Oaktree enters $750 million replacement revolver, term loan due 2019

By Marisa Wong

Madison, Wis., April 4 - Oaktree Capital Group, LLC's indirect subsidiaries, Oaktree Capital Management, LP, Oaktree Capital II, LP, Oaktree AIF Investments, LP and Oaktree Capital I, LP, entered into a credit agreement on March 31 for a $250 million term loan that was fully funded at closing, according to an 8-K filing with the Securities and Exchange Commission.

The new agreement also provides an unsecured revolving credit facility of up to $500 million, with an option to increase availability to up to $750 million. The revolver was undrawn at closing.

The revolver also includes a $50 million letter-of-credit sub-facility.

The new credit agreement replaces Oaktree's credit agreement dated Dec. 21, 2012 with Wells Fargo. The prior $750 million facility due December 2017 included a term loan with a remaining balance of $218.8 million and an undrawn revolver. The prior facility was terminated upon closing of the new $750 million facility.

Loans under the new credit agreement mature in March 2019. Borrowers have the option to extend the maturity date by one year if the lenders holding at least 50% of the aggregate amount of the term loan and revolver consent to the extension.

Borrowings bear interest at Libor plus a margin based on the credit ratings of Oaktree Capital Management. Based on current ratings, the interest rate is Libor plus 100 basis points, and the commitment fee for unused portions of the revolver is 12.5 bps.

The borrowers intend to maintain existing interest-rate swaps that, based on the current ratings, fix the majority of the term loan's annual interest rate at 2.69% through January 2016 and 2.22% for the 13 months thereafter. Oaktree may enter into additional interest-rate swaps for all or a portion of the term loan's five-year term.

Borrowings will be used for working capital and general corporate purposes, including to repay the term loan outstanding under the prior facility, to make capital contributions to investment funds, accounts or investment companies managed by Oaktree and to make permitted distributions or equity repurchases.

The credit agreement includes financial covenants relating to Oaktree's combined leverage ratio and minimum assets under management.

Wells Fargo Bank, NA is the administrative agent for a 13-bank syndicate and letter-of-credit issuer and swingline lender. Wells Fargo Securities, LLC is the lead arranger and lead bookrunner.

Oaktree Capital is a Los Angeles-based asset management firm.

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