Oaktree Specialty Lending Corp - FORM 10-Q

Attached files

file	filename
EX-32.2 - EX-32.2 - Oaktree Specialty Lending Corp	ocsl-ex322_12312020x10xq.htm
EX-32.1 - EX-32.1 - Oaktree Specialty Lending Corp	ocsl-ex321_12312020x10xq.htm
EX-31.2 - EX-31.2 - Oaktree Specialty Lending Corp	ocsl-ex312_12312020x10xq.htm
EX-31.1 - EX-31.1 - Oaktree Specialty Lending Corp	ocsl-ex311_12312020x10xq.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended December 31, 2020


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

COMMISSION FILE NUMBER: 1-33901

Oaktree Specialty Lending Corporation

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


DELAWARE (State or jurisdiction of incorporation or organization)						26-1219283 (I.R.S. Employer Identification No.)

333 South Grand Avenue, 28th Floor Los Angeles, CA (Address of principal executive office)						90071 (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:

(213) 830-6300

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, par value $0.01 per share

OCSL

The Nasdaq Stock Market LLC

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 þ 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 definitions 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 þ

Non-accelerated filer ¨

Smaller 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 þ

The registrant had 140,960,651 shares of common stock outstanding as of February 2, 2021.

OAKTREE SPECIALTY LENDING CORPORATION

FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2020

TABLE OF CONTENTS



		PART I — FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements:
		Consolidated Statements of Assets and Liabilities as of December 31, 2020 (unaudited) and September 30, 2020	3
		Consolidated Statements of Operations (unaudited) for the three months ended December 31, 2020 and 2019	4
		Consolidated Statements of Changes in Net Assets (unaudited) for the three months ended December 31, 2020 and 2019	5
		Consolidated Statements of Cash Flows (unaudited) for the three months ended December 31, 2020 and 2019	6
		Consolidated Schedule of Investments (unaudited) as of December 31, 2020	7
		Consolidated Schedule of Investments as of September 30, 2020	19
		Notes to Consolidated Financial Statements (unaudited)	30
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		73
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		98
Item 4.	Controls and Procedures		100
		PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		100
Item 1A.	Risk Factors		100
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		100
Item 3 .	Defaults Upon Senior Securities		101
Item 4 .	Mine Safety Disclosures		101
Item 5 .	Other Information		101
Item 6.	Exhibits		101
Signatures			102

PART I — FINANCIAL INFORMATION


Item 1.			Consolidated Financial Statements.

Oaktree Specialty Lending Corporation

Consolidated Statements of Assets and Liabilities

(in thousands, except per share amounts)


	December 31, 2020 (unaudited)		September 30, 2020
ASSETS
Investments at fair value:
Control investments (cost December 31, 2020: $243,990; cost September 30, 2020: $245,950)	$	207,760	$	201,385
Affiliate investments (cost December 31, 2020: $10,303; cost September 30, 2020: $7,551)	8,971		6,509
Non-control/Non-affiliate investments (cost December 31, 2020: $1,503,368; cost September 30, 2020: $1,415,669)	1,495,593		1,365,957
Total investments at fair value (cost December 31, 2020: $1,757,661; cost September 30, 2020: $1,669,170)	1,712,324		1,573,851
Cash and cash equivalents	24,234		39,096
Interest, dividends and fees receivable	8,999		6,935
Due from portfolio companies	2,093		2,725
Receivables from unsettled transactions	11,054		9,123
Deferred financing costs	5,840		5,947
Deferred offering costs	67		67
Deferred tax asset, net	1,122		847
Derivative assets at fair value	—		223
Other assets	28,170		1,898
Total assets	$	1,793,903	$	1,640,712
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	2,442	$	1,072
Base management fee and incentive fee payable	20,230		11,212
Due to affiliate	2,355		2,130
Interest payable	4,192		1,626
Payables from unsettled transactions	102,737		478
Derivative liability at fair value	2,203		—
Credit facility payable	400,025		414,825
Unsecured notes payable (net of $3,086 and $3,272 of unamortized financing costs as of December 31, 2020 and September 30, 2020, respectively)	294,802		294,490
Total liabilities	828,986		725,833
Commitments and contingencies (Note 14)
Net assets:
Common stock, $0.01 par value per share, 250,000 shares authorized; 140,961 shares issued and outstanding as of December 31, 2020 and September 30, 2020	1,409		1,409
Additional paid-in-capital	1,487,774		1,487,774
Accumulated overdistributed earnings	(524,266)		(574,304)
Total net assets (equivalent to $6.85 and $6.49 per common share as of December 31, 2020 and September 30, 2020, respectively) (Note 12)	964,917		914,879
Total liabilities and net assets	$	1,793,903	$	1,640,712

See notes to Consolidated Financial Statements.

Oaktree Specialty Lending Corporation

Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)


	Three months ended December 31, 2020		Three months ended December 31, 2019
Interest income:
Control investments	$	2,343	$	2,551
Affiliate investments	105		114
Non-control/Non-affiliate investments	29,184		25,659
Interest on cash and cash equivalents	1		81
Total interest income	31,633		28,405
PIK interest income:
Non-control/Non-affiliate investments	3,089		1,161
Total PIK interest income	3,089		1,161
Fee income:
Control investments	15		6
Affiliate investments	5		5
Non-control/Non-affiliate investments	3,332		1,060
Total fee income	3,352		1,071
Dividend income:
Control investments	130		323
Total dividend income	130		323
Total investment income	38,204		30,960
Expenses:
Base management fee	6,541		5,607
Part I incentive fee	4,149		2,988
Part II incentive fee	9,540		1,051
Professional fees	867		640
Directors fees	143		143
Interest expense	6,095		6,535
Administrator expense	333		428
General and administrative expenses	518		532
Total expenses	28,186		17,924
Reversal of fees waived	—		5,200
Net expenses	28,186		23,124
Net investment income	10,018		7,836
Unrealized appreciation (depreciation):
Control investments	8,335		1,997
Affiliate investments	(290)		(64)
Non-control/Non-affiliate investments	41,937		2,408
Foreign currency forward contracts	(2,426)		(1,462)
Net unrealized appreciation (depreciation)	47,556		2,879
Realized gains (losses):
Non-control/Non-affiliate investments	8,738		3,839
Foreign currency forward contracts	(523)		(551)
Net realized gains (losses)	8,215		3,288
Provision for income tax (expense) benefit	(245)		(160)
Net realized and unrealized gains (losses), net of taxes	55,526		6,007
Net increase (decrease) in net assets resulting from operations	$	65,544	$	13,843
Net investment income per common share — basic and diluted	$	0.07	$	0.06
Earnings (loss) per common share — basic and diluted (Note 5)	$	0.46	$	0.10
Weighted average common shares outstanding — basic and diluted	140,961		140,961

See notes to Consolidated Financial Statements.

Oaktree Specialty Lending Corporation

Consolidated Statements of Changes in Net Assets

(in thousands, except per share amounts)

(unaudited)


	Three months ended December 31, 2020		Three months ended December 31, 2019
Operations:
Net investment income	$	10,018	$	7,836
Net unrealized appreciation (depreciation)	47,556		2,879
Net realized gains (losses)	8,215		3,288
Provision for income tax (expense) benefit	(245)		(160)
Net increase (decrease) in net assets resulting from operations	65,544		13,843
Stockholder transactions:
Distributions to stockholders	(15,506)		(13,391)
Net increase (decrease) in net assets from stockholder transactions	(15,506)		(13,391)
Capital share transactions:
Issuance of common stock under dividend reinvestment plan	528		481
Repurchases of common stock under dividend reinvestment plan	(528)		(481)
Net increase (decrease) in net assets from capital share transactions	—		—
Total increase (decrease) in net assets	50,038		452
Net assets at beginning of period	914,879		930,630
Net assets at end of period	$	964,917	$	931,082
Net asset value per common share	$	6.85	$	6.61
Common shares outstanding at end of period	140,961		140,961

See notes to Consolidated Financial Statements.

Oaktree Specialty Lending Corporation

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three months ended December 31, 2020		Three months ended December 31, 2019
Operating activities:
Net increase (decrease) in net assets resulting from operations	$	65,544	$	13,843
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net unrealized (appreciation) depreciation	(47,556)		(2,879)
Net realized (gains) losses	(8,215)		(3,288)
PIK interest income	(3,089)		(1,161)
Accretion of original issue discount on investments	(3,143)		(2,028)
Accretion of original issue discount on unsecured notes payable	127		—
Amortization of deferred financing costs	636		463
Deferred taxes	(275)		225
Purchases of investments	(243,741)		(115,792)
Proceeds from the sales and repayments of investments	169,821		97,022
Changes in operating assets and liabilities:
(Increase) decrease in interest, dividends and fees receivable	(1,848)		811
(Increase) decrease in due from portfolio companies	632		(315)
(Increase) decrease in receivables from unsettled transactions	(1,931)		(872)
(Increase) decrease in other assets	(26,272)		(267)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	1,314		(92)
Increase (decrease) in base management fee and incentive fee payable	9,018		5,804
Increase (decrease) in due to affiliate	225		(141)
Increase (decrease) in interest payable	2,566		106
Increase (decrease) in payables from unsettled transactions	102,259		(34,909)
Increase (decrease) in amounts payable to syndication partners	—		1
Net cash provided by (used in) operating activities	16,072		(43,469)
Financing activities:
Distributions paid in cash	(14,978)		(12,910)
Borrowings under credit facilities	—		82,000
Repayments of borrowings under credit facilities	(14,800)		(19,000)
Repurchases of common stock under dividend reinvestment plan	(528)		(481)
Deferred financing costs paid	(288)		—
Deferred offering costs paid	—		(20)
Net cash provided by (used in) financing activities	(30,594)		49,589
Effect of exchange rate changes on foreign currency	(340)		1
Net increase (decrease) in cash and cash equivalents	(14,862)		6,121
Cash and cash equivalents, beginning of period	39,096		15,406
Cash and cash equivalents, end of period	$	24,234	$	21,527
Supplemental information:
Cash paid for interest	$	2,766	$	5,966
Non-cash financing activities:
Issuance of shares of common stock under dividend reinvestment plan	$	528	$	481
Deferred financing costs	(57)		—
Deferred offering costs	—		(45)

Reconciliation to the Consolidated Statements of Assets and Liabilities	December 31, 2020		September 30, 2020
Cash and cash equivalents	$	24,234	$	39,096
Restricted cash	—		—
Total cash and cash equivalents and restricted cash	$	24,234	$	39,096

See notes to Consolidated Financial Statements.

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Control Investments										(8)(9)
C5 Technology Holdings, LLC			Data Processing & Outsourced Services
829 Common Units						$	—	$	—	(20)
34,984,460.37 Preferred Units						34,984		27,638		(20)
						34,984		27,638
Dominion Diagnostics, LLC			Health Care Services
First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024	6.00	%		$	27,590	27,590		27,590		(6)(20)
First Lien Revolver, LIBOR+5.00% cash due 2/28/2024	6.00	%		7,699		7,699		7,699		(6)(19)(20)
30,030.8 Common Units in DD Healthcare Services Holdings, LLC						18,626		7,667		(20)
						53,915		42,956
First Star Speir Aviation Limited			Airlines							(10)
First Lien Term Loan, 9.00% cash due 12/15/2025				7,500		—		7,500		(11)(20)
100% equity interest						6,356		1,681		(11)(12)(20)
						6,356		9,181
New IPT, Inc.			Oil & Gas Equipment & Services
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.00	%		2,154		2,154		1,683		(6)(20)
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021	6.00	%		1,009		1,009		788		(6)(19)(20)
50.087 Class A Common Units in New IPT Holdings, LLC						—		—		(20)
						3,163		2,471
Senior Loan Fund JV I, LLC			Multi-Sector Holdings							(14)
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028	7.14	%		96,250		96,250		96,250		(6)(11)(20)
87.5% LLC equity interest						49,322		29,264		(11)(16)(19)
						145,572		125,514
Total Control Investments (21.5% of net assets)						$	243,990	$	207,760

Affiliate Investments										(17)
Assembled Brands Capital LLC			Specialized Finance
First Lien Revolver, LIBOR+6.00% cash due 10/17/2023	7.00	%		$	7,440	$	7,440	$	6,949	(6)(19)(20)
1,609,201 Class A Units						764		418		(20)
1,019,168.80 Preferred Units, 6%						1,019		1,101		(20)
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029						—		—		(20)
						9,223		8,468
Caregiver Services, Inc.			Health Care Services
1,080,399 shares of Series A Preferred Stock, 10%						1,080		503		(20)
						1,080		503
Total Affiliate Investments (0.9% of net assets)						$	10,303	$	8,971

Non-Control/Non-Affiliate Investments										(18)
4 Over International, LLC			Commercial Printing
First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022	7.00	%		$	5,645	$	5,627	$	5,236	(6)(20)
First Lien Revolver, LIBOR+6.00% cash due 6/7/2021	7.00	%		2,232		2,214		2,070		(6)(20)
						7,841		7,306
A.T. Holdings II SÀRL			Biotechnology
First Lien Term Loan, 9.50% cash due 12/22/2022				37,158		36,793		36,786		(11)(20)
						36,793		36,786
Access CIG, LLC			Diversified Support Services
Second Lien Term Loan, LIBOR+7.75% cash due 2/27/2026	7.98	%		15,000		14,913		14,869		(6)
						14,913		14,869

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Accupac, Inc.			Personal Products
First Lien Term Loan, LIBOR+6.00% cash due 1/17/2026	7.00	%		$	12,456	$	12,273	$	12,456	(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 1/17/2026				—		(34)		—		(6)(19)(20)
First Lien Revolver, LIBOR+6.00% cash due 1/17/2026	7.00	%		1,564		1,541		1,564		(6)(20)
						13,780		14,020
Acquia Inc.			Application Software
First Lien Term Loan, LIBOR+7.00% cash due 10/31/2025	8.00	%		20,950		20,612		20,656		(6)(20)
First Lien Revolver, LIBOR+7.00% cash due 10/31/2025				—		(37)		(31)		(6)(19)(20)
						20,575		20,625
ADB Companies, LLC			Construction & Engineering
First Lien Term Loan, LIBOR+6.25% cash due 12/18/2025	7.25	%		8,333		8,125		8,167		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+6.25% cash due 12/18/2025				—		(42)		(33)		(6)(19)(20)
						8,083		8,134
Aden & Anais Merger Sub, Inc.			Apparel, Accessories & Luxury Goods
51,645 Common Units in Aden & Anais Holdings, Inc.						5,165		—		(20)
						5,165		—
AdVenture Interactive, Corp.			Advertising
9,073 shares of common stock						13,611		13,857		(20)
						13,611		13,857
AI Ladder (Luxembourg) Subco S.a.r.l.			Electrical Components & Equipment
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025	4.65	%		16,301		15,984		16,199		(6)(11)
						15,984		16,199
AI Sirona (Luxembourg) Acquisition S.a.r.l.			Pharmaceuticals
Second Lien Term Loan, EURIBOR+7.25% cash due 9/28/2026	7.25	%		€	24,838	27,683		30,315		(6)(11)(20)
						27,683		30,315
Airbnb, Inc.			Hotels, Resorts & Cruise Lines
First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025	8.50	%		$	15,703	15,360		17,057		(6)
						15,360		17,057
AirStrip Technologies, Inc.			Application Software
5,715 Common Stock Warrants (exercise price $139.99) expiration date 5/11/2025						90		—		(20)
						90		—
Aldevron, L.L.C.			Biotechnology
First Lien Term Loan, LIBOR+4.25% cash due 10/12/2026	5.25	%		7,940		7,861		7,980		(6)
						7,861		7,980
Algeco Scotsman Global Finance Plc			Construction & Engineering
Fixed Rate Bond, 8.00% cash due 2/15/2023				13,524		13,301		13,820		(11)
						13,301		13,820
Alvotech Holdings S.A.			Biotechnology							(13)
Fixed Rate Bond 15% PIK Note A due 12/13/2023				14,800		19,529		20,999		(11)(20)
Fixed Rate Bond 15% PIK Note B due 12/13/2023				14,800		19,529		20,408		(11)(20)
						39,058		41,407
Amplify Finco Pty Ltd.			Movies & Entertainment
First Lien Term Loan, LIBOR+4.25% cash due 11/26/2026	5.00	%		7,328		6,541		6,815		(6)(11)(20)
Second Lien Term Loan, LIBOR+8.00% cash due 11/26/2027	8.75	%		12,500		12,188		10,313		(6)(11)(20)
						18,729		17,128
Ancile Solutions, Inc.			Application Software
First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021	8.00	%		7,995		7,977		7,987		(6)(20)
						7,977		7,987

