8-K: Blue Owl Capital Subsidiary Completes $484.9 Million Debt Securitization Refinancing

Blue Owl Capital Corporation's subsidiary, Owl Rock CLO VII, LLC, finalized a $484.92 million term debt securitization refinancing on February 28, 2025.

Summary

• Blue Owl Capital Corporation completed a $484.92 million term debt securitization refinancing through its subsidiary, Owl Rock CLO VII, LLC, on February 28, 2025.
• The refinancing involved issuing secured notes and preferred shares backed by a portfolio of middle market loans.
• The secured notes included $202 million of AAA(sf) Class A-R Notes bearing interest at Benchmark plus 1.40% and $53.5 million of AA(sf) Class B-R Notes bearing interest at Benchmark plus 1.70%.
• The subsidiary also borrowed $50 million under floating rate Class A-L1-R loans and $25 million under floating rate Class A-L2-R loans, both bearing interest at Benchmark plus 1.40%.
• Concurrently, the Issuer issued $43.1 million of additional subordinated securities in the form of preferred shares, which the Company purchased.
• The proceeds from the CLO Refinancing were used to redeem in full the classes of notes issued on the Original Closing Date and to pay expenses incurred in connection with the CLO Refinancing.
• An amended and restated loan sale agreement provides for the sale and contribution of approximately $111.24 million par amount of middle market loans from the Company to the Issuer.
• Through April 20, 2030, a portion of the proceeds may be used to purchase additional middle market loans under the direction of Blue Owl Credit Advisors LLC.
• The Company expects to use the proceeds of the issuance and incurrence of the Debt, net of certain fees and expenses, for general corporate purposes.

Sentiment

Score: 7

Explanation: The announcement is a routine financial transaction. The sentiment is neutral to positive as it represents a successful refinancing.

Positives

• The CLO refinancing allows Blue Owl to optimize its capital structure.
• The refinancing provides capital for general corporate purposes.

Risks

• The debt is secured by middle market loans, which can be subject to credit risk.
• The Adviser may rescind its waiver of fees, which would increase expenses.
• The secured notes have not been registered under the Securities Act of 1933, as amended (the Securities Act), or any state securities (e.g., blue sky) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration.

Future Outlook

The Company expects to use the proceeds of the issuance and incurrence of the Debt, net of certain fees and expenses, for general corporate purposes.

Industry Context

CLOs are a significant part of the leveraged finance market, providing funding for middle-market companies. Refinancings are common to optimize the cost of capital and extend maturities.

Comparison to Industry Standards

• Comparable CLO transactions often involve similar structures with secured notes and preferred shares.
• Interest rate spreads on the notes are within the typical range for CLOs with similar ratings.
• Blue Owl is a major player in the direct lending and CLO market, managing billions in assets.

Related Party Transactions

• The Company purchased all of the Additional Preferred Shares issued on the Refinancing Date.
• The Adviser serves as collateral manager for the Issuer under an amended and restated collateral management agreement.
• The Issuer and the Company entered into an amended and restated loan sale agreement.

Stakeholder Impact

• Shareholders: The refinancing could improve the company's financial flexibility.
• Creditors: The refinancing maintains the security of the debt obligations.
• Customers: No direct impact is expected on customers.

Next Steps

• The Issuer will use the proceeds for general corporate purposes.
• Blue Owl Credit Advisors LLC will continue to manage the collateral portfolio.

Key Dates

Keywords

CLO, refinancing, securitization, debt, middle market loans, Blue Owl Capital, Owl Rock CLO VII, collateralized loan obligation