611

 
1,605

 Datto Inc.
 
 
 
 Technology distributors
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8% (1% floor) cash due 12/7/2022 (6)
 
10.46
%
 
 
 
35,000

 
34,450

 
34,160

 First Lien Revolver, LIBOR+8% (1% floor) cash due 12/7/2022 (6)(19)
 


 
 
 

 
(37
)
 
(57
)
 
 
 
 
 
 
 
 
34,413

 
34,103

 DigiCert, Inc.
 
 
 
 Internet services & infrastructure
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4% (1% floor) cash due 10/31/2024 (6)(20)
 
6.52
%
 
 
 
4,254

 
4,211

 
4,180

 
 
 
 
 
 
 
 
4,211

 
4,180

See notes to Consolidated Financial Statements.


7

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2018
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
 
 Cash Interest Rate (6)
 
Industry
 
Principal (7)

 
Cost
 
Fair Value
 Dominion Diagnostics, LLC
 
 
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 1% PIK due 10/18/2019 (21)
 
 
 
 
 
$
20,120

 
$
14,840

 
$
8,968

 First Lien Term Loan, LIBOR+5% (1% floor) cash due 4/8/2019 (6)
 
7.45
%
 
 
 
45,691

 
39,809

 
45,691

 First Lien Revolver, LIBOR+5% (1% floor) cash due 4/8/2019 (6)(19)
 
7.45
%
 
 
 
1,742

 
1,742

 
1,742

 
 
 
 
 
 
 
 
56,391

 
56,401

 Eagleview Technology Corporation
 
 
 
 Application software
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.5% (1% floor) cash due 8/14/2026 (6)
 
9.96
%
 
 
 
12,000

 
11,880

 
11,760

 
 
 
 
 
 
 
 
11,880

 
11,760

 EHR Canada, LLC
 
 
 
 Food retail
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8% (1% floor) cash due 9/28/2020 (6)
 
10.80
%
 
 
 
23,086

 
22,695

 
22,901

 
 
 
 
 
 
 
 
22,695

 
22,901

 EOS Fitness Opco Holdings, LLC
 
 
 
Leisure facilities
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.25% (0.75% floor) cash due 12/30/2019 (6)
 
10.60
%
 
 
 
3,502

 
3,502

 
3,503

 First Lien Revolver, LIBOR+8.25% (0.75% floor) cash due 12/30/2019 (6)(19)
 
 
 
 
 

 

 

 487.5 Class A Preferred Units, 12%
 
 
 
 
 
 
 
488

 
782

 12,500 Class B Common Units
 
 
 
 
 
 
 
13

 
1,052

 
 
 
 
 
 
 
 
4,003

 
5,337

 Equitrans Midstream Corp.
 
 
 
 Oil & gas storage & transportation
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.5% cash due 1/31/2024 (6)(11)(20)
 
7.03
%
 
 
 
12,000

 
11,640

 
11,770

 
 
 
 
 
 
 
 
11,640

 
11,770

 Eton
 
 
 
 Research & consulting services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.5% (0% floor) cash due 5/1/2026 (6)(20)
 
10.02
%
 
 
 
20,000

 
19,908

 
20,100

 
 
 
 
 
 
 
 
19,908

 
20,100

 ExamSoft Worldwide, Inc.
 
 
 
 Application software
 
 
 
 
 
 
 180,707 Class C Units in ExamSoft Investor LLC
 
 
 
 
 
 
 
181

 

 
 
 
 
 
 
 
 
181

 

 Gentiva Health Services, Inc.
 
 
 
 Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7% cash due 7/2/2026 (6)(20)
 
9.56
%
 
 
 
14,500

 
14,404

 
14,500

 
 
 
 
 
 
 
 
14,404

 
14,500

 GI Chill Acquisition LLC
 
 
 
 Managed healthcare
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+4% cash due 8/6/2025 (6)
 
6.80
%
 
 
 
17,955

 
17,865

 
17,955

 Second Lien Term Loan, LIBOR+7.5% cash due 8/6/2026 (6)
 
10.30
%
 
 
 
10,000

 
9,905

 
10,000

 
 
 
 
 
 
 
 
27,770

 
27,955

 GKD Index Partners, LLC
 
 
 
 Specialized finance
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.25% (1% floor) cash due 6/29/2023 (6)
 
10.05
%
 
 
 
23,913

 
23,698

 
23,482

 First Lien Revolver, LIBOR+7.25% (1% floor) cash due 6/29/2023 (6)(19)
 
10.04
%
 
 
 
347

 
336

 
327

 
 
 
 
 
 
 
 
24,034

 
23,809

 GoodRx, Inc.
 