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Apptio, Inc.			Application Software
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025	8.25	%		$	23,764	$	23,441	$	23,318	(6)(20)
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025				—		(20)		(29)		(6)(19)(20)
						23,421		23,289
Ardonagh Midco 3 PLC			Insurance Brokers
First Lien Term Loan, EURIBOR+7.50% cash due 7/14/2026	8.50	%		€	1,440	1,596		1,746		(6)(11)(20)
First Lien Term Loan, UK LIBOR+5.4375% cash 2.0625% PIK due 7/14/2026	6.19	%		£	11,303	13,773		15,311		(6)(11)(20)
First Lien Delayed Draw Term Loan, UK LIBOR+5.4375% cash 2.0625% PIK due 7/14/2026	6.19	%		£	400	434		517		(6)(11)(19)(20)
Fixed Rate Bond, 11.50% cash due 1/15/2027				$	1,111	1,100		1,192		(11)
						16,903		18,766
Associated Asphalt Partners, LLC			Construction Materials
First Lien Term Loan, LIBOR+5.25% cash due 4/5/2024	6.25	%		2,546		2,174		2,182		(6)
						2,174		2,182
Asurion, LLC			Property & Casualty Insurance
Second Lien Term Loan, LIBOR+6.50% cash due 8/4/2025	6.65	%		19,985		19,952		20,180		(6)
						19,952		20,180
Athenex, Inc.			Pharmaceuticals
First Lien Term Loan, 11.00% cash due 6/19/2026				34,169		32,875		34,108		(11)(20)
First Lien Delayed Draw Term Loan, 11.00% cash due 6/19/2026				—		(237)		(31)		(11)(19)(20)
266,052 Common Stock Warrants (exercise price $12.63) expiration date 6/19/2027						915		860		(11)(20)
						33,553		34,937
Aurora Lux Finco S.À.R.L.			Airport Services
First Lien Term Loan, LIBOR+5.75% cash due 12/24/2026	6.75	%		22,828		22,341		21,275		(6)(11)(20)
						22,341		21,275
Blackhawk Network Holdings, Inc.			Data Processing & Outsourced Services
Second Lien Term Loan, LIBOR+7.00% cash due 6/15/2026	7.19	%		26,250		26,058		24,019		(6)
						26,058		24,019
Boxer Parent Company Inc.			Systems Software
First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025	4.40	%		10,284		10,195		10,262		(6)
						10,195		10,262
BX Commercial Mortgage Trust 2020-VIVA			Diversified Real Estate Activities
Class D Variable Notes due 3/9/2044	3.67	%		3,130		2,616		3,129		(6)(11)(20)
Class E Variable Notes due 3/9/2044	3.67	%		4,739		3,667		4,481		(6)(11)(20)
						6,283		7,610
California Pizza Kitchen, Inc.			Restaurants
Second Lien Term Loan, 1.00% cash / LIBOR+12.50% PIK due 5/23/2025				588		588		470		(6)(15)(20)
36,188 Shares of Common Stock in CPK Parent, Inc.						437		398		(20)
						1,025		868
Chief Power Finance II, LLC			Independent Power Producers & Energy Traders
First Lien Term Loan, LIBOR+6.50% cash due 12/31/2022	7.50	%		21,563		21,224		20,538		(6)(20)
						21,224		20,538
CITGO Holding, Inc.			Oil & Gas Refining & Marketing
First Lien Term Loan, LIBOR+7.00% cash due 8/1/2023	8.00	%		11,724		11,558		10,903		(6)
Fixed Rate Bond, 9.25% cash due 8/1/2024				10,672		10,672		9,845
						22,230		20,748
CITGO Petroleum Corp.			Oil & Gas Refining & Marketing
First Lien Term Loan, LIBOR+6.25% cash due 3/28/2024	7.25	%		8,957		8,867		8,925		(6)
						8,867		8,925

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Continental Intermodal Group LP			Oil & Gas Storage & Transportation
First Lien Term Loan, LIBOR+9.50% PIK due 1/28/2025				$	25,411	$	25,411	$	20,710	(6)(20)
Common Stock Warrants expiration date 7/28/2025						—		1,672		(20)
						25,411		22,382
Convergeone Holdings, Inc.			IT Consulting & Other Services
First Lien Term Loan, LIBOR+5.00% cash due 1/4/2026	5.15	%		14,584		14,155		13,819		(6)
						14,155		13,819
Conviva Inc.			Application Software
417,851 Series D Preferred Stock Warrants (exercise price $1.1966) expiration date 2/28/2021						105		395		(20)
						105		395
Corrona, LLC			Health Care Services
First Lien Term Loan, LIBOR+5.50% cash due 12/13/2025	6.50	%		10,274		10,126		10,134		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 12/13/2025	6.50	%		1,221		1,178		1,171		(6)(19)(20)
First Lien Revolver, PRIME+4.50% cash due 12/13/2025	7.75	%		305		279		280		(6)(19)(20)
1,099 Class A2 Common Units in Corrona Group Holdings, L.P.						1,038		1,038		(20)
						12,621		12,623
Coyote Buyer, LLC			Specialty Chemicals
First Lien Term Loan, LIBOR+6.00% cash due 2/6/2026	7.00	%		13,090		12,959		12,959		(6)(20)
First Lien Revolver, LIBOR+6.00% cash due 2/6/2025				—		(9)		(9)		(6)(19)(20)
						12,950		12,950
CTOS, LLC			Trading Companies & Distributors
First Lien Term Loan, LIBOR+4.25% cash due 4/18/2025	4.40	%		5,684		5,718		5,698		(6)
						5,718		5,698
Curium Bidco S.à.r.l.			Biotechnology
Second Lien Term Loan, LIBOR+7.75% cash due 10/27/2028	8.50	%		16,787		16,535		16,829		(6)(11)(20)
						16,535		16,829
Delta Topco, Inc.			Systems Software
Second Lien Term Loan, LIBOR+7.25% cash due 12/1/2028	8.00	%		6,680		6,647		6,755		(6)
						6,647		6,755
Eagleview Technology Corporation			Application Software
Second Lien Term Loan, LIBOR+7.50% cash due 8/14/2026	8.50	%		12,000		11,880		10,860		(6)(20)
						11,880		10,860
EHR Canada, LLC			Food Retail
First Lien Term Loan, LIBOR+8.00% cash due 1/31/2021	9.00	%		6,861		6,857		6,998		(6)(20)
						6,857		6,998
EOS Fitness Opco Holdings, LLC			Leisure Facilities
487.5 Class A Preferred Units, 12%						488		49		(20)
12,500 Class B Common Units						—		—		(20)
						488		49
FFI Holdings I Corp			Industrial Machinery
First Lien Term Loan, LIBOR+6.25% cash due 1/24/2025	7.25	%		4,132		3,722		3,719		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+6.25% cash due 1/24/2025				—		—		—		(6)(19)(20)
						3,722		3,719

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes

Fortress Biotech, Inc.			Biotechnology
First Lien Term Loan, 11.00% cash due 8/27/2025				$	8,346	$	7,874	$	8,054	(11)(20)
243,348 Common Stock Warrants (exercise price $3.20) expiration date 8/27/2030						258		260		(11)(20)
						8,132		8,314
GI Chill Acquisition LLC			Managed Health Care
First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025	4.25	%		17,595		17,507		17,441		(6)(20)
Second Lien Term Loan, LIBOR+7.50% cash due 8/6/2026	7.75	%		10,000		9,930		9,700		(6)(20)
						27,437		27,141
GKD Index Partners, LLC			Specialized Finance
First Lien Term Loan, LIBOR+7.00% cash due 6/29/2023	8.00	%		19,705		19,608		19,390		(6)(20)
First Lien Revolver, LIBOR+7.00% cash due 6/29/2023	8.00	%		924		916		906		(6)(19)(20)
						20,524		20,296
Global Medical Response			Health Care Services
First Lien Term Loan, LIBOR+4.25% cash due 3/14/2025	5.25	%		6,240		6,142		6,193		(6)
						6,142		6,193
Guidehouse LLP			Research & Consulting Services
First Lien Term Loan, LIBOR+4.50% cash due 5/1/2025	4.65	%		4,937		4,897		4,945		(6)
Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026	8.15	%		20,000		19,933		20,000		(6)(20)
						24,830		24,945
Gulf Operating, LLC			Oil & Gas Storage & Transportation
First Lien Term Loan, LIBOR+5.25% cash due 8/25/2023	6.25	%		2,035		1,258		1,553		(6)
First Lien Revolver, LIBOR+4.00% cash due 12/27/2021				—		(704)		(704)		(6)(19)(20)
						554		849
Houghton Mifflin Harcourt Publishers Inc.			Education Services
First Lien Term Loan, LIBOR+6.25% cash due 11/22/2024	7.25	%		6,650		6,438		6,428		(6)(11)
						6,438		6,428
I Drive Safely, LLC			Education Services
125,079 Class A Common Units of IDS Investments, LLC						1,000		225		(20)
						1,000		225
IBG Borrower LLC			Apparel, Accessories & Luxury Goods
First Lien Term Loan, LIBOR+7.00% cash due 8/2/2022	7.31	%		7,768		7,409		6,753		(6)(20)
						7,409		6,753
iCIMs, Inc.			Application Software
First Lien Term Loan, LIBOR+6.50% cash due 9/12/2024	7.50	%		19,171		18,913		19,029		(6)(20)
First Lien Revolver, LIBOR+6.50% cash due 9/12/2024	7.50	%		882		869		876		(6)(20)
						19,782		19,905
Immucor, Inc.			Health Care Supplies
First Lien Term Loan, LIBOR+5.75% cash due 7/2/2025	6.75	%		6,461		6,345		6,331		(6)(20)
First Lien Revolver, LIBOR+5.75% cash due 7/2/2025				—		(10)		(11)		(6)(19)(20)
Second Lien Term Loan, LIBOR+8.00% cash 3.50% PIK due 10/2/2025	9.00	%		15,750		15,471		15,435		(6)(20)
						21,806		21,755
Integral Development Corporation			Other Diversified Financial Services
1,078,284 Common Stock Warrants (exercise price $0.9274) expiration date 7/10/2024						113		—		(20)
						113		—

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Ivanti Software, Inc.			Application Software
Second Lien Term Loan, LIBOR+8.50% cash due 12/1/2028	9.50	%		$	17,346	$	16,826	$	17,281	(6)(20)
						16,826		17,281
Jazz Acquisition, Inc.			Aerospace & Defense
First Lien Term Loan, LIBOR+7.50% cash due 1/29/2027	8.50	%		16,871		16,222		16,179		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+7.50% cash due 1/29/2027				—		—		—		(6)(19)(20)
						16,222		16,179
L Squared Capital Partners LLC			Multi-Sector Holdings
2.00% limited partnership interest						—		1,251		(11)(16)
						—		1,251
Lanai Holdings III, Inc.			Health Care Distributors
First Lien Term Loan, LIBOR+4.75% cash due 8/29/2022	5.75	%		12,914		12,795		12,511		(6)
						12,795		12,511
Latam Airlines Group S.A.			Airlines
First Lien Delayed Draw Term Loan, LIBOR+11.00% PIK due 3/29/2022				8,177		7,903		8,449		(6)(11)(19)(20)
						7,903		8,449
Lift Brands Holdings, Inc.			Leisure Facilities
2,000,000 Class A Common Units in Snap Investments, LLC						1,399		—		(20)
						1,399		—
Lightbox Intermediate, L.P.			Real Estate Services
First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026	5.15	%		39,400		38,946		38,218		(6)(20)
						38,946		38,218
LogMeIn, Inc.			Application Software
Second Lien Term Loan, LIBOR+9.00% cash due 8/31/2028	9.15	%		9,293		8,846		9,270		(6)
						8,846		9,270
LTI Holdings, Inc.			Electronic Components
First Lien Term Loan, LIBOR+4.75% cash due 7/24/2026	4.90	%		1,790		1,522		1,779		(6)
First Lien Term Loan, LIBOR+3.50% cash due 9/6/2025	3.65	%		18,036		15,206		17,567		(6)
Second Lien Term Loan, LIBOR+6.75% cash due 9/6/2026	6.90	%		10,140		10,072		9,861		(6)
						26,800		29,207
Mayfield Agency Borrower Inc.			Property & Casualty Insurance
First Lien Term Loan, LIBOR+4.50% cash due 2/28/2025	4.65	%		28,749		28,019		27,887		(6)
						28,019		27,887
MHE Intermediate Holdings, LLC			Diversified Support Services
First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024	6.00	%		2,903		2,882		2,826		(6)(20)
						2,882		2,826
Mindbody, Inc.			Internet Services & Infrastructure
First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025	8.00	%		29,208		28,811		26,760		(6)(20)
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025				—		(42)		(255)		(6)(19)(20)
						28,769		26,505

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Ministry Brands, LLC			Application Software
First Lien Revolver, LIBOR+5.00% cash due 12/2/2022				$	—	$	(9)	$	(9)	(6)(19)(20)
Second Lien Term Loan, LIBOR+9.25% cash due 6/2/2023	10.25	%		9,000		8,940		8,923		(6)(20)
						8,931		8,914
MRI Software LLC			Application Software
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026	6.50	%		15,097		14,970		15,059		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026				—		(57)		(13)		(6)(19)(20)
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026				—		(13)		(3)		(6)(19)(20)
						14,900		15,043
Navisite, LLC			Data Processing & Outsourced Services
Second Lien Term Loan, LIBOR+8.50% cash due 12/30/2026	9.50	%		22,560		22,110		22,109		(6)(20)
						22,110		22,109
NeuAG, LLC			Fertilizers & Agricultural Chemicals
First Lien Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024	7.00	%		35,938		34,642		34,716		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024				—		(175)		(149)		(6)(19)(20)
						34,467		34,567
NuStar Logistics, L.P.			Oil & Gas Refining & Marketing
Unsecured Delayed Draw Term Loan, 12.00% cash due 4/19/2023				—		—		—		(19)(20)
						—		—
Olaplex, Inc.			Personal Products
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026	7.50	%		41,939		41,286		41,939		(6)(20)
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025				—		(61)		—		(6)(19)(20)
						41,225		41,939
OmniSYS Acquisition Corporation			Diversified Support Services
100,000 Common Units in OSYS Holdings, LLC						1,000		607		(20)
						1,000		607
Onvoy, LLC			Integrated Telecommunication Services
Second Lien Term Loan, LIBOR+10.50% cash due 2/10/2025	11.50	%		16,750		16,750		15,745		(6)(20)
19,666.67 Class A Units in GTCR Onvoy Holdings, LLC						1,967		785		(20)
13,664.73 Series 3 Class B Units in GTCR Onvoy Holdings, LLC						—		—		(20)
						18,717		16,530
OZLM Funding III, Ltd.			Multi-Sector Holdings
Class DR Notes, LIBOR+7.77% cash due 1/22/2029	7.99	%		2,312		1,666		2,288		(6)(11)
						1,666		2,288
P & L Development, LLC			Pharmaceuticals
Fixed Rate Bond, 7.75% cash due 11/15/2025				9,123		9,123		9,830
						9,123		9,830
Park Place Technologies, LLC			Internet Services & Infrastructure
First Lien Term Loan, LIBOR+5.00% cash due 11/10/2027	6.00	%		5,000		4,804		4,817		(6)
						4,804		4,817

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
PaySimple, Inc.			Data Processing & Outsourced Services
First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025	5.65	%		$	49,410	$	48,631	$	48,422	(6)(20)
						48,631		48,422
Pingora MSR Opportunity Fund I-A, LP			Thrifts & Mortgage Finance
1.86% limited partnership interest						752		113		(11)(16)(19)
						752		113
Planview Parent, Inc.			Application Software
Second Lien Term Loan, LIBOR+7.25% cash due 12/18/2028	8.00	%		21,484		21,162		21,484		(6)(20)
						21,162		21,484
ProFrac Services, LLC			Industrial Machinery
First Lien Term Loan, LIBOR+7.50% cash due 9/15/2023	8.75	%		15,007		14,925		11,818		(6)(20)
						14,925		11,818
Project Boost Purchaser, LLC			Application Software
Second Lien Term Loan, LIBOR+8.00% cash due 5/9/2027	8.15	%		3,750		3,750		3,675		(6)(20)
						3,750		3,675
Pug LLC			Internet & Direct Marketing Retail
First Lien Term Loan, LIBOR+8.00% cash due 2/12/2027	8.75	%		15,701		14,803		16,015		(6)
						14,803		16,015
QuorumLabs, Inc.			Application Software
64,887,669 Junior-2 Preferred Stock						375		—		(20)
						375		—
Refac Optical Group			Specialty Stores
1,550.9435 Shares of Common Stock in Refac Holdings, Inc.						1		—		(20)
550.9435 Series A-2 Preferred Stock in Refac Holdings, Inc., 10%						305		—		(20)
1,000 Series A-1 Preferred Stock in Refac Holdings, Inc., 10%						999		—		(20)
						1,305		—
Salient CRGT, Inc.			Aerospace & Defense
First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022	7.50	%		2,911		2,898		2,802		(6)(20)
						2,898		2,802
Scilex Pharmaceuticals Inc.			Pharmaceuticals
Fixed Rate Zero Coupon Bond due 8/15/2026				12,277		9,738		10,312		(20)
						9,738		10,312
ShareThis, Inc.			Application Software
345,452 Series C Preferred Stock Warrants (exercise price $3.0395) expiration date 3/4/2024						367		—		(20)
						367		—
Sorrento Therapeutics, Inc.			Biotechnology
125,000 Common Stock Warrants (exercise price $3.94) expiration date 11/3/2029						—		625		(11)(20)
						—		625
Supermoose Borrower, LLC			Application Software
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025	4.00	%		10,170		8,969		9,540		(6)
						8,969		9,540
Swordfish Merger Sub LLC			Auto Parts & Equipment
Second Lien Term Loan, LIBOR+6.75% cash due 2/2/2026	7.75	%		12,500		12,460		11,016		(6)(20)
						12,460		11,016

