10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal quarter ended June 30, 2021

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 814-01190

OWL ROCK CAPITAL CORPORATION

(Exact name of Registrant as specified in its Charter)


Maryland		47-5402460
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

399 Park Avenue, 38th Floor, New York, New York		10022
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 419-3000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	ORCC	The New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  NO 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES  NO 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer		Accelerated filer	

Non-accelerated filer		Small reporting company	

Emerging growth company	

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES  NO 

As of August 4, 2021, the registrant had 392,217,490 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements	2
	Consolidated Statements of Assets and Liabilities as of June 30, 2021 (Unaudited) and December 31, 2020	2
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	3
	Consolidated Schedules of Investments as of June 30, 2021 (Unaudited) and December 31, 2020	4
	Consolidated Statements of Changes in Net Assets for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	38
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (Unaudited)	39
	Notes to Consolidated Financial Statements (Unaudited)	41
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	86
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	135
Item 4.	Controls and Procedures	136

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	137
Item 1A.	Risk Factors	138
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	142
Item 3.	Defaults Upon Senior Securities	142
Item 4.	Mine Safety Disclosures	142
Item 5.	Other Information	142
Item 6.	Exhibits	144
Signatures		146

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about Owl Rock Capital Corporation (the “Company,” “we” or “our”), our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:



an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;



an economic downturn could disproportionately impact the companies that we intend to target for investment, potentially causing us to experience a decrease in investment opportunities and diminished demand for capital from these companies;



an economic downturn could also impact availability and pricing of our financing and our ability to access the debt and equity capital markets;



a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;



the impact of the novel strain of coronavirus known as “COVID-19” and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy;



interest rate volatility, including the decommissioning of LIBOR, could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;



currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars;



our future operating results;



our business prospects and the prospects of our portfolio companies including our and their ability to achieve our respective objectives as a result of the current COVID-19 pandemic;



the impact of interest and inflation rates on our business prospects and the prospects of our portfolio companies;



our contractual arrangements and relationships with third parties;



the ability of our portfolio companies to achieve their objectives;



competition with other entities and our affiliates for investment opportunities;



the speculative and illiquid nature of our investments;



the use of borrowed money to finance a portion of our investments as well as any estimates regarding potential use of leverage;



the adequacy of our financing sources and working capital;



the loss of key personnel;



the timing of cash flows, if any, from the operations of our portfolio companies;



the ability of Owl Rock Capital Advisors LLC (“the Adviser” or “our Adviser”) to locate suitable investments for us and to monitor and administer our investments;



the ability of the Adviser to attract and retain highly talented professionals;



our ability to qualify for and maintain our tax treatment as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and as a business development company (“BDC”);



the effect of legal, tax and regulatory changes, including the Coronavirus Aid, Relief and Economic Security Act signed into law in December 2020 and the American Rescue Plan Act of 2021, signed into law in March 2021; and



other risks, uncertainties and other factors previously identified in the reports and other documents we have filed with the Securities and Exchange Commission (“SEC”).

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this report. Moreover, we assume no duty and do not undertake to update the forward-looking statements. Because we are an investment company, the forward-looking statements and projections contained in this report are excluded from the safe harbor protection provided by Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).

PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Owl Rock Capital Corporation

Consolidated Statements of Assets and Liabilities

(Amounts in thousands, except share and per share amounts)


	June 30, 2021 (Unaudited)			December 31, 2020
Assets
Investments at fair value
Non-controlled, non-affiliated investments (amortized cost of $11,479,200 and $10,653,613, respectively)	$	11,512,119		$	10,569,691
Controlled, affiliated investments (amortized cost of $398,095 and $275,105, respectively)		394,753			272,381
Total investments at fair value (amortized cost of $11,877,295 and $10,928,718, respectively)		11,906,872			10,842,072
Cash (restricted cash of $14,433 and $8,841, respectively)		615,461			347,917
Foreign cash (cost of $11,636 and $9,641, respectively)		11,783			9,994
Interest receivable		69,044			57,108
Receivable for investments sold		—			6,316
Receivable from a controlled affiliate		3,974			2,347
Prepaid expenses and other assets		28,292			38,603
Total Assets	$	12,635,426		$	11,304,357
Liabilities
Debt (net of unamortized debt issuance costs of $106,743 and $91,085, respectively)	$	6,383,737		$	5,292,722
Distribution payable		121,587			152,087
Management fee payable		44,005			35,936
Incentive fee payable		25,270			19,070
Payables to affiliates		4,614			6,527
Payables for investments purchased		140,076			—
Accrued expenses and other liabilities		73,873			51,581
Total Liabilities		6,793,162			5,557,923
Commitments and contingencies (Note 7)
Net Assets
Common shares $0.01 par value, 500,000,000 shares authorized; 392,217,490 and 389,966,688 shares issued and outstanding, respectively		3,922			3,900
Additional paid-in-capital		5,971,684			5,940,979
Total distributable earnings (losses)		(133,342	)		(198,445	)
Total Net Assets		5,842,264			5,746,434
Total Liabilities and Net Assets	$	12,635,426		$	11,304,357
Net Asset Value Per Share	$	14.90		$	14.74

The accompanying notes are an integral part of these consolidated financial statements.

