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): May 8, 2019

 

 

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))

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.  ☐

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 Global Select Market

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On May 8, 2019, Oaktree Strategic Income Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1.

On May 8, 2019, the Company will host a conference call to discuss its financial results for the fiscal quarter ended March 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 May 8, 2019
99.2    Oaktree Strategic Income Corporation Second Quarter 2019 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: May 8, 2019     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 Second Fiscal Quarter 2019 Financial Results and Declares Distribution of $0.155 Per Share

LOS ANGELES, CA, May 8, 2019 - 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 March 31, 2019.

Financial Highlights for the Quarter Ended March 31, 2019

 

   

Total investment income of $12.5 million ($0.42 per share), up from $11.3 million ($0.38 per share) for the first fiscal quarter of 2019, primarily reflecting a larger average portfolio.

 

   

Net investment income of $5.2 million ($0.18 per share), up from $4.9 million ($0.17 per share) for the first fiscal quarter of 2019, primarily due to higher interest income.

 

   

Net asset value per share of $9.74, up from $9.43 for the first fiscal quarter of 2019, driven by unrealized appreciation in certain debt instruments.

 

   

Originated $64.4 million of new investment commitments and received $38.9 million of proceeds from prepayments, exits, other paydowns and sales.

 

   

A quarterly distribution was declared of $0.155 per share, payable on June 28, 2019 to stockholders of record on June 14, 2019.

Edgar Lee, Chief Executive Officer and Chief Investment Officer, said, “The second quarter was highlighted by NAV appreciation and strong sequential earnings growth. OCSI delivered $0.18 of net investment income per share, an increase of $0.02 over the same quarter a year ago, reflecting our efforts to prudently grow the portfolio. The rebound in the liquid credit markets led to a NAV increase of over 3 percent during the quarter, as credit quality remains excellent, and we continue to defensively position OCSI’s portfolio by taking a highly selective, late-cycle approach to investing.”

Distribution Declaration

The Board of Directors declared a quarterly distribution of $0.155 per share, payable on June 28, 2019 to stockholders of record on June 14, 2019.

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  
     March 31, 2019      December 31,
2018
     March 31, 2018  

Operating results:

        

Interest income

   $ 12,294,014      $ 11,203,567      $ 9,121,457  

PIK interest income

     6,004        7,745        782,055  

Fee income

     181,806        47,635        651,259  
  

 

 

    

 

 

    

 

 

 

Total investment income

     12,481,824        11,258,947        10,554,771  

Net expenses

     7,265,064        6,395,410        5,965,424  
  

 

 

    

 

 

    

 

 

 

Net investment income

     5,216,760        4,863,537        4,589,347  

Net realized and unrealized gains (losses)

     8,478,667        (18,064,228      4,093,292  
  

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 13,695,427      $ (13,200,691    $ 8,682,639  
  

 

 

    

 

 

    

 

 

 

Net investment income per common share

   $ 0.18      $ 0.17      $ 0.16  

Net realized and unrealized gains (losses) per common share

   $ 0.28      $ (0.62    $ 0.13  

Earnings (loss) per common share — basic and diluted

   $ 0.46      $ (0.45    $ 0.29  

 

    

 

 
     As of  
     March 31, 2019      December 31,
2018
     September 30,
2018
 

Select balance sheet and other data:

        

Investment portfolio at fair value

   $ 592,147,418      $ 553,351,420      $ 556,841,828  

Total debt outstanding

     307,656,800        262,156,800        275,056,800  

Net assets

     287,105,458        277,977,380        295,745,420  

Net asset value per share

     9.74        9.43        10.04  

Total leverage

     1.07x        0.94x        0.93x  

Total investment income for the quarter ended March 31, 2019 was $12.5 million, and included $12.3 million of cash interest income from portfolio investments and $0.2 million of fee income. Total investment income was higher as compared to the quarter ended December 31, 2018, primarily due to a larger average portfolio.

Net expenses for the quarter were $7.3 million, a $0.9 million increase from $6.4 million in the prior quarter. The increase was primarily due to a $0.6 million increase in Part I incentive fees (net of waivers) as a result of higher pre-incentive fee net investment income during the quarter and a $0.5 million increase in interest expense as a result of additional borrowings during the quarter, partially offset by a $0.2 million decrease in professional fees and administrator expense.

