8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 6, 2020

 

 

Oaktree Strategic Income Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Delaware    814-01013    61-1713295

(State or other jurisdiction

of incorporation)

   (Commission File Number)    (IRS Employer Identification No.)

 

333 South Grand Avenue, 28th Floor

Los Angeles, CA

   90071
(Address of principal executive offices)    (Zip Code)

Registrant’s telephone number, including area code: (213) 830-6300

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.01 per share   OCSI   The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging Growth Company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02.

Results of Operations and Financial Condition.

On February 6, 2020, Oaktree Strategic Income Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended December 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1.

On February 6, 2020, the Company will host a conference call to discuss its financial results for the fiscal quarter ended December 31, 2019. In connection therewith, the Company provided an investor presentation on its website at http://www.oaktreestrategicincome.com. A copy of the investor presentation is attached hereto as Exhibit 99.2.

The information disclosed under this Item 2.02, including Exhibits 99.1 and 99.2 hereto, is being “furnished” and is not deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor is it deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits

 

99.1    Press release of Oaktree Strategic Income Corporation dated February 6, 2020
99.2    Oaktree Strategic Income Corporation First Quarter 2020 Earnings Presentation


SIGNATURE

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    OAKTREE STRATEGIC INCOME CORPORATION
Date: February 6, 2020     By:   /s/ Mel Carlisle
      Name: Mel Carlisle
      Title: Chief Financial Officer and Treasurer
EX-99.1

Exhibit 99.1

 

LOGO

Oaktree Strategic Income Corporation Announces First Fiscal Quarter 2020 Financial Results and Declares Distribution of $0.155 Per Share

LOS ANGELES, CA, February 6, 2020 - Oaktree Strategic Income Corporation (NASDAQ: OCSI) (“Oaktree Strategic Income” or the “Company”), a specialty finance company, today announced its unaudited financial results for the fiscal quarter ended December 31, 2019.

Financial Highlights for the Quarter Ended December 31, 2019

 

   

Total investment income was $11.6 million ($0.39 per share) for the first fiscal quarter of 2020, down from $12.1 million ($0.41 per share) for the fourth fiscal quarter of 2019, primarily reflecting lower interest income due to decreases in LIBOR and a smaller average investment portfolio.

 

   

Net investment income was $4.7 million ($0.16 per share) for the first fiscal quarter of 2020, as compared with $5.1 million ($0.17 per share) for the fourth fiscal quarter of 2019, primarily reflecting lower investment income.

 

   

Net asset value (“NAV”) per share was $9.71 as of December 31, 2019, up $0.06 as compared to $9.65 as of September 30, 2019. The increase in NAV was primarily due to unrealized appreciation on the investment portfolio.

 

   

Originated $34.9 million of new investment commitments and received $46.0 million of proceeds from prepayments, exits, other paydowns and sales during the quarter ended December 31, 2019.

 

   

A quarterly distribution was declared of $0.155 per share, payable on March 31, 2020 to stockholders of record on March 13, 2020.

Armen Panossian, Chief Executive Officer and Chief Investment Officer, said, “OCSI produced solid first-quarter results, highlighted by NAV appreciation, steady progress rotating out of non-core investments, and selective originations. We exited two non-core positions, and we originated $35 million in mostly first lien investments that are consistent with our late-cycle investment approach. Credit quality remains excellent with no investments on non-accrual, and with 97% of the non-JV portfolio in first lien loans, we believe we are well-positioned to deliver strong risk-adjusted returns to our shareholders.”

Distribution Declaration

The Board of Directors declared a quarterly distribution of $0.155 per share, payable on March 31, 2020 to stockholders of record on March 13, 2020.

Distributions are paid primarily from distributable (taxable) income. To the extent taxable earnings for a fiscal taxable year fall below the total amount of distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to the Company’s stockholders.

