OAKTREE SPECIALTY LENDING CORPORATION The following discussion should be read in connection with our Consolidated Financial Statements and the notes thereto included elsewhere in this quarterly report on Form 10-Q. Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to: •our future operating results and distribution projections; •the ability ofOaktree Fund Advisors, LLC , or Oaktree, to reposition our portfolio and to implement Oaktree's future plans with respect to our business; •the ability of Oaktree and its affiliates to attract and retain highly talented professionals; •our business prospects and the prospects of our portfolio companies; •the impact of the investments that we expect to make; •the ability of our portfolio companies to achieve their objectives; •our expected financings and investments and additional leverage we may seek to incur in the future; •the adequacy of our cash resources and working capital; •the timing of cash flows, if any, from the operations of our portfolio companies; and •the cost or potential outcome of any litigation to which we may be a party. In addition, words such as "anticipate," "believe," "expect," "seek," "plan," "should," "estimate," "project" and "intend" indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in "Item 1A. Risk Factors" in our annual report on Form 10-K for the year endedSeptember 30, 2020 and elsewhere in this quarterly report on Form 10-Q. Other factors that could cause actual results to differ materially include: •changes or potential disruptions in our operations, the economy, financial markets or political environment; •risks associated with possible disruptions in our operations or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic; •future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to Business Development Companies or regulated investment companies, or RICs; •general considerations associated with the COVID-19 pandemic; •the ability of the parties to consummate the Mergers (as defined below) on the expected timeline, or at all; •the ability to realize the anticipated benefits of the Mergers; •the effects of disruption on our business from the proposed Mergers; •the combined company's plans, expectations, objectives and intentions, as a result of the Mergers; •any potential termination of the Merger Agreement; •the actions of our stockholders or the stockholders of Oaktree Specialty Lending Corporation, or OCSL, with respect to the proposals submitted for their approval in connection with the Mergers; and •other considerations that may be disclosed from time to time in our publicly disseminated documents and filings. We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with theSecurities and Exchange Commission , or theSEC , including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Business Overview We are a specialty finance company that looks to provide customized capital solutions for middle-market companies in both the syndicated and private placement markets. We are a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a Business Development Company under the Investment Company Act of 1940, as amended, or the Investment Company Act. In addition, we have qualified and elected to be treated as a RIC under the Internal Revenue Code of 1986, as amended, or the Code, for tax purposes. 53 -------------------------------------------------------------------------------- We are externally managed by Oaktree pursuant to an investment advisory agreement, as amended from time to time, or the Investment Advisory Agreement, between the Company and Oaktree.Oaktree Fund Administration, LLC , or the Oaktree Administrator, an affiliate of Oaktree, provides certain administrative and other services necessary for us to operate pursuant to an administration agreement, as amended from time to time, or the Administration Agreement. Our investment objective is 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. We invest in companies across a variety of industries that typically possess resilient business models with strong underlying fundamentals. We intend to deploy capital across credit and economic cycles with a focus on long-term results, which we believe will enable us to build lasting partnerships with financial sponsors and management teams. We invest in unsecured loans, including subordinated loans and bonds, issued by private middle-market companies and, to a lesser extent, senior and subordinated loans and bonds issued by public companies and equity investments. Oaktree intends to (1) rotate out of a small number of investments where the underlying business fundamentals may expose us to significant risk of loss of principal, (2) focus on increasing the size of private first lien investments originated on Oaktree's platform (which we call "core investments") and (3) supplement the portfolio with broadly syndicated and select privately placed loans. Oaktree is generally focused on middle-market companies, which we define as companies with enterprise values of between$100 million and$750 million . We generally invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as "high yield" and "junk," have predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. Oaktree has performed a comprehensive review of our portfolio and categorized our portfolio into core investments, non-core performing investments and non-accrual investments. Certain additional information on such categorization and our portfolio composition is included in investor presentations that we file with theSEC . Since an Oaktree affiliate became our investment adviser inOctober 2017 , Oaktree and its affiliates have reduced the investments identified as non-core by over$250 million , at fair value. Over time, Oaktree intends to rotate us out of the remaining non-core investments, which were approximately$38 million at fair value as ofDecember 31, 2020 . OnOctober 28, 2020 , we entered into an Agreement and Plan of Merger, or the Merger Agreement, with OCSL,Lion Merger Sub, Inc. , aDelaware corporation and OCSL's wholly-owned subsidiary, or the Merger Sub, and, solely for the limited purposes set forth therein, Oaktree. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into us, with us continuing as the surviving company and as OCSL's wholly-owned subsidiary, or the Merger, and, immediately thereafter, we will merge with and into OCSL, with OCSL continuing as the surviving company, or together with the Merger, the Mergers. Consummation of the Mergers, which is currently anticipated to occur during the first half of calendar year 2021, is subject to certain closing conditions, including requisite approvals of our and OCSL's stockholders and certain other closing conditions. For more information about the Mergers, see Note 15 to our consolidated financial statements included in this quarterly report on Form 10-Q and our definitive proxy statement filed with theSEC onJanuary 21, 2021 . Business Environment and Developments We believe that the COVID-19 pandemic may have lasting effects on theU.S. and global financial markets and may cause further economic uncertainties or deterioration in the performance of the middle market inthe United States and worldwide. While the initial market disruptions have somewhat eased, the global economy continues to experience economic uncertainty, particularly due to difficulties in the reopening of certain economies, or portions thereof, and delays in vaccine rollout. This uncertainty can impact the overall supply and demand of the market through changing spreads, deal terms and structures, and equity purchase price multiples. Despite this economic uncertainty, we believe attractive risk-adjusted returns can be achieved by making loans to companies in the middle market. Given the breadth of the investment platform of Oaktree and its affiliates, we believe that we have the resources and experience to source, diligence and structure investments in these companies and are well placed to generate attractive returns for investors. We have proactively taken a number of actions to evaluate and support our portfolio companies in light of the COVID-19 pandemic, including outreach to a variety of management teams and sponsors. We have been in close contact with many of our portfolio companies to understand their liquidity and solvency positions. We believe that these efforts to closely monitor and identify vulnerable investments will allow us to address potential problems early and provide constructive solutions to our portfolio companies. As ofDecember 31, 2020 , 97.9% of our debt investment portfolio (at fair value) and 98.1% of our debt portfolio (at cost) bore interest at floating rates indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly or monthly at the borrower's option. As a result of the COVID-19 pandemic and the related decision of theU.S. Federal Reserve to reduce certain interest rates, LIBOR decreased beginning inMarch 2020 . A prolonged reduction in interest rates will result in a decrease in our 54 -------------------------------------------------------------------------------- total investment income and could result in a decrease in our net investment income to the extent the decreases are not offset by an increase in the spread on our floating rate investments, a decrease in our interest expense or a reduction or waiver of our incentive fee on income. InJuly 2017 , the head of theUnited Kingdom Financial Conduct Authority , or theFCA , announced the desire to phase out the use of LIBOR by the end of 2021. However, theFCA recently announced that most US Dollar LIBOR would continue to be published throughJune 30, 2023 . In anticipation of the cessation of LIBOR, we may need to renegotiate any credit agreements extending beyond the applicable phase out date with our prospective portfolio companies that utilize LIBOR as a factor in determining the interest rate. The reinvestment period of each of our borrowing facilities in place as ofDecember 31, 2020 ends prior to the expected phase out of LIBOR; however, we expect that any refinancings or future borrowing facilities that bear interest at floating rates indexed to LIBOR (or certain amendments to current borrowing facilities) would include procedures for the selection of a replacement reference rate following any phase out of LIBOR. Certain of the loan agreements with our portfolio companies have included fallback language in the event that LIBOR becomes unavailable. This language generally provides that the administrative agent may identify a replacement reference rate, typically with the consent of (or prior consultation with) the borrower. In certain cases, the administrative agent will be required to obtain the consent of either a majority of the lenders under the facility, or the consent of each lender, prior to identifying a replacement reference rate. Alternatively, certain of the loan agreements with our portfolio companies do not include any fallback language providing a mechanism for the parties to negotiate a new reference interest rate and will instead revert to the base rate in the event LIBOR ceases to exist. Critical Accounting Policies Basis of Presentation Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted inthe United States of America , or GAAP, and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of our Consolidated Financial Statements have been made. All intercompany balances and transactions have been eliminated. We are an investment company following the accounting and reporting guidance inFinancial Accounting Standards Board , or FASB, Accounting Standards Codification, or ASC, Topic 946, Financial Services-Investment Companies, or ASC 946. Investment Valuation We value our investments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments' complexity. Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:
•Level 1 - Unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.