Owl Rock Capital Corporation

Consolidated Statements of Operations

(Amounts in thousands, except share and per share amounts)

(Unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020
Investment Income
Investment income from non-controlled, non-affiliated investments:
Interest income	$	233,316		$	183,246		$	444,348		$	381,639
Dividend Income		5,765			920			9,324			920
Other income		4,463			3,815			7,617			7,966
Total investment income from non-controlled, non-affiliated investments		243,544			187,981			461,289			390,525
Investment income from controlled, affiliated investments:
Interest income		1,338			—			2,641			—
Dividend income		3,973			2,261			6,341			4,449
Other Income		160			—			317			—
Total investment income from controlled, affiliated investments		5,471			2,261			9,299			4,449
Total Investment Income		249,015			190,242			470,588			394,974
Expenses
Interest expense		54,445			39,185			102,521			73,142
Management fee		44,007			34,602			86,117			68,392
Performance based incentive fees		25,270			22,603			47,045			48,198
Professional fees		3,349			3,300			7,117			6,452
Directors' fees		274			221			518			454
Other general and administrative		2,344			1,741			4,162			3,905
Total Operating Expenses		129,689			101,652			247,480			200,543
Management and incentive fees waived (Note 3)		—			(39,904	)		—			(82,394	)
Net Operating Expenses		129,689			61,748			247,480			118,149
Net Investment Income (Loss) Before Taxes		119,326			128,494			223,108			276,825
Income tax expense (benefit), including excise tax expense (benefit)		197			(668	)		1,324			1,407
Net Investment Income (Loss) After Taxes	$	119,129		$	129,162		$	221,784		$	275,418
Net Realized and Change in Unrealized Gain (Loss)
Net change in unrealized gain (loss):
Non-controlled, non-affiliated investments	$	62,407		$	167,515		$	119,486		$	(276,620	)
Income tax (provision) benefit		(1,589	)		—			(4,222	)		—
Controlled affiliated investments		(1,483	)		6,748			(618	)		(8,151	)
Translation of assets and liabilities in foreign currencies		(488	)		205			(2,920	)		124
Total Net Change in Unrealized Gain (Loss)		58,847			174,468			111,726			(284,647	)
Net realized gain (loss):
Non-controlled, non-affiliated investments		(27,828	)		—			(26,674	)		348
Foreign currency transactions		32			(11	)		1,189			(90	)
Total Net Realized Gain (Loss)		(27,796	)		(11	)		(25,485	)		258
Total Net Realized and Change in Unrealized Gain (Loss)		31,051			174,457			86,241			(284,389	)
Net Increase (Decrease) in Net Assets Resulting from Operations	$	150,180		$	303,619		$	308,025		$	(8,971	)
Earnings Per Share - Basic and Diluted	$	0.38		$	0.79		$	0.79		$	(0.02	)
Weighted Average Shares Outstanding - Basic and Diluted		391,832,048			385,469,952			391,475,389			389,455,832

The accompanying notes are an integral part of these consolidated financial statements.

Owl Rock Capital Corporation

Consolidated Schedule of Investments

As of June 30, 2021

(Amounts in thousands, except share amounts)

(Unaudited)