 
 
 Interactive media & services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.5% cash due 10/12/2026 (6)
 
9.96
%
 
 
 
22,222

 
21,761

 
22,110

 
 
 
 
 
 
 
 
21,761

 
22,110

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

 
769

 
 
 
 
 
 
 
 
213

 
769

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

 

 
 
 
 
 
 
 
 
1,000

 

See notes to Consolidated Financial Statements.

8

Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
December 31, 2018
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
 
 Cash Interest Rate (6)
 
Industry
 
Principal (7)

 
Cost
 
Fair Value
 IBG Borrower LLC
 
 
 
 Apparel, accessories & luxury goods
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 8/2/2022 (6)
 
9.81
%
 
 
 
$
14,734

 
$
13,187

 
$
13,187

 
 
 
 
 
 
 
 
13,187

 
13,187

 iCIMs, Inc.
 
 
 
Application software
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.5% (1% floor) cash due 9/12/2024 (6)
 
8.94
%
 
 
 
14,118

 
13,850

 
13,850

 First Lien Revolver, LIBOR+6.5% (1% floor) cash due 9/12/2024 (6)(19)
 
 
 
 
 

 
(17
)
 
(17
)
 
 
 
 
 
 
 
 
13,833

 
13,833

 Integral Development Corporation
 
 
 
Other diversified financial services
 
 
 
 
 
 
1,078,284 Common Stock Warrants (exercise price $0.9274) expiration date 7/10/2024
 
 
 
 
 
 
 
113

 

 
 
 
 
 
 
 
 
113

 

 Intelsat Jackson Holdings S.A.
 
 
 
 Alternative carriers
 
 
 
 
 
 
 First Lien Term Loan B3, LIBOR+3.75% (1% floor) cash due 11/27/2023 (6)(11)(20)
 
6.26
%
 
 
 
2,000

 
1,985

 
1,945

 
 
 
 
 
 
 
 
1,985

 
1,945

 Internet Pipeline, Inc.
 
 
 
 Internet services & infrastructure
 
 
 
 
 
 
 Incremental First Lien Term Loan, LIBOR+4.75% (1% floor) cash due 8/4/2022 (6)
 
7.28
%
 
 
 
5,496

 
5,443

 
5,456

 
 
 
 
 
 
 
 
5,443

 
5,456

 Janrain, Inc.
 
 
 
 Application software
 
 
 
 
 
 
 218,008 Common Stock Warrants (exercise price $1.3761) expiration date 12/5/2024
 
 
 
 
 
 
 
45

 

 
 
 
 
 
 
 
 
45

 

 Kason Corporation
 
 
 
Industrial machinery
 
 
 
 
 
 
 Mezzanine Term Loan, 11.5% cash 1.75% PIK due 10/28/2019
 
 
 
 
 
6,141

 
6,141

 
5,925

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

 
249

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

 

 
 
 
 
 
 
 
 
6,695

 
6,174

 Kellermeyer Bergensons Services, LLC
 
 
 
 Environmental & facilities services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 4/29/2022 (6)
 
11.02
%
 
 
 
6,105

 
5,927

 
6,159

 
 
 
 
 
 
 
 
5,927

 
6,159

 L Squared Capital Partners LLC
 
 
 
Multi-sector holdings
 
 
 
 
 
 
 2% limited partnership interest (11)(16)
 
 
 
 
 
 
 
1,502

 
3,284

 
 
 
 
 
 
 
 
1,502

 
3,284

 Lanai Holdings III, Inc.
 
 
 
Healthcare distributors
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.75% (1% floor) cash due 8/29/2022 (6)(20)
 
7.28
%
 
 
 
20,047

 
19,659

 
18,519

 
 
 
 
 
 
 
 
19,659

 
18,519

 Lannett Company, Inc.
 
 
 
 Pharmaceuticals
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5% (1% floor) cash due 11/25/2020 (6)(11)(20)
 
7.52
%
 
 
 
1,824

 
1,826

 
1,711

 
 
 
 
 
 
 
 
1,826

 
1,711

 Lift Brands Holdings, Inc.
 
 
 
Leisure facilities
 
 
 
 
 
 
 2,000,000 Class A Common Units in Snap Investments, LLC
 
 
 
 
 
 
 
1,399

 
3,020

 
 
 
 
 
 
 
 
1,399

 
3,020

 Long's Drugs Incorporated
 
 
 
Pharmaceuticals
 
 
 
 
 
 
 50 Series A Preferred Shares in Long's Drugs Incorporated
 
 
 
 
 
 
 
385

 
836

 25 Series B Preferred Shares in Long's Drugs Incorporated
 
 
 
 
 
 
 
210

 
519

 
 
 
 
 
 
 
 
595

 
1,355