As previously announced on October 14, 2021, Oaktree Capital Management, L.P. (the “Issuer”), and Oaktree Capital I, L.P., Oaktree Capital II, L.P. and Oaktree AIF Investments, L.P. (the “Guarantors” and together with the Issuer, the “Obligors”) entered into a note and guaranty agreement (the “Note Agreement”) with certain accredited investors (collectively, the “Investors”) on November 4, 2021, pursuant to which the Issuer agreed to issue and sell to the Investors $200 million aggregate principal amount of its 3.06% Senior Notes due January 12, 2037 (the “Notes”). The issuance and funding of the Notes is subject to customary closing conditions and is expected to occur on or before January 12, 2022. The Issuer and the Guarantors are owned directly or indirectly by Oaktree Capital Group Holdings, L.P. and Brookfield Asset Management Inc. (“Brookfield”). Brookfield holds all of the Class A common units of Oaktree Capital Group, LLC (the “Company”), which represent all of the common economic interests in the Company. The Notes will be senior unsecured obligations of the Issuer and guaranteed (the “Guarantees”) by the Guarantors on a joint and several basis. The offer and sale of the Notes and the Guarantees were and will be made solely in private placement transactions exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
The Notes will bear interest at a rate of 3.06% per annum, payable semi-annually, and will be due on January 12, 2037. The Note Agreement provides for certain affirmative and negative covenants, including financial covenants relating to the Obligors’ combined leverage ratio and minimum assets under management. In addition, the Note Agreement contains customary representations and warranties of the Obligors and customary events of default, in certain cases, subject to cure periods. The Issuer may prepay all, or from time to time any part of, the Notes at any time, subject in the case of optional prepayment prior to the date that is three months prior to maturity of the Notes, to the Issuer’s payment of the applicable make-whole amount, determined with respect to such principal amount prepaid. Upon the occurrence of a change of control, the Issuer will be required to make an offer to prepay the Notes without any make-whole amount. The Note Agreement contains customary events of default, including, among other things, failure to pay interest, breach of certain covenants, failure to pay certain other indebtedness at maturity or upon earlier acceleration, and certain events of insolvency or bankruptcy. Upon the occurrence and continuance of an event of default, the holders of at least a majority in outstanding principal amount of the Notes may declare the Notes immediately due and payable by providing notice to the Issuer. Such acceleration will occur automatically in the event of certain insolvency or bankruptcy related events of default. Upon the occurrence and continuance of an event of default with respect to payment of principal, interest or make-whole amount on any Note, the holder thereof may declare all Notes held by it immediately due and payable by providing notice to the Issuer.
The Issuer intends to use the proceeds from the sale of the Notes for general corporate purposes.
The above description of the terms and conditions of the Notes and the Note Agreement does not purport to be complete and is qualified in its entirety by the full text of the Note Agreement and the form of the Notes attached as Exhibits 4.1 and 4.2, respectively, to this Form 8-K and incorporated herein by reference.