•Level 2 - Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that are not active;
or other inputs that are observable or can be corroborated by observable market
data at the measurement date for substantially the full term of the assets or
liabilities.
•Level 3 - Unobservable inputs that reflect management's best estimate of what
market participants would use in pricing the asset or liability at the
measurement date. Consideration is given to the risk inherent in the valuation
technique and the risk inherent in the inputs to the model.
If inputs used to measure fair value fall into different levels of the fair
value hierarchy, an investment's level is based on the lowest level of input
that is significant to the fair value measurement. Our assessment of the
significance of a particular input to the fair value measurement in its entirety
requires judgment and considers factors specific to the investment. This
includes investment securities that are valued using "bid" and "ask" prices
obtained from independent third party pricing services or directly from brokers.
These investments may be classified as Level 3 because the quoted prices may be
indicative in nature for securities that are in an inactive market, may be for
similar securities or may require adjustments for investment-specific factors or
restrictions.
Financial instruments with readily available quoted prices generally will have a
higher degree of market price observability and a lesser degree of judgment
inherent in measuring fair value. As such, Oaktree obtains and analyzes readily
available market quotations provided by pricing vendors and brokers for all of
our investments for which quotations are available. In determining the fair
value of a
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particular investment, pricing vendors and brokers use observable market
information, including both binding and non-binding indicative quotations.
We seek to obtain at least two quotations for the subject or similar securities,
typically from pricing vendors. If we are unable to obtain two quotes from
pricing vendors, or if the prices obtained from pricing vendors are not within
our set threshold, we seek to obtain a quote directly from a broker making a
market for the asset. Oaktree evaluates the quotations provided by pricing
vendors and brokers based on available market information, including trading
activity of the subject or similar securities, or by performing a comparable
security analysis to ensure that fair values are reasonably estimated. Oaktree
also performs back-testing of valuation information obtained from pricing
vendors and brokers against actual prices received in transactions. In addition
to ongoing monitoring and back-testing, Oaktree performs due diligence
procedures over pricing vendors to understand their methodology and controls to
support their use in the valuation process. Generally, we do not adjust any of
the prices received from these sources.
If the quotations obtained from pricing vendors or brokers are determined to not
be reliable or are not readily available, we value such investments using any of
three different valuation techniques. The first valuation technique is the
transaction precedent technique, which utilizes recent or expected future
transactions of the investment to determine fair value, to the extent
applicable. The second valuation technique is an analysis of the enterprise
value, or EV, of the portfolio company. EV means the entire value of the
portfolio company to a market participant, including the sum of the values of
debt and equity securities used to capitalize the enterprise at a point in time.
The EV analysis is typically performed to determine (i) the value of equity
investments, (ii) whether there is credit impairment for debt investments and
(iii) the value for debt investments that we are deemed to control under the
Investment Company Act. To estimate the EV of a portfolio company, Oaktree
analyzes various factors, including the portfolio company's historical and
projected financial results, macroeconomic impacts on the company, and
competitive dynamics in the company's industry. Oaktree also utilizes some or
all of the following information based on the individual circumstances of the
portfolio company: (i) valuations of comparable public companies, (ii) recent
sales of private and public comparable companies in similar industries or having
similar business or earnings characteristics, (iii) purchase prices as a
multiple of their earnings or cash flow, (iv) the portfolio company's ability to
meet its forecasts and its business prospects, (v) a discounted cash flow
analysis, (vi) estimated liquidation or collateral value of the portfolio
company's assets and (vii) offers from third parties to buy the portfolio
company. We may probability weight potential sale outcomes with respect to a
portfolio company when uncertainty exists as of the valuation date. The third
valuation technique is a market yield technique, which is typically performed
for non-credit impaired debt investments. In the market yield technique, a
current price is imputed for the investment based upon an assessment of the
expected market yield for a similarly structured investment with a similar level
of risk, and we consider the current contractual interest rate, the capital
structure and other terms of the investment relative to risk of the company and
the specific investment. A key determinant of risk, among other things, is the
leverage through the investment relative to the EV of the portfolio company. As
debt investments held by us are substantially illiquid with no active
transaction market, we depend on primary market data, including newly funded
transactions and industry specific market movements, as well as secondary market
data with respect to high yield debt instruments and syndicated loans, as inputs
in determining the appropriate market yield, as applicable.
In accordance with ASC 820-10, certain investments that qualify as investment
companies in accordance with ASC 946 may be valued using net asset value as a
practical expedient for fair value. Consistent with FASB guidance under ASC 820,
these investments are excluded from the hierarchical levels. These investments
are generally not redeemable.
We estimate the fair value of privately held warrants using a Black Scholes
pricing model, which includes an analysis of various factors and subjective
assumptions, including the current stock price (by using an EV analysis as
described above), the expected period until exercise, expected volatility of the
underlying stock price, expected dividends and the risk-free rate. Changes in
the subjective input assumptions can materially affect the fair value estimates.
