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Oaktree to Assume Management of Fifth Street Finance Corp. and Fifth Street Senior Floating Rate Corp. Business Development Companies
Transaction Provides Oaktree with BDC Platform with Scale
“We are excited about the opportunity to serve as the investment adviser
for FSC and FSFR,” said
Oaktree portfolio manager
“Oaktree has a foundation built on deep expertise in credit and we have
significant experience investing across market cycles. We will seek to
apply our rigorous credit underwriting process for the benefit of the
shareholders of the BDCs by helping stabilize and improve the
performance of both BDC portfolios as well as leverage our broad, global
credit platform to source quality investments,” said
Following the closing of the transaction, Oaktree will replace FSM as the investment adviser to the BDCs, and an Oaktree affiliate will become their administrator. Oaktree’s proposed investment advisory agreements are more aligned with BDC shareholders as the management fee rate for FSC will be reduced from 1.75% to 1.50%, and the incentive fee will be reduced from 20.0% to 17.5% with respect to both income and capital gains. The incentive fee for FSFR will also be reduced from 20.0% to 17.5% with respect to both income and capital gains. The current FSFR management fee rate of 1.0% will remain unchanged. OCG expects the transaction to be immediately accretive to its adjusted net income.
The new advisory agreements, which have been unanimously approved by the
independent directors of the boards of directors of FSC and FSFR, are
subject to approval by the stockholders of FSC and FSFR. The FSC and
FSFR boards of directors unanimously recommended that the stockholders
of each BDC vote in favor of the new investment advisory agreement with
Oaktree and related corporate governance matters, including the election
of new directors.
Following the closing of the transaction, all current FSC board members
Consummation of the transaction contemplated by the asset purchase agreement is subject to FSAM stockholder approval, approval of the new investment advisory agreements and new director nominees by the stockholders of both BDCs, Hart-Scott-Rodino antitrust clearance and other customary closing conditions.
Oaktree is a leader among global investment managers specializing in alternative investments, with $100 billion in assets under management as of March 31, 2017. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Headquartered in Los Angeles, the firm has over 900 employees and offices in 18 cities worldwide. For additional information, please visit Oaktree’s website at oaktreecapital.com.
This press release contains forward-looking statements within the
meaning of Section 27A of the U.S. Securities Act of 1933, as amended
(the “Securities Act”), and Section 21E of the Exchange Act, which
reflect the current views of OCG with respect to, among other things,
its future results of operations and financial performance. In some
cases, you can identify forward-looking statements by words such as
“anticipate,” “approximately,” “believe,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,”
“predict,” “seek,” “should,” “will” and “would” or the negative version
of these words or other comparable or similar words. These statements
identify prospective information. Because forward-looking statements
include risks and uncertainties, actual results may differ materially
from those expressed or implied and include, but are not limited to,
those discussed in OCG’s filings with the
Forward-looking statements speak only as of the date of this press release. Except as required by law, OCG does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
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