Company(1)(2)(17)	Investment	Interest	Maturity Date	Par / Units		Amortized Cost(3)(27)			Fair Value			Percentage of Net Assets
Non-controlled/non-affiliated portfolio company investments
Debt Investments
Aerospace and defense
Aviation Solutions Midco, LLC (dba STS Aviation)(4)(6)(24)	First lien senior secured loan	L + 8.25%	1/3/2025		215,628		212,969			191,908			3.3	%
Peraton Corp.(4)(5)(24)	Second lien senior secured loan	L + 7.75%	2/1/2029		47,500		46,803			46,788			0.8	%
Valence Surface Technologies LLC(4)(7)(24)	First lien senior secured loan	L + 6.75% (incl. 1.00% PIK)	6/28/2025		121,820		120,516			111,466			1.9	%
Valence Surface Technologies LLC(4)(6)(16)(24)	First lien senior secured revolving loan	L + 6.75% (incl. 1.00% PIK)	6/28/2025		6,003		5,903			5,152			0.1	%
					390,951		386,191			355,314			6.1	%
Buildings and real estate
Associations, Inc.(4)(6)(24)	First lien senior secured loan	L + 7.00% (incl. 3.00% PIK)	7/30/2024		311,239		308,847			311,239			5.3	%
Associations, Inc.(4)(6)(16)(19)(24)	First lien senior secured delayed draw term loan	L + 7.00% (incl. 3.00% PIK)	7/30/2021		60,069		59,699			60,065			1.0	%
Associations, Inc.(4)(6)(24)	First lien senior secured revolving loan	L + 6.00%	7/30/2024		11,543		11,469			11,543			0.2	%
Dodge Data & Analytics LLC(4)(9)(24)	First lien senior secured loan	P + 6.50%	4/14/2026		32,725		32,092			32,070			0.5	%
Dodge Data & Analytics LLC(4)(16)(18)(24)	First lien senior secured revolving loan	L + 7.50%	4/14/2026		-		(36	)		(38	)		—	%
REALPAGE, INC.(4)(5)(24)	Second lien senior secured loan	L + 6.50%	4/23/2029		34,500		33,993			33,983			0.6	%
Reef Global, Inc. (fka Cheese Acquisition, LLC)(4)(7)(24)	First lien senior secured loan	L + 6.00% (incl. 1.25% PIK)	11/28/2024		134,373		133,369			128,326			2.2	%
Imperial Parking Canada(4)(8)(24)	First lien senior secured loan	C + 6.00% (incl. 1.25% PIK)	11/28/2024		28,528		26,618			27,244			0.5	%
Reef Global, Inc. (fka Cheese Acquisition, LLC)(4)(5)(16)(24)	First lien senior secured revolving loan	L + 4.75%	11/28/2023		10,987		10,937			10,251			0.2	%
					623,964		616,988			614,683			10.5	%

Owl Rock Capital Corporation

Consolidated Schedule of Investments

As of June 30, 2021

(Amounts in thousands, except share amounts)

(Unaudited)


Company(1)(2)(17)	Investment	Interest	Maturity Date	Par / Units		Amortized Cost(3)(27)			Fair Value			Percentage of Net Assets
Business services
Access CIG, LLC(4)(5)(24)	Second lien senior secured loan	L + 7.75%	2/27/2026		58,760		58,300			58,319			1.0	%
CIBT Global, Inc.(4)(9)(24)	First lien senior secured loan	P + 4.25% (incl. 3.25% PIK)	6/3/2024		841		614			614			—	%
CIBT Global, Inc.(4)(6)(24)(29)	Second lien senior secured loan	L + 7.75% (incl. 6.75% PIK)	12/1/2025		63,678		26,745			26,745			0.5	%
ConnectWise, LLC(4)(5)(24)	First lien senior secured loan	L + 5.25%	2/28/2025		177,747		176,259			177,747			3.0	%
ConnectWise, LLC(4)(5)(16)(24)	First lien senior secured revolving loan	L + 5.25%	2/28/2025		1,250		1,094			1,250			—	%
Entertainment Benefits Group, LLC(4)(6)(24)	First lien senior secured loan	L + 8.25% (incl. 2.50% PIK)	9/30/2025		82,411		81,512			74,994			1.3	%
Entertainment Benefits Group, LLC(4)(6)(16)(24)	First lien senior secured revolving loan	L + 8.25% (incl. 2.50% PIK)	9/30/2024		9,896		9,788			8,888			0.2	%
Hercules Borrower, LLC (dba The Vincit Group)(4)(6)(24)	First lien senior secured loan	L + 6.50%	12/15/2026		179,593		177,096			178,246			3.1	%
Hercules Borrower, LLC (dba The Vincit Group)(4)(16)(18)(24)	First lien senior secured revolving loan	L + 6.50%	12/15/2026		-		(285	)		(157	)		—	%
Hercules Buyer, LLC (dba The Vincit Group)(24)(26)(30)	Unsecured notes	0.48% PIK	12/14/2029		5,112		5,112			5,112			0.1	%
Vestcom Parent Holdings, Inc.(4)(5)(24)	Second lien senior secured loan	L + 8.00%	12/19/2024		78,987		78,392			78,987			1.4	%
					658,275		614,627			610,745			10.6	%
Chemicals
Aruba Investments Holdings LLC (dba Angus Chemical Company)(4)(7)(24)	Second lien senior secured loan	L + 7.75%	11/24/2028		10,000		9,860			9,950			0.2	%
Douglas Products and Packaging Company LLC(4)(6)(24)	First lien senior secured loan	L + 5.75%	10/19/2022		97,436		97,139			96,219			1.6	%
Douglas Products and Packaging Company LLC(4)(9)(16)(24)	First lien senior secured revolving loan	P + 4.75%	10/19/2022		6,964		6,943			6,850			0.1	%
Gaylord Chemical Company, L.L.C(4)(6)(24)	First lien senior secured loan	L + 6.00%	3/30/2027		153,414		151,933			151,880			2.6	%
Gaylord Chemical Company, L.L.C(4)(16)(18)(24)	First lien senior secured revolving loan	L + 6.00%	3/30/2026		-		(125	)		(132	)		—	%
Innovative Water Care Global Corporation(4)(6)(24)	First lien senior secured loan	L + 5.00%	2/27/2026		146,625		139,174			142,226			2.4	%
Velocity HoldCo III Inc. (dba Velocity EHS)(4)(6)(24)	First lien senior secured loan	L + 5.75%	4/22/2027		22,327		21,838			21,825			0.4	%
Velocity HoldCo III Inc. (dba Velocity EHS)(4)(16)(18)(24)	First lien senior secured revolving loan	L + 5.75%	4/22/2026		-		(29	)		(30	)		—	%
					436,766		426,733			428,788			7.3	%

