Oaktree Specialty Lending Corporation · NASDAQ:OCSL
Oaktree Specialty Lending — Merger or Acquisition (September 2022)
17 slides from Oaktree Specialty Lending's merger presentation, Sep 15, 2022
Slide 1: Merger of Oaktree Specialty Lending Corporation and Oaktree Strategic Income II, Inc.
september 15, 2022 merger of oaktree specialty lending corporation (nasdaq: ocsl) and oaktree strategic income ii, inc. (“osi ii”)
Slide 2: Forward Looking Statements & Legal Disclosures
Forward Looking Statements & Legal Disclosures Some of the statements in this presentation constitute forward-looking statements because they relate to future events, future performance or financial condition or the two-step merger (collectively, the “Mergers”) of Oaktree Strategic Income II, Inc. (
Slide 3: Forward Looking Statements & Legal Disclosures (continued)
Forward Looking Statements & Legal Disclosures (continued) Additional Information and Where to Find It In connection with the Mergers, OSI II and OCSL plan to file with the SEC and mail to their respective stockholders a joint proxy statement on Schedule 14A (the “Joint Proxy Statement”), and OCSL p
Slide 4: Expected to Deliver Significant Benefits to OCSL Stockholders
Expected to Deliver Significant Benefits to OCSL Stockholders Expected to be accretive Increased scale with to NII $3+ billion of assets and improved secondary market liquidity Increase in first lien investments Acquisition of a known, diversified portfolio with significant investment Greater access
Slide 5: Transaction Summary
Transaction Summary • OCSL to acquire 100% of OSI II in a stock-for-stock transaction, with shares of OSI II common stock to be exchanged for shares of OCSL common stock on a NAV-for-NAV basis merger structure • Merger will result in an ownership split of the combined company proportional to each of
Slide 6: Overview of OSI II
Overview of OSI II portfolio characteristics • Private, non-traded BDC that began investing in 2018 (At fair value) • Over $325 million of net assets as of June 30, 2022 • Managed by Oaktree’s Strategic Credit strategy, the same team that manages OCSL $567mm 115 total investments portfolio companies
Slide 7: Strategic Rationale
Strategic Rationale 1 • Combined company will have more than $3 billion of total assets and over $1.5 billion of net assets increased Increased scale Scale and and secondary Secondary Market • Larger market capitalization may lead to broader equity research coverage to reach a larger set of investor
Slide 8: The Combination Would Create a Top Ten Publicly-Traded BDC by Total Assets
The Combination of OCSL and OSI II Would Create a Top Ten Publicly-Traded BDC by Total Assets top 20 publicly traded bdcs by total assets ($ in millions) $25,000 20,000 15,000 $21,797 10,000 $17,189 $13,088 $604 million of 5,000 $10,383 additional assets $7,663 $5,770 $3,826 $3,678 $3,405 $3,294 $2,
Slide 9: Larger BDCs are Generally More Liquid
Larger BDCs are Generally More Liquid market capitalization and 3-month average daily trading volume ($) ($ in millions) $12,000 $60 50 10,000 3-Month Daily Trading Volume ($) 40 8,000 30 Market Cap 6,000 20 4,000 10 2,000 0 0 -10 ARCC FSK ORCC BXSL MAIN PSEC GBDC HTGC GSBD Pro TSLX NMFC OCSL BBDC B
Slide 10: Improved Metrics Resulting From the Combined Investment Portfolio
Improved Metrics Resulting From the Combined Investment Portfolio portfolio diversification (At fair value unless otherwise noted, $ in thousands) ocsl osi ii combined Investments at Fair Value $2,565,388 $566,676 $3,132,064 Top 10 Investments (%) 22.6% 23.6% 21.8% Number of Portfolio Companies 151
Slide 11: Significant Portfolio Overlap
Significant Portfolio Overlap investment overlap1 (At fair value, $ in millions) ocsl osi ii Non-Overlapping Non-Overlapping Investments, 14% Investments, 3% Overlapping Overlapping Investments, 86% Investments, 97% Fair Value % Portfolio Fair Value % Portfolio Overlapping Investments $2,058 86% $55
Slide 12: Opportunity for Debt Optimization
Opportunity for Debt Optimization the merger of ocsl and osi ii is expected to optimize financing costs • Larger scale may improve access to more diverse, lower cost sources of debt capital • Ability to consolidate existing borrowing facilities • Combined company is expected to benefit from OCSL’s i
Slide 13: Anticipated to be Accretive to Net Investment Income
Anticipated to be Accretive to Net Investment Income potential cost synergies estimated annual operating expense savings1 ($ in millions) $1.4 million operational synergies through the in operating expense elimination of expenses totaling an $14 savings $11.9 estimated $1.4 million annually 12 $10.5
Slide 14: Conclusion
Conclusion increased scale and secondary market liquidity potential improved portfolio metrics and seamless portfolio integration greater access to debt capital markets anticipated to be accretive to net investment income 13
Slide 15: Appendix
OAKTREE OCSL | Specialty Lending Corporation
Slide 16: Appendix I: Total Merger Consideration
Appendix I: Total Merger Consideration merger consideration highlights illustrative example1 ($ and share amounts in millions, except per share data) Total merger consideration will be based on the net asset values of OCSL and OSI II $18.69 $6.89 osi ii nav ocsl nav • OCSL to acquire 100% of OSI II
Slide 17: Appendix II: OCSL & OSI II Comparison
Appendix II: OCSL & OSI II Comparison portfolio and balance sheet metrics (At fair value, $ in thousands) OCSL OSI II Combined Company Portfolio: Investments at Fair Value $2,565,388 $566,676 $3,132,064 Top 10 Investments (%) 22.6% 23.6% 21.8% Number of Portfolio Companies 151 115 158 First Lien (%)
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