 

1


Results of Operations

    

 

 
     For the three months ended  
     December 31, 2019
(unaudited)
     September 30, 2019
(unaudited)
     December 31, 2018
(unaudited)
 

Operating results:

        

Interest income

   $ 11,211,885      $ 11,975,868      $ 11,203,567  

PIK interest income

     3,563        9,633        7,745  

Fee income

     387,665        92,675        47,635  
  

 

 

    

 

 

    

 

 

 

Total investment income

     11,603,113        12,078,176        11,258,947  

Net expenses

     6,875,533        6,936,609        6,395,410  
  

 

 

    

 

 

    

 

 

 

Net investment income

     4,727,580        5,141,567        4,863,537  

Net realized and unrealized gains (losses)

     1,406,674        (2,145,221      (18,064,228
  

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 6,134,254      $ 2,996,346      $ (13,200,691
  

 

 

    

 

 

    

 

 

 

Net investment income per common share

   $ 0.16      $ 0.17      $ 0.17  

Net realized and unrealized gains (losses) per common share

   $ 0.05      $ (0.07    $ (0.62

Earnings (loss) per common share — basic and diluted

   $ 0.21      $ 0.10      $ (0.45

 

    

 

 
     As of  
     December 31, 2019
(unaudited)
     September 30,
2019
 

Select balance sheet and other data:

     

Investment portfolio at fair value

   $ 584,453,747      $ 597,104,447  

Total debt outstanding

     306,156,800        294,656,800  

Net assets

     286,016,910        284,450,006  

Net asset value per share

     9.71        9.65  

Total leverage

     1.07x        1.04x  

Total investment income for the quarter ended December 31, 2019 was $11.6 million and included $11.2 million of interest income from portfolio investments and $0.4 million of fee income. Total investment income was $0.5 million lower as compared to the quarter ended September 30, 2019, primarily due to lower interest income earned due to decreases in LIBOR that impacted our floating rate investments and a smaller average investment portfolio.

Net expenses of $6.9 million for the quarter ended December 31, 2019 were relatively flat as compared to the fourth quarter of 2019. This was primarily attributable to a $0.2 million decrease in interest expense resulting from decreases in LIBOR, offset by a $0.1 million increase in Part I incentive fees (net of waivers), which was primarily attributable to lower investment income and lower fees waived in connection with the expiration of the two-year contractual fee waiver period1, as well as a $0.1 million increase in professional fees.

Net realized and unrealized gains on the investment portfolio for the quarter were $1.4 million, primarily reflecting unrealized appreciation on certain debt investments.

 

 

1

To ensure compliance with Section 15(f) of the Investment Company Act, Oaktree Capital Management, L.P. (“Oaktree”) entered into a two-year contractual fee waiver with the Company, which ended on October 17, 2019, pursuant to which Oaktree waived any management or incentive fees payable under the investment advisory agreement that exceeded what would have been paid to the Company’s former investment adviser in the aggregate under the former investment advisory agreement.

 

2


Portfolio and Investment Activity

 

    

 

 
     As of  
($ in thousands)    December 31, 2019
(unaudited)
    September 30, 2019
(unaudited)
    December 31, 2018
(unaudited)
 

Investments at fair value

   $ 584,454     $ 597,104     $ 553,351  

Number of portfolio companies

     84       84       79  

Average portfolio company debt size

   $ 7,100     $ 7,200     $ 7,100  

Asset class:

      

Senior secured debt

     90.7     90.9     90.1

OCSI Glick JV

     9.3     9.1     9.9

Equity

     —       —       —  

Non-accrual debt investments:

      

Non-accrual investments at fair value

   $ —       $ —       $ 50  

Non-accrual investments as a percentage of debt investments

     —       —       —  

Number of investments on non-accrual

     —         —         1  

Interest rate type:

      

Percentage floating-rate

     100.0     100.0     100.0

Yields:

      

Weighted average yield on debt investments (1)