Net realized and unrealized gains on the investment portfolio for the quarter were $8.5 million, reflecting unrealized appreciation in certain debt investments.

 

2


Portfolio and Investment Activity

 

    

 

 
     As of  
($ in thousands)    March 31,
2019
    December 31,
2018
    March 31,
2018
 

Investments at fair value

   $ 592,147     $ 553,351     $ 542,673  

Number of portfolio companies

     81       79       65  

Average portfolio company debt size

   $ 7,400     $ 7,100     $ 8,500  

Asset class:

      

Senior secured debt

     90.5     90.1     89.0

Unsecured debt

     9.5     9.9     10.7

Equity

     —       —       0.3

Non-accrual debt investments:

      

Non-accrual investments at fair value

   $ —       $ 50     $ 5,434  

Non-accrual investments as a percentage of debt investments

     —       —       1.0

Number of investments on non-accrual

     1       1       3  

Interest rate type:

      

Percentage floating-rate

     100.0     100.0     100.0

Yields:

      

Weighted average yield on debt investments (1)

     8.0     7.8     7.9

Cash component of weighted average yield on debt investments

     7.8     7.7     7.7

Weighted average yield on total portfolio investments (2)

     8.0     7.8     7.7

Investment activity:

      

New investment commitments

   $ 64,400     $ 93,100     $ 94,300  

New funded investment activity (3)

   $ 67,900     $ 87,000     $ 94,700  

Proceeds from prepayments, exits, other paydowns and sales

   $ 38,900     $ 73,100     $ 98,400  

Net new investments (4)

   $ 29,000     $ 13,900     $ (3,700

Number of new investment commitments in new portfolio companies

     9       12       11  

Number of new investment commitments in existing portfolio companies

     5       7       —    

Number of portfolio company exits

     7       9       13  

 

(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 is reflected net of 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 March 31, 2019, the fair value of the Company’s investment portfolio was $592.1 million and was comprised of investments in 81 companies, including the Company’s investments in OCSI Glick JV LLC (“OCSI Glick JV”).

At fair value, 90.5% of the Company’s portfolio as of March 31, 2019 consisted of senior secured floating-rate debt investments, including 85.4% of first liens and 5.1% of second liens, and 9.5% consisted of a subordinated note investment in the OCSI Glick JV.

As of March 31, 2019, there was one investment on which the Company had stopped accruing cash and/or PIK interest or original issue discount (“OID”) income that, in the aggregate, represented 0.13% of the debt portfolio at cost and 0.00% at fair value.

 

3


As of March 31, 2019, the OCSI Glick JV had $167.5 million in assets, including senior secured loans to 34 portfolio companies. The joint venture generated income of $1.5 million for Oaktree Strategic Income during the quarter ended March 31, 2019.

Liquidity and Capital Resources

As of March 31, 2019, the Company had $11.8 million of cash and cash equivalents (including restricted cash), total principal value of debt outstanding of $307.7 million, and $147.3 million of undrawn capacity on its credit facilities, subject to borrowing base and other limitations. The weighted average interest rate on debt outstanding was 4.6% as of March 31, 2019.

As of March 31, 2019, the Company’s total leverage ratio was 1.07x debt-to-equity.

Conference Call Information

Oaktree Strategic Income will host a conference call to discuss its second fiscal quarter results at 12:30 p.m. Eastern Time / 9:30 a.m. Pacific Time on May 8, 2019. 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 10130351, 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 firm 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.

 

4


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.

