Owl Rock Capital subsidiary obtains $250 million credit agreement

By Rebecca Melvin

New York, Aug. 7 – Owl Rock Capital Corp. II subsidiary ORCC Financing IV LLC entered into a $250 million credit agreement with Société Générale as administrative agent, State Street Bank and Trust Co. as collateral agent, collateral administrator and custodian, and Cortland Capital Market Services LLC as document custodian, according to an 8-K filing with the Securities and Exchange Commission.

The facility, dated Aug. 2, matures Aug. 1, 2029.

Amounts drawn under the facility will bear interest at Libor plus a spread ranging from 215 basis points to 250 bps. For some lenders that are commercial paper conduits, the interest will be the lower of their costs of funds and Libor plus 0.25%, plus 215 bps to 250 bps.

From the closing date to the commitment termination date, there is a commitment fee ranging from 50 bps to 100 bps per annum on the undrawn amount, if any, of the revolving commitments in the secured credit facility.

The proceeds will be used to finance the origination and acquisition of eligible assets by the subsidiary including purchase of assets from the company.

The availability of the credit agreement amount is subject to an overcollateralization ratio test, which is based on the value of the subsidiary’s assets from time to time and satisfaction of certain conditions, including an interest coverage ratio test.

The facility provides the ability to draw term loans and draw and redraw revolving loans under the credit facility for up to two years, unless the revolving commitments are terminated or converted to term loans.

The facility contains customary covenants, including some financial maintenance covenants, limitations on the activities of ORCC Financing IV, including limitations on incurrence of incremental debt, and customary events of default.

It is secured by a perfected first priority security interest in the assets of ORCC Financing IV and on any payments received by ORCC Financing IV in respect of those assets. Assets pledged to the lenders will not be available to pay the debts of the company.

From time to time, the company expects to sell and contribute investments to ORCC Financing IV under a sale and contribution agreement by and between the company and ORCC. No gain or loss will be recognized as a result of the contribution.

Owl Rock is a business development company based in New York.

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