     7.2     7.4     7.8

Cash component of weighted average yield on debt investments

     7.0     7.3     7.7

Weighted average yield on total portfolio investments (2)

     7.2     7.4     7.8

Investment activity:

      

New investment commitments

   $ 34,900     $ 50,800     $ 93,100  

New funded investment activity (3)

   $ 37,900     $ 51,100     $ 87,000  

Proceeds from prepayments, exits, other paydowns and sales

   $ 46,000     $ 40,200     $ 73,100  

Net new investments (4)

   $ (8,100   $ 10,900     $ 13,900  

Number of new investment commitments in new portfolio companies

     9       7       12  

Number of new investment commitments in existing portfolio companies

     2       1       7  

Number of portfolio company exits

     9       5       9  

 

(1)

Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments, including the Company’s share of the return on debt investments in the OCSI Glick JV.

(2)

Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments and dividend income, including the Company’s share of the return on debt investments in the OCSI Glick JV.

(3)

New funded investment activity includes drawdowns on existing revolver commitments.

(4)

Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales.

As of December 31, 2019, the fair value of the Company’s investment portfolio was $584.5 million and was comprised of investments in 84 companies, including the Company’s investments in OCSI Glick JV LLC (“OCSI Glick JV”).

As of December 31, 2019, 90.7% of the Company’s portfolio consisted of senior secured floating-rate debt investments, including 88.0% of first liens and 2.7% of second liens, and 9.3% consisted of a subordinated note investment in the OCSI Glick JV at fair value.

As of December 31, 2019, there were no investments on which the Company had stopped accruing cash and/or payment-in-kind interest or original issue discount income.

As of December 31, 2019, the OCSI Glick JV had $171.4 million in assets, including senior secured loans to 42 portfolio companies. The joint venture generated income of $1.4 million for Oaktree Strategic Income during the quarter ended December 31, 2019. As of December 31, 2019, OCSI Glick JV had $25.6 million of undrawn capacity on its senior revolving credit facility.

 

3


Liquidity and Capital Resources

As of December 31, 2019, the Company had $18.0 million of cash and cash equivalents (including restricted cash), total principal value of debt outstanding of $306.2 million, and $148.8 million of undrawn capacity on its credit facilities, subject to borrowing base and other limitations. The weighted average interest rate on debt outstanding was 4.0% and 4.2% as of December 31, 2019 and September 30, 2019, respectively.

The Company’s total leverage ratio was 1.07x and 1.04x debt-to-equity as of December 31, 2019 and September 30, 2019, respectively.

Conference Call Information

Oaktree Strategic Income will host a conference call to discuss its first fiscal quarter results at 12:30 p.m. Eastern Time / 9:30 a.m. Pacific Time on February 6, 2020. The conference call may be accessed by dialing (877) 507-4376 (U.S. callers) or +1 (412) 317-5239 (non-U.S. callers), participant password “Oaktree Strategic Income.” During the earnings conference call, Oaktree Strategic Income intends to refer to an investor presentation that will be available on the Investors section of the Oaktree Strategic Income website, www.oaktreestrategicincome.com. Alternatively, a live webcast of the conference call can be accessed on Oaktree Strategic Income’s website.

For those individuals unable to listen to the live broadcast of the conference call, a replay will be available on Oaktree Strategic Income’s website, or by dialing (877) 344-7529 (U.S. callers) or +1 (412) 317-0088 (non-U.S. callers), access code 10138076, beginning approximately one hour after the broadcast.

About Oaktree Strategic Income Corporation

Oaktree Strategic Income Corporation (NASDAQ:OCSI) is a specialty finance company dedicated to providing customized capital solutions for middle-market companies in both the syndicated and private placement markets. The Company seeks 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. The Company is regulated as a business development company under the Investment Company Act of 1940, as amended. Oaktree Strategic Income is managed by Oaktree Capital Management, L.P. For additional information, please visit Oaktree Strategic Income’s website at www.oaktreestrategicincome.com.