Our Board of Directors undertakes a multi-step valuation process each quarter in
connection with determining the fair value of our investments:
•The quarterly valuation process begins with each portfolio company or
investment being initially valued by Oaktree's valuation team in conjunction
with Oaktree's portfolio management team and investment professionals
responsible for each portfolio investment;
•Preliminary valuations are then reviewed and discussed with management of
Oaktree;
•Separately, independent valuation firms engaged by our Board of Directors
prepare valuations of our investments, on a selected basis, for which market
quotations are not readily available or are readily available but deemed not
reflective of the fair value of the investment, and submit the reports to us and
provide such reports to Oaktree and the Audit Committee of our Board of
Directors;
•Oaktree compares and contrasts its preliminary valuations to the valuations of
the independent valuation firms and prepares a valuation report for the Audit
Committee;
•The Audit Committee reviews the preliminary valuations with Oaktree, and
Oaktree responds and supplements the preliminary valuations to reflect any
discussions between Oaktree and the Audit Committee;
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•The Audit Committee makes a recommendation to our full Board of Directors
regarding the fair value of the investments in our portfolio; and
•Our Board of Directors discusses valuations and determines the fair value of
each investment in our portfolio.
The fair value of our investments as of December 31, 2020 and September 30, 2020
was determined in good faith by our Board of Directors. Our Board of Directors
has and will continue to engage independent valuation firms to provide
assistance regarding the determination of the fair value of a portion of our
portfolio securities for which market quotations are not readily available or
are readily available but deemed not reflective of the fair value of the
investment each quarter, and the Board of Directors may reasonably rely on that
assistance. As of December 31, 2020 , 93.7% of our portfolio at fair value was
valued either based on market quotations, the transactions precedent approach or
corroborated by independent valuation firms. However, our Board of Directors is
responsible for the ultimate valuation of the portfolio investments at fair
value as determined in good faith pursuant to our valuation policy and a
consistently applied valuation process.
Due to the inherent uncertainty of determining the fair value of investments
that do not have a readily available market value, the fair value of our
investments may fluctuate from period to period. Because of the inherent
uncertainty of valuation, these estimated values may differ significantly from
the values that would have been reported had a ready market for the investments
existed, and it is reasonably possible that the difference could be material.
As of December 31, 2020 and September 30, 2020 , approximately 94.3% and 92.3%,
respectively, of our total assets represented investments at fair value.
Revenue Recognition
Interest Income
Interest income, adjusted for accretion of original issue discount, or OID, is
recorded on an accrual basis to the extent that such amounts are expected to be
collected. We stop accruing interest on investments when it is determined that
interest is no longer collectible. Investments that are expected to pay
regularly scheduled interest in cash are generally placed on non-accrual status
when there is reasonable doubt that principal or interest cash payments will be
collected. Cash interest payments received on investments may be recognized as
income or a return of capital depending upon management's judgment. A
non-accrual investment is restored to accrual status if past due principal and
interest are paid in cash, and the portfolio company, in management's judgment,
is likely to continue timely payment of its remaining obligations.
As of December 31, 2020 , there was one investment on which we had stopped
accruing cash and/or payment in kind, or PIK, interest or OID income. During the
three months ended March 31, 2020 , we restructured our investment in the
subordinated notes in OCSI Glick JV LLC , or the OCSI Glick JV, a joint venture
through which we and GF Equity Funding 2014 LLC, or GF Equity Funding, co-invest
primarily in senior secured loans of middle-market companies, to provide, among
other things, that the subordinated notes, or the Subordinated Notes, did not
pay interest beginning on the April 15, 2020 scheduled coupon date through the
January 15, 2021 scheduled coupon date. Given that the Subordinated Notes did
not pay interest for four consecutive quarters, our investment in the
Subordinated Notes was on cash non-accrual status and we did not recognize any
interest income from the OCSI Glick JV during the three months ended December
31, 2020 .
In connection with our investment in a portfolio company, we sometimes receive
nominal cost equity that is valued as part of the negotiation process with the
portfolio company. When we receive nominal cost equity, we allocate our cost
basis in the investment between debt securities and the nominal cost equity at
the time of origination. Any resulting discount from recording the loan, or
otherwise purchasing a security at a discount, is accreted into interest income
over the life of the loan.
PIK Interest Income
Our investments in debt securities may contain PIK interest provisions. PIK
interest, which typically represents contractually deferred interest added to
the loan balance that is generally due at the end of the loan term, is generally
recorded on the accrual basis to the extent such amounts are expected to be
collected. We generally cease accruing PIK interest if there is insufficient
value to support the accrual or if we do not expect the portfolio company to be
able to pay all principal and interest due. Our decision to cease accruing PIK
interest on a loan or debt security involves subjective judgments and
determinations based on available information about a particular portfolio
company, including whether the portfolio company is current with respect to its
payment of principal and interest on its loans and debt securities; financial
statements and financial projections for the portfolio company; our assessment
of the portfolio company's business development success; information obtained by
us in connection with periodic formal update interviews with the portfolio
company's management and, if appropriate, the private equity sponsor; and
information about the general economic and market conditions in which the
portfolio company operates. Our determination to cease accruing PIK interest is
generally made well before our full write-down of a loan or debt security. In
addition, if it is subsequently determined that we will not be able to collect
any previously accrued PIK interest, the fair value of the loans or debt
securities would be reduced by the amount of such previously accrued, but
uncollectible, PIK interest.
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The accrual of PIK interest on our debt investments increases the recorded cost
bases of these investments in our Consolidated Financial Statements including
for purposes of computing the capital gains incentive fee payable by us to
Oaktree. To maintain our status as a RIC, certain income from PIK interest may
be required to be distributed to our stockholders, even though we have not yet
collected the cash and may never do so.
Fee Income
Oaktree or its affiliates may provide financial advisory services to portfolio
companies and, in return, we may receive fees for capital structuring services.
These fees are generally nonrecurring and are recognized by us upon the
investment closing date. We may also receive additional fees in the ordinary
course of business, including servicing, amendment and prepayment fees, which
are classified as fee income and recognized as they are earned or the services
are rendered.
We have also structured exit fees across certain of our portfolio investments to
be received upon the future exit of those investments. These fees are typically
paid to us upon the earliest to occur of (i) a sale of the borrower or
substantially all of the assets of the borrower, (ii) the maturity date of the
loan or (iii) the date when full prepayment of the loan occurs. The receipt of
such fees is contingent upon the occurrence of one of the events listed above
for each of the investments. These fees are included in net investment income
over the life of the loan.