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

 

     March 31, 2019
(unaudited)
    December 31, 2018
(unaudited)
    September 30,
2018
 
ASSETS       

Investments at fair value:

      

Control investments (cost March 31, 2019: $73,237,461; cost December 31, 2018: $73,440,352; cost September 30, 2018: $73,501,970)

   $ 56,017,403     $ 54,535,309     $ 58,512,170  

Non-control/Non-affiliate investments (cost March 31, 2019: $546,005,001; cost December 31, 2018: $515,681,060; cost September 30, 2018: $499,423,794)

     536,130,015       498,816,111       498,329,658  
  

 

 

   

 

 

   

 

 

 

Total investments at fair value (cost March 31, 2019: $619,242,462; cost December 31, 2018: $589,121,412; cost September 30, 2018: $572,925,764)

     592,147,418       553,351,420       556,841,828  

Cash and cash equivalents

     2,854,506       6,892,598       10,439,023  

Restricted cash

     8,972,775       8,081,210       5,992,764  

Interest, dividends and fees receivable

     2,935,766       3,074,356       3,139,334  

Due from portfolio companies

     52,091       50,826       167,946  

Receivables from unsettled transactions

     —         2,939,282       5,143,533  

Deferred financing costs

     2,199,665       2,329,897       2,469,675  

Derivative asset at fair value

     93,702       —         45,807  

Other assets

     930,541       1,009,609       891,960  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 610,186,464     $ 577,729,198     $ 585,131,870  
  

 

 

   

 

 

   

 

 

 
LIABILITIES AND NET ASSETS       

Liabilities:

      

Accounts payable, accrued expenses and other liabilities

   $ 650,869     $ 552,712     $ 649,781  

Base management fee and incentive fee payable

     1,368,446       1,139,267       1,915,682  

Due to affiliate

     1,047,888       2,855,707       1,700,952  

Interest payable

     2,961,560       2,549,429       1,130,735  

Payables from unsettled transactions

     9,395,443       30,419,142       8,932,500  

Derivative liability at fair value

     —         28,761       —    

Director fees payable

     —         50,000       —    

Credit facilities payable

     307,656,800       262,156,800       275,056,800  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     323,081,006       299,751,818       289,386,450  

Commitments and contingencies

      

Net assets:

      

Common stock, $0.01 par value, 150,000,000 shares authorized; 29,466,768 shares issued and outstanding as of March 31, 2019, December 31, 2018 and September 30, 2018

     294,668       294,668       294,668  

Additional paid-in-capital

     370,751,389       370,751,389       370,751,389  

Accumulated overdistributed earnings

     (83,940,599     (93,068,677     (75,300,637
  

 

 

   

 

 

   

 

 

 

Total net assets (equivalent to $9.74, $9.43 and 10.04 per common share as of March 31, 2019, December 31, 2018 and September 30, 2018, respectively)

     287,105,458       277,977,380       295,745,420  
  

 

 

   

 

 

   

 

 

 

Total liabilities and net assets

   $ 610,186,464     $ 577,729,198     $ 585,131,870  
  

 

 

   

 

 

   

 

 

 

 

6


Oaktree Strategic Income Corporation

Consolidated Statements of Operations

(unaudited)

 

     Three months
ended
March 31, 2019
    Three months
ended
December 31,
2018
    Three months
ended
March 31, 2018
    Six months
ended
March 31, 2019
    Six months
ended
March 31, 2018
 

Interest income:

          

Control investments

   $ 1,472,785     $ 1,485,423     $ 768,550     $ 2,958,208     $ 1,967,247  

Non-control/Non-affiliate investments

     10,769,097       9,651,149       8,290,028       20,420,246       17,054,503  

Interest on cash and cash equivalents

     52,132       66,995       62,879       119,127       133,974  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

     12,294,014       11,203,567       9,121,457       23,497,581       19,155,724  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PIK interest income:

          

Control investments

     —         —         774,562       —         1,069,713  

Non-control/Non-affiliate investments

     6,004       7,745       7,493       13,749       10,756  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total PIK interest income

     6,004       7,745       782,055       13,749       1,080,469  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fee income:

          

Non-control/Non-affiliate investments

     181,806       47,635       651,259       229,441       1,049,308  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total fee income

     181,806       47,635       651,259       229,441       1,049,308  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

     12,481,824       11,258,947       10,554,771       23,740,771       21,285,501  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

          

Base management fee

     1,451,393       1,414,767       1,393,458       2,866,160       2,805,630  

Part I incentive fee

     1,096,144       854,378       480,384       1,950,522       740,106  

Professional fees

     375,601       458,612       745,110       834,213       1,765,293  

Directors fees

     105,278       105,000       130,000       210,278       260,000  

Interest expense

     3,771,530       3,222,954       2,898,165       6,994,484       5,662,642  

Administrator expense

     231,033       434,867       281,931       665,900       561,615  

General and administrative expenses

     283,338       332,226       276,568       615,564       711,778  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     7,314,317       6,822,804       6,205,616       14,137,121       12,507,064  