Forward-Looking Statements

Some of the statements in this press release constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements may include statements as to: our future operating results and distribution projections; our business prospects and the prospects of our portfolio companies; and the impact of the investments that we expect to make. 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 press release 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 “Risk Factors” and elsewhere in our annual report on Form 10-K. Other factors that could cause actual results to differ materially include: changes in the economy, financial markets and political environment; risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; 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; 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 presentation on information available to us on the date of this presentation, 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 the Securities and Exchange Commission, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

 

4


Contacts

Investor Relations:

Oaktree Strategic Income Corporation

Michael Mosticchio

(212) 284-1900

ocsi-ir@oaktreecapital.com

Media Relations:

Financial Profiles, Inc.

Moira Conlon

(310) 478-2700

mediainquiries@oaktreecapital.com

 

5


Oaktree Strategic Income Corporation

Consolidated Statements of Assets and Liabilities

 

     December 31, 2019
(unaudited)
    September 30,
2019
 

ASSETS

    

Investments at fair value:

    

Control investments (cost December 31, 2019: $73,168,024; cost September 30, 2019: $73,189,664)

   $ 54,169,710     $ 54,326,418  

Non-control/Non-affiliate investments (cost December 31, 2019: $538,934,038; cost September 30, 2019: $553,679,070)

     530,284,037       542,778,029  
  

 

 

   

 

 

 

Total investments at fair value (cost December 31, 2019: $612,102,062; cost September 30, 2019: $626,868,734)

     584,453,747       597,104,447  

Cash and cash equivalents

     9,525,141       5,646,899  

Restricted cash

     8,469,933       8,404,733  

Interest, dividends and fees receivable

     3,031,841       3,813,730  

Due from portfolio companies

     806,914       350,597  

Receivables from unsettled transactions

     4,105,042       5,091,671  

Deferred financing costs

     1,923,373       2,139,299  

Derivative asset at fair value

     —         20,876  

Other assets

     817,916       761,462  
  

 

 

   

 

 

 

Total assets

   $ 613,133,907     $ 623,333,714  
  

 

 

   

 

 

 

LIABILITIES AND NET ASSETS

    

Liabilities:

    

Accounts payable, accrued expenses and other liabilities

   $ 932,315     $ 901,410  

Base management fee and incentive fee payable

     1,255,344       1,368,431  

Due to affiliate

     1,404,411       1,457,007  

Interest payable

     2,545,744       2,750,587  

Payables from unsettled transactions

     14,653,671       37,724,473  

Derivative liability at fair value

     168,712       —    

Director fees payable

     —         25,000  

Credit facilities payable

     306,156,800       294,656,800  
  

 

 

   

 

 

 

Total liabilities

     327,116,997       338,883,708  

Commitments and contingencies

    

Net assets:

    

Common stock, $0.01 par value per share, 150,000,000 shares authorized; 29,466,768 shares issued and outstanding as of December 31, 2019 and September 30, 2019

     294,668       294,668  

Additional paid-in-capital

     369,199,332       369,199,332  

Accumulated overdistributed earnings

     (83,477,090     (85,043,994
  

 

 

   

 

 

 

Total net assets (equivalent to $9.71 and $9.65 per common share as of December 31, 2019 and September 30, 2019, respectively)

     286,016,910       284,450,006  
  

 

 

   

 

 

 

Total liabilities and net assets

   $ 613,133,907     $ 623,333,714  
  

 

 

   

 

 

 

 

6


Oaktree Strategic Income Corporation

Consolidated Statements of Operations

(unaudited)

 

     Three months ended
December 31, 2019

(unaudited)
    Three months ended
September 30, 2019

(unaudited)
    Three months ended
December 31, 2018

(unaudited)
 

Interest income:

      

Control investments

   $ 1,436,726     $ 1,500,837     $ 1,485,423  

Non-control/Non-affiliate investments

     9,744,449       10,443,068       9,651,149  

Interest on cash and cash equivalents

     30,710       31,963       66,995  
  

 