Dividend Income
We generally recognize dividend income on the ex-dividend date for public
securities and the record date for private equity investments. Distributions
received from private equity investments are evaluated to determine if the
distribution should be recorded as dividend income or a return of capital.
Generally, we will not record distributions from private equity investments as
dividend income unless there are sufficient earnings at the portfolio company
prior to the distribution. Distributions that are classified as a return of
capital are recorded as a reduction in the cost basis of the investment.
Portfolio Composition
Our investments principally consist of senior loans in private middle-market
companies and investments in the OCSI Glick JV. As of December 31, 2020 , our
senior loans were typically secured by a first or second lien on the assets of
the portfolio company and generally had terms of up to ten years (but an
expected average life of between three and four years).
During the three months ended December 31, 2020 , we originated $55.8 million of
investment commitments in nine new and three existing portfolio companies and
funded $43.0 million of investments.
During the three months ended December 31, 2020 , we received $34.3 million of
proceeds from prepayments, exits, other paydowns and sales and exited nine
portfolio companies.
A summary of the composition of our investment portfolio at cost and fair value
as a percentage of total investments is shown in the following tables:
December 31, 2020 September 30, 2020
Cost:
Senior secured loans 86.62 % 86.16 %
OCSI Glick JV Subordinated Notes 11.70 12.07
OCSI Glick JV equity interests 1.30 1.32
Equity securities, excluding the OCSI Glick JV 0.38 0.45
Total 100.00 % 100.00 %
December 31, 2020 September 30, 2020
Fair value:
Senior secured loans 89.33 % 89.69 %
OCSI Glick JV Subordinated Notes 10.24 9.84
Equity securities, excluding the OCSI Glick JV 0.43 0.47
OCSI Glick JV equity interests - -
Total 100.00 % 100.00 %
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The industry composition of our portfolio at cost and fair value as a percentage of total investments was as follows:
December 31, 2020 September 30, 2020
Cost:
Multi-Sector Holdings (1) 12.99 % 13.36 %
Application Software 10.51 10.43
Aerospace & Defense 6.69 5.68
Diversified Support Services 4.80 4.89
Advertising 4.44 4.48
Movies & Entertainment 2.89 3.09
Integrated Telecommunication Services 2.80 2.87
Commercial Printing 2.79 2.84
Personal Products 2.78 2.49
Pharmaceuticals 2.65 2.47
Industrial Machinery 2.65 2.55
Data Processing & Outsourced Services 2.57 2.61
Internet Services & Infrastructure 2.52 1.66
Specialized Finance 2.45 1.55
Health Care Services 2.39 2.43
Health Care Technology 2.14 2.18
Biotechnology 2.03 2.28
Oil & Gas Storage & Transportation 2.01 2.04
Specialty Chemicals 1.83 1.86
Real Estate Services 1.78 1.81
Publishing 1.76 1.79
Leisure Facilities 1.75 1.74
Trading Companies & Distributors 1.61 1.64
Distributors 1.60 1.63
Systems Software 1.53 1.84
Fertilizers & Agricultural Chemicals 1.52 1.51
Alternative Carriers 1.52 1.55
Health Care Supplies 1.40 2.50
Research & Consulting Services 1.36 1.38
Electrical Components & Equipment 1.14 1.17
Auto Parts & Equipment 1.04 1.06
Internet & Direct Marketing Retail 0.98 1.00
Oil & Gas Refining & Marketing 0.97 0.99
Insurance Brokers 0.96 0.95
Construction & Engineering 0.89 -
Hotels, Resorts & Cruise Lines 0.85 0.86
Restaurants 0.62 0.63
Independent Power Producers & Energy Traders 0.59 0.61
Managed Health Care 0.54 0.55
Airlines 0.52 -
Oil & Gas Exploration & Production 0.45 -
Electric Utilities 0.36 0.36
Metal & Glass Containers 0.33 0.98
Environmental & Facilities Services - 0.72
Household Products - 0.62
General Merchandise Stores - 0.30
Specialized REITs - 0.05
100.00 % 100.00 %
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December 31, 2020 September 30, 2020
Fair value:
Application Software 11.07 % 11.13 %
Multi-Sector Holdings (1) 10.24 9.84
Aerospace & Defense 6.72 5.67
Diversified Support Services 4.90 4.96
Advertising 4.31 4.44
Movies & Entertainment 3.11 3.26
Personal Products 2.97 2.72
Integrated Telecommunication Services 2.88 2.91
Pharmaceuticals 2.83 2.67
Commercial Printing 2.83 2.94
Data Processing & Outsourced Services 2.63 2.70
Specialized Finance 2.55 1.64
Internet Services & Infrastructure 2.51 1.65
Industrial Machinery 2.50 2.37
Health Care Services 2.46 2.54
Health Care Technology 2.27 2.34
Biotechnology 2.17 2.48
Specialty Chemicals 1.90 1.94
Oil & Gas Storage & Transportation 1.90 2.11
Publishing 1.86 1.93
Real Estate Services 1.83 1.88
Distributors 1.69 1.73
Trading Companies & Distributors 1.68 1.73
Systems Software 1.62 1.95
Fertilizers & Agricultural Chemicals 1.60 1.62
Alternative Carriers 1.58 1.62
Health Care Supplies 1.46 2.68
Research & Consulting Services 1.43 1.45
Leisure Facilities 1.35 1.45
Electrical Components & Equipment 1.22 1.22
Insurance Brokers 1.12 1.05
Internet & Direct Marketing Retail 1.11 1.10
Auto Parts & Equipment 1.09 1.10
Oil & Gas Refining & Marketing 1.03 1.02
Hotels, Resorts & Cruise Lines 0.99 1.03
Construction & Engineering 0.94 -
Restaurants 0.68 0.71
Independent Power Producers & Energy Traders 0.60 0.63
Airlines 0.59 -
Managed Health Care 0.56 0.58
Oil & Gas Exploration & Production 0.48 -
Electric Utilities 0.39 0.39
Metal & Glass Containers 0.35 1.03
Environmental & Facilities Services - 0.75
Household Products - 0.66
General Merchandise Stores - 0.30
Specialized REITs - 0.08
100.00 % 100.00 %
___________________(1)This industry includes our investment in the OCSI Glick JV.
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OCSI Glick JV
In October 2014 , we entered into a limited liability company, or LLC, agreement
with GF Equity Funding to form the OCSI Glick JV. On April 21, 2015 , the OCSI
Glick JV began investing in senior secured loans of middle-market companies. We
co-invest in these securities with GF Equity Funding through the OCSI Glick JV.