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Tacala, LLC			Restaurants
Second Lien Term Loan, LIBOR+7.50% cash due 2/4/2028	8.25	%		$	9,448	$	9,302	$	9,357	(6)
						9,302		9,357
Telestream Holdings Corporation			Application Software
First Lien Term Loan, LIBOR+8.75% cash due 10/15/2025	9.75	%		15,020		14,749		14,720		(6)(20)
First Lien Revolver, LIBOR+8.75% cash due 10/15/2025				—		(27)		(28)		(6)(19)(20)
						14,722		14,692
TerSera Therapeutics LLC			Pharmaceuticals
Second Lien Term Loan, LIBOR+9.50% cash due 3/30/2024	10.50	%		29,663		29,268		29,372		(6)(20)
668,879 Common Units of TerSera Holdings LLC						2,192		3,487		(20)
						31,460		32,859
Thrasio, LLC			Specialized Finance
First Lien Term Loan, LIBOR+7.00% cash due 12/18/2026	8.00	%		17,213		16,783		16,783		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+7.00% cash due 12/18/2026				—		(284)		(284)		(6)(19)(20)
						16,499		16,499
TIBCO Software Inc.			Application Software
Second Lien Term Loan, LIBOR+7.25% cash due 3/3/2028	7.40	%		16,788		16,677		17,012		(6)
						16,677		17,012
TigerConnect, Inc.			Application Software
299,110 Series B Preferred Stock Warrants (exercise price $1.3373) expiration date 12/8/2024						60		525		(20)
						60		525
Transact Holdings Inc.			Application Software
First Lien Term Loan, LIBOR+4.75% cash due 4/30/2026	4.90	%		6,913		6,809		6,757		(6)(20)
						6,809		6,757
Truck Hero, Inc.			Auto Parts & Equipment
Second Lien Term Loan, LIBOR+8.25% cash due 4/21/2025	9.25	%		21,500		21,191		21,500		(6)(20)
						21,191		21,500
Verscend Holding Corp.			Health Care Technology
First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025	4.65	%		14,488		14,441		14,510		(6)
Fixed Rate Bond, 9.75% cash due 8/15/2026				7,000		7,019		7,599
						21,460		22,109
Vitalyst Holdings, Inc.			IT Consulting & Other Services
675 Series A Preferred Stock Units						675		440		(20)
7,500 Class A Common Stock Units						75		—		(20)
						750		440
William Morris Endeavor Entertainment, LLC			Movies & Entertainment
First Lien Term Loan, LIBOR+8.50% cash due 5/18/2025	9.50	%		33,214		31,611		34,190		(6)(20)
						31,611		34,190
Windstream Services II, LLC			Integrated Telecommunication Services
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027	7.25	%		25,870		24,876		25,377		(6)
6,129 Shares of Common Stock in Windstream Holdings II, LLC						53		90		(20)
37,215 Warrants in Windstream Holdings II, LLC						853		546		(20)
						25,782		26,013
WP CPP Holdings, LLC			Aerospace & Defense
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026	8.75	%		15,000		14,898		12,713		(6)(20)
						14,898		12,713

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
WPEngine, Inc.			Application Software
First Lien Term Loan, LIBOR+6.50% cash due 3/27/2026	7.50	%		$	14,188	$	13,879	$	13,969	(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+6.50% cash due 3/27/2026				—		(575)		(406)		(6)(19)(20)
						13,304		13,563
xMatters, Inc.			Application Software
600,000 Common Stock Warrants (exercise price $0.593333) expiration date 2/26/2025						709		336		(20)
						709		336
Zep Inc.			Specialty Chemicals
First Lien Term Loan, LIBOR+4.00% cash due 8/12/2024	5.00	%		1,950		1,894		1,909		(6)
Second Lien Term Loan, LIBOR+8.25% cash due 8/11/2025	9.25	%		23,807		23,737		22,147		(6)(20)
						25,631		24,056
Zephyr Bidco Limited			Specialized Finance
Second Lien Term Loan, UK LIBOR+7.50% cash due 7/23/2026	7.52	%		£	18,000	23,732		23,952		(6)(11)
						23,732		23,952
Total Non-Control/Non-Affiliate Investments (155.0% of net assets)						$	1,503,368	$	1,495,593
Total Portfolio Investments (177.5% of net assets)						$	1,757,661	$	1,712,324
Cash and Cash Equivalents
JP Morgan Prime Money Market Fund, Institutional Shares						$	20,966	$	20,966
Other cash accounts						3,268		3,268
Total Cash and Cash Equivalents (2.5% of net assets)						$	24,234	$	24,234
Total Portfolio Investments and Cash and Cash Equivalents (180.0% of net assets)						$	1,781,895	$	1,736,558


Derivative Instrument	Notional Amount to be Purchased		Notional Amount to be Sold		Maturity Date	Counterparty	Cumulative Unrealized Appreciation /(Depreciation)
Foreign currency forward contract	$	36,999	£	27,894	2/11/2021	JPMorgan Chase Bank, N.A.	$	(1,141)
Foreign currency forward contract	$	30,308	€	25,614	2/11/2021	JPMorgan Chase Bank, N.A.	(1,062)
							$	(2,203)

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)

(1)All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted.

(2)See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region.

(3)Equity ownership may be held in shares or units of companies related to the portfolio companies.

(4)Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents.

(5)Each of the Company's investments is pledged as collateral under the Credit Facility (as defined in Note 6 to the accompanying notes to the Consolidated Financial Statements).

(6)The interest rate on the principal balance outstanding for all floating rate loans is indexed to the London Interbank Offered Rate ("LIBOR") and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of December 31, 2020, the reference rates for the Company's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.25%, the 180-day LIBOR at 0.26%, the 360-day LIBOR at 0.34%, the PRIME at 3.25%, the 30-day UK LIBOR at 0.02%, the 180-day UK LIBOR at 0.22%, the 30-day EURIBOR at (0.61)% and the 180-day EURIBOR at (0.36)%. Most loans include an interest floor, which generally ranges from 0% to 1%.

(7)Principal includes accumulated payment in kind ("PIK") interest and is net of repayments, if any. “£” signifies the investment is denominated in British Pounds. "€" signifies the investment is denominated in Euros. All other investments are denominated in U.S. dollars.

(8)Control Investments generally are defined by the Investment Company Act of 1940, as amended (the "Investment Company Act"), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.

(9)As defined in the Investment Company Act, the Company is deemed to be both an "Affiliated Person" of and to "Control" these portfolio companies as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). See Schedule 12-14 in the accompanying notes to the Consolidated Financial Statements for transactions during the three months ended December 31, 2020 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to control.

(10)First Star Speir Aviation 1 Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with Accounting Standards Update ("ASU") 2013-08, the Company has deemed the holding company to be an investment company under accounting principles generally accepted in the United States ("GAAP") and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.

(11)Investment is not a "qualifying asset" as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of December 31, 2020, qualifying assets represented 75.3% of the Company's total assets and non-qualifying assets represented 24.7% of the Company's total assets.

(12)Income producing through payment of dividends or distributions.

(13)PIK interest income for this investment accrues at an annualized rate of 15%, however, the PIK interest is not contractually capitalized on the investment. As a result, the principal amount of the investment does not increase over time for accumulated PIK interest. As of December 31, 2020, the accumulated PIK interest balance for each of the A notes and the B notes was $4.9 million. The fair value of this investment is inclusive of PIK.

(14)See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition.

(15)This investment was on cash non-accrual status as of December 31, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

(16)This investment was valued using net asset value as a practical expedient for fair value. Consistent with Financial Accounting Standards Board ("FASB") guidance under Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), these investments are excluded from the hierarchical levels.

(17)Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.

(18)Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.

(19)Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

December 31, 2020

(dollar amounts in thousands)

(unaudited)

(20)As of December 31, 2020, these investments were categorized as Level 3 within the fair value hierarchy established by ASC 820.

See notes to Consolidated Financial Statements.

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Control Investments										(8)(9)
C5 Technology Holdings, LLC			Data Processing & Outsourced Services
829 Common Units						$	—	$	—	(20)
34,984,460.37 Preferred Units						34,984		27,638		(20)
						34,984		27,638
Dominion Diagnostics, LLC			Health Care Services
First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024	6.00	%		$	27,660	27,660		27,660		(6)(20)
First Lien Revolver, LIBOR+5.00% cash due 2/28/2024	6.00	%		5,260		5,260		5,260		(6)(19)(20)
30,030.8 Common Units in DD Healthcare Services Holdings, LLC						18,626		7,667		(20)
						51,546		40,587
First Star Speir Aviation Limited			Airlines							(10)
First Lien Term Loan, 9.00% cash due 12/15/2020				11,510		2,035		11,510		(11)(20)
100% equity interest						8,500		1,622		(11)(12)(20)
						10,535		13,132
New IPT, Inc.			Oil & Gas Equipment & Services
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.00	%		2,304		2,304		1,800		(6)(20)
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021	6.00	%		1,009		1,009		788		(6)(19)(20)
50.087 Class A Common Units in New IPT Holdings, LLC						—		—		(20)
						3,313		2,588
Senior Loan Fund JV I, LLC			Multi-Sector Holdings							(14)
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028	7.17	%		96,250		96,250		96,250		(6)(11)(20)
87.5% LLC equity interest						49,322		21,190		(11)(16)(19)
						145,572		117,440
Total Control Investments (22.0% of net assets)						$	245,950	$	201,385

Affiliate Investments										(17)
Assembled Brands Capital LLC			Specialized Finance
First Lien Revolver, LIBOR+6.00% cash due 10/17/2023	7.00	%		$	4,688	$	4,688	$	4,194	(6)(19)(20)
1,609,201 Class A Units						764		483		(20)
1,019,168.80 Preferred Units, 6%						1,019		1,091		(20)
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029						—		—		(20)
						6,471		5,768
Caregiver Services, Inc.			Health Care Services
1,080,399 shares of Series A Preferred Stock, 10%						1,080		741		(20)
						1,080		741
Total Affiliate Investments (0.7% of net assets)						$	7,551	$	6,509


Non-Control/Non-Affiliate Investments										(18)
4 Over International, LLC			Commercial Printing
First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022	7.00	%		$	5,676	$	5,654	$	5,264	(6)(20)
First Lien Revolver, LIBOR+6.00% cash due 6/7/2021	7.00	%		2,232		2,214		2,070		(6)(20)
						7,868		7,334
99 Cents Only Stores LLC			General Merchandise Stores
First Lien Term Loan, LIBOR+5.00% cash 1.50% PIK due 1/13/2022	6.00	%		19,431		19,220		17,877		(6)
						19,220		17,877
A.T. Holdings II SÀRL			Biotechnology
First Lien Term Loan, 12.00% cash due 4/27/2023				22,619		22,619		26,464		(11)(20)
First Lien Delayed Draw Term Loan, 12.00% cash due 4/27/2023				1,508		1,508		1,780		(11)(19)(20)
						24,127		28,244

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Access CIG, LLC			Diversified Support Services
Second Lien Term Loan, LIBOR+7.75% cash due 2/27/2026	7.91	%		$	15,000	$	14,909	$	14,250	(6)
						14,909		14,250
Accupac, Inc.			Personal Products
First Lien Term Loan, LIBOR+6.00% cash due 1/17/2026	7.00	%		12,487		12,294		12,487		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 1/17/2026				—		(36)		—		(6)(19)(20)
First Lien Revolver, LIBOR+6.00% cash due 1/17/2026	7.00	%		1,564		1,540		1,564		(6)(20)
						13,798		14,051
Acquia Inc.			Application Software
First Lien Term Loan, LIBOR+7.00% cash due 10/31/2025	8.00	%		20,950		20,594		20,499		(6)(20)
First Lien Revolver, LIBOR+7.00% cash due 10/31/2025				—		(39)		(48)		(6)(19)(20)
						20,555		20,451
Aden & Anais Merger Sub, Inc.			Apparel, Accessories & Luxury Goods
51,645 Common Units in Aden & Anais Holdings, Inc.						5,165		—		(20)
						5,165		—
AdVenture Interactive, Corp.			Advertising
9,073 shares of common stock						13,611		13,440		(20)
						13,611		13,440
AI Ladder (Luxembourg) Subco S.a.r.l.			Electrical Components & Equipment
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025	4.65	%		21,374		20,934		20,465		(6)(11)
						20,934		20,465
AI Sirona (Luxembourg) Acquisition S.a.r.l.			Pharmaceuticals
Second Lien Term Loan, EURIBOR+7.25% cash due 9/28/2026	7.25	%		€	24,838	27,668		28,435		(6)(11)(20)
						27,668		28,435
Airbnb, Inc.			Hotels, Resorts & Cruise Lines
First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025	8.50	%		$	15,743	15,378		17,081		(6)
						15,378		17,081
AirStrip Technologies, Inc.			Application Software
5,715 Common Stock Warrants (exercise price $139.99) expiration date 5/11/2025						90		—		(20)
						90		—
Aldevron, L.L.C.			Biotechnology
First Lien Term Loan, LIBOR+4.25% cash due 10/12/2026	5.25	%		7,960		7,880		7,977		(6)
						7,880		7,977
Algeco Scotsman Global Finance Plc			Construction & Engineering
Fixed Rate Bond, 8.00% cash due 2/15/2023				13,524		13,277		13,465		(11)
						13,277		13,465
Alvotech Holdings S.A.			Biotechnology							(13)
Fixed Rate Bond 15% PIK Note A due 12/13/2023				14,800		18,849		19,968		(11)(20)
Fixed Rate Bond 15% PIK Note B due 12/13/2023				14,800		18,849		19,196		(11)(20)
						37,698		39,164
Amplify Finco Pty Ltd.			Movies & Entertainment
First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026	4.75	%		995		909		856		(6)(11)(20)
Second Lien Term Loan, LIBOR+8.00% cash due 11/26/2027	8.75	%		12,500		12,188		9,438		(6)(11)(20)
						13,097		10,294