 

   

 

 

   

 

 

 

Total interest income

     11,211,885       11,975,868       11,203,567  
  

 

 

   

 

 

   

 

 

 

PIK interest income:

      

Non-control/Non-affiliate investments

     3,563       9,633       7,745  
  

 

 

   

 

 

   

 

 

 

Total PIK interest income

     3,563       9,633       7,745  
  

 

 

   

 

 

   

 

 

 

Fee income:

      

Non-control/Non-affiliate investments

     387,665       92,675       47,635  
  

 

 

   

 

 

   

 

 

 

Total fee income

     387,665       92,675       47,635  
  

 

 

   

 

 

   

 

 

 

Total investment income

     11,603,113       12,078,176       11,258,947  
  

 

 

   

 

 

   

 

 

 

Expenses:

      

Base management fee

     1,505,526       1,511,365       1,414,767  

Part I incentive fee

     992,138       1,048,786       854,378  

Professional fees

     373,186       303,380       458,612  

Directors fees

     105,000       105,000       105,000  

Interest expense

     3,426,891       3,673,356       3,222,954  

Administrator expense

     249,914       231,756       434,867  

General and administrative expenses

     273,479       260,501       332,226  
  

 

 

   

 

 

   

 

 

 

Total expenses

     6,926,134       7,134,144       6,822,804  

Fees waived

     (50,601     (197,535     (427,394
  

 

 

   

 

 

   

 

 

 

Net expenses

     6,875,533       6,936,609       6,395,410  
  

 

 

   

 

 

   

 

 

 

Net investment income

     4,727,580       5,141,567       4,863,537  
  

 

 

   

 

 

   

 

 

 

Unrealized appreciation (depreciation):

      

Control investments

     (135,068     (1,287,873     (3,915,243

Non-control/Non-affiliate investments

     2,251,040       1,106,013       (15,770,813

Foreign currency forward contract

     (189,588     33,508       (74,568
  

 

 

   

 

 

   

 

 

 

Net unrealized appreciation (depreciation)

     1,926,384       (148,352     (19,760,624
  

 

 

   

 

 

   

 

 

 

Realized gains (losses):

      

Non-control/Non-affiliate investments

     (277,225     (2,187,603     1,447,306  

Foreign currency forward contract

     (242,485     190,734       249,090  
  

 

 

   

 

 

   

 

 

 

Net realized gains (losses)

     (519,710     (1,996,869     1,696,396  
  

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses)

     1,406,674       (2,145,221     (18,064,228
  

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 6,134,254     $ 2,996,346     $ (13,200,691
  

 

 

   

 

 

   

 

 

 

Net investment income per common share — basic and diluted

   $ 0.16     $ 0.17     $ 0.17  

Earnings (loss) per common share — basic and diluted

   $ 0.21     $ 0.10     $ (0.45

Weighted average common shares outstanding — basic and diluted

     29,466,768       29,466,768       29,466,768  

 

7

EX-99.2

Slide 0

First Quarter Fiscal Year 2020 Earnings Presentation February 6, 2020 Nasdaq: OCSI Exhibit 99.2


Slide 1

Forward Looking Statements Some of the statements in this presentation constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this presentation may include statements as to: our future operating results and distribution projections; the ability of Oaktree Capital Management, L.P. (“Oaktree”) to reposition our portfolio and to implement Oaktree’s future plans with respect to our business; the ability of Oaktree 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 presentation 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 “Risk Factors” and elsewhere in our annual report on Form 10-K for the fiscal year ended September 30, 2019. 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; 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; 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 presentation on information available to us on the date of this presentation, 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 the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Unless otherwise indicated, data provided herein are dated as of December 31, 2019.