The OCSI Glick JV is managed by a four person Board of Directors, two of whom
are selected by us and two of whom are selected by GF Equity Funding. The OCSI
Glick JV is capitalized as transactions are completed, and portfolio decisions
and investment decisions in respect of the OCSI Glick JV must be approved by the
OCSI Glick JV investment committee, consisting of one representative selected by
us and one representative selected by GF Equity Funding (with approval from a
representative of each required). The members provide capital to the OCSI Glick
JV in exchange for LLC equity interests, and we and GF Debt Funding 2014 LLC, or
GF Debt Funding, an entity advised by affiliates of GF Equity Funding, provide
capital to the OCSI Glick JV in exchange for the Subordinated Notes. As of
December 31, 2020 and September 30, 2019 , we and GF Equity Funding owned 87.5%
and 12.5%, respectively, of the outstanding LLC equity interests, and we and GF
Debt Funding owned 87.5% and 12.5%, respectively, of the Subordinated Notes. The
OCSI Glick JV is not an "eligible portfolio company" as defined in section
2(a)(46) of the Investment Company Act.
The OCSI Glick JV's portfolio consisted of middle-market and other corporate
debt securities of 42 and 40 portfolio companies as of December 31, 2020 and
September 30, 2020 , respectively. The portfolio companies in the OCSI Glick JV
are in industries similar to those in which we may invest directly.
The OCSI Glick JV has a senior revolving credit facility with Deutsche Bank AG,
New York Branch, or the JV Deutsche Bank Facility, which, as of December 31,
2020 , had a reinvestment period end date and maturity date of September 30, 2021
and March 31, 2025 , respectively, and permitted borrowings of up to $90.0
million (subject to borrowing base and other limitations). Borrowings under the
JV Deutsche Bank Facility are secured by all of the assets of the OCSI Glick JV
and all of the equity interests in the OCSI Glick JV and bore interest at a rate
equal to the 3-month LIBOR plus 2.65% per annum with a 0.25% LIBOR floor as of
December 31, 2020 . Under the JV Deutsche Bank Facility, $78.7 million and $80.7
million of borrowings were outstanding as of December 31, 2020 and September 30,
2020 , respectively.
As of December 31, 2020 , the JV Deutsche Bank Facility included a waiver period
(which extended through January 3, 2021 ) during which the facility agent was
restricted from revaluing certain collateral obligations where the change in
valuation was caused by or resulted from a business disruption due primarily to
the COVID-19 pandemic.
As of December 31, 2020 and September 30, 2020 , the OCSI Glick JV had total
assets of $154.1 million and $137.9 million , respectively. Our investment in the
OCSI Glick JV consisted of LLC equity interests and Subordinated Notes of $53.4
million and $49.4 million in the aggregate at fair value as of December 31, 2020
and September 30, 2020 , respectively. The Subordinated Notes are junior in right
of payment to the repayment of temporary contributions made by us to fund
investments of the OCSI Glick JV that are repaid when GF Equity Funding and GF
Debt Funding make their capital contributions and fund their Subordinated Notes,
respectively.
As of December 31, 2020 and September 30, 2020 , the OCSI Glick JV had total
capital commitments of $100.0 million , $87.5 million of which was from us and
the remaining $12.5 million from GF Equity Funding and GF Debt Funding.
Approximately $84.0 million in aggregate commitments was funded as of each of
December 31, 2020 and September 30, 2020 , of which $73.5 million was from us. As
of each of December 31, 2020 and September 30, 2020 , we had commitments to fund
Subordinated Notes to the OCSI Glick JV of $78.8 million , of which $12.4 million
was unfunded. As of each of December 31, 2020 and September 30, 2020 , we had
commitments to fund LLC equity interests in the OCSI Glick JV of $8.7 million ,
of which $1.6 million was unfunded as of each such date.
Below is a summary of the OCSI Glick JV's portfolio, followed by a listing of
the individual loans in the OCSI Glick JV's portfolio as of December 31, 2020
and September 30, 2020 :
December 31, 2020 September 30, 2020
Senior secured loans (1) $146,884,184 $143,138,964
Weighted average current interest rate on senior 5.80% 5.56%
secured loans (2)
Number of borrowers in the OCSI Glick JV 42 40
Largest loan exposure to a single borrower (1) $6,994,829 $6,994,829
Total of five largest loan exposures to borrowers (1) $31,360,969 $31,371,046
__________
(1) At principal amount.
(2) Computed using the weighted average annual interest rate on accruing senior
secured loans at fair value.
61
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OCSI Glick JV Portfolio as of December 31, 2020
Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost Fair Value (3) Notes
First Lien Term Loan, Construction &
ADB Companies, LLC LIBOR+6.25% cash due 12/18/2025 7.25% Engineering $ 3,333,333 $ 3,250,000 $ 3,266,667 (4)
First Lien Delayed Draw Term
Loan, LIBOR+6.25% cash due Construction &
ADB Companies, LLC 12/18/2025 Engineering - (16,667) (13,333) (4)(5)
Total ADB Companies, LLC 3,333,333 3,233,333 3,253,334
AI Ladder (Luxembourg) First Lien Term Loan, Electrical Components & Subco S.a.r.l. LIBOR+4.50% cash due 7/9/2025 4.65% Equipment 2,659,897 2,608,134
2,643,273 (4)
First Lien Term Loan,
Pharmaceuticals 6,994,829 6,823,867 6,726,682
First Lien Term Loan,
2,947,725 2,769,075 (4)
First Lien Term Loan,
Anastasia Parent, LLC LIBOR+3.75% cash due 8/11/2025 Personal Products 1,680,216 1,331,881 1,126,047 (6)
First Lien Term Loan,
Application Software 3,128,595 3,124,546 3,125,466 (4) Aurora Lux Finco First Lien Term Loan, S.À.R.L. LIBOR+5.75% cash due 12/24/2026 6.75% Airport Services 3,721,875 3,642,547
3,468,788
First Lien Term Loan, Oil & Gas Equipment &
Brazos Delaware II, LLC LIBOR+4.00% cash due 5/21/2025 4.15% Services 4,874,132 4,858,878 4,270,081
