Blog: OAKTREE SPECIALTY LENDING CORP : Entry into a Material Definitive Agreement, Regulation FD Disclosure, Other Events, Financial Statements and Exhibits (form 8-K) – Marketscreener.com

Item 1.01. Entry into a Material Definitive Agreement.

Agreement and Plan of Merger

On September 14, 2022, Oaktree Specialty Lending Corporation, a Delaware
corporation (“OCSL”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with Oaktree Strategic Income II, Inc., a Delaware corporation
(“OSI2”), Project Superior Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of OCSL (“Merger Sub”), and, solely for the limited
purposes set forth therein, Oaktree Fund Advisors, LLC, a Delaware limited
liability company and investment adviser to each of OSI2 and OCSL. The Merger
Agreement provides that, subject to the conditions set forth in the Merger
Agreement, at the effective time of the Merger (the “Effective Time”), Merger
Sub will merge with and into OSI2, with OSI2 continuing as the surviving company
and as a wholly-owned subsidiary of OCSL (the “Merger”) and, immediately
thereafter, OSI2 will merge with and into OCSL, with OCSL continuing as the
surviving company (together with the Merger, the “Mergers”). The boards of
directors of both OSI2 and OCSL, in each case, on the recommendation of a
special committee (such company’s “Special Committee”) comprised solely of
certain independent directors of OSI2 or OCSL, as applicable, have approved the
Merger Agreement and the transactions contemplated thereby. The parties to the
Merger Agreement intend the Mergers to be treated as a “reorganization” within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

Merger Consideration

At the Effective Time, each share of common stock, par value $0.001 per share,
of OSI2 (“OSI2 Common Stock”) issued and outstanding immediately prior to the
Effective Time (other than shares owned by OCSL or any of its consolidated
subsidiaries (the “Cancelled Shares”)) will be converted into the right to
receive a number of shares of common stock, par value $0.01 per share, of OCSL
(“OCSL Common Stock”) equal to the Exchange Ratio (as defined below), plus any
cash (without interest) in lieu of fractional shares.

As of a mutually agreed date no earlier than 48 hours (excluding Sundays and
holidays) prior to the Effective Time (such date, the “Determination Date”),
each of OSI2 and OCSL will deliver to the other a calculation of its net asset
value (“NAV”) as of such date (such calculation with respect to OSI2, the
“Closing OSI2 Net Asset Value” and such calculation with respect to OCSL, the
“Closing OCSL Net Asset Value”), in each case using a pre-agreed set of
assumptions, methodologies and adjustments. Based on such calculations, the
parties will calculate the “OSI2 Per Share NAV”, which will be equal to (i) the
Closing OSI2 Net Asset Value divided by (ii) the number of shares of OSI2 Common
Stock issued and outstanding as of the Determination Date (excluding any
Cancelled Shares), and the “OCSL Per Share NAV”, which will be equal to (A) the
Closing OCSL Net Asset Value divided by (B) the number of shares of OCSL Common
Stock issued and outstanding as of the Determination Date. The “Exchange Ratio”
will be equal to the quotient (rounded to four decimal places) of (i) the OSI2
Per Share NAV divided by (ii) the OCSL Per Share NAV.

OSI2 and OCSL will update and redeliver the Closing OSI2 Net Asset Value or the
Closing OCSL Net Asset Value, respectively, in the event of a material change to
such calculation between the Determination Date and the closing of the Mergers
and if needed to ensure that the calculation is determined within 48 hours
(excluding Sundays and holidays) prior to the Effective Time.

Representations, Warranties and Covenants

The Merger Agreement contains customary representations and warranties by each
of OSI2, OCSL and Oaktree Fund Advisors, LLC. The Merger Agreement also contains
customary covenants, including, among others, covenants relating to the
operation of each of OSI2’s and OCSL’s businesses during the period prior to the
closing of the Mergers. OSI2 and OCSL have agreed to convene and hold
stockholder meetings for the purpose of obtaining the approvals required of
OSI2’s and OCSL’s stockholders, respectively, and have agreed that each of the
OSI2 board of directors and OCSL board of directors will, subject to certain
exceptions, recommend that OSI2 and OCSL stockholders, respectively, approve the
applicable proposals.