Slide 2

Summary of Results for the Quarter Ended December 31, 2019 $0.16 per share as of December 31, 2019, as compared to $0.17 for the quarter ended September 30, 2019 Net Investment Income Net Asset Value $9.71 per share as of December 31, 2019, up $0.06 as compared to $9.65 as of September 30, 2019 Dividends Paid a distribution of $0.155 per share during the quarter ended December 31, 2019 Board of Directors declared a dividend of $0.155 per share, payable on March 31, 2020 to stockholders of record as of March 13, 2020 Investment Activity $35 million of new investment commitments and received $46 million of proceeds from prepayments, exits, other paydowns and sales 94% of new investment commitments first lien; 6% second lien 6.6% weighted average yield on new investment commitments Non-Core Investment Exits Exited $7 million of non-core investments in two companies $36 million (7% of the total portfolio) at fair value of non-core investments in four companies remained as of December 31, 20191 93% of portfolio comprised of core investments1 Investment Portfolio $584 million of investments at fair value in 84 companies 7.2% weighted average debt portfolio yield 100% of the debt portfolio was performing and there were no investments on non-accrual status 1 Excludes investments in OCSI Glick JV LLC (“Glick JV”), a joint venture that invests primarily in middle market and other corporate debt securities.


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Portfolio Summary as of December 31, 2019 (As % of total portfolio at fair value; $ in millions) (As % of total portfolio at fair value) Portfolio Composition Top 10 Industries2,3 Portfolio Characteristics (at fair value) $584 million invested in 84 companies 99.9% of the total portfolio consists of debt investments 100% of debt portfolio consists of floating rate investments 7.2% weighted average yield on debt investments $7 million average debt investment size1 No investments on non-accrual < 1% Note:Numbers may not sum due to rounding. 1Excludes investments in the Glick JV. 2Excludes multi-sector holdings, which is comprised of investments in the Glick JV. 3Based on GICS sub-industry classifications.


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Portfolio Diversity OCSI’s portfolio is diverse across borrowers and industries (As % of total portfolio at fair value) (As % of total portfolio at fair value) Portfolio by Industry1,2 Diversity by Investment Size Top 10 Investments 22% Next 15 Investments 23% Remaining 58 Investments 46% Glick JV 9% Industry Group % of Portfolio Software 19.0% Commercial Services & Supplies 8.8% IT Services 8.1% Media 5.9% Aerospace & Defense 5.8% Oil, Gas & Consumable Fuels 4.7% Diversified Telecommunication Services 4.5% Health Care Providers & Services 3.1% Entertainment 2.9% Diversified Financial Services 2.9% Health Care Equipment & Supplies 2.6% Professional Services 2.4% Remaining 21 Industries 29.4% As of December 31, 2019 1Excludes investments in the Glick JV. 2Based on GICS industry classifications.


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Debt Portfolio Company Metrics OCSI’s portfolio has transitioned into higher quality, larger borrowers with lower leverage, reflecting our defensive investment approach Debt Portfolio Company EBITDA1 Debt Portfolio Company Leverage1 Median Debt Portfolio Company EBITDA ($ in millions) Source: S&P Global Market Intelligence. 1 Excludes negative EBITDA borrowers and recurring revenue software investments. 2Represents average debt multiples for 1Q-3Q 2019. 3Represents average debt multiples for CY 2019. 2 9/30/17 9/30/18 9/30/19 12/31/19 $67 $110 $158 $153 3


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Non-core Investments: 7% of portfolio Non-core Investments: 58% of portfolio Historical Portfolio Progression1 100% of core debt portfolio is comprised of senior secured loans ($ in millions; at fair value) ($ in millions; at fair value) Non-core Portfolio Core Debt Portfolio 1Excludes investments in the Glick JV. -88% Non-core Investments +136% Core Investments