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Ancile Solutions, Inc.			Application Software
First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021	8.00	%		$	8,181	$	8,150	$	8,124	(6)(20)
						8,150		8,124
Apptio, Inc.			Application Software
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025	8.25	%		23,764		23,420		23,297		(6)(20)
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025				—		(22)		(30)		(6)(19)(20)
						23,398		23,267
Ardonagh Midco 3 PLC			Insurance Brokers
First Lien Term Loan, EURIBOR+7.50% cash due 7/14/2026	8.50	%		€	1,440	1,594		1,640		(6)(11)(20)
First Lien Term Loan, UK LIBOR+7.50% cash due 7/14/2026	8.25	%		£	11,303	13,752		14,188		(6)(11)(20)
First Lien Delayed Draw Term Loan, UK LIBOR+7.50% cash due 7/14/2026				£	—	—		—		(6)(11)(19)(20)
Fixed Rate Bond, 11.50% cash due 1/15/2027				$	2,222	2,200		2,255		(11)
						17,546		18,083
Associated Asphalt Partners, LLC			Construction Materials
First Lien Term Loan, LIBOR+5.25% cash due 4/5/2024	6.25	%		2,554		2,150		2,073		(6)
						2,150		2,073
Asurion, LLC			Property & Casualty Insurance
Second Lien Term Loan, LIBOR+6.50% cash due 8/4/2025	6.65	%		19,985		19,950		20,058		(6)
						19,950		20,058
Athenex, Inc.			Pharmaceuticals
First Lien Term Loan, 11.00% cash due 6/19/2026				28,475		27,252		28,261		(11)(20)
First Lien Delayed Draw Term Loan, 11.00% cash due 6/19/2026				—		(321)		(171)		(11)(19)(20)
266,052 Common Stock Warrants (exercise price $12.63) expiration date 6/19/2027						915		785		(11)(20)
						27,846		28,875
Aurora Lux Finco S.À.R.L.			Airport Services
First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026	7.00	%		22,885		22,376		21,283		(6)(11)(20)
						22,376		21,283
Blackhawk Network Holdings, Inc.			Data Processing & Outsourced Services
Second Lien Term Loan, LIBOR+7.00% cash due 6/15/2026	7.19	%		26,250		26,049		24,150		(6)
						26,049		24,150
Boxer Parent Company Inc.			Systems Software
First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025	4.40	%		13,775		13,666		13,407		(6)
						13,666		13,407
BX Commercial Mortgage Trust 2020-VIVA			Diversified Real Estate Activities
Class D Variable Notes due 3/9/2044	3.67	%		12,556		10,482		11,451		(6)(11)(20)
Class E Variable Notes due 3/9/2044	3.67	%		6,221		4,806		5,395		(6)(11)(20)
						15,288		16,846
California Pizza Kitchen, Inc.			Restaurants
First Lien Term Loan, LIBOR+8.00% cash due 8/23/2022				3,222		3,081		983		(6)(21)
						3,081		983
Chief Power Finance II, LLC			Independent Power Producers & Energy Traders
First Lien Term Loan, LIBOR+6.50% cash due 12/31/2022	7.50	%		21,850		21,462		20,812		(6)(20)
						21,462		20,812
CITGO Holding, Inc.			Oil & Gas Refining & Marketing
First Lien Term Loan, LIBOR+7.00% cash due 8/1/2023	8.00	%		11,753		11,570		11,081		(6)
Fixed Rate Bond, 9.25% cash due 8/1/2024				10,672		10,672		10,192
						22,242		21,273

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes

CITGO Petroleum Corp.			Oil & Gas Refining & Marketing
First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024	6.00	%		$	8,979	$	8,890	$	8,553	(6)
						8,890		8,553
Continental Intermodal Group LP			Oil & Gas Storage & Transportation
First Lien Term Loan, LIBOR+9.50% PIK due 1/28/2025				24,741		24,741		21,753		(6)(20)
Common Stock Warrants expiration date 7/28/2025						—		1,672		(20)
						24,741		23,425
Convergeone Holdings, Inc.			IT Consulting & Other Services
First Lien Term Loan, LIBOR+5.00% cash due 1/4/2026	5.15	%		14,621		14,169		13,465		(6)
						14,169		13,465
Conviva Inc.			Application Software
417,851 Series D Preferred Stock Warrants (exercise price $1.1966) expiration date 2/28/2021						105		395		(20)
						105		395
Corrona, LLC			Health Care Services
First Lien Term Loan, LIBOR+5.50% cash due 12/13/2025	6.50	%		10,300		10,144		10,152		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 12/13/2025				—		(32)		(52)		(6)(19)(20)
First Lien Revolver, PRIME+4.50% cash due 12/13/2025	7.75	%		305		277		279		(6)(19)(20)
1,099 Class A2 Common Units in Corrona Group Holdings, L.P.						1,038		1,038		(20)
						11,427		11,417
Coyote Buyer, LLC			Specialty Chemicals
First Lien Term Loan, LIBOR+6.00% cash due 2/6/2026	7.00	%		13,123		12,992		12,992		(6)(20)
First Lien Revolver, LIBOR+6.00% cash due 2/6/2025				—		(9)		(9)		(6)(19)(20)
						12,983		12,983
CTOS, LLC			Trading Companies & Distributors
First Lien Term Loan, LIBOR+4.25% cash due 4/18/2025	4.40	%		10,139		10,228		10,069		(6)
						10,228		10,069
Eagleview Technology Corporation			Application Software
Second Lien Term Loan, LIBOR+7.50% cash due 8/14/2026	8.50	%		12,000		11,880		10,440		(6)(20)
						11,880		10,440
EHR Canada, LLC			Food Retail
First Lien Term Loan, LIBOR+8.00% cash due 12/4/2020	9.00	%		6,861		6,851		6,998		(6)(20)
						6,851		6,998
EOS Fitness Opco Holdings, LLC			Leisure Facilities
487.5 Class A Preferred Units, 12%						488		49		(20)
12,500 Class B Common Units						—		—		(20)
						488		49
ExamSoft Worldwide, Inc.			Application Software
180,707 Class C Units in ExamSoft Investor LLC						181		500		(20)
						181		500
Fortress Biotech, Inc.			Biotechnology
First Lien Term Loan, 11.00% cash due 8/27/2025				8,346		7,842		7,908		(11)(20)
243,348 Common Stock Warrants (exercise price $3.20) expiration date 8/27/2030						258		419		(11)(20)
						8,100		8,327
GI Chill Acquisition LLC			Managed Health Care
First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025	4.22	%		17,640		17,552		17,331		(6)(20)
Second Lien Term Loan, LIBOR+7.50% cash due 8/6/2026	7.72	%		10,000		9,927		9,350		(6)(20)
						27,479		26,681

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes

GKD Index Partners, LLC			Specialized Finance
First Lien Term Loan, LIBOR+7.00% cash due 6/29/2023	8.00	%		$	20,933	$	20,818	$	20,577	(6)(20)
First Lien Revolver, LIBOR+7.00% cash due 6/29/2023	8.00	%		924		915		904		(6)(19)(20)
						21,733		21,481
Global Medical Response			Health Care Services
First Lien Term Loan, LIBOR+4.25% cash due 3/14/2025	5.25	%		6,256		6,152		6,084		(6)
						6,152		6,084
Guidehouse LLP			Research & Consulting Services
First Lien Term Loan, LIBOR+4.50% cash due 5/1/2025	4.65	%		4,949		4,907		4,912		(6)
Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026	8.15	%		20,000		19,930		19,300		(6)(20)
						24,837		24,212
Gulf Operating, LLC			Oil & Gas Storage & Transportation
First Lien Term Loan, LIBOR+5.25% cash due 8/25/2023	6.25	%		3,275		1,874		2,324		(6)
						1,874		2,324
Houghton Mifflin Harcourt Publishers Inc.			Education Services
First Lien Term Loan, LIBOR+6.25% cash due 11/22/2024	7.25	%		6,738		6,508		6,300		(6)(11)
						6,508		6,300
I Drive Safely, LLC			Education Services
125,079 Class A Common Units of IDS Investments, LLC						1,000		200		(20)
						1,000		200
IBG Borrower LLC			Apparel, Accessories & Luxury Goods
First Lien Term Loan, LIBOR+7.00% cash due 8/2/2022	7.25	%		9,056		8,569		7,856		(6)(20)
						8,569		7,856
iCIMs, Inc.			Application Software
First Lien Term Loan, LIBOR+6.50% cash due 9/12/2024	7.50	%		16,718		16,493		16,584		(6)(20)
First Lien Revolver, LIBOR+6.50% cash due 9/12/2024				—		(15)		(7)		(6)(19)(20)
						16,478		16,577
Immucor, Inc.			Health Care Supplies
First Lien Term Loan, LIBOR+5.75% cash due 7/2/2025	6.75	%		6,477		6,354		6,347		(6)(20)
First Lien Revolver, LIBOR+5.75% cash due 7/2/2025				—		(10)		(11)		(6)(19)(20)
Second Lien Term Loan, LIBOR+8.00% cash 3.50% PIK due 10/2/2025	9.00	%		15,611		15,316		15,298		(6)(20)
						21,660		21,634
Integral Development Corporation			Other Diversified Financial Services
1,078,284 Common Stock Warrants (exercise price $0.9274) expiration date 7/10/2024						113		—		(20)
						113		—
L Squared Capital Partners LLC			Multi-Sector Holdings
2.00% limited partnership interest						887		2,192		(11)(16)
						887		2,192
Lanai Holdings III, Inc.			Health Care Distributors
First Lien Term Loan, LIBOR+4.75% cash due 8/29/2022	5.75	%		12,948		12,810		12,260		(6)
						12,810		12,260
Lannett Company, Inc.			Pharmaceuticals
First Lien Term Loan, LIBOR+5.00% cash due 11/25/2020	6.00	%		460		460		456		(6)(11)
						460		456

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Lift Brands Holdings, Inc.			Leisure Facilities
2,000,000 Class A Common Units in Snap Investments, LLC						$	1,399	$	—	(20)
						1,399		—
Lightbox Intermediate, L.P.			Real Estate Services
First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026	5.15	%		$	39,500	39,023		37,723		(6)(20)
						39,023		37,723
LogMeIn, Inc.			Application Software
Second Lien Term Loan, LIBOR+9.00% cash due 8/31/2028	9.16	%		9,293		8,831		9,247		(6)
						8,831		9,247
LTI Holdings, Inc.			Electronic Components
First Lien Term Loan, LIBOR+4.75% cash due 7/24/2026	4.90	%		1,794		1,513		1,685		(6)
First Lien Term Loan, LIBOR+3.50% cash due 9/6/2025	3.65	%		18,082		15,087		16,884		(6)
Second Lien Term Loan, LIBOR+6.75% cash due 9/6/2026	6.90	%		9,000		9,000		7,983		(6)
						25,600		26,552
Maravai Intermediate Holdings, LLC			Biotechnology
First Lien Term Loan, LIBOR+4.25% cash due 8/1/2025	5.25	%		11,760		11,642		11,789		(6)(20)
						11,642		11,789
Mauser Packaging Solutions Holding Company			Metal & Glass Containers
Fixed Rate Bond, 8.50% cash due 4/15/2024				11,378		11,273		11,833
						11,273		11,833
Mayfield Agency Borrower Inc.			Property & Casualty Insurance
First Lien Term Loan, LIBOR+4.50% cash due 2/28/2025	4.65	%		28,823		28,045		26,679		(6)
						28,045		26,679
McAfee, LLC			Systems Software
Second Lien Term Loan, LIBOR+8.50% cash due 9/29/2025	9.50	%		7,000		7,028		7,074		(6)
						7,028		7,074
MHE Intermediate Holdings, LLC			Diversified Support Services
First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024	6.00	%		2,910		2,888		2,832		(6)(20)
						2,888		2,832
Mindbody, Inc.			Internet Services & Infrastructure
First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025	8.00	%		29,097		28,675		26,828		(6)(20)
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025				—		(44)		(241)		(6)(19)(20)
						28,631		26,587
Ministry Brands, LLC			Application Software
First Lien Revolver, LIBOR+5.00% cash due 12/2/2022	6.00	%		575		566		566		(6)(19)(20)
Second Lien Term Loan, LIBOR+9.25% cash due 6/2/2023	10.25	%		9,000		8,934		8,923		(6)(20)
						9,500		9,489
MRI Software LLC			Application Software
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026	6.50	%		14,369		14,242		14,022		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026				—		(59)		(144)		(6)(19)(20)
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026				—		(13)		(31)		(6)(19)(20)
						14,170		13,847

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
NeuAG, LLC			Fertilizers & Agricultural Chemicals
First Lien Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024	7.00	%		$	35,306	$	33,918	$	33,894	(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024				—		(175)		(175)		(6)(19)(20)
						33,743		33,719
NuStar Logistics, L.P.			Oil & Gas Refining & Marketing
Unsecured Delayed Draw Term Loan, 12.00% cash due 4/19/2023				—		—		—		(19)(20)
						—		—
Olaplex, Inc.			Personal Products
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026	7.50	%		35,056		34,441		35,056		(6)(20)
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025	7.50	%		1,917		1,852		1,917		(6)(19)(20)
						36,293		36,973
OmniSYS Acquisition Corporation			Diversified Support Services
100,000 Common Units in OSYS Holdings, LLC						1,000		607		(20)
						1,000		607
Onvoy, LLC			Integrated Telecommunication Services
Second Lien Term Loan, LIBOR+10.50% cash due 2/10/2025	11.50	%		16,750		16,750		15,142		(6)(20)
19,666.67 Class A Units in GTCR Onvoy Holdings, LLC						1,967		268		(20)
13,664.73 Series 3 Class B Units in GTCR Onvoy Holdings, LLC						—		—		(20)
						18,717		15,410
OZLM Funding III, Ltd.			Multi-Sector Holdings
Class DR Notes, LIBOR+7.77% cash due 1/22/2029	8.03	%		2,312		1,657		2,119		(6)(11)
						1,657		2,119
PaySimple, Inc.			Data Processing & Outsourced Services
First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025	5.65	%		49,535		48,711		47,801		(6)(20)
						48,711		47,801
Pingora MSR Opportunity Fund I-A, LP			Thrifts & Mortgage Finance
1.86% limited partnership interest						938		353		(11)(16)(19)
						938		353
PLATO Learning Inc.			Education Services
Unsecured Senior PIK Note, 8.50% PIK due 12/9/2021				3,099		2,434		—		(15)(20)
Unsecured Junior PIK Note, 10.00% PIK due 12/9/2021				15,010		10,227		—		(15)(20)
Unsecured Revolver, 5.00% cash due 12/9/2021				2,938		2,631		588		(20)(21)
126,127.80 Class A Common Units of Edmentum						126		—		(20)
						15,418		588
ProFrac Services, LLC			Industrial Machinery
First Lien Term Loan, LIBOR+7.50% cash due 9/15/2023	8.75	%		15,170		15,081		11,643		(6)(20)
						15,081		11,643
Project Boost Purchaser, LLC			Application Software
Second Lien Term Loan, LIBOR+8.00% cash due 5/9/2027	8.15	%		3,750		3,750		3,375		(6)(20)
						3,750		3,375

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Pug LLC			Internet & Direct Marketing Retail
First Lien Term Loan, LIBOR+8.00% cash due 2/12/2027	8.75	%		$	15,740	$	14,802	$	15,307	(6)
						14,802		15,307
QuorumLabs, Inc.			Application Software
64,887,669 Junior-2 Preferred Stock						375		—		(20)
						375		—
Refac Optical Group			Specialty Stores
1,550.9435 Shares of Common Stock in Refac Holdings, Inc.						1		—		(20)
550.9435 Series A-2 Preferred Stock in Refac Holdings, Inc., 10%						305		—		(20)
1,000 Series A-1 Preferred Stock in Refac Holdings, Inc., 10%						999		—		(20)
						1,305		—
Salient CRGT, Inc.			Aerospace & Defense
First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022	7.50	%		2,955		2,938		2,748		(6)(20)
						2,938		2,748
Scilex Pharmaceuticals Inc.			Pharmaceuticals
Fixed Rate Zero Coupon Bond due 8/15/2026				15,585		12,069		12,468		(20)
						12,069		12,468
ShareThis, Inc.			Application Software
345,452 Series C Preferred Stock Warrants (exercise price $3.0395) expiration date 3/4/2024						367		—		(20)
						367		—
Sorrento Therapeutics, Inc.			Biotechnology
125,000 Common Stock Warrants (exercise price $3.94) expiration date 11/3/2029						—		1,123		(11)(20)
						—		1,123
Supermoose Borrower, LLC			Application Software
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025	3.90	%		10,196		8,925		9,193		(6)
						8,925		9,193
Surgery Center Holdings, Inc.			Health Care Facilities
First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024	4.25	%		3,850		3,133		3,640		(6)(11)
						3,133		3,640
Swordfish Merger Sub LLC			Auto Parts & Equipment
Second Lien Term Loan, LIBOR+6.75% cash due 2/2/2026	7.75	%		12,500		12,458		10,563		(6)(20)
						12,458		10,563
Tacala, LLC			Restaurants
Second Lien Term Loan, LIBOR+7.50% cash due 2/4/2028	7.65	%		7,276		7,167		6,903		(6)
						7,167		6,903
TerSera Therapeutics LLC			Pharmaceuticals
Second Lien Term Loan, LIBOR+9.50% cash due 3/30/2024	10.50	%		29,663		29,236		29,371		(6)(20)
668,879 Common Units of TerSera Holdings LLC						2,192		3,487		(20)
						31,428		32,858
TIBCO Software Inc.			Application Software
Second Lien Term Loan, LIBOR+7.25% cash due 3/3/2028	7.40	%		15,000		14,925		14,766		(6)
						14,925		14,766
TigerConnect, Inc.			Application Software
299,110 Series B Preferred Stock Warrants (exercise price $1.3373) expiration date 12/8/2024						60		525		(20)
						60		525
Transact Holdings Inc.			Application Software
First Lien Term Loan, LIBOR+4.75% cash due 4/30/2026	4.90	%		6,930		6,826		6,553		(6)(20)
						6,826		6,553