Second Lien Term Loan, 1.00%
California Pizza cash / LIBOR+12.50% PIK due
Kitchen, Inc. 5/23/2025 Restaurants 913,125 901,843 730,500 (6)
California Pizza Shares of Common Stock in CPK
Kitchen, Inc. Parent, Inc. Restaurants - 678,882 618,354
Total California Pizza
Kitchen, Inc. 913,125 1,580,725 1,348,854
Carrols Restaurant First Lien Term Loan, Group, Inc. LIBOR+6.25% cash due 4/30/2026 7.25% Restaurants 1,115,395 1,062,641
1,111,212 (4)
First Lien Term Loan, Oil & Gas Refining &
CITGO Petroleum Corp. LIBOR+6.25% cash due 3/28/2024 7.25% Marketing 3,582,652 3,546,825 3,570,112 (4)
First Lien Term Loan,
Connect
Alternative Carriers 4,570,594 4,475,633
4,597,127 (4)
First Lien Term Loan,
Curium Bidco S.à.r.l. LIBOR+3.75% cash due
Biotechnology 4,937,500 4,900,469 4,908,690
eResearch Technology, First Lien Term Loan,
Inc. LIBOR+4.50% cash due 2/4/2027 5.50% Application Software 2,487,500 2,462,625 2,470,398
First Lien Term Loan,
Gigamon, Inc. LIBOR+4.25% cash due 12/27/2024 5.25% Systems Software 5,821,200 5,787,939 5,781,179
Second Lien Term Loan, Research & Consulting
Guidehouse LLP LIBOR+8.00% cash due 5/1/2026 8.15% Services 5,000,000 4,983,262 5,000,000 (4)
Helios Software First Lien Term Loan,
Holdings, Inc. LIBOR+4.25% cash due 10/24/2025 4.52% Systems Software 989,884 979,985 986,582 (4)
Houghton Mifflin First Lien Term Loan,
Harcourt Publishers Inc. LIBOR+6.25% cash due 11/22/2024 7.25% Education Services 2,850,000 2,760,193 2,755,010
First Lien Term Loan,
Integro Parent, Inc. LIBOR+5.75% cash due 10/31/2022 6.75% Insurance Brokers 3,265,271 3,242,084 2,999,295
Intelsat Jackson First Lien Term Loan,
Holdings S.A. LIBOR+5.50% cash due 7/13/2022 6.50% Alternative Carriers 796,501 722,217 814,821
First Lien Term Loan,
Lightstone Holdco LLC LIBOR+3.75% cash due 1/30/2024 4.75% Electric Utilities 3,300,000 2,928,750 3,075,650
First Lien Term Loan,
LTI Holdings, Inc. LIBOR+3.50% cash due 9/6/2025 3.65% Electronic Components 1,382,805 1,112,966 1,346,879
MHE Intermediate First Lien Term Loan, Diversified Support
Holdings, LLC LIBOR+5.00% cash due 3/8/2024 6.00% Services 4,090,625 4,050,380 3,983,258 (4)
First Lien Delayed Draw Term
MHE Intermediate Loan, LIBOR+5.00% cash due Diversified Support
Holdings, LLC 3/8/2024 6.00% Services 826,442 816,269 804,750 (4)
Total MHE Intermediate
Holdings, LLC 4,917,067 4,866,649 4,788,008
First Lien Term Loan,
MRI Software LLC LIBOR+5.50% cash due 2/10/2026 6.50% Application Software 1,629,094 1,615,449 1,625,021 (4)
First Lien Revolver, LIBOR+5.50%
MRI Software LLC cash due 2/10/2026 Application Software - (1,429) (357) (4)(5)
First Lien Delayed Draw Term
Loan, LIBOR+5.50% cash due
MRI Software LLC 2/10/2026 Application Software - (687) (117) (4)(5)
Total MRI Software LLC 1,629,094 1,613,333 1,624,547
62
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Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost Fair Value (3) Notes
First Lien Term Loan, LIBOR+4.00%
Navicure, Inc. cash due 10/22/2026 4.15% Health Care Technology $ 3,970,000 $ 3,950,150 $ 3,970,020
First Lien Term Loan, LIBOR+4.75%
Northern Star Industries Inc. cash due 3/31/2025 5.75% Electrical Components & Equipment 5,348,750 5,332,532 5,241,775
First Lien Term Loan, LIBOR+5.50% Integrated Telecommunication
Northwest Fiber, LLC cash due 4/30/2027 5.65% Services 983,060 949,136 987,975 (4)
First Lien Term Loan, LIBOR+5.00%
Novetta Solutions, LLC cash due 10/17/2022 6.00% Application Software 5,792,407 5,757,292 5,780,330
First Lien Term Loan, LIBOR+4.00%
OEConnection LLC cash due 9/25/2026 4.15% Application Software 3,939,767 3,921,723 3,910,219 (4)
First Lien Delayed Draw Term Loan,
OEConnection LLC LIBOR+4.00% cash due 9/25/2026 Application Software - (61) (107) (4)(5)
Total OEConnection LLC 3,939,767 3,921,662 3,910,112
First Lien Term Loan, LIBOR+6.50%
Olaplex, Inc. cash due 1/8/2026 7.50% Personal Products 3,569,761 3,514,349 3,569,761 (4)
First Lien Revolver, LIBOR+6.50%
Olaplex, Inc. cash due 1/8/2025 Personal Products - (5,196) - (4)(5)
Total Olaplex, Inc. 3,569,761 3,509,153 3,569,761
Second Lien Term Loan, LIBOR+7.25%
Planview Parent, Inc. cash due 12/18/2028 8.00% Application Software 2,842,000 2,799,370 2,842,000
First Lien Term Loan, LIBOR+5.50% Oil & Gas Exploration &
RS Ivy Holdco, Inc. cash due 12/23/2027 6.50% Production 4,000,000 3,940,000 3,980,000 (4)
First Lien Term Loan, LIBOR+4.50%
Sabert Corporation cash due 12/10/2026 5.50% Metal & Glass Containers 1,827,941 1,809,662 1,828,700 (4)
First Lien Term Loan, LIBOR+5.25%
SHO Holding I Corporation cash due 4/27/2024 6.25% Footwear 6,274,940 6,250,097 5,459,198
First Lien Term Loan, LIBOR+4.50%
Signify Health, LLC cash due 12/23/2024 5.50% Health Care Services 5,835,000 5,801,221 5,659,950 (4)
First Lien Term Loan, LIBOR+4.00%
Sunshine Luxembourg VII SARL cash due 10/1/2026 5.00% Personal Products 6,435,000 6,402,824 6,474,735
First Lien Term Loan, LIBOR+3.75%
Supermoose Borrower, LLC cash due 8/29/2025 4.00% Application Software 2,871,538 2,695,389 2,693,503 (4)
First Lien Term Loan, LIBOR+3.25%
Surgery Center Holdings, Inc. cash due 9/3/2024 4.25% Health Care Facilities 4,948,849 4,931,101 4,876,002
First Lien Term Loan, LIBOR+4.50% Human Resource & Employment
Tribe Buyer LLC cash due 2/16/2024 5.50% Services 1,611,940 1,609,855 1,437,359
First Lien Term Loan, LIBOR+4.50%
Verscend Holding Corp. cash due 8/27/2025 4.65% Health Care Technology 1,729,301 1,716,293 1,731,895 (4)
First Lien Term Loan, LIBOR+6.25% Integrated Telecommunication
Windstream Services II, LLC cash due 9/21/2027 7.25% Services 4,974,965 4,783,842 4,880,142 (4)
Second Lien Term Loan, LIBOR+7.75%
WP CPP Holdings, LLC cash due 4/30/2026 8.75% Aerospace & Defense 3,000,000 2,979,258 2,542,500 (4)
Total Portfolio Investments $ 146,884,184 $ 144,736,044 $ 142,427,067
__________
(1) Represents the interest rate as of December 31, 2020 . All interest rates are
payable in cash, unless otherwise noted.