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As of December 31, 2019 Note:Numbers may not sum due to rounding. Non-core Investment Portfolio Detail Non-core Portfolio Characteristics Private Loans $26 million at fair value in two companies Average debt price: 89.1% Liquid Debt Investments $10 million at fair value in two companies Average debt price: 96.5% Exited $7 million in two companies Investments exited above previous fair value mark (As % of non-core investment portfolio at fair value; $ in millions) Non-core Investments by Type (At fair value; $ in millions) Non-core Portfolio Composition $36


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Q1 2020 Portfolio Originations $35 million of new investment commitments $31 million in 9 new portfolio companies and $4 million in two existing portfolio companies Diversified across 9 industries $38 million of new funded investments1 6.6% weighted average yield at cost on new investments 100% of new debt investment commitments at floating rates 100% of new investments also held by other Oaktree funds $41 million of originations from January 1, 2020 through January 31, 2020 8.6% weighted average yield at cost 100% first lien New Investment Highlights ($ in millions) Historical Originations, Exits and Leverage (As % of new investment commitments; $ in millions) New Investment Composition Note:Numbers rounded to the nearest million or percentage point and may not sum due to rounding. 1 New funded investments includes drawdowns on existing revolver commitments. 2Investment exits includes proceeds from prepayments, exits, other paydowns and sales. 2 1


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Financial Highlights 1Net of unamortized financing costs. ($ in thousands, except per share amounts) As of 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Net Investment Income per Share $0.16 $0.17 $0.20 $0.18 $0.17 Net Realized and Unrealized Gains (Losses) per Share $0.05 $(0.07) $(0.08) $0.28 $(0.62) Earnings (Loss) per Share $0.21 $0.10 $0.12 $0.46 $(0.45) Distributions per Share $0.155 $0.155 $0.155 $0.155 $0.155 NAV per Share $9.71 $9.65 $9.71 $9.74 $9.43 Weighted Average Shares Outstanding 29,467 29,467 29,467 29,467 29,467 Investment Portfolio (at Fair Value) $584,454 $597,104 $588,582 $592,147 $553,351 Total Assets $613,134 $623,334 $613,810 $610,186 $577,729 Total Debt Outstanding1 $306,157 $294,657 $308,257 $307,657 $262,157 Total Net Assets $286,017 $284,450 $286,021 $287,105 $277,977 Total Leverage 1.07x 1.04x 1.08x 1.07x 0.94x Weighted Average Interest Rate on Debt Outstanding 4.0% 4.2% 4.5% 4.6% 4.5%


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Portfolio Highlights ($ in thousands) As of 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Investments at Fair Value $584,454 $597,104 $588,582 $592,147 $553,351 Number of Portfolio Companies 84 84 82 81 79 Average Portfolio Company Debt Investment Size $7,100 $7,200 $7,300 $7,400 $7,100 Asset Class: First Lien 88.0% 88.5% 88.4% 85.4% 85.7% Second Lien 2.7% 2.4% 2.1% 5.1% 4.4% Glick JV 9.3% 9.1% 9.5% 9.5% 9.9% Equity 0.0% 0.0% 0.0% 0.0% 0.0% Interest Rate Type for Debt Investments: % Floating Rate 100% 100% 100% 100% 100% Yields: Weighted Average Yield on Debt Investments1 7.2% 7.4% 7.8% 8.0% 7.8% Cash Component of Weighted Average Yield on Debt Investments 7.0% 7.3% 7.6% 7.8% 7.7% Weighted Average Yield on Total Portfolio Investments2 7.2% 7.4% 7.8% 8.0% 7.8% 1Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments, including our share of the return on the debt investments in the Glick JV. 2Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments and dividend income, including our share of the return on the debt investments in the Glick JV.