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The Merger Agreement provides that each of OSI2 and OCSL may not solicit
proposals relating to alternative transactions, or, subject to certain
exceptions, enter into discussions or negotiations or provide information in
connection with any proposal for an alternative transaction. However, the OSI2
board of directors may, subject to certain conditions and in some instances
payment by the party submitting the superior proposal of a termination fee of
approximately $9.8 million, change its recommendation to the stockholders of
OSI2, terminate the Merger Agreement and enter into an agreement with respect to
a superior proposal if the OSI2 Special Committee determines in its reasonable
good faith judgment, after consultation with its outside legal counsel and, in
the case of financial matters, its financial advisor, that the failure to take
such action would be reasonably likely to be inconsistent with the OSI2’s
directors exercise of their fiduciary duties under applicable law (taking into
account, among other factors, any changes to the Merger Agreement proposed by
OCSL). In addition, the OCSL board of directors may, subject to certain
conditions and in some instances payment by the party submitting the superior
proposal of a termination fee of approximately $37.9 million, change its
recommendation to the stockholders of OCSL, terminate the Merger Agreement and
enter into an agreement with respect to a superior proposal if the OCSL Special
Committee determines in its reasonable good faith judgment, after consultation
with its outside legal counsel and, in the case of financial matters, its
financial advisor, that the failure to take such action would be reasonably
likely to be inconsistent with the OCSL directors’ exercise of their fiduciary
duties under applicable law (taking into account, among other factors, any
changes to the Merger Agreement proposed by OSI2).

Conditions to the Mergers

Consummation of the Mergers, which is expected to occur in the second fiscal
quarter of 2023, is subject to certain closing conditions, including
(1) requisite approvals of OSI2’s and OCSL’s stockholders, (2) authorization of
the shares of OCSL Common Stock to be issued as consideration in the Mergers for
listing on the Nasdaq Global Select Market, (3) effectiveness of the
registration statement for the OCSL Common Stock to be issued as consideration
in the Mergers, (4) the absence of certain legal impediments to the consummation
of the Mergers, (5) required regulatory approvals (including expiration of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended), (6) determinations of closing NAV in accordance with the terms of
the Merger Agreement and (7) subject to certain exceptions, the accuracy of the
representations and warranties and compliance with the covenants of each party
to the Merger Agreement.
. . .

Item 7.01. Regulation FD Disclosure.

On September 15, 2022, OSI2 and OCSL issued a joint press release announcing
entry into the Merger Agreement. A copy of the press release is furnished
herewith as Exhibit 99.1.

On September 15, 2022, OCSL provided an investor presentation in connection with
entry into the Merger Agreement. A copy of the investor presentation is
furnished herewith as Exhibit 99.2.

The information disclosed under this Item 7.01, including Exhibits 99.1 and 99.2
hereto, is being “furnished” and is not deemed “filed” by OCSL 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 (the “Securities Act”), or the Exchange Act, except as shall be
expressly set forth by specific reference in such filing.

Item 8.01. Other Events.

On September 14, 2022, ING Capital LLC, as administrative agent, notified OCSL
that the administrative agent and certain lenders under the amended and restated
senior secured credit facility, as amended, among OCSL, the lenders party
thereto, ING Capital LLC, as administrative agent, ING Capital LLC, JPMorgan
Chase Bank, N.A., BofA Securities, Inc. and MUFG Union Bank, N.A., as joint lead
arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. and Bank of
America, N.A., as syndication agents, consented to entry by OCSL into the Merger
Agreement for purposes of the covenant under such facility restricting certain
transactions with affiliates.

Forward-Looking Statements

Some of the statements in this Current Report on Form 8-K constitute
forward-looking statements because they relate to future events, future
performance or financial condition or the Mergers. The forward-looking
statements may include statements as to: future operating results of OSI2 and
OCSL and distribution projections; business prospects of OSI2 and OCSL and the
prospects of their portfolio companies; and the impact of the investments that
OSI2 and OCSL 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
Current Report on Form 8-K involve risks and uncertainties. Certain factors
could cause actual results and conditions to differ materially from those
projected, including the uncertainties associated with (i) the timing or
likelihood of the Mergers closing; (ii) the expected synergies and savings
associated with the Mergers; (iii) the ability to realize the anticipated
benefits of the Mergers, including the expected elimination of certain expenses
and costs due to the Mergers; (iv) the percentage of OSI2 and OCSL stockholders
voting in favor of the proposals submitted for their approval; (v) the
possibility that competing offers or acquisition proposals will be made;
(vi) the possibility that any or all of the various conditions to the
consummation of the Mergers may not be satisfied or waived; (vii) risks related
to diverting management’s attention from ongoing business operations; (viii) the
risk that stockholder litigation in connection with the Mergers may result in
significant costs of defense and liability; (ix) changes in the economy,
financial markets and political environment, including the impacts of inflation
and rising interest rates; (x) risks associated with possible disruption in the
operations of OSI2 and OCSL or the economy generally due to terrorism, war or
other geopolitical conflict (including the current conflict between Russia and
Ukraine), natural disasters or the COVID-19 pandemic; (xi) future changes in
laws or regulations (including the interpretation of these laws and regulations
by regulatory authorities); (xii) conditions in OSI2’s and OCSL’s operating
areas, particularly with respect to business development companies or regulated
investment companies; (xiii) general considerations associated with the COVID-19
pandemic; and (xiv) other considerations that may be disclosed from time to time
in OSI2’s and OCSL’s publicly disseminated documents and filings. OSI2 and OCSL
have based the forward-looking statements included in this Current Report on
Form 8-K on information available to them on the date hereof, and


