Blue Owl Capital Corporation III
Blue Owl Capital Corporation III — Blue Owl Capital Corp III — Merger or Acquisition (August 2024)
24 slides from Blue Owl Capital Corporation III's merger presentation, Aug 7, 2024
Slide 1: Overview of Proposed Merger Between OBDC and OBDE
August 2024 Blue Owl Capital Corporation (“OBDC”) and Blue Owl Capital Corporation III (“OBDE”) Overview of Proposed Merger Between OBDC and OBDE Highly Confidential. Trade Secret.
Slide 2: Benefits of Proposed Merger to Shareholders
Anticipated Merger between two known, high quality diversified portfolios with significant investment overlap that have been under Blue Owl management since inception Benefits of Proposed Increases scale and diversification with $17.7 billion of 1 total investments and an average position size of le
Slide 3: Key Transaction Terms
Key Transaction Terms o OBDC to acquire 100% of OBDE in a stock-for-stock merger, with shares of OBDE common stock to be exchanged for shares of OBDC common stock Merger o Number of shares of OBDC common stock to be received by OBDE shareholders to be determined at merger close based upon Structure
Slide 4: Commitment to Long-Term Shareholder Value
Commitment to Long-Term Shareholder Value Dividend Structure OBDC Shareholders § OBDC will continue to declare and pay regular quarterly dividends, subject to Board approval § Incremental upside to dividend yield from supplemental dividend structure, which will be unchanged (50% of net investment in
Slide 5: Overview of Proposed Merger Consideration
Overview of Proposed Merger Consideration OBDC to acquire 100% of OBDE in a stock-for-stock merger, with shares to be exchanged based upon an exchange ratio 1 determined prior to closing 1 1 OBDC At Or Below NAV Per Share OBDC Above NAV Per Share NAV-for-NAV Formulaic Exchange Ratio Based on OBDC Tr
Slide 6: Structure Provides Opportunity for NAV Per Share Accretion
Structure Provides Opportunity for NAV Per Share Accretion 1 1 OBDC Trading At or Below NAV Per Share OBDC Trading Above NAV Per Share NAV-for-NAV Formulaic Exchange Ratio Based on OBDC Trading Level Scenario 1 Scenario 2 Scenario 3 OBDC Illustrative 95% 104.5% 110% 1 P / NAV OBDC Illustrative Impli
Slide 7: Transaction Rationale
Transaction Rationale • Significant portfolio overlap: approximately 90% of OBDE’s investments are also in OBDC’s portfolio Seamless Portfolio • OBDC’s investment strategy to remain primarily focused on first lien loans to upper middle-market companies Integration and • Strong credit quality in expe
Slide 8: OBDC at a Glance
OBDC at a Glance $876mm $195mm 212 44% $13.3bn 11.4% Portfolio Portfolio Portfolio Net Loan-to- 1 4 Portfolio Size Company Company Asset Yield 3 Companies Value 2 2 Revenue EBITDA Portfolio Mix by Asset Class Portfolio Mix by Industry 3% 10% 11% 3% 2% 9% 6% 82% Senior 31 Portfolio 46% 8% Secured Ind
Slide 9: OBDE at a Glance
OBDE at a Glance $989mm $214mm 207 39% $4.3bn 11.1% Portfolio Portfolio Portfolio Net Loan-to- 1 4 Portfolio Size Company Company Asset Yield 3 Companies Value 2 2 Revenue EBITDA Portfolio Mix by Asset Class Portfolio Mix by Industry 5% 4% 1% 13% 5% 10% 39% 90% Senior 29 Portfolio Secured Industries
Slide 10: Combined Company Has Enhanced Portfolio Diversification
Combined Company Has Enhanced Portfolio Diversification 1 OBDC OBDE Illustrative Combined Entity Investments at Fair Value (in Millions) $13,342 $4,346 $17,688 Top 15 Investments (%) 32% 28% 29% Top 25 Investments (%) 44% 40% 40% Number of Portfolio Companies 212 207 256 Average Position Size 0.5% 0
Slide 11: Substantial Investment Overlap Will Help Facilitate a Seamless Portfolio Integration
Substantial Investment Overlap Will Help Facilitate a Seamless Portfolio Integration OBDC Portfolio Overlap OBDE Portfolio Overlap OBDC Only (Strategic 1 Investments ) 7% OBDC Only (Ex- Strategic 75% of OBDC 90% of OBDE 1 Investments ) 18% investments are also investments are held in OBDE also held
Slide 12: Combination Would Create the Second Largest Publicly Traded BDC by Total Assets
Combination of OBDC and OBDE Would Create the Second Largest Publicly Traded BDC by Total Assets ($ Billions) $26.1 $18.4 $15.2 $13.9 $10.7 $7.9 $5.9 $4.8 $4.5 $3.7 $3.5 $3.4 $3.4 $3.4 $3.3 $2.7 $2.6 $2.5 $2.4 $2.3 Includes the top twenty largest publicly traded BDCs by total assets. Source: Latest
Slide 13: Larger BDCs are Generally More Liquid
Larger BDCs are Generally More Liquid $14,000 $70 $12,000 $60 $10,000 $50 $8,000 $40 $6,000 $30 $4,000 $20 $2,000 $10 $0 $0 Market Cap ($mm) 1M ADTV ($mm) Larger market capitalization may improve OBDC’s market trading liquidity, creating a more attractive opportunity for investors Source: Bloomberg.
