Blue Owl’s OCIC Opens New 5% Tender, Tightens Credit Facility Risk Limits
Blue Owl Credit Income Corp. opened a tender offer Aug. 26 to repurchase up to 101,609,217 shares – 5% of shares outstanding as of June 30 – the same week the nontraded business development company amended a credit facility to tighten risk limits and add a new category of eligible collateral.
The offer covers Class S, Class D, and Class I common stock. As of Aug. 25, OCIC had approximately 2.05 billion total shares outstanding across all classes, and no officers or directors intend to tender their shares, the company said. The 5% repurchase cap matches the limit OCIC has applied in each of the past several quarters.
Separately, Blue Owl disclosed an amendment to the senior secured revolving credit facility held through its financing subsidiary, Core Income Funding VII LLC. The amendment cuts the facility’s concentration limit for first-lien last-out and second- of collateral assets, down from 15%, and cuts the limit for covenant-lite loans to 30%, down from 40%. An existing sub-limit, capping covenant-lite loans to borrowers with less than $75 million in earnings before interest, taxes, depreciation, and amortization at 25%, is unchanged.
The amendment also activates a new eligible collateral category, early-stage healthcare loans, in a section of the credit agreement previously held in reserve. Loans in the new category carry their own advance-rate cap of 60% and are subject to asset-quality tests based on a liquidity covenant – the borrower must maintain at least 175% of its applicable liquidity-maintenance-covenant threshold – rather than the leverage-ratio and EBITDA-based tests applied to standard loans. The structure mirrors treatment already in place for recurring-revenue loans under the facility. The facility’s base size, $500 million with an option to increase by up to $300 million, is unchanged, and pricing terms are set in a separate, non-public fee letter.
The tender offer follows two quarters of redemption demand well above OCIC’s repurchase cap. OCIC absorbed $988 million in repurchases against 21.9% of shares requested in the first quarter, meaning roughly 23% of requests were filled under the 5% cap. Demand eased somewhat in the second quarter, with requests falling to 18.8% of shares, still well above the cap OCIC applies each quarter.
The tender also comes against a backdrop of outside pressure on OCIC’s shareholder base. In February, Saba Capital and Cox Capital announced plans for opportunistic tender offers targeting OCIC and two other Blue Owl funds at a 20% to 35% discount to net asset value.
Blue Owl Credit Income Corp. is a nontraded business development company sponsored by Blue Owl Capital.
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