Fees waived

     (49,253     (427,394     (240,192     (476,647     (357,685
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net expenses

     7,265,064       6,395,410       5,965,424       13,660,474       12,149,379  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

     5,216,760       4,863,537       4,589,347       10,080,297       9,136,122  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unrealized appreciation (depreciation):

          

Control investments

     1,684,985       (3,915,243     (59,931     (2,230,258     (781,106

Affiliate investments

     —         —         134,093       —         210,009  

Non-control/Non-affiliate investments

     6,989,963       (15,770,813     3,045,873       (8,780,850     5,433,031  

Foreign currency forward contract

     122,463       (74,568     —         47,895       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net unrealized appreciation (depreciation)

     8,797,411       (19,760,624     3,120,035       (10,963,213     4,861,934  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Realized gains (losses):

          

Affiliate investments

     —         —         —         —         28  

Non-control/Non-affiliate investments

     (77,774     1,447,306       973,257       1,369,532       (3,409,477

Foreign currency forward contract

     (240,970     249,090       —         8,120       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net realized gains (losses)

     (318,744     1,696,396       973,257       1,377,652       (3,409,449
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses)

     8,478,667       (18,064,228     4,093,292       (9,585,561     1,452,485  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 13,695,427     $ (13,200,691   $ 8,682,639     $ 494,736     $ 10,588,607  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income per common share — basic and diluted

   $ 0.18     $ 0.17     $ 0.16     $ 0.34     $ 0.31  

Earnings (loss) per common share — basic and diluted

   $ 0.46     $ (0.45   $ 0.29     $ 0.02     $ 0.36  

Weighted average common shares outstanding — basic and diluted

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

 

7

EX-99.2

Slide 0

Second Quarter Fiscal Year 2019 Earnings Presentation May 8, 2019 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; 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, 2018 and our quarterly report on Form 10-Q for the quarter ended December 31, 2018. 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 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 March 31, 2019.


Slide 2

Net investment income of $0.18 per share, up 14% year-over-year Highlights for the Quarter Ended March 31, 2019 1 Excludes investments in OCSI Glick JV LLC (“Glick JV”), a joint venture that invests primarily in senior secured loans to middle market companies. 2 There is one investment on non-accrual that has a fair value of $0. 3 Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales. 1 Net asset value of $9.74 per share, up from $9.43 in the prior quarter 2 Significant progress transitioning portfolio 3 Prudent portfolio growth 4 High quality of earnings with cash interest representing 99% total investment income Board of Directors declared a dividend of $0.155 per share, payable on June 28, 2019 to stockholders of record as of June 14, 2019 Rebound in the credit markets primarily contributed to the NAV increase Core investments represented approximately 91% of the portfolio at fair value as of March 31, 20191 Exited one non-core investment during the quarter 0% non-accruals at fair value2 Selectively added $64 million of new investments; $29 million of net new investments3 Increased leverage (debt-to-equity) to 1.07x from 0.94x


Slide 3

Portfolio Summary as of March 31, 2019 (As % of total portfolio, at fair value; $ in millions) (As % of total portfolio, at fair value) Portfolio Composition Top 10 Industries1 Portfolio Characteristics (at fair value) $592 million invested in 81 companies 99.9% of the total portfolio consists of debt investments 100% of debt portfolio consists of floating rate investments 8.0% weighted average yield on debt investments $7 million average debt investment size1 < 1% Note:Numbers may not sum due to rounding. 1Excludes the investments in the Glick JV. 1Excludes multi-sector holdings, which is comprised of investments in the Glick JV.


Slide 4

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 23% Next 15 Investments 25% Remaining 53 Investments 43% Glick JV 9% Average Investment Size1 $7 million Industry Group % of Portfolio Software 14.0% IT Services 9.2% Commercial Services & Supplies 8.9% Aerospace & Defense 6.1% Media 6.0% Healthcare Providers & Services 5.6% Oil, Gas & Consumable Fuels 5.0% Diversified Telecommunication Services 4.9% Professional Services 3.4% Pharmaceuticals 2.9% Diversified Financial Services 2.9% Specialty Retail 2.7% Remaining 18 Industries 28.4% Average Industry Exposure 3.3% As of March 31, 2019 1Excludes investments in the Glick JV. 2Based on GICS industry classifications.


