Blue Owl Technology Finance Corp. · NYSE:OTF
Blue Owl Technology Finance — Merger or Acquisition (November 2024)
19 slides from Blue Owl Technology Finance's merger presentation, Nov 13, 2024
Slide 1: Overview of Proposed Merger Between OTF and OTF II
November 13, 2024 Blue Owl Technology Finance Corp. (“OTF”) and Blue Owl Technology Finance Corp. II (“OTF II”) Overview of Proposed Merger Between OTF and OTF II Highly Confidential. Trade Secret.
Slide 2: Anticipated Benefits of Proposed Merger to Shareholders
Anticipated Merger between two known, high-quality, software- focused portfolios with significant investment Benefits of overlap that have been under Blue Owl management since inception Proposed Strong portfolio metrics of combined company, Merger to with less than 0.1%1 of investments on non-accrua
Slide 3: Key Transaction Terms
Key Transaction Terms o OTF to acquire 100% of OTF II in a stock-for-stock merger, with shares of OTF II common stock to be exchanged for shares of Merger OTF common stock on a NAV-for-NAV basis3 Structure o Merger will result in an ownership split of the combined company proportional to each of OTF
Slide 4: Transaction Rationale
Transaction Rationale Seamless Portfolio • Significant portfolio overlap: approximately 84% of OTF II’s investments are also in OTF’s portfolio Integration and Strong • Attractive asset mix on a combined basis with 77% first lien investments and 81% senior secured investments Combined Portfolio • St
Slide 5: OTF at a Glance
OTF at a Glance 146 $690mm $201mm 31% 11.4% $6.4bn Portfolio Portfolio Portfolio Net Loan-to- Debt Portfolio Portfolio Size Company Company Companies Value11 Yield12 Revenue10 EBITDA10 Portfolio Mix by Asset Class Portfolio Mix by Industry <1% 9% 21% 24% 11% 5% 75% Senior 4% 32 Portfolio 5% Secured
Slide 6: OTF II at a Glance
OTF II at a Glance 122 $900mm $256mm 31% 11.2% $5.1bn Portfolio Portfolio Portfolio Net Loan-to- Debt Portfolio Portfolio Size Company Company Companies Value11 Yield12 Revenue10 EBITDA10 Portfolio Mix by Asset Class Portfolio Mix by Industry <1% 6% 3% 2% 21% 3% 23% 89% Senior 3% 32 Portfolio Secure
Slide 7: Combined Company Has Enhanced Portfolio Diversification
Combined Company Has Enhanced Portfolio Diversification At Fair Value OTF OTF II Combined Entity1 Investments (in Millions) $6,397 $5,084 $11,481 Top 10 Investments (%) 26% 28% 18% Top 25 Investments (%) 49% 53% 40% Number of Portfolio Companies 146 122 180 Average Position Size 0.7% 0.8% 0.6% Weigh
Slide 8: Substantial Investment Overlap Will Help Facilitate a Seamless Portfolio Integration
Substantial Investment Overlap Will Help Facilitate a Seamless Portfolio Integration OTF Portfolio Overlap OTF II Portfolio Overlap Launched in 2018 Launched in 2021 41% of OTF 84% of OTF II investments are also investments are also Overlap held in OTF II OTF II held in OTF OTF Only 41% Only Overlap
Slide 9: Larger BDCs are Generally More Liquid
Larger BDCs are Generally More Liquid Should the combined company choose to pursue a possible future liquidity event, larger scale will likely increase trading liquidity, creating a more attractive opportunity for investors $30 $70 $27.1 Represents Blue Owl BDCs $60 $25 1M Average Daily Trading Volu
Slide 10: Greater Access to Debt Markets and Financing Cost Savings
Greater Access to Debt Markets and Financing Cost Savings The increased scale of the combined company may enable better access to a wider array of debt funding solutions and a potential reduction to borrowing costs • Combined company is expected to continue to benefit from OTF’s investment grade cre
Slide 11: Accretive to Net Investment Income
Accretive to Estimated Operating Expense Savings In Year One15 ($ Millions) Greater than $4 Million in Year One Net (~5 bps of ROE Expansion)16 Investment $11 $9 Income $12 $10 OTF + OTF II Standalone Combined Operational synergies Professional Fees Other G&A Lower cost of financing Improved portfol
Slide 12: Merger Consideration Structure
Merger Consideration Structure Total merger consideration will be based on the net asset values of OTF and OTF II • OTF to acquire 100% of OTF II in a stock-for-stock merger, with shares of OTF II common Merger Consideration stock to be exchanged for shares of OTF common stock on a NAV-for-NAV basis
Slide 13: Illustrative Transaction Timeline
Illustrative Transaction Timeline N-14 registration Transaction statement and joint Shareholder announcement proxy effective meetings Combined Company: November Q1 Q2 2024 2025 2025 Proxy Target solicitation closing begins Timeline subject to regulatory and shareholder approval. 13
Slide 14: Conclusion
Conclusion We believe the proposed merger between OTF and OTF II creates meaningful value for both sets of shareholders 1 XX Seamless portfolio integration and strong combined portfolio metrics 1 Increased scale and portfolio diversification 1 Enhanced positioning for possible future liquidity event
Slide 15: Endnotes
Endnotes Note: Figures are as of the quarter-ended 9/30/2024 at fair value unless otherwise noted. Past performance is not a guarantee of future results. 1. Pro forma as of September 30, 2024 and at fair value. Pro forma is defined as OTF and OTF II metrics on a combined basis. 2. BDC ranking based
Slide 16: Disclosures
Disclosures Forward-Looking Statements Certain statements made in this presentation are “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 because they relate to future events, future performance or fi
Slide 17: Disclosures
Disclosures Important Notice; No Offer or Solicitation No representations or warranties, express or implied are given in, or in respect of, this presentation. To the fullest extent permitted by law, in no circumstances will OTF, OTF II or any of their respective subsidiaries, shareholders, affiliate
Slide 18: Disclaimer
Disclaimer Past performance is not a guide to future results and is not indicative of expected realized returns. As of September 30, 2024. Assets Under Management (“AUM”) refers to the assets that Credit manages and are generally equal to the sum of (i) net asset value (“NAV”); (ii) drawn and undraw
Slide 19: ff sue OWL
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