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Investment Activity ($ in thousands) As of 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 New Investment Commitments $34,900 $50,800 $38,800 $64,400 $93,100 New Funded Investment Activity1 $37,900 $51,100 $41,300 $67,900 $87,000 Proceeds from Prepayments, Exits, Other Paydowns and Sales $46,000 $40,200 $43,000 $38,900 $73,100 Net New Investments2 $(8,100) $10,900 $(1,700) $29,000 $13,900 New Investment Commitments in New Portfolio Companies 9 7 5 9 12 New Investment Commitments in Existing Portfolio Companies 2 1 4 5 7 Portfolio Company Exits 9 5 4 7 9 Weighted Average Yield at Cost on New Debt Investments 6.6% 6.8% 6.9% 7.7% 6.8% 1New funded investment activity includes drawdowns on existing revolver commitments. 2Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales.


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Historical Statement of Operations ($ in thousands, except per share data) For the three months ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Interest income $11,212 $11,976 $13,522 $12,294 $11,204 PIK interest income 4 10 3 6 8 Fee income 388 93 284 182 48 Total investment income 11,603 12,078 13,809 12,482 11,259 Base management fee 1,506 1,511 1,498 1,451 1,415 Part I incentive fee 992 1,049 1,295 1,096 854 Interest expense 3,427 3,673 3,860 3,772 3,223 Other operating expenses1 1,002 901 1,052 995 1,331 Total expenses 6,926 7,134 7,705 7,314 6,823 Fees waived (51) (198) 185 (49) (427) Net expenses 6,876 6,937 7,890 7,265 6,395 Net investment income 4,728 5,142 5,918 5,217 4,864 Net unrealized appreciation (depreciation) 1,926 (148) (2,594) 8,797 (19,761) Net realized gains (losses) (520) (1,997) 158 (319) 1,696 Net increase (decrease) in net assets resulting from operations $6,134 $2,996 $3,483 $13,695 $(13,201) 1Includes professional fees, directors fees, administrator expenses and general and administrative expenses.


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Net Asset Value Per Share Bridge Note:Net asset value per share amounts are based on the shares outstanding at each respective quarter end. Net investment income per share, net unrealized appreciation / (depreciation), and net realized gain / (loss) are based on the weighted average number of shares outstanding for the period. 1Excludes reclassifications of net unrealized appreciation / (depreciation) to net realized gains / (losses) as a result of investments exited during the quarter. 1 1


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Capital Structure Overview ($ in millions) (As % of total funding sources) ($ in millions) Funding Sources Funding Source by Type Historical Principal Outstanding and Leverage Ratio Committed Principal Outstanding Interest Rate Maturity Deutsche Bank Facility $250 $164 LIBOR+2.10% 6/30/2020 Citibank Revolving Credit Facility 180 126 LIBOR+1.70% / 2.25%1 7/18/2023 East West Bank Facility 25 16 LIBOR+2.85% 1/6/2021 Total $455 $306 As of December 31, 2019 1Interest rate spread depends on asset type. Target Leverage Ratio: 1.2x-1.6x debt-to-equity Multiple capital sources provide us with flexibility to optimize new investment fundings in order to maintain competitive borrowing costs Prudently deploying leverage toward long-term target ratio range 100% of debt sources are floating rate


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Increase portfolio size to operate within long term target leverage ratio range Opportunities to Increase Return on Equity 1 Utilize additional investment capacity at the Glick JV 2 Modest increase in second lien investments 3 Current total leverage of 1.07x debt-to-equity, below target leverage range of 1.2x to 1.6x debt-to-equity Would need to invest approximately $37 million in order to reach 1.2x debt-to-equity Prudently deploying capital in new investment opportunities in order to reach long-term target range $171 million total assets, including senior secured loans to 42 portfolio companies Originated $25 million of investments across 10 issuers during the quarter ended December 31, 2019 1.6x leverage (debt-to-equity), below long-term target leverage level of 2.0x $24 million of remaining investment capacity (assuming 2.0x leverage) Second liens represented 3% of the portfolio at fair value Ample capacity to selectively invest in second lien loans As of December 31, 2019 We believe OCSI is well-positioned to enhance return on equity


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Contact: Michael Mosticchio, Investor Relations ocsi-ir@oaktreecapital.com