(2) The interest rate on the principal balance outstanding for all floating rate
loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate),
which typically resets semi-annually, quarterly, or monthly at the borrower's
option. The borrower may also elect to have multiple interest reset periods for
each loan. For each of these loans, we have provided the applicable margin over
LIBOR or the alternate base rate based on each respective credit agreement and
the cash interest rate as of period end. All LIBOR shown above is in U.S.
dollars. As of December 31, 2020 , the reference rates for the OCSI Glick JV's
variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%,
the 90-day LIBOR at 0.25% and the 180-day LIBOR at 0.26%. Most loans include an
interest floor, which generally ranges from 0% to 1%.
(3) Represents the current determination of fair value as of December 31, 2020
utilizing a similar technique as us in accordance with ASC 820. However, the
determination of such fair value is not included in our Board of Directors'
valuation process described elsewhere herein.
(4) This investment was held by both us and the OCSI Glick JV as of December 31,
2020 .
(5) Investment had undrawn commitments. Unamortized fees are classified as
unearned income which reduces cost basis, which may result in a negative cost
basis. A negative fair value may result from the unfunded commitment being
valued below par.
(6) This investment was on cash non-accrual status as of December 31, 2020 . Cash
non-accrual is inclusive of PIK and other non-cash income where applicable.
63
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OCSI Glick JV Portfolio as of September 30, 2020
Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost Fair Value (3) Notes
AI Ladder (Luxembourg) First Lien Term Loan, LIBOR+4.50% Electrical Components &
Subco S.a.r.l. cash due 7/9/2025 4.65%
Equipment
2,558,168 (4)
First Lien Term Loan, LIBOR+5.25%
Alvogen Pharma US, Inc. cash due 12/31/2023 6.25% Pharmaceuticals 6,994,829 6,808,979 6,773,337
First Lien Term Loan, LIBOR+4.00%
Amplify Finco Pty Ltd. cash due 11/26/2026 4.75% Movies & Entertainment 2,985,000 2,955,150 2,567,100 (4)
First Lien Term Loan, LIBOR+3.75%
Anastasia Parent, LLC cash due 8/11/2025 Personal Products 1,684,513 1,352,429 743,814 (6)
First Lien Term Loan, LIBOR+7.00%
Ancile Solutions, Inc. cash due 6/30/2021 8.00% Application Software 3,201,353 3,194,577
3,178,943 (4)
cash due 12/24/2026 7.00% Airport Services 3,731,250 3,648,256 3,470,063
First Lien Term Loan, LIBOR+4.00% Oil & Gas Equipment &
Brazos Delaware II, LLC cash due 5/21/2025 4.16% Services 4,887,066 4,870,862 3,733,376
California Pizza First Lien Term Loan, LIBOR+8.00%
Kitchen, Inc. cash due 8/23/2022 Restaurants 5,004,489 4,813,378 1,526,369 (6)
Carrols Restaurant First Lien Term Loan, LIBOR+6.25%
Group, Inc. cash due 4/30/2026 7.25% Restaurants 1,118,198 1,062,723 1,109,811 (4)
First Lien Term Loan, LIBOR+5.00% Oil & Gas Refining &
CITGO Petroleum Corp. cash due 3/28/2024 6.00% Marketing 3,591,768 3,555,850 3,421,159 (4)
First Lien Term Loan, LIBOR+4.50%
Connect U.S. Finco LLC cash due 12/11/2026 5.50% Alternative Carriers 4,582,107 4,482,733
4,453,258 (4)
First Lien Term Loan, LIBOR+3.75%
Curium Bidco S.à.r.l. cash due 7/9/2026 3.97% Biotechnology 4,950,000 4,912,875 4,912,875 (4)
eResearch Technology, First Lien Term Loan, LIBOR+4.50%
Inc. cash due 2/4/2027 5.50%
Application Software 2,493,750 2,468,813
2,486,992 (4)
First Lien Term Loan, LIBOR+4.25%
Gigamon, Inc. cash due 12/27/2024 5.25% Systems Software 5,835,900 5,800,375 5,762,951
Second Lien Term Loan, Research & Consulting
Guidehouse LLP LIBOR+8.00% cash due 5/1/2026 8.15% Services 5,000,000 4,982,443 4,825,000 (4)
Helios Software First Lien Term Loan, LIBOR+4.25%
Holdings, Inc. cash due 10/24/2025 4.52% Systems Software 992,422 982,498
980,642 (4)
7.25% Education Services 2,887,500 2,790,416 2,699,813
First Lien Term Loan, LIBOR+5.75%
Integro Parent, Inc. cash due 10/31/2022 6.75% Insurance Brokers 3,277,221 3,249,274 3,011,753
First Lien Delayed Draw Term
7/13/2022 6.50% Alternative Carriers 398,251 328,422 414,511 (5)
First Lien Term Loan, LIBOR+3.50%
LTI Holdings, Inc. cash due 9/6/2025 3.65% Electronic Components 1,386,341 1,100,748 1,294,496
MHE Intermediate First Lien Term Loan, LIBOR+5.00% Diversified Support
Holdings, LLC cash due 3/8/2024 6.00% Services 4,101,250 4,058,056 3,991,747 (4)
First Lien Delayed Draw Term
MHE Intermediate Loan, LIBOR+5.00% cash due Diversified Support
Holdings, LLC 3/8/2024 6.00% Services 828,579 818,379 806,456 (4)
Total MHE Intermediate
Holdings, LLC 4,929,829 4,876,435 4,798,203
First Lien Term Loan, LIBOR+5.50%
MRI Software LLC cash due 2/10/2026 6.50%
Application Software 1,614,980 1,601,301 1,575,954 (4)
First Lien Revolver, LIBOR+5.50%
MRI Software LLC cash due 2/10/2026 Application Software - (1,429) (3,454) (4)(5)
First Lien Delayed Draw Term
Loan, LIBOR+5.50% cash due
MRI Software LLC 2/10/2026 Application Software - (763) (1,568) (4)(5)
Total MRI Software LLC 1,614,980 1,599,109 1,570,932
First Lien Term Loan, LIBOR+4.00%
Navicure, Inc. cash due 10/22/2026 4.15% Health Care Technology 3,980,000 3,960,100 3,899,584
Northern Star Industries First Lien Term Loan, LIBOR+4.75% Electrical Components &
Inc. cash due 3/31/2025 5.75% Equipment 5,362,500 5,345,242 5,121,188
First Lien Term Loan, LIBOR+5.50% Integrated
Northwest Fiber, LLC cash due 4/30/2027 5.66% Telecommunication Services 985,530 950,121 986,762 (4)
First Lien Term Loan, LIBOR+5.00%
Novetta Solutions, LLC cash due 10/17/2022 6.00% Application Software 5,807,651 5,770,724 5,706,017
64
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Cash Interest