Owl Rock Capital Corporation

Consolidated Schedule of Investments

As of June 30, 2021

(Amounts in thousands, except share amounts)

(Unaudited)


Company(1)(2)(17)	Investment	Interest	Maturity Date	Par / Units		Amortized Cost(3)(27)			Fair Value			Percentage of Net Assets
Consumer products
Conair Holdings, LLC(4)(6)(24)	Second lien senior secured loan	L + 7.50%	5/17/2029		187,500		186,109			186,094			3.2	%
Feradyne Outdoors, LLC(4)(6)(24)	First lien senior secured loan	L + 6.25%	5/25/2023		88,400		88,013			88,400			1.5	%
WU Holdco, Inc. (dba Weiman Products, LLC)(4)(6)(24)	First lien senior secured loan	L + 5.25%	3/26/2026		215,216		211,793			214,678			3.7	%
WU Holdco, Inc. (dba Weiman Products, LLC)(4)(16)(18)(19)(24)	First lien senior secured delayed draw term loan	L + 5.25%	5/21/2022		-		(145	)		-			—	%
WU Holdco, Inc. (dba Weiman Products, LLC)(4)(6)(16)(24)	First lien senior secured revolving loan	L + 5.25%	3/26/2025		8,066		7,797			8,018			0.1	%
					499,182		493,567			497,190			8.5	%
Containers and packaging
Pregis Topco LLC(4)(5)(22)(24)	First lien senior secured loan	L + 4.00%	7/31/2026		859		818			858			—	%
Pregis Topco LLC(4)(5)(24)	Second lien senior secured loan	L + 8.00%	7/30/2027		215,033		211,448			215,033			3.7	%
					215,892		212,266			215,891			3.7	%
Distribution
ABB/Con-cise Optical Group LLC(4)(7)	First lien senior secured loan	L + 5.00%	6/15/2023		75,225		74,766			72,216			1.2	%
ABB/Con-cise Optical Group LLC(4)(7)	Second lien senior secured loan	L + 9.00%	6/17/2024		25,000		24,653			23,250			0.4	%
Aramsco, Inc.(4)(5)(24)	First lien senior secured loan	L + 5.25%	8/28/2024		56,188		55,391			56,188			1.0	%
Aramsco, Inc.(4)(16)(18)(24)	First lien senior secured revolving loan	L + 5.25%	8/28/2024		-		(110	)		-			—	%
Endries Acquisition, Inc.(4)(7)(24)	First lien senior secured loan	L + 6.25%	12/10/2025		201,191		198,771			199,178			3.4	%
Endries Acquisition, Inc.(4)(16)(18)(24)	First lien senior secured revolving loan	L + 6.25%	12/10/2024		-		(271	)		(270	)		—	%
Individual Foodservice Holdings, LLC(4)(7)(24)	First lien senior secured loan	L + 6.25%	11/22/2025		141,578		139,295			140,516			2.4	%
Individual Foodservice Holdings, LLC(4)(7)(16)(19)(24)	First lien senior secured delayed draw term loan	L + 6.25%	6/30/2022		13,629		13,075			13,365			0.2	%
Individual Foodservice Holdings, LLC(4)(5)(16)(24)	First lien senior secured revolving loan	L + 6.25%	11/22/2024		1,917		1,601			1,755			—	%
JM Swank, LLC(4)(6)	First lien senior secured loan	L + 7.50%	7/25/2022		114,362		113,810			114,362			2.0	%

Owl Rock Capital Corporation

Consolidated Schedule of Investments

As of June 30, 2021

(Amounts in thousands, except share amounts)

(Unaudited)

Company(1)(2)(17)

Investment

Interest

Maturity Date

Par / Units

Amortized Cost(3)(27)

Fair Value

Percentage of Net Assets

Offen, Inc.(4)(5)(24)

First lien senior secured loan

L + 5.00%

6/22/2026

19,682

19,535

19,387

0.3

QC Supply, LLC(4)(5)(29)

First lien senior secured loan

L + 7.00% (incl. 1.00% PIK)

12/29/2022

34,484

34,199