Houlihan Lokey Advises Oaktree Strategic Income Corporation (1)

Houlihan Lokey is pleased to announce that Oaktree Strategic Income Corporation (formerly NASDAQ:OCSI) (OCSI), a middle-market business development company (BDC), has merged with Oaktree Specialty Lending Corporation (NASDAQ:OCSL) (OCSL). The transaction was previously announced on October 29, 2020, and closed on March 19, 2021. Based on December 31, 2020, financial information, the combined company has more than $2.2 billion of assets on a pro forma basis. Houlihan Lokey served as the exclusive financial advisor to the special committee of OCSI.

In connection with the merger, former OCSI stockholders will receive 1.3371 shares of OCSL for each share of OCSI based on the final exchange ratio, subject to payment of cash in lieu of fractional shares. As a result of the merger, legacy OCSL stockholders and former OCSI stockholders own approximately 78.2% and 21.8%, respectively, of the combined company at closing.

In addition, in connection with the closing of the merger, and as previously announced, OCSL and Oaktree Fund Advisers, LLC (Oaktree) amended the existing investment advisory agreement to provide that Oaktree will waive $750,000 of base management fees payable to it under the Investment Advisory Agreement in each of the eight quarters immediately following the closing of the transaction (for an aggregate waiver of $6.0 million of base management fees).

The combined company has over $2.2 billion of assets invested in 143 portfolio companies as of December 31, 2020. The combined investment portfolio is composed of 86% senior secured loans, 2% unsecured debt, 3% equity, and 8% in joint venture interests. The merger reduced the concentration of top 10 investments to 20%, down from 23% for both OCSL and OCSI. The combination of two known portfolios—including over 60% of OCSI’s investments that overlap with those of OCSL—will help to facilitate a seamless portfolio integration. The combined company will continue to be externally managed by Oaktree and all current OCSL officers and directors will remain in their current positions. The combined company will trade under the ticker symbol “OCSL” on the Nasdaq Global Select Market.

OCSI was a BDC dedicated to providing customized capital solutions for middle-market companies in both the syndicated and private placement markets. OCSI’s investment objective was to generate a stable source of current income while minimizing the risk of principal loss and, to a lesser extent, capital appreciation by providing innovative first lien financing solutions to companies across a wide variety of industries. OCSI was managed by Oaktree, an affiliate of Oaktree Capital Management, LP.

OCSL is a BDC dedicated to providing customized one-stop credit solutions to companies with limited access to public or syndicated capital markets. OCSL’s investment objective is to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, and preferred equity. OCSL is managed by Oaktree, an affiliate of Oaktree Capital Management, LP.

Houlihan Lokey Capital, Inc., served as the exclusive financial advisor.

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