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Truck Hero, Inc.			Auto Parts & Equipment
Second Lien Term Loan, LIBOR+8.25% cash due 4/21/2025	9.25	%		$	21,500	$	21,191	$	20,819	(6)(20)
						21,191		20,819
U.S. Renal Care, Inc.			Health Care Services
First Lien Term Loan, LIBOR+5.00% cash due 6/26/2026	5.15	%		1,122		934		1,096		(6)
						934		1,096
Uniti Group Inc.			Specialized REITs
21,072 Common Units				—		133		222		(11)(12)
						133		222
Verscend Holding Corp.			Health Care Technology
First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025	4.65	%		14,525		14,479		14,429		(6)
Fixed Rate Bond, 9.75% cash due 8/15/2026				7,000		7,020		7,629
						21,499		22,058
Vertex Aerospace Services Corp.			Aerospace & Defense
First Lien Term Loan, LIBOR+4.50% cash due 6/29/2025	4.65	%		10,168		10,133		10,073		(6)
						10,133		10,073
Vitalyst Holdings, Inc.			IT Consulting & Other Services
675 Series A Preferred Stock Units						675		440		(20)
7,500 Class A Common Stock Units						75		—		(20)
						750		440
William Morris Endeavor Entertainment, LLC			Movies & Entertainment
First Lien Term Loan, LIBOR+8.50% cash due 5/18/2025	9.50	%		33,298		31,594		33,298		(6)(20)
						31,594		33,298
Windstream Services II, LLC			Integrated Telecommunication Services
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027	7.25	%		25,935		24,900		25,168		(6)
6,129 Shares of Common Stock in Windstream Holdings II, LLC						53		69		(20)
37,215 Warrants in Windstream Holdings II, LLC						913		444		(20)
						25,866		25,681
WP CPP Holdings, LLC			Aerospace & Defense
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026	8.75	%		15,000		14,893		11,700		(6)(20)
						14,893		11,700
WPEngine, Inc.			Application Software
First Lien Term Loan, LIBOR+6.50% cash due 3/27/2026	7.50	%		14,188		13,863		13,949		(6)(20)
First Lien Delayed Draw Term Loan, LIBOR+6.50% cash due 3/27/2026				—		(602)		(443)		(6)(19)(20)
						13,261		13,506
xMatters, Inc.			Application Software
600,000 Common Stock Warrants (exercise price $0.593333) expiration date 2/26/2025						709		336		(20)
						709		336
Zep Inc.			Specialty Chemicals
First Lien Term Loan, LIBOR+4.00% cash due 8/12/2024	5.00	%		1,955		1,895		1,845		(6)
Second Lien Term Loan, LIBOR+8.25% cash due 8/11/2025	9.25	%		30,000		29,908		24,180		(6)(20)
						31,803		26,025
Zephyr Bidco Limited			Specialized Finance
Second Lien Term Loan, UK LIBOR+7.50% cash due 7/23/2026	7.55	%		£	18,000	23,705		21,176		(6)(11)
						23,705		21,176
Total Non-Control/Non-Affiliate Investments (149.3% of net assets)						$	1,415,669	$	1,365,957

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)


Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)	Industry	Principal (7)	Cost		Fair Value		Notes
Total Portfolio Investments (172.0% of net assets)				$	1,669,170	$	1,573,851
Cash and Cash Equivalents
JP Morgan Prime Money Market Fund, Institutional Shares				$	35,248	$	35,248
Other cash accounts				3,848		3,848
Total Cash and Cash Equivalents (4.3% of net assets)				$	39,096	$	39,096
Total Portfolio Investments and Cash and Cash Equivalents (176.3% of net assets)				$	1,708,266	$	1,612,947


Derivative Instrument	Notional Amount to be Purchased		Notional Amount to be Sold		Maturity Date	Counterparty	Cumulative Unrealized Appreciation /(Depreciation)
Foreign currency forward contract	$	35,577	£	27,494	11/12/2020	JPMorgan Chase Bank, N.A.	$	25
Foreign currency forward contract	$	30,260	€	25,614	11/12/2020	JPMorgan Chase Bank, N.A.	198
							$	223

Oaktree Specialty Lending Corporation

Consolidated Schedule of Investments

September 30, 2020

(dollar amounts in thousands)

(1)All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted.

(2)See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region.

(3)Equity ownership may be held in shares or units of companies related to the portfolio companies.

(5)Each of the Company's investments is pledged as collateral under the Credit Facility (as defined in Note 6 to the accompanying notes to the Consolidated Financial Statements).

(6)The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of September 30, 2020, the reference rates for the Company's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27%, the 360-day LIBOR at 0.37%, the PRIME at 3.25%, the 30-day UK LIBOR at 0.05%, the 180-day UK LIBOR at 0.22%, the 30-day EURIBOR at (0.57)% and the 180-day EURIBOR at (0.36)%. Most loans include an interest floor, which generally ranges from 0% to 1%.

(7)Principal includes accumulated PIK interest and is net of repayments, if any. “£” signifies the investment is denominated in British Pounds. "€" signifies the investment is denominated in Euros. All other investments are denominated in U.S. dollars.

(8)Control Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.

(9)As defined in the Investment Company Act, the Company is deemed to be both an "Affiliated Person" of and to "Control" these portfolio companies as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). See Schedule 12-14 in the Company's annual report on Form 10-K for the year ended September 30, 2020 for transactions during the year ended September 30, 2020 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to control.

(10)First Star Speir Aviation 1 Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.

(11)Investment is not a "qualifying asset" as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of September 30, 2020, qualifying assets represented 75.4% of the Company's total assets and non-qualifying assets represented 24.6% of the Company's total assets.

(12)Income producing through payment of dividends or distributions.

(13)PIK interest income for this investment accrues at an annualized rate of 15%, however, the PIK interest is not contractually capitalized on the investment. As a result, the principal amount of the investment does not increase over time for accumulated PIK interest. As of September 30, 2020, the accumulated PIK interest balance for each of the A notes and the B notes was $4.3 million. The fair value of this investment is inclusive of PIK.

(14)See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition.

(15)This investment was on PIK non-accrual status as of September 30, 2020. PIK non-accrual status is inclusive of other non-cash income, where applicable.

(16)This investment was valued using net asset value as a practical expedient for fair value. Consistent with ASC 820, these investments are excluded from the hierarchical levels.

(17)Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.

(18)Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.

(20)As of September 30, 2020, these investments were categorized as Level 3 within the fair value hierarchy established by ASC 820.

(21)This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

See notes to Consolidated Financial Statements.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Note 1. Organization

Oaktree Specialty Lending Corporation (together with its consolidated subsidiaries, the "Company") is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. The Company was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a Business Development Company under the Investment Company Act. The Company has qualified and elected to be treated as a regulated investment company ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code"), for tax purposes.

The Company's investment objective is to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments. The Company may also seek to generate capital appreciation and income through secondary investments at discounts to par in either private or syndicated transactions.

The Company is externally managed by Oaktree Fund Advisors, LLC ("Oaktree"), a subsidiary of Oaktree Capital Group, LLC (“OCG”), pursuant to an investment advisory agreement between the Company and Oaktree (the “Investment Advisory Agreement”). Oaktree is an affiliate of Oaktree Capital Management, L.P. ("OCM"), the Company's external investment adviser from October 17, 2017 through May 3, 2020 and also a subsidiary of OCG. Oaktree Fund Administration, LLC (“Oaktree Administrator”), a subsidiary of OCM, provides certain administrative and other services necessary for the Company to operate pursuant to an administration agreement between the Company and Oaktree Administrator (the “Administration Agreement”). See Note 11. In 2019, Brookfield Asset Management Inc. ("Brookfield") acquired a majority economic interest in OCG. OCG operates as an independent business within Brookfield, with its own product offerings and investment, marketing and support teams.

On October 28, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Oaktree Strategic Income Corporation, a Delaware corporation (“OCSI”), Lion Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and, solely for the limited purposes set forth therein, Oaktree, the investment adviser to each of the Company and OCSI. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), Merger Sub will merge with and into OCSI, with OCSI continuing as the surviving company and as a wholly-owned subsidiary of the Company (the “Merger”) and, immediately thereafter, OCSI will merge with and into the Company, with the Company continuing as the surviving company (together with the Merger, the “Mergers”). Both the Company’s Board of Directors and the Board of Directors of OCSI, including all of the respective independent directors, in each case, on the recommendation of a special committee comprised solely of certain independent directors of the Company or OCSI, as applicable, have approved the Merger Agreement and the transactions contemplated thereby. For more information about the Mergers, see “Note 15. Pending Merger with OCSI”.

Note 2. Significant Accounting Policies

Basis of Presentation:

The Consolidated Financial Statements of the Company have been prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of the Consolidated Financial Statements have been made. All intercompany balances and transactions have been eliminated. The Company is an investment company following the accounting and reporting guidance in ASC Topic 946, Financial Services - Investment Companies ("ASC 946").

Use of Estimates:

The preparation of the financial statements in conformity with GAAP requires management to make certain estimates and assumptions affecting amounts reported in the financial statements and accompanying notes. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Changes in the economic and political environments, financial markets and any other parameters used in determining these estimates could cause actual results to differ and such differences could be material. Significant estimates include the valuation of investments and revenue recognition.

Consolidation:

The accompanying Consolidated Financial Statements include the accounts of Oaktree Specialty Lending Corporation and its consolidated subsidiaries. Each consolidated subsidiary is wholly-owned and, as such, consolidated into the Consolidated Financial Statements. Certain subsidiaries that hold investments are treated as pass through entities for tax purposes. The assets of certain of the consolidated subsidiaries are not directly available to satisfy the claims of the creditors of Oaktree Specialty Lending Corporation or any of its other subsidiaries.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

As an investment company, portfolio investments held by the Company are not consolidated into the Consolidated Financial Statements but rather are included on the Statements of Assets and Liabilities as investments at fair value.

Fair Value Measurements:

The Company values its investments in accordance with ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments' complexity.

Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

•Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.

•Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.

•Level 3 — Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

If inputs used to measure fair value fall into different levels of the fair value hierarchy, an investment's level is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. This includes investment securities that are valued using "bid" and "ask" prices obtained from independent third party pricing services or directly from brokers. These investments may be classified as Level 3 because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustments for investment-specific factors or restrictions.

Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, Oaktree obtains and analyzes readily available market quotations provided by pricing vendors and brokers for all of the Company's investments for which quotations are available. In determining the fair value of a particular investment, pricing vendors and brokers use observable market information, including both binding and non-binding indicative quotations.

The Company seeks to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If the Company is unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within the Company's set threshold, the Company seeks to obtain a quote directly from a broker making a market for the asset. Oaktree evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Oaktree also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, Oaktree performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process. Generally, the Company does not adjust any of the prices received from these sources.

If the quotations obtained from pricing vendors or brokers are determined to not be reliable or are not readily available, the Company values such investments using any of three different valuation techniques. The first valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The second valuation technique is an analysis of the enterprise value ("EV") of the portfolio company. EV means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The EV analysis is typically performed to determine (i) the value of equity investments, (ii) whether there is credit impairment for debt investments and (iii) the value for debt investments that the Company is deemed to control under the Investment Company Act. To estimate the EV of a portfolio company, Oaktree analyzes various factors, including the portfolio company’s historical and projected financial results, macroeconomic impacts on the company and competitive dynamics in the company’s industry. Oaktree also utilizes some or all of the following information based on the individual circumstances of the portfolio company: (i) valuations of comparable public companies, (ii) recent sales of private and public comparable companies in similar industries or having similar business or earnings characteristics, (iii) purchase prices as a multiple of their earnings or cash flow, (iv) the portfolio company’s ability to meet its

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

forecasts and its business prospects, (v) a discounted cash flow analysis, (vi) estimated liquidation or collateral value of the portfolio company's assets and (vii) offers from third parties to buy the portfolio company. The Company may probability weight potential sale outcomes with respect to a portfolio company when uncertainty exists as of the valuation date. The third valuation technique is a market yield technique, which is typically performed for non-credit impaired debt investments. In the market yield technique, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk, and the Company considers the current contractual interest rate, the capital structure and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the EV of the portfolio company. As debt investments held by the Company are substantially illiquid with no active transaction market, the Company depends on primary market data, including newly funded transactions and industry specific market movements, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.

In accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. Consistent with FASB guidance under ASC 820, these investments are excluded from the hierarchical levels. These investments are generally not redeemable.

The Company estimates the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an EV analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk free rate. Changes in the subjective input assumptions can materially affect the fair value estimates.

The Company's Board of Directors undertakes a multi-step valuation process each quarter in connection with determining the fair value of the Company's investments:

•The quarterly valuation process begins with each portfolio company or investment being initially valued by Oaktree's valuation team in conjunction with Oaktree's portfolio management team and investment professionals responsible for each portfolio investment;

•Preliminary valuations are then reviewed and discussed with management of Oaktree;

•Separately, independent valuation firms engaged by the Board of Directors prepare valuations of the Company's investments, on a selected basis, for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment, and submit the reports to the Company and provide such reports to Oaktree and the Audit Committee of the Board of Directors;

•Oaktree compares and contrasts its preliminary valuations to the valuations of the independent valuation firms and prepares a valuation report for the Audit Committee;

•The Audit Committee reviews the preliminary valuations with Oaktree, and Oaktree responds and supplements the preliminary valuations to reflect any discussions between Oaktree and the Audit Committee;

•The Audit Committee makes a recommendation to the full Board of Directors regarding the fair value of the investments in the Company's portfolio; and

•The Board of Directors discusses valuations and determines the fair value of each investment in the Company's portfolio.

The fair value of the Company's investments as of December 31, 2020 and September 30, 2020 was determined in good faith by the Board of Directors. The Board of Directors has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of a portion of the Company's portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board of Directors may reasonably rely on that assistance. However, the Board of Directors is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to the Company's valuation policy and a consistently applied valuation process.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.

With the exception of the line items entitled "deferred financing costs," "deferred offering costs," "other assets," "deferred tax asset, net," "credit facility payable" and "unsecured notes payable," which are reported at amortized cost, all assets and liabilities approximate fair value on the Consolidated Statements of Assets and Liabilities. The carrying value of the line items titled "interest, dividends and fees receivable," "due from portfolio companies," "receivables from unsettled transactions,"

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

"accounts payable, accrued expenses and other liabilities," "base management fee and incentive fee payable," "due to affiliate," "interest payable" and "payables from unsettled transactions" approximate fair value due to their short maturities.

Foreign Currency Translation:

The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the prevailing foreign exchange rate on the reporting date. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. The Company’s investments in foreign securities may involve certain risks, including foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.

Derivative Instruments:

The Company does not utilize hedge accounting and as such values its derivative instruments at fair value with the unrealized gains or losses recorded in “net unrealized appreciation (depreciation)” in the Company’s Consolidated Statements of Operations.

Investment Income:

Interest Income

Interest income, adjusted for accretion of original issue discount ("OID"), is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment. A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations.

In connection with its investment in a portfolio company, the Company sometimes receives nominal cost equity that is valued as part of the negotiation process with the portfolio company. When the Company receives nominal cost equity, the Company allocates its cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan.

PIK Interest Income

The Company's investments in debt securities may contain PIK interest provisions. PIK interest, which generally represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. The Company generally ceases accruing PIK interest if there is insufficient value to support the accrual or if the Company does not expect the portfolio company to be able to pay all principal and interest due. The Company's decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; the Company's assessment of the portfolio company's business development success; information obtained by the Company in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. The Company's determination to cease accruing PIK interest is generally made well before the Company's full write-down of a loan or debt security. In addition, if it is subsequently determined that the Company will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on the Company’s debt investments increases the recorded cost bases of these investments in the Consolidated Financial Statements including for purposes of computing the capital gains incentive fee payable by the Company to Oaktree. To maintain its status as a RIC, certain income from PIK interest may be required to be distributed to the Company’s stockholders, even though the Company has not yet collected the cash and may never do so.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Fee Income

Oaktree or its affiliates may provide financial advisory services to portfolio companies and, in return, the Company may receive fees for capital structuring services. These fees are generally nonrecurring and are recognized by the Company upon the investment closing date. The Company may also receive additional fees in the ordinary course of business, including servicing, amendment and prepayment fees, which are classified as fee income and recognized as they are earned or the services are rendered.

The Company has also structured exit fees across certain of its portfolio investments to be received upon the future exit of those investments. These fees are typically paid to the Company upon the earliest to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. These fees are included in net investment income over the life of the loan.

Dividend Income

The Company generally recognizes dividend income on the ex-dividend date for public securities and the record date for private equity investments. Distributions received from private equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from private equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

Cash and Cash Equivalents:

Cash and cash equivalents consist of demand deposits and highly liquid investments with maturities of three months or less when acquired. The Company places its cash and cash equivalents and restricted cash with financial institutions and, at times, cash held in bank accounts may exceed the Federal Deposit Insurance Corporation ("FDIC") insurance limit. Cash and cash equivalents are included on the Company's Consolidated Schedule of Investments and cash equivalents are classified as Level 1 assets.