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they assume no obligation to update any such forward-looking statements.
Although OSI2 and OCSL 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
they may make directly to you or through reports that OSI2 and OCSL in the
future may file with the Securities and Exchange Commission (“SEC”), including
the Joint Proxy Statement and the Registration Statement (each as defined
below), annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K.

Additional Information and Where to Find It

In connection with the Mergers, OSI2 and OCSL plan to file with the SEC and mail
to their respective stockholders a joint proxy statement on Schedule 14A (the
“Joint Proxy Statement”), and OCSL plans to file with the SEC a registration
statement on Form N-14 (the “Registration Statement”) that will include the
Joint Proxy Statement and a prospectus of OCSL. The Joint Proxy Statement and
the Registration Statement will each contain important information about OSI2,
OCSL, the Mergers and related matters. This Current Report on Form 8-K does not
constitute an offer to sell or the solicitation of an offer to buy any
securities or a solicitation of any vote or approval. No offer of securities
shall be made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act. STOCKHOLDERS OF OSI2 AND OCSL ARE URGED TO
READ THE JOINT PROXY STATEMENT AND REGISTRATION STATEMENT, AND OTHER DOCUMENTS
THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OSI2, OCSL, THE
MERGERS AND RELATED MATTERS.

Investors and security holders will be able to obtain the documents filed with
the SEC free of charge at the SEC’s website, http://www.sec.gov or, for
documents filed by OCSL, from OCSL’s website at
http://www.oaktreespecialtylending.com.

Participants in the Solicitation

OSI2, its directors, certain of its executive officers and certain employees and
officers of Oaktree Fund Advisors, LLC and its affiliates may be deemed to be
participants in the solicitation of proxies in connection with the Mergers.
Information about the directors and executive officers of OSI2 is set forth in
its proxy statement for its 2022 Annual Meeting of Stockholders, which was filed
with the SEC on January 20, 2022. OCSL, its directors, certain of its executive
officers and certain employees and officers of Oaktree Fund Advisors, LLC and
its affiliates may be deemed to be participants in the solicitation of proxies
in connection with the Mergers. Information about the directors and executive
officers of OCSL is set forth in its proxy statement for its 2022 Annual Meeting
of Stockholders, which was filed with the SEC on January 20, 2022. Information
regarding the persons who may, under the rules of the SEC, be considered
participants in the solicitation of the OSI2 and OCSL stockholders in connection
with the Mergers will be contained in the Joint Proxy Statement when such
document becomes available. These documents may be obtained free of charge from
the sources indicated above.

No Offer or Solicitation

This Current Report on Form 8-K is not, and under no circumstances is it to be
construed as, a prospectus or an advertisement and the communication of this
Current Report on Form 8-K is not, and under no circumstances is it to be
construed as, an offer to sell or a solicitation of an offer to purchase any
securities in OSI2, OCSL or in any fund or other investment vehicle managed by
Oaktree Fund Advisors, LLC or any of its affiliates.


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Item 9.01. Financial Statements and Exhibits.




(d) Exhibits



 2.1*      Agreement and Plan of Merger among Oaktree Strategic Income II, Inc.,
         Oaktree Specialty Lending Corporation, Project Superior Merger Sub, Inc.
         and Oaktree Fund Advisors LLC (for the limited purposes set forth
         therein), dated as of September 14, 2022.

99.1       Joint press release of Oaktree Strategic Income II, Inc. and Oaktree
         Specialty Lending Corporation, dated as of September 15, 2022.

99.2       Investor presentation of Oaktree Specialty Lending Corporation, dated
         as of September 15, 2022.

104      Cover Page Interactive Data File (embedded within the Inline XBRL
         document)




*   Exhibits and schedules to Exhibit 2.1 have been omitted in accordance with
    Item 601 of Regulation S-K. The registrant agrees to furnish supplementally a
    copy of all omitted exhibits and schedules to the SEC upon its request.



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