Slide 14: Well-Balanced Capital Structure And Increased Access to Long-Term, Low-Cost Debt Capital
Well-Balanced Capital Structure And Increased Access to Long-Term, Low-Cost, Flexible Debt Capital The increased scale of the combined company may enable better access to a wider array of debt funding solutions and a potential reduction to borrowing cost • Combined company is expected to benefit fro
Slide 15: Estimated Operating Expense Savings In Year One
1 Estimated Operating Expense Savings In Year One ($ Millions) Accretive to Net Greater than $5 Million in Year One $38 Investment $33 $17 Income Over $15 Time $21 $18 Driven By Cost Synergies & Investment Optimization OBDC + OBDE Today Combined Post-Merger Professional Fees Other G&A • Operational
Slide 16: Bottom Line: Market Leader in Upper-Middle Market Direct Lending
Bottom Line: Market Leader in We Are Creating 83% Senior Upper-Middle Market 1 Secured , Direct Lending First-Lien Scale the Focused Conservative Way Deep, 81% Total Diversified Return Financing Since OBDC is Well-Positioned to Sources 2 Inception Deliver for Investors Investment team with decades o
Slide 17: Appendix
Appendix
Slide 18: Illustrative Transaction Timeline
Illustrative Transaction Timeline N-14 registration statement and joint Shareholder Transaction proxy effective meetings announcement Combined Company: August Q4 Q1 2024 2024 2025 Proxy Target solicitation closing begins Timeline subject to regulatory and shareholder approval. 18
Slide 19: Merger Consideration Structure
Merger Consideration Structure OBDC to acquire 100% of OBDE in a stock-for-stock transaction, with shares to be exchanged based on the following: i. If the ratio of OBDC’s market price to OBDC’s NAV per share is less than or equal to 100% then the exchange ratio is determined by the ratio of (a) OBD
Slide 20: Additional Key Dates & Details for OBDE Shareholders
Additional Key Dates & Details for OBDE Shareholders 1 Remaining special dividends declared in conjunction with listing in January 2024 Declaration date Record date Payment date Amount per share 01/12/2024 08/30/2024 09/13/2024 $0.06 01/12/2024 11/29/2024 12/13/2024 $0.06 01/12/2024 02/28/2025 03/14
Slide 21: Disclosures: Forward-Looking Statements
Disclosures Forward-Looking Statements Certain statements made in this presentation are “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 because they relate to future events, future performance or fi
Slide 22: Disclosures: Important Notice; No Offer or Solicitation
Disclosures Important Notice; No Offer or Solicitation No representations or warranties, express or implied are given in, or in respect of, this presentation. To the fullest extent permitted by law, in no circumstances will OBDC, OBDE or any of their respective subsidiaries, shareholders, affiliates
Slide 23: Disclaimer
Disclaimer Past performance is not a guide to future results and is not indicative of expected realized returns. As of June 30, 2024. Pro forma is defined as OBDC and OBDE metrics on a combined basis. Assets Under Management (“AUM”) refers to the assets that Credit manages and are generally equal to
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