Slide 5

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. 1Excludes negative EBITDA borrowers and recurring revenue software investments. 2 Represents average debt multiples for respective LTM periods, as there were not enough middle market observations during each respective quarter to produce a meaningful average. 2 9/30/17 3/31/18 9/30/18 3/31/19 $67 $83 $110 $125 2


Slide 6

Non-core Investments: 9% of portfolio Non-core Investments: 58% of portfolio Historical Portfolio Progression Non-core performing private loans represent only 6% of OCSI’s portfolio ($ in millions, at fair value) Portfolio by Category1 1Excludes investments in the Glick JV. -84% Non-core Investments +134% Core Investments


Slide 7

Note:Numbers may not sum due to rounding. Non-core Investment Portfolio Detail Non-core Portfolio Characteristics $46 million at fair value of non-core investments remain, consisting of the following: Private Loans $34 million at fair value in three companies Average debt price: 92.0% Liquid Debt Investments $12 million at fair value in four companies Comprised of publicly quoted liquid loans Average debt price: 95.0% Non-accrual One investment valued at $0.0 million at fair value Debt price: 0.0% (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 < 1%


Slide 8

Core Portfolio Progression Nearly 100% of OCSI’s core portfolio is comprised of senior secured investments Core Portfolio by Investment Type (At fair value, $ in millions) ~100% Senior Secured < $1 < $1 < $1 < $1 < $1 < $1 < $1


Slide 9

Q2 2019 Portfolio Originations1 $64 million of new investment commitments $68 million of new funded investments $53 million in 9 new portfolio companies and $12 million in 5 existing portfolio companies Diversified across 9 industries 7.7% weighted average yield at cost on new investments 100% of new debt investment commitments at floating rates Average net leverage through tranche: 2.9x2 New Investment Highlights (As % of new investment commitments, at fair value) New Investment Industry Composition (As % of new investment commitments; $ in millions) New Investment Composition Note:Numbers rounded to the nearest million or percentage point. 1 New investments exclude fundings of existing revolver or delayed draw term loan commitments. 2 Excludes two new recurring revenue technology investments.


Slide 10

Historical Financial Information ($ in thousands, except per share data) Operating Results Q2’19 Q1’19 Q4’18 Q3’18 Q2’18 Mar-19 Dec-18 Sep-18 Jun-18 Mar-18 Interest income $12,294 $11,204 $13,436 $10,792 $9,121 PIK interest income 6 8 536 571 782 Fee income 182 48 752 299 651 Total investment income 12,482 11,259 14,724 11,661 10,555 Base management fee 1,451 1,415 1,437 1,415 1,393 Part I incentive fee 1,096 854 1,181 1,002 480 Interest expense 3,772 3,223 5,482 3,235 2,898 Other operating expenses1 995 1,331 1,057 1,285 1,434 Total expenses 7,314 6,823 9,158 6,937 6,206 Fees recouped/(waived) (49) (427) 3 (348) (240) Net expenses 7,265 6,395 9,161 6,589 5,965 Net investment income 5,217 4,864 5,563 5,072 4,589 Net unrealized appreciation (depreciation) 8,797 (19,761) 2,540 21,214 3,120 Net realized gains (losses) (319) 1,696 256 (24,560) 973 Net increase (decrease) in net assets resulting from operations $13,695 $(13,201) $8,359 $1,725 $8,683 Net investment income per common share $0.18 $0.17 $0.19 $0.17 $0.16 Net realized and unrealized gains (losses) per common share 0.28 (0.62) 0.09 (0.11) 0.13 Earnings (loss) per common share – basic and diluted $0.46 $(0.45) $0.28 $0.06 $0.29 Distributions per common share $0.155 $0.155 $0.155 $0.145 $0.140 1 Includes professional fees, directors fees, administrator expenses and general and administrative expenses.