Due from Portfolio Companies:

Due from portfolio companies consists of amounts payable to the Company from its portfolio companies, including proceeds from the sale of portfolio companies not yet received or being held in escrow and excluding those amounts attributable to interest, dividends or fees receivable. These amounts are recognized as they become payable to the Company (e.g., principal payments on the scheduled amortization payment date).

Receivables/Payables from Unsettled Transactions:

Receivables/payables from unsettled transactions consist of amounts receivable to or payable by the Company for transactions that have not settled at the reporting date.

Deferred Financing Costs:

Deferred financing costs consist of fees and expenses paid in connection with the closing or amending of credit facilities and debt offerings. Deferred financing costs in connection with credit facilities are capitalized as an asset when incurred. Deferred financing costs in connection with all other debt arrangements are a direct deduction from the related debt liability when incurred. Deferred financing costs are amortized using the effective interest method over the term of the respective debt arrangement. This amortization expense is included in interest expense in the Company's Consolidated Statements of Operations. Upon early termination or modification of a credit facility, all or a portion of unamortized fees related to such facility may be accelerated into interest expense. For extinguishments of the Company’s unsecured notes payable, any unamortized deferred financing costs are deducted from the carrying amount of the debt in determining the gain or loss from the extinguishment.

Deferred Offering Costs:

Legal fees and other costs incurred in connection with the Company’s shelf registration statement are capitalized as deferred offering costs in the Consolidated Statements of Assets and Liabilities. To the extent any such costs relate to equity offerings, these costs are charged as a reduction of capital upon utilization. To the extent any such costs relate to debt offerings, these costs are treated as deferred financing costs and are amortized over the term of the respective debt arrangement. Any

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

deferred offering costs that remain at the expiration of the shelf registration statement or when it becomes probable that an offering will not be completed are expensed.

Income Taxes:

The Company has elected to be subject to tax as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends to its stockholders of an amount generally at least equal to 90% of investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each taxable year. As a RIC, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to stockholders as a dividend. Depending on the level of taxable income earned during a taxable year, the Company may choose to retain taxable income in excess of current year dividend distributions and would distribute such taxable income in the next taxable year. The Company would then incur a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income, determined on a calendar year basis, could exceed estimated current calendar year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. The Company anticipates timely distribution of its taxable income within the tax rules under Subchapter M of the Code. The Company did not incur a U.S. federal excise tax for calendar years 2019 and 2020 and does not expect to incur a U.S. federal excise tax for calendar year 2021.

The Company holds certain portfolio investments through taxable subsidiaries. The purpose of the Company's taxable subsidiaries is to permit the Company to hold equity investments in portfolio companies which are "pass through" entities for U.S. federal income tax purposes in order to comply with the RIC tax requirements. The taxable subsidiaries are consolidated for financial reporting purposes, and portfolio investments held by them are included in the Company’s Consolidated Financial Statements as portfolio investments and recorded at fair value. The taxable subsidiaries are not consolidated with the Company for U.S. federal income tax purposes and may generate income tax expense, or benefit, and the related tax assets and liabilities, as a result of their ownership of certain portfolio investments. This income tax expense, if any, would be reflected in the Company's Consolidated Statements of Operations. The Company uses the liability method to account for its taxable subsidiaries' income taxes. Using this method, the Company recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between financial reporting and tax bases of assets and liabilities. In addition, the Company recognizes deferred tax benefits associated with net operating loss carry forwards that it may use to offset future tax obligations. The Company measures deferred tax assets and liabilities using the enacted tax rates expected to apply to taxable income in the years in which it expects to recover or settle those temporary differences.

FASB ASC Topic 740, Accounting for Uncertainty in Income Taxes ("ASC 740"), provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the Company's Consolidated Financial Statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Management's determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including an ongoing analysis of tax laws, regulations and interpretations thereof. The Company recognizes the tax benefits of uncertain tax positions only where the position is "more-likely-than-not" to be sustained assuming examination by tax authorities. Management has analyzed the Company's tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years 2018, 2019 and 2020. The Company identifies its major tax jurisdictions as U.S. Federal and California, and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Note 3. Portfolio Investments

As of December 31, 2020, 177.5% of net assets at fair value, or $1.7 billion, was invested in 115 portfolio companies, including $125.5 million in subordinated notes and limited liability company ("LLC") equity interests of Senior Loan Fund JV I, LLC ("SLF JV I"), a joint venture through which the Company and Trinity Universal Insurance Company, a subsidiary of Kemper Corporation ("Kemper"), co-invest in senior secured loans of middle-market companies and other corporate debt securities. As of December 31, 2020, 2.5% of net assets at fair value, or $24.2 million, was invested in cash and cash equivalents. In comparison, as of September 30, 2020, 172.0% of net assets at fair value, or $1.6 billion, was invested in 113 portfolio investments, including $117.4 million in subordinated notes and LLC equity interests of SLF JV I, and 4.3% of net assets at fair value, or $39.1 million, was invested in cash and cash equivalents. As of December 31, 2020, 85.7% of the Company's portfolio at fair value consisted of senior secured debt investments and 8.7% consisted of subordinated debt investments, including the debt investment in SLF JV I. As of September 30, 2020, 84.1% of the Company's portfolio at fair value consisted of senior secured debt investments and 10.3% consisted of subordinated debt investments, including the debt investment in SLF JV I.

The Company also held equity investments in certain of its portfolio companies consisting of common stock, preferred stock, warrants, limited partnership interests or LLC equity interests. These instruments generally do not produce a current return but are held for potential investment appreciation and capital gain.

During the three months ended December 31, 2020 and 2019, the Company recorded net realized gains of $8.2 million and $3.3 million, respectively. During the three months ended December 31, 2020 and 2019, the Company recorded net unrealized appreciation of $47.6 million and $2.9 million, respectively.

The composition of the Company's investments as of December 31, 2020 and September 30, 2020 at cost and fair value was as follows:


	December 31, 2020				September 30, 2020
	Cost		Fair Value		Cost		Fair Value
Investments in debt securities	$	1,514,258	$	1,520,243	$	1,422,487	$	1,388,605
Investments in equity securities	97,831		66,567		101,111		67,806
Debt investment in SLF JV I	96,250		96,250		96,250		96,250
Equity investment in SLF JV I	49,322		29,264		49,322		21,190
Total	$	1,757,661	$	1,712,324	$	1,669,170	$	1,573,851

The following table presents the composition of the Company's debt investments as of December 31, 2020 and September 30, 2020 at fixed rates and floating rates:


	December 31, 2020				September 30, 2020
	Fair Value		% of Debt Portfolio		Fair Value		% of Debt Portfolio
Floating rate debt securities, including the debt investment in SLF JV I	$	1,436,071	88.84	%	$	1,311,509	88.33	%
Fixed rate debt securities	180,422		11.16		173,346		11.67
Total	$	1,616,493	100.00	%	$	1,484,855	100.00	%

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

The following table presents the financial instruments carried at fair value as of December 31, 2020 on the Company's Consolidated Statement of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820:


	Level 1		Level 2		Level 3		Measured at Net Asset Value (a)		Total
Investments in debt securities (senior secured)	$	—	$	389,161	$	1,078,416	$	—	$	1,467,577
Investments in debt securities (subordinated, including the debt investment in SLF JV I)	—		34,744		114,172		—		148,916
Investments in equity securities (preferred)	—		—		29,731		—		29,731
Investments in equity securities (common and warrants, including LLC equity interests of SLF JV I)	—		—		35,472		30,628		66,100
Total investments at fair value	—		423,905		1,257,791		30,628		1,712,324
Cash equivalents	20,966		—		—		—		20,966
Total assets at fair value	$	20,966	$	423,905	$	1,257,791	$	30,628	$	1,733,290
Derivative liabilities	$	—	$	2,203	$	—	$	—	$	2,203
Total liabilities at fair value	$	—	$	2,203	$	—	$	—	$	2,203

__________

(a)In accordance with ASC 820-10, certain investments that are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. These investments are generally not redeemable. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities.

The following table presents the financial instruments carried at fair value as of September 30, 2020 on the Company's Consolidated Statement of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820:


	Level 1		Level 2		Level 3		Measured at Net Asset Value (a)		Total
Investments in debt securities (senior secured)	$	—	$	418,806	$	904,237	$	—	$	1,323,043
Investments in debt securities (subordinated, including the debt investment in SLF JV I)	—		35,660		126,152		—		161,812
Investments in equity securities (preferred)	—		—		29,959		—		29,959
Investments in equity securities (common and warrants, including LLC equity interests of SLF JV I)	222		—		35,080		23,735		59,037
Total investments at fair value	222		454,466		1,095,428		23,735		1,573,851
Cash equivalents	35,248		—		—		—		35,248
Derivative assets	—		223		—		—		223
Total assets at fair value	$	35,470	$	454,689	$	1,095,428	$	23,735	$	1,609,322

__________

When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the fact that the unobservable factors are significant to the overall fair value measurement. However, Level 3 financial instruments typically have both unobservable or Level 3 components and observable components (i.e. components that are actively quoted and can be validated by external sources). Accordingly, the appreciation (depreciation) in the tables below includes changes in fair value due in part to observable factors that are part of the valuation methodology. Transfers between levels are recognized at the beginning of the reporting period.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

The following table provides a roll-forward in the changes in fair value from September 30, 2020 to December 31, 2020 for all investments for which the Company determined fair value using unobservable (Level 3) factors:


	Investments
	Senior Secured Debt		Subordinated Debt (including debt investment in SLF JV I)		Preferred Equity		Common Equity and Warrants		Total
Fair value as of September 30, 2020	$	904,237	$	126,152	$	29,959	$	35,080	$	1,095,428
Purchases	209,177		—		—		—		209,177
Sales and repayments	(68,895)		(34,905)		(31)		(5,147)		(108,978)
Transfers in (a)(b)	18,458		—		—		437		18,895
PIK interest income	2,873		—		—		—		2,873
Accretion of OID	1,379		992		—		—		2,371
Net unrealized appreciation (depreciation)	12,751		14,648		(228)		2,467		29,638
Net realized gains (losses)	(1,564)		7,285		31		2,635		8,387
Fair value as of December 31, 2020	$	1,078,416	$	114,172	$	29,731	$	35,472	$	1,257,791
Net unrealized appreciation (depreciation) relating to Level 3 investments still held as of December 31, 2020 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the three months ended December 31, 2020	$	15,672	$	(56)	$	(228)	$	2,209	$	17,597

__________

(a) There were transfers into Level 3 from Level 2 for certain investments during the three months ended December 31, 2020 as a result of a change in the number of market quotes available and/or a change in market liquidity.

(b) There was a transfer into Level 3 from Level 2 as a result of an investment restructuring in which Level 2 senior secured debt was exchanged for Level 3 senior secured debt and common equity.

The following table provides a roll-forward in the changes in fair value from September 30, 2019 to December 31, 2019 for all investments for which the Company determined fair value using unobservable (Level 3) factors:


	Investments
	Senior Secured Debt		Subordinated Debt (including debt investment in SLF JV I)		Preferred Equity		Common Equity and Warrants		Total
Fair value as of September 30, 2019	$	653,334	$	110,309	$	40,578	$	41,006	$	845,227
New investments	96,395		959		—		1,328		98,682
Sales and repayments	(73,292)		(365)		(1,388)		(39)		(75,084)
Transfers in (a)	33,252		—		—		—		33,252
Transfers out (a)	(15,000)		—		—		—		(15,000)
PIK interest income	1,119		—		—		—		1,119
Accretion of OID	1,421		305		—		—		1,726
Net unrealized appreciation (depreciation)	469		(2,860)		(1,076)		2,311		(1,156)
Net realized gains (losses)	(66)		—		795		39		768
Fair value as of December 31, 2019	$	697,632	$	108,348	$	38,909	$	44,645	$	889,534
Net unrealized appreciation (depreciation) relating to Level 3 assets & liabilities still held as of December 31, 2019 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the three months ended December 31, 2019	$	1,313	$	(2,860)	$	(174)	$	2,311	$	590

__________

(a) There were transfers into/out of Level 3 from/to Level 2 for certain investments during the three months ended December 31, 2019 as a result of a change in the number of market quotes available and/or a change in market liquidity.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Significant Unobservable Inputs for Level 3 Investments

The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, which are carried at fair value, as of December 31, 2020:

Asset

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted
Average (a)

Senior Secured Debt

563,045

Market Yield

(b)

6.9%

20.0%

11.2%

35,289

Enterprise Value

EBITDA Multiple

(c)

5.8x

6.8x

6.3x

9,971

Enterprise Value

Asset Multiple

(c)

0.9x

1.1x

1.0x

79,113

Transactions Precedent

Transaction Price

(d)

N/A

390,998

Broker Quotations

Broker Quoted Price

(e)

N/A

Subordinated Debt

17,922

Market Yield

(b)

3.6%

28.0%

17.8%

SLF JV I Debt Investment

96,250

Enterprise Value

N/A

(f)

N/A

Preferred & Common Equity

19,389

Enterprise Value

Revenue Multiple

(c)

0.9x

6.4x

3.0x

43,735

Enterprise Value

EBITDA Multiple

(c)

3.0x

15.0x

7.7x

1,681

Enterprise Value

Asset Multiple

(c)

0.9x

1.1x

1.0x

398

Broker Quotations

Broker Quoted Price

(e)

N/A

Total

1,257,791

__________

(a)Weighted averages are calculated based on fair value of investments.

(b)Used when market participants would take into account market yield when pricing the investment.

(c)Used when market participants would use such multiples when pricing the investment.

(d)Used when there is an observable transaction or pending event for the investment.

(e)The Company generally uses prices provided by an independent pricing service which are non-binding indicative prices on or near the valuation date as the primary basis for the fair value determinations for quoted senior secured debt investments. Since these prices are non-binding, they may not be indicative of fair value. The Company evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company's Board of Directors in conjunction with additional information compiled by Oaktree.

(f)The Company determined the value of its subordinated notes of SLF JV I based on the total assets less the total liabilities senior to the subordinated notes held at SLF JV I in an amount not exceeding par under the EV technique.

The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, which are carried at fair value, as of September 30, 2020:

Asset

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted
Average (a)

Senior Secured Debt

542,354

Market Yield

(b)

6.6%

30.0%

12.5%

35,508

Enterprise Value

EBITDA Multiple

(c)

0.6x

6.3x

5.9x

11,510

Enterprise Value

Asset Multiple

(c)

0.9x

1.1x

1.0x

314,865

Broker Quotations

Broker Quoted Price

(e)

N/A

Subordinated Debt

29,314

Market Yield

(b)

4.8%

15.0%

9.3%

588

Enterprise Value

EBITDA Multiple

(c)

7.6x

8.6x

8.1x

SLF JV I Debt Investment

96,250

Enterprise Value

N/A

(f)

N/A

Preferred & Common Equity

16,470

Enterprise Value

Revenue Multiple

(c)

0.9x

7.0x

3.1x

45,934

Enterprise Value

EBITDA Multiple

(c)

0.6x

15.0x

7.6x

1,622

Enterprise Value

Asset Multiple

(c)

0.9x

1.1x

1.0x

1,013

Transactions Precedent

Transaction Price

(d)

N/A

Total

1,095,428

__________

(a)Weighted averages are calculated based on fair value of investments.

(b)Used when market participants would take into account market yield when pricing the investment.

(c)Used when market participants would use such multiples when pricing the investment.

(d)Used when there is an observable transaction or pending event for the investment.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company's Board of Directors in conjunction with additional information compiled by Oaktree.

Under the market yield technique, the significant unobservable input used in the fair value measurement of the Company's investments in debt securities is the market yield. Increases or decreases in the market yield may result in a lower or higher fair value measurement, respectively.

Under the EV technique, the significant unobservable input used in the fair value measurement of the Company's investments in debt or equity securities is the earnings before interest, taxes, depreciation and amortization ("EBITDA"), revenue or asset multiple, as applicable. Increases or decreases in the valuation multiples in isolation may result in a higher or lower fair value measurement, respectively.

Financial Instruments Disclosed, But Not Carried, At Fair Value

The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of December 31, 2020 and the level of each financial liability within the fair value hierarchy:


	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Credit facility payable	$	400,025	$	400,025	$	—	$	—	$	400,025
Unsecured notes payable (net of unamortized financing costs and unaccreted discount)	294,802		311,346		—		311,346		—
Total	$	694,827	$	711,371	$	—	$	311,346	$	400,025

The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of September 30, 2020 and the level of each financial liability within the fair value hierarchy:


	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Credit facility payable	$	414,825	$	414,825	$	—	$	—	$	414,825
Unsecured notes payable (net of unamortized financing costs and unaccreted discount)	294,490		301,431		—		301,431		—
Total	$	709,315	$	716,256	$	—	$	301,431	$	414,825

The principal value of the credit facility payable approximates fair value due to its variable interest rate and is included in Level 3 of the hierarchy. As of December 31, 2020 and September 30, 2020, unsecured notes payable consisted of the 3.500% unsecured notes due 2025 ("2025 Notes"). The Company used market quotes as of the valuation date to estimate the fair value of the 2025 Notes, which are included in Level 2 of the hierarchy.