Portfolio Company Investment Type Rate (1)(2) Industry Principal Cost
Fair Value (3) Notes
First Lien Term Loan, LIBOR+4.00%
OEConnection LLC cash due 9/25/2026 4.15% Application Software
First Lien Delayed Draw Term Loan,
OEConnection LLC LIBOR+4.00% cash due 9/25/2026 Application Software - (1,048) (2,654) (4)(5)
Total OEConnection LLC 3,727,256 3,708,123 3,682,671
First Lien Term Loan, LIBOR+6.50%
Olaplex, Inc. cash due 1/8/2026 7.50% Personal Products 2,962,500 2,910,467 2,962,500 (4)
First Lien Revolver, LIBOR+6.50%
Olaplex, Inc. cash due 1/8/2025 7.50% Personal Products 162,000 156,467 162,000 (4)(5)
Total Olaplex, Inc. 3,124,500 3,066,934 3,124,500
First Lien Term Loan, LIBOR+4.50%
Sabert Corporation cash due 12/10/2026 5.50% Metal & Glass Containers 1,885,500 1,866,645 1,860,366 (4)
First Lien Term Loan, LIBOR+3.00%
SHO Holding I Corporation cash PIK 2.25% due 4/27/2024 4.00% Footwear 6,239,067 6,212,276 4,382,944
First Lien Term Loan, LIBOR+4.50%
Signify Health, LLC cash due 12/23/2024 5.50% Health Care Services 5,850,000 5,813,914 5,645,250 (4)
First Lien Term Loan, LIBOR+4.25%
Sunshine Luxembourg VII SARL cash due 10/1/2026 5.25% Personal Products 6,451,250 6,418,993 6,427,573
First Lien Term Loan, LIBOR+3.75%
Supermoose Borrower, LLC cash due 8/29/2025 3.90% Application Software 2,878,863 2,692,385 2,595,483 (4)
Surgery Center Holdings, First Lien Term Loan, LIBOR+3.25%
Inc. cash due 9/3/2024 4.25% Health Care Facilities 4,961,637 4,942,580 4,690,806
First Lien Term Loan, LIBOR+4.50% Human Resource &
Tribe Buyer LLC cash due 2/16/2024 5.50% Employment Services 1,616,127 1,613,862 1,224,798
First Lien Term Loan, LIBOR+3.25%
UFC Holdings, LLC cash due 4/29/2026 4.25% Movies & Entertainment 1,557,649 1,540,707 1,534,775 (4)
First Lien Term Loan, LIBOR+4.50%
Verscend Holding Corp. cash due 8/27/2025 4.65% Health Care Technology 1,733,723 1,720,364 1,722,238 (4)
First Lien Term Loan, LIBOR+3.25% Data Processing &
VM Consolidated, Inc. cash due 2/28/2025 3.40% Outsourced Services 4,771,728 4,756,892 4,682,258
Integrated
First Lien Term Loan, LIBOR+6.25% Telecommunication
Windstream Services II, LLC cash due 9/21/2027 7.25% Services 4,987,500 4,788,469 4,839,970 (4)
Second Lien Term Loan, LIBOR+7.75%
WP CPP Holdings, LLC cash due 4/30/2026 8.75% Aerospace & Defense 3,000,000 2,978,243 2,340,000 (4)
Total Portfolio Investments $ 143,138,964 $ 140,599,644 $ 130,760,749
__________
(1) Represents the interest rate as of September 30, 2020 . All interest rates
are payable in cash, unless otherwise noted.
(2) The interest rate on the principal balance outstanding for all floating rate
loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate),
which typically resets semi-annually, quarterly, or monthly at the borrower's
option. The borrower may also elect to have multiple interest reset periods for
each loan. For each of these loans, we have provided the applicable margin over
LIBOR or the alternate base rate based on each respective credit agreement and
the cash interest rate as of period end. All LIBOR shown above is in U.S.
dollars. As of September 30, 2020 , the reference rates for the OCSI Glick JV's
variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%,
the 90-day LIBOR at 0.22% and the 180-day LIBOR at 0.27%. Most loans include an
interest floor, which generally ranges from 0% to 1%.
(3) Represents the current determination of fair value as of September 30, 2020
utilizing a similar technique as us in accordance with ASC 820. However, the
determination of such fair value is not included in our Board of Directors'
valuation process described elsewhere herein.
(4) This investment was held by both us and the OCSI Glick JV as of
September 30, 2020 .
(5) Investment had undrawn commitments. Unamortized fees are classified as
unearned income which reduces cost basis, which may result in a negative cost
basis. A negative fair value may result from the unfunded commitment being
valued below par.
(6) This investment was on cash non-accrual status as of September 30, 2020 .
Cash non-accrual is inclusive of PIK and other non-cash income where applicable.
65--------------------------------------------------------------------------------
The cost and fair value of our aggregate investment in the OCSI Glick JV was$71.2 million and$53.4 million , respectively, as ofDecember 31, 2020 and$72.2 million and$49.4 million , respectively, as ofSeptember 30, 2020 . We and GF Debt Funding amended the Subordinated Notes during the year endedSeptember 30, 2020 to (1) decrease the interest rate to 1-month LIBOR plus 4.5% per annum, (2) extend the maturity date fromOctober 20, 2021 toOctober 20, 2028 and (3) provide that the Subordinated Notes would not pay interest on its previously scheduledApril 15, 2020 ,July 15, 2020 ,October 15, 2020 orJanuary 15, 2021 coupon dates. For the three months endedDecember 31, 2020 , our investment in the Subordinated Notes was on cash non-accrual status and no interest income was earned on our investment in the Subordinated Notes. For the three months endedDecember 31, 2019 , we earned interest income of$1.4 million on our investment in the Subordinated Notes. We did not earn any dividend income for the three months endedDecember 31, 2020 and 2019 with respect to our investment in the LLC equity interests of the OCSI Glick JV. The LLC equity interests of the OCSI Glick JV are income producing to the extent there is residual cash to be distributed on a quarterly basis. Below is certain summarized financial information for the OCSI Glick JV as ofDecember 31, 2020 andSeptember 30, 2020 and for the three months endedDecember 31, 2020 and 2019:
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