Slide 11

Historical Financial Information ($ in thousands, except per share data) Select Balance Sheet and Other Data Q2’19 Q1’19 Q4’18 Q3’18 Q2’18 Mar-19 Dec-18 Sep-18 Jun-18 Mar-18 Investment Portfolio (at fair value) $592,147 $553,351 $556,842 $570,794 $542,673 Debt Outstanding1 307,657 262,157 275,057 258,550 257,978 Total Net Assets 287,105 277,977 295,745 291,953 294,501 Net Asset Value per share $9.74 $9.43 $10.04 $9.91 $9.99 Total Leverage 1.07x 0.94x 0.93x 0.89x 0.88x Weighed Average Yield on Debt Investments2 8.0% 7.8% 7.7% 7.9% 7.9% Cash Component of Weighted Average Yield on Debt Investments 7.8% 7.7% 7.6% 7.7% 7.7% Weighted Average Yield on Total Portfolio Investments3 8.0% 7.8% 7.7% 7.8% 7.7% Weighted Average Interest Rate on Debt Outstanding 4.6% 4.5% 4.3% 4.3% 3.7% 1 Net of unamortized financing costs. 2Annual 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. 3Annual 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.


Slide 12

Historical Portfolio Activity  ($ in thousands) Q2’19 Q1’19 Q4’18 Q3’18 Q2’18 Mar-19 Dec-18 Sep-18 Jun-18 Mar-18 Investments at Fair Value $592,147 $553,351 $556,842 $570,794 $542,673 Number of Portfolio Companies 81 79 75 72 65 Average Portfolio Company Debt Investment Size $7,400 $7,100 $7,600 $8,100 $8,500 Asset Class: Senior Secured Debt 90.5% 90.1% 89.1% 89.7% 89.0% Glick JV 9.5% 9.9% 10.5% 10.1% 10.7% Equity 0.0% 0.0% 0.4% 0.2% 0.3% Interest Rate Type: % Floating Rate 100% 100% 100% 100% 100% Investment Activity at Cost: New Investment Commitments $64,400 $93,100 $91,800 $113,600 $94,300 New Funded Investment Activity1 67,900 87,000 91,000 114,300 94,700 Proceeds from Prepayments, Exits, Other Paydowns and Sales 38,900 73,100 101,700 83,800 98,400 Net New Investments2 29,000 13,900 (10,700) 30,500 (3,700) Number of New Investment Commitments in New Portfolio Companies 9 12 13 15 11 Number of New Investment Commitments in Existing Portfolio Companies 5 7 2 1 0 Number of Portfolio Company Exits 7 9 9 8 12 1 New funded investment activity is reflected net of drawdowns on existing revolver commitments. 2Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales.


Slide 13

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


Slide 14

Capital Structure Overview ($ in millions) (As % of total funding sources) ($ in millions) Funding Sources Interest Rate Type Historical Principal Outstanding and Leverage Ratio Committed Principal Outstanding Interest Rate Maturity Deutsche Bank Facility $250 $165 LIBOR+1.90% 9/24/2019 Citibank Revolving Credit Facility 180 134 LIBOR+1.70% / 2.25%1 7/18/2023 East West Bank Facility 25 9 LIBOR+2.85% 1/6/2021 Total $455 $308 As of March 31, 2019 1 Interest rate spread depends on asset type. Target Leverage Ratio: 1.2x-1.6x debt-to-equity Multiple capital sources provides us with flexibility to optimize new investment fundings in order to maintain competitive borrowing costs Prudently deploying leverage toward long-term target ratio range


Slide 15

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 Rotation into higher-yielding proprietary investments 4 Current total leverage of 1.07x debt-to-equity; target leverage range: 1.2x-1.6x debt-to-equity Prudently deploying capital in new investment opportunities in order to reach long term target range Originated $10 million of investments across 4 issuers during Q2 2019 Total remaining investment capacity of approximately $34 million (assuming 2.0x leverage) Second liens represented 5% of the portfolio at fair value $75 million or 13% of the portfolio at fair value comprised of broadly syndicated loans priced lower than LIBOR + 4.00% As of March 31, 2019 We believe OCSI is well-positioned to enhance return on equity


Slide 16

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