Portfolio Composition

Summaries of the composition of the Company's portfolio at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets are shown in the following tables:


	December 31, 2020				September 30, 2020
Cost:			% of Total Investments				% of Total Investments
Senior secured debt	$	1,464,479	83.31	%	$	1,345,012	80.58	%
Debt investment in SLF JV I	96,250		5.48	%	96,250		5.77	%
Common equity and warrants	58,281		3.32	%	61,561		3.69	%
Subordinated debt	49,779		2.83	%	77,475		4.64	%
LLC equity interests of SLF JV I	49,322		2.81	%	49,322		2.95	%
Preferred equity	39,550		2.25	%	39,550		2.37	%
Total	$	1,757,661	100.00	%	$	1,669,170	100.00	%

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)


	December 31, 2020						September 30, 2020
Fair Value:			% of Total Investments		% of Net Assets				% of Total Investments		% of Net Assets
Senior secured debt	$	1,467,577	85.70	%	152.09	%	$	1,323,043	84.06	%	144.61	%
Debt investment in SLF JV I	96,250		5.62	%	9.97	%	96,250		6.12	%	10.52	%
Subordinated debt	52,666		3.08	%	5.46	%	65,562		4.17	%	7.17	%
Common equity and warrants	36,836		2.15	%	3.82	%	37,847		2.40	%	4.14	%
Preferred equity	29,731		1.74	%	3.08	%	29,959		1.90	%	3.27	%
LLC equity interests of SLF JV I	29,264		1.71	%	3.03	%	21,190		1.35	%	2.32	%
Total	$	1,712,324	100.00	%	177.45	%	$	1,573,851	100.00	%	172.03	%

The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company's business. The following tables show the composition of the Company's portfolio by geographic region at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets:


	December 31, 2020				September 30, 2020
Cost:			% of Total Investments				% of Total Investments
Northeast	$	546,733	31.09	%	$	495,440	29.69	%
West	354,623		20.18	%	330,468		19.80	%
Midwest	268,098		15.25	%	285,674		17.11	%
International	245,318		13.96	%	210,963		12.64	%
Southeast	171,853		9.78	%	171,330		10.26	%
South	70,073		3.99	%	72,150		4.32	%
Southwest	65,662		3.74	%	67,867		4.07	%
Northwest	35,301		2.01	%	35,278		2.11	%
Total	$	1,757,661	100.00	%	$	1,669,170	100.00	%


	December 31, 2020						September 30, 2020
Fair Value:			% of Total Investments		% of Net Assets				% of Total Investments		% of Net Assets
Northeast	$	510,433	29.81	%	52.89	%	$	446,499	28.38	%	48.81	%
West	356,515		20.82	%	36.95	%	325,708		20.69	%	35.60	%
Midwest	255,389		14.91	%	26.47	%	252,482		16.04	%	27.60	%
International	254,107		14.84	%	26.33	%	213,741		13.58	%	23.36	%
Southeast	170,994		9.99	%	17.72	%	165,516		10.52	%	18.09	%
South	67,211		3.93	%	6.97	%	70,551		4.48	%	7.71	%
Southwest	63,526		3.71	%	6.58	%	65,647		4.17	%	7.18	%
Northwest	34,149		1.99	%	3.54	%	33,707		2.14	%	3.68	%
Total	$	1,712,324	100.00	%	177.45	%	$	1,573,851	100.00	%	172.03	%

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

The following tables show the composition of the Company's portfolio by industry at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets as of December 31, 2020 and September 30, 2020:


	December 31, 2020				September 30, 2020
Cost:			% of Total Investments				% of Total Investments
Application Software	$	220,237	12.51	%	$	162,536	9.71	%
Multi-Sector Holdings (1)	147,238		8.38		148,116		8.87
Data Processing & Outsourced Services	131,783		7.50		109,744		6.57
Pharmaceuticals	111,557		6.35		99,471		5.96
Biotechnology	108,379		6.17		89,447		5.36
Health Care Services	73,758		4.20		71,139		4.26
Specialized Finance	69,978		3.98		51,909		3.11
Personal Products	55,005		3.13		50,091		3.00
Movies & Entertainment	50,340		2.86		44,691		2.68
Property & Casualty Insurance	47,971		2.73		47,995		2.88
Integrated Telecommunication Services	44,499		2.53		44,583		2.67
Real Estate Services	38,946		2.22		39,023		2.34
Specialty Chemicals	38,581		2.20		44,786		2.68
Fertilizers & Agricultural Chemicals	34,467		1.96		33,743		2.02
Aerospace & Defense	34,018		1.94		27,964		1.68
Auto Parts & Equipment	33,651		1.91		33,649		2.02
Internet Services & Infrastructure	33,573		1.91		28,631		1.72
Oil & Gas Refining & Marketing	31,097		1.77		31,132		1.87
Managed Health Care	27,437		1.56		27,479		1.65
Electronic Components	26,800		1.52		25,600		1.53
Oil & Gas Storage & Transportation	25,965		1.48		26,615		1.59
Research & Consulting Services	24,830		1.41		24,837		1.49
Airport Services	22,341		1.27		22,376		1.34
Health Care Supplies	21,806		1.24		21,660		1.30
Health Care Technology	21,460		1.22		21,499		1.29
Construction & Engineering	21,384		1.22		13,277		0.80
Independent Power Producers & Energy Traders	21,224		1.21		21,462		1.29
Diversified Support Services	18,795		1.07		18,797		1.13
Industrial Machinery	18,647		1.06		15,081		0.90
Insurance Brokers	16,903		0.96		17,546		1.05
Systems Software	16,842		0.96		20,694		1.24
Electrical Components & Equipment	15,984		0.91		20,934		1.25
Hotels, Resorts & Cruise Lines	15,360		0.87		15,378		0.92
IT Consulting & Other Services	14,905		0.85		14,919		0.89
Internet & Direct Marketing Retail	14,803		0.84		14,802		0.89
Airlines	14,259		0.81		10,535		0.63
Advertising	13,611		0.77		13,611		0.82
Health Care Distributors	12,795		0.73		12,810		0.77
Apparel, Accessories & Luxury Goods	12,574		0.72		13,734		0.82
Restaurants	10,327		0.59		10,248		0.61
Commercial Printing	7,841		0.45		7,868		0.47
Education Services	7,438		0.42		22,926		1.37
Food Retail	6,857		0.39		6,851		0.41
Diversified Real Estate Activities	6,283		0.36		15,288		0.92
Trading Companies & Distributors	5,718		0.33		10,228		0.61
Oil & Gas Equipment & Services	3,163		0.18		3,313		0.20
Construction Materials	2,174		0.12		2,150		0.13
Leisure Facilities	1,887		0.11		1,887		0.11
Specialty Stores	1,305		0.07		1,305		0.08
Thrifts & Mortgage Finance	752		0.04		938		0.06
Other Diversified Financial Services	113		0.01		113		0.01
General Merchandise Stores	—		—		19,220		1.15
Metal & Glass Containers	—		—		11,273		0.68
Health Care Facilities	—		—		3,133		0.19
Specialized REITs	—		—		133		0.01
Total	$	1,757,661	100.00	%	$	1,669,170	100.00	%

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)


	December 31, 2020						September 30, 2020
Fair Value:			% of Total Investments		% of Net Assets				% of Total Investments		% of Net Assets
Application Software	$	221,153	12.88	%	22.88	%	$	160,591	10.21	%	17.57	%
Multi-Sector Holdings (1)	129,053		7.54		13.37		121,751		7.74		13.31
Data Processing & Outsourced Services	122,188		7.14		12.66		99,589		6.33		10.89
Pharmaceuticals	118,253		6.91		12.26		103,092		6.55		11.27
Biotechnology	111,941		6.54		11.60		96,624		6.14		10.56
Specialized Finance	69,215		4.04		7.17		48,425		3.08		5.29
Health Care Services	62,275		3.64		6.45		59,925		3.81		6.55
Personal Products	55,959		3.27		5.80		51,024		3.24		5.58
Movies & Entertainment	51,318		3.00		5.32		43,592		2.77		4.76
Property & Casualty Insurance	48,067		2.81		4.98		46,737		2.97		5.11
Integrated Telecommunication Services	42,543		2.48		4.41		41,091		2.61		4.49
Real Estate Services	38,218		2.23		3.96		37,723		2.40		4.12
Specialty Chemicals	37,006		2.16		3.84		39,008		2.48		4.26
Fertilizers & Agricultural Chemicals	34,567		2.02		3.58		33,719		2.14		3.69
Auto Parts & Equipment	32,516		1.90		3.37		31,382		1.99		3.43
Aerospace & Defense	31,694		1.85		3.28		24,521		1.56		2.68
Internet Services & Infrastructure	31,322		1.83		3.25		26,587		1.69		2.91
Oil & Gas Refining & Marketing	29,673		1.73		3.08		29,826		1.90		3.26
Electronic Components	29,207		1.71		3.03		26,552		1.69		2.90
Managed Health Care	27,141		1.59		2.81		26,681		1.70		2.92
Research & Consulting Services	24,945		1.46		2.59		24,212		1.54		2.65
Oil & Gas Storage & Transportation	23,231		1.36		2.41		25,749		1.64		2.81
Health Care Technology	22,109		1.29		2.29		22,058		1.40		2.41
Construction & Engineering	21,954		1.28		2.28		13,465		0.86		1.47
Health Care Supplies	21,755		1.27		2.25		21,634		1.37		2.36
Airport Services	21,275		1.24		2.20		21,283		1.35		2.33
Independent Power Producers & Energy Traders	20,538		1.20		2.13		20,812		1.32		2.27
Insurance Brokers	18,766		1.10		1.94		18,083		1.15		1.98
Diversified Support Services	18,302		1.07		1.90		17,689		1.12		1.93
Airlines	17,630		1.03		1.83		13,132		0.83		1.44
Hotels, Resorts & Cruise Lines	17,057		1.00		1.77		17,081		1.09		1.87
Systems Software	17,017		0.99		1.76		20,481		1.30		2.24
Electrical Components & Equipment	16,199		0.95		1.68		20,465		1.30		2.24
Internet & Direct Marketing Retail	16,015		0.94		1.66		15,307		0.97		1.67
Industrial Machinery	15,537		0.91		1.61		11,643		0.74		1.27
IT Consulting & Other Services	14,259		0.83		1.48		13,905		0.88		1.52
Advertising	13,857		0.81		1.44		13,440		0.85		1.47
Health Care Distributors	12,511		0.73		1.30		12,260		0.78		1.34
Restaurants	10,225		0.60		1.06		7,886		0.50		0.86
Diversified Real Estate Activities	7,610		0.44		0.79		16,846		1.07		1.84
Commercial Printing	7,306		0.43		0.76		7,334		0.47		0.80
Food Retail	6,998		0.41		0.73		6,998		0.44		0.76
Apparel, Accessories & Luxury Goods	6,753		0.39		0.70		7,856		0.50		0.86
Education Services	6,653		0.39		0.69		7,088		0.45		0.77
Trading Companies & Distributors	5,698		0.33		0.59		10,069		0.64		1.10
Oil & Gas Equipment & Services	2,471		0.14		0.26		2,588		0.16		0.28
Construction Materials	2,182		0.13		0.23		2,073		0.13		0.23
Thrifts & Mortgage Finance	113		0.01		0.01		353		0.02		0.04
Leisure Facilities	49		—		0.01		—		—		—
General Merchandise Stores	—		—		—		17,877		1.14		1.95
Metal & Glass Containers	—		—		—		11,833		0.75		1.29
Health Care Facilities	—		—		—		3,640		0.23		0.40
Specialized REITs	—		—		—		222		0.01		0.02
Leisure Products	—		—		—		49		—		0.01
Total	$	1,712,324	100.00	%	177.45	%	$	1,573,851	100.00	%	172.03	%

___________________

(1)This industry includes the Company's investments in SLF JV I and certain limited partnership interests.

As of December 31, 2020 and September 30, 2020, the Company had no single investment that represented greater than 10% of the total investment portfolio at fair value. Income, consisting of interest, dividends, fees, other investment income and realization of gains or losses, may fluctuate and in any given period can be highly concentrated among several investments.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Senior Loan Fund JV I, LLC

In May 2014, the Company entered into an LLC agreement with Kemper to form SLF JV I. The Company co-invests in senior secured loans of middle-market companies and other corporate debt securities with Kemper through its investment in SLF JV I. SLF JV I is managed by a four person Board of Directors, two of whom are selected by the Company and two of whom are selected by Kemper. All portfolio decisions and investment decisions in respect of SLF JV I must be approved by the SLF JV I investment committee, which consists of one representative selected by the Company and one representative selected by Kemper (with approval from a representative of each required). Since the Company does not have a controlling financial interest in SLF JV I, the Company does not consolidate SLF JV I.

SLF JV I is capitalized pro rata with LLC equity interests as transactions are completed and may be capitalized with additional subordinated notes issued to the Company and Kemper by SLF JV I. The subordinated notes issued by SLF JV I are referred to as the SLF JV I Notes. The SLF JV I Notes are senior in right of payment to SLF JV I LLC equity interests and subordinated in right of payment to SLF JV I’s secured debt. As of December 31, 2020 and September 30, 2020, the Company and Kemper owned, in the aggregate, 87.5% and 12.5%, respectively, of the LLC equity interests of SLF JV I and the outstanding SLF JV I Notes.

SLF JV I has a senior revolving credit facility with Deutsche Bank AG, New York Branch (as amended, the "Deutsche Bank I Facility"), which permitted up to $225.0 million and $250.0 million of borrowings (subject to borrowing base and other limitations) as of December 31, 2020 and September 30, 2020, respectively. Borrowings under the Deutsche Bank I Facility are secured by all of the assets of SLF JV I Funding LLC, a special purpose financing subsidiary of SLF JV I. As of December 31, 2020, the reinvestment period of the Deutsche Bank I Facility was scheduled to expire June 28, 2021 and the maturity date for the Deutsche Bank I Facility was June 29, 2026. As of December 31, 2020, borrowings under the Deutsche Bank I Facility accrued interest at a rate equal to 3-month LIBOR plus 1.85% per annum during the reinvestment period and 3-month LIBOR plus 2.00% per annum during the amortization period. Under the Deutsche Bank I Facility, $175.4 million and $167.9 million of borrowings were outstanding as of December 31, 2020 and September 30, 2020, respectively.

On December 9, 2020, the waiver period under the Deutsche Bank I Facility during which the facility agent was restricted from revaluing certain collateral obligations where the change in valuation was caused by or resulted from a business disruption due primarily to the COVID-19 pandemic was terminated.

As of December 31, 2020 and September 30, 2020, SLF JV I had total assets of $341.2 million and $313.5 million, respectively. SLF JV I's portfolio primarily consisted of senior secured loans to 56 portfolio companies as of each of December 31, 2020 and September 30, 2020. The portfolio companies in SLF JV I are in industries similar to those in which the Company may invest directly. As of December 31, 2020, the Company's investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of $125.5 million, at fair value. As of September 30, 2020, the Company's investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of $117.4 million, at fair value.

As of each of December 31, 2020 and September 30, 2020, the Company and Kemper had funded approximately $165.5 million to SLF JV I, of which $144.8 million was from the Company. As of December 31, 2020 and September 30, 2020, the Company and Kemper had the option to fund additional SLF JV I Notes, subject to additional equity funding to SLF JV I. As of each of December 31, 2020 and September 30, 2020, the Company had commitments to fund LLC equity interests in SLF JV I of $17.5 million, of which $1.3 million was unfunded.

Below is a summary of SLF JV I's portfolio, followed by a listing of the individual loans in SLF JV I's portfolio as of December 31, 2020 and September 30, 2020:


	December 31, 2020	September 30, 2020
Senior secured loans (1)	$313,978	$307,579
Weighted average interest rate on senior secured loans (2)	5.65%	5.44%
Number of borrowers in SLF JV I	56	56
Largest exposure to a single borrower (1)	$9,879	$10,487
Total of five largest loan exposures to borrowers (1)	$46,981	$49,097

__________

(1) At principal amount.

(2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

SLF JV I Portfolio as of December 31, 2020


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Access CIG, LLC	First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025	3.98	%	Diversified Support Services	$	9,182	$	9,149	$	9,107
ADB Companies, LLC	First Lien Term Loan, LIBOR+6.25% cash due 12/18/2025	7.25	%	Construction & Engineering	6,667		6,500		6,533		(4)
	First Lien Delayed Draw Term Loan, LIBOR+6.25% cash due 12/18/2025			Construction & Engineering	—		(33)		(27)		(4)(5)
Total ADB Companies, LLC							6,467		6,506
AdVenture Interactive, Corp.	927 shares of common stock			Advertising			1,390		1,416		(4)
AI Ladder (Luxembourg) Subco S.a.r.l.	First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025	4.65	%	Electrical Components & Equipment	6,011		5,894		5,974		(4)
Airbnb, Inc.	First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025	8.50	%	Hotels, Resorts & Cruise Lines	3,044		2,977		3,306		(4)
Altice France S.A.	First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026	4.24	%	Integrated Telecommunication Services	4,631		4,447		4,623
Alvogen Pharma US, Inc.	First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023	6.25	%	Pharmaceuticals	9,879		9,643		9,500
Amplify Finco Pty Ltd.	First Lien Term Loan, LIBOR+4.25% cash due 11/26/2026	5.00	%	Movies & Entertainment	7,940		7,861		7,384		(4)
Anastasia Parent, LLC	First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025			Personal Products	2,821		2,247		1,890		(6)
Apptio, Inc.	First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025	8.25	%	Application Software	4,615		4,554		4,529		(4)
	First Lien Revolver, LIBOR+7.25% cash due 1/10/2025			Application Software	—		(5)		(7)		(4)(5)
Total Apptio, Inc.							4,549		4,522
Aurora Lux Finco S.À.R.L.	First Lien Term Loan, LIBOR+5.75% cash due 12/24/2026	6.75	%	Airport Services	6,451		6,314		6,013		(4)
Blackhawk Network Holdings, Inc.	First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025	3.15	%	Data Processing & Outsourced Services	9,750		9,734		9,517
Boxer Parent Company Inc.	First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025	4.40	%	Systems Software	7,513		7,430		7,497		(4)
Brazos Delaware II, LLC	First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025	4.15	%	Oil & Gas Equipment & Services	7,311		7,288		6,405
C5 Technology Holdings, LLC	171 Common Units			Data Processing & Outsourced Services			—		—		(4)
	7,193,539.63 Preferred Units			Data Processing & Outsourced Services			7,194		5,683		(4)
Total C5 Technology Holdings, LLC							7,194		5,683
Carrols Restaurant Group, Inc.	First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026	7.25	%	Restaurants	3,980		3,792		3,965
CITGO Petroleum Corp.	First Lien Term Loan, LIBOR+6.25% cash due 3/28/2024	7.25	%	Oil & Gas Refining & Marketing	7,165		7,094		7,140		(4)
Clear Channel Outdoor Holdings, Inc.	First Lien Term Loan, LIBOR+3.50% cash due 8/21/2026	3.71	%	Advertising	330		291		318
Connect U.S. Finco LLC	First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026	5.50	%	Alternative Carriers	7,418		7,252		7,462
Curium Bidco S.à.r.l.	First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026	4.00	%	Biotechnology	5,925		5,881		5,890
Dcert Buyer, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026	4.15	%	Internet Services & Infrastructure	7,940		7,920		7,945
Dealer Tire, LLC	First Lien Term Loan, LIBOR+4.25% cash due 12/12/2025	4.40	%	Distributors	940		902		937
eResearch Technology, Inc.	First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027	5.50	%	Application Software	7,463		7,388		7,411
Gigamon, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024	5.25	%	Systems Software	7,762		7,717		7,708

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Global Medical Response, Inc.	First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025	5.75	%	Health Care Services	$	2,231	$	2,188	$	2,221
Guidehouse LLP	Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026	8.15	%	Research & Consulting Services	6,000		5,980		6,000		(4)
Helios Software Holdings, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025	4.52	%	Systems Software	3,960		3,920		3,946
Intelsat Jackson Holdings S.A.	First Lien Term Loan, PRIME+4.75% cash due 11/27/2023	8.00	%	Alternative Carriers	3,568		3,543		3,628
	First Lien Term Loan, LIBOR+5.50% cash due 7/13/2022	6.50	%	Alternative Carriers	1,943		1,762		1,988
Total Intelsat Jackson Holdings S.A.							5,305		5,616
LogMeIn, Inc.	First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027	4.90	%	Application Software	5,000		4,880		4,994
Maravai Intermediate Holdings, LLC	First Lien Term Loan, LIBOR+4.25% cash due 10/19/2027	5.25	%	Biotechnology	6,875		6,806		6,952
Mindbody, Inc.	First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025	8.00	%	Internet Services & Infrastructure	4,564		4,502		4,181		(4)
	First Lien Revolver, LIBOR+8.00% cash due 2/14/2025			Internet Services & Infrastructure	—		(7)		(40)		(4)(5)
Total Mindbody, Inc.							4,495		4,141
MRI Software LLC	First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026	6.50	%	Application Software	3,863		3,829		3,854		(4)
	First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026			Application Software	—		(1)		—		(4)(5)
	First Lien Revolver, LIBOR+5.50% cash due 2/10/2026			Application Software	—		(3)		(1)		(4)(5)
Total MRI Software LLC							3,825		3,853
Navicure, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026	4.15	%	Health Care Technology	5,955		5,925		5,955
New IPT, Inc.	First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.00	%	Oil & Gas Equipment & Services	941		941		735		(4)
	21.876 Class A Common Units in New IPT Holdings, LLC			Oil & Gas Equipment & Services			—		—		(4)
Total New IPT, Inc.							941		735
Northern Star Industries Inc.	First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025	5.75	%	Electrical Components & Equipment	6,807		6,787		6,671
Northwest Fiber, LLC	First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027	5.65	%	Integrated Telecommunication Services	2,394		2,311		2,406
Novetta Solutions, LLC	First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022	6.00	%	Application Software	5,915		5,897		5,903
OEConnection LLC	First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026	4.15	%	Application Software	7,879		7,843		7,820
	First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026			Application Software	—		—		—		(5)
Total OEConnection LLC							7,843		7,820
Olaplex, Inc.	First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026	7.50	%	Personal Products	6,395		6,298		6,395		(4)
	First Lien Revolver, LIBOR+6.50% cash due 1/8/2025			Personal Products	—		(9)		—		(4)(5)
Total Olaplex, Inc.							6,289		6,395
Park Place Technologies, LLC	First Lien Term Loan, LIBOR+5.00% cash due 11/10/2027	6.00	%	Internet Services & Infrastructure	5,000		4,804		4,817		(4)
PetVet Care Centers, LLC	First Lien Term Loan, LIBOR+4.25% cash due 2/14/2025	5.25	%	Specialized Consumer Services	2,736		2,729		2,753
PG&E Corporation	First Lien Term Loan, LIBOR+4.50% cash due 6/23/2025	5.50	%	Electric Utilities	5,970		5,889		6,051
Planview Parent, Inc.	Second Lien Term Loan, LIBOR+7.25% cash due 12/18/2028	8.00	%	Application Software	4,503		4,435		4,503		(4)
Recorded Books Inc.	First Lien Term Loan, LIBOR+4.25% cash due 8/29/2025	4.75	%	Publishing	6,000		5,940		6,025
RS Ivy Holdco, Inc.	First Lien Term Loan, LIBOR+5.50% cash due 12/23/2027	6.50	%	Oil & Gas Exploration & Production	7,000		6,895		6,965

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Sabert Corporation	First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026	5.50	%	Metal & Glass Containers	$	2,742	$	2,714	$	2,743
Salient CRGT, Inc.	First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022	7.50	%	Aerospace & Defense	2,080		2,070		2,002		(4)
SHO Holding I Corporation	First Lien Term Loan, LIBOR+5.25% cash due 4/27/2024	6.25	%	Footwear	8,445		8,430		7,347
Signify Health, LLC	First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024	5.50	%	Health Care Services	9,725		9,669		9,433
Sirva Worldwide, Inc.	First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025	5.65	%	Diversified Support Services	4,750		4,679		4,352
Star US Bidco LLC	First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027	5.25	%	Industrial Machinery	3,709		3,529		3,649
Sunshine Luxembourg VII SARL	First Lien Term Loan, LIBOR+4.00% cash due 10/1/2026	5.00	%	Personal Products	7,920		7,880		7,969
Supermoose Borrower, LLC	First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025	4.00	%	Application Software	4,876		4,580		4,574		(4)
Surgery Center Holdings, Inc.	First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024	4.25	%	Health Care Facilities	4,949		4,931		4,876
Veritas US Inc.	First Lien Term Loan, LIBOR+5.50% cash due 9/1/2025	6.50	%	Application Software	6,484		6,362		6,475
Verscend Holding Corp.	First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025	4.65	%	Health Care Technology	4,101		4,070		4,107		(4)
Windstream Services II, LLC	First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027	7.25	%	Integrated Telecommunication Services	7,960		7,654		7,808		(4)
WP CPP Holdings, LLC	Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026	8.75	%	Aerospace & Defense	6,000		5,959		5,085		(4)
					$	313,978	$	317,432	$	313,261

__________

(1) Represents the interest rate as of December 31, 2020. All interest rates are payable in cash, unless otherwise noted.

(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of December 31, 2020, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.25%, the 180-day LIBOR at 0.26% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.

(3) Represents the current determination of fair value as of December 31, 2020 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company's Board of Directors' valuation process described elsewhere herein.

(4) This investment was held by both the Company and SLF JV I as of December 31, 2020.

(5) Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.

(6) This investment was on cash non-accrual status as of December 31, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

SLF JV I Portfolio as of September 30, 2020


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Access CIG, LLC	First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025	3.91	%	Diversified Support Services	$	9,206	$	9,170	$	9,029
AdVenture Interactive, Corp.	927 shares of common stock			Advertising			1,390		1,373		(4)
AI Ladder (Luxembourg) Subco S.a.r.l.	First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025	4.65	%	Electrical Components & Equipment	6,038		5,914		5,781		(4)
Airbnb, Inc.	First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025	8.50	%	Hotels, Resorts & Cruise Lines	3,051		2,981		3,311		(4)
Altice France S.A.	First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026	4.15	%	Integrated Telecommunication Services	4,643		4,450		4,527
Alvogen Pharma US, Inc.	First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023	6.25	%	Pharmaceuticals	9,879		9,623		9,566
Amplify Finco Pty Ltd.	First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026	4.75	%	Movies & Entertainment	7,960		7,880		6,846		(4)
Anastasia Parent, LLC	First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025			Personal Products	2,828		2,282		1,248		(6)
Apptio, Inc.	First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025	8.25	%	Application Software	4,615		4,550		4,526		(4)
	First Lien Revolver, LIBOR+7.25% cash due 1/10/2025			Application Software	—		(5)		(8)		(4)(5)
Total Apptio, Inc.							4,545		4,518
Aurora Lux Finco S.À.R.L.	First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026	7.00	%	Airport Services	6,468		6,324		6,015		(4)
Blackhawk Network Holdings, Inc.	First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025	3.15	%	Data Processing & Outsourced Services	9,775		9,758		9,251
Boxer Parent Company Inc.	First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025	4.40	%	Systems Software	7,532		7,448		7,331		(4)
Brazos Delaware II, LLC	First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025	4.16	%	Oil & Gas Equipment & Services	7,331		7,306		5,600
C5 Technology Holdings, LLC	171 Common Units			Data Processing & Outsourced Services			—		—		(4)
	7,193,539.63 Preferred Units			Data Processing & Outsourced Services			7,194		5,683		(4)
Total C5 Technology Holdings, LLC							7,194		5,683
Carrols Restaurant Group, Inc.	First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026	7.25	%	Restaurants	3,990		3,792		3,960
CITGO Petroleum Corp.	First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024	6.00	%	Oil & Gas Refining & Marketing	7,184		7,112		6,842		(4)
Clear Channel Outdoor Holdings, Inc.	First Lien Term Loan, LIBOR+3.50% cash due 8/21/2026	3.76	%	Advertising	331		290		302
Connect U.S. Finco LLC	First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026	5.50	%	Alternative Carriers	7,437		7,262		7,228
Curium Bidco S.à.r.l.	First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026	3.97	%	Biotechnology	5,940		5,895		5,895
Dcert Buyer, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026	4.15	%	Internet Services & Infrastructure	7,960		7,940		7,879
Dealer Tire, LLC	First Lien Term Loan, LIBOR+4.25% cash due 12/12/2025	4.40	%	Distributors	943		902		924
eResearch Technology, Inc.	First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027	5.50	%	Application Software	7,481		7,406		7,461
Frontier Communications Corporation	First Lien Term Loan, PRIME+2.75% cash due 6/15/2024	6.00	%	Integrated Telecommunication Services	3,939		3,901		3,887
Gigamon, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024	5.25	%	Systems Software	7,781		7,734		7,684
Global Medical Response, Inc.	First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025	5.75	%	Health Care Services	2,231		2,187		2,185
Guidehouse LLP	Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026	8.15	%	Research & Consulting Services	6,000		5,979		5,790		(4)

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Helios Software Holdings, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025	4.52	%	Systems Software	$	3,970	$	3,930	$	3,923
Intelsat Jackson Holdings S.A.	First Lien Term Loan, PRIME+4.75% cash due 11/27/2023	8.00	%	Alternative Carriers	3,568		3,541		3,598
	First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 7/13/2022	6.50	%	Alternative Carriers	971		801		1,011		(5)
Total Intelsat Jackson Holdings S.A.							4,342		4,609
KIK Custom Products Inc.	First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023	5.00	%	Household Products	5,322		5,308		5,302
LogMeIn, Inc.	First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027	4.91	%	Application Software	5,000		4,876		4,842
Mindbody, Inc.	First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025	8.00	%	Internet Services & Infrastructure	4,546		4,481		4,192		(4)
	First Lien Revolver, LIBOR+8.00% cash due 2/14/2025			Internet Services & Infrastructure	—		(7)		(38)		(4)(5)
Total Mindbody, Inc.							4,474		4,154
MRI Software LLC	First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026	6.50	%	Application Software	3,830		3,795		3,737		(4)
	First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026			Application Software	—		(1)		(4)		(4)(5)
	First Lien Revolver, LIBOR+5.50% cash due 2/10/2026			Application Software	—		(3)		(8)		(4)(5)
Total MRI Software LLC							3,791		3,725
Navicure, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026	4.15	%	Health Care Technology	5,970		5,940		5,849
New IPT, Inc.	First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.00	%	Oil & Gas Equipment & Services	1,006		1,006		786		(4)
	21.876 Class A Common Units in New IPT Holdings, LLC			Oil & Gas Equipment & Services			—		—		(4)
Total New IPT, Inc.							1,006		786
Northern Star Industries Inc.	First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025	5.75	%	Electrical Components & Equipment	6,825		6,803		6,518
Northwest Fiber, LLC	First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027	5.66	%	Integrated Telecommunication Services	2,400		2,314		2,403
Novetta Solutions, LLC	First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022	6.00	%	Application Software	5,931		5,909		5,827
OEConnection LLC	First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026	4.15	%	Application Software	7,455		7,418		7,371
	First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026			Application Software	—		(2)		(5)		(5)
Total OEConnection LLC							7,416		7,366
Olaplex, Inc.	First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026	7.50	%	Personal Products	4,938		4,851		4,938		(4)
	First Lien Revolver, LIBOR+6.50% cash due 1/8/2025	7.50	%	Personal Products	270		261		270		(4)(5)
Total Olaplex, Inc.							5,112		5,208
PetVet Care Centers, LLC	First Lien Term Loan, LIBOR+4.25% cash due 2/14/2025	5.25	%	Specialized Consumer Services	2,743		2,736		2,747
PG&E Corporation	First Lien Term Loan, LIBOR+4.50% cash due 6/23/2025	5.50	%	Electric Utilities	5,985		5,899		5,875
Recorded Books, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 8/31/2025	4.75	%	Publishing	6,000		5,940		5,940
Sabert Corporation	First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026	5.50	%	Metal & Glass Containers	2,828		2,800		2,791
Salient CRGT, Inc.	First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022	7.50	%	Aerospace & Defense	2,111		2,099		1,963		(4)
SHO Holding I Corporation	First Lien Term Loan, LIBOR+3.00% cash PIK 2.25% due 4/27/2024	4.00	%	Footwear	8,396		8,380		5,898
Signify Health, LLC	First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024	5.50	%	Health Care Services	9,750		9,690		9,409
Sirva Worldwide, Inc.	First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025	5.65	%	Diversified Support Services	4,781		4,709		3,992

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Star US Bidco LLC	First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027	5.25	%	Industrial Machinery	$	3,718	$	3,532	$	3,551
Sunshine Luxembourg VII SARL	First Lien Term Loan, LIBOR+4.25% cash due 10/1/2026	5.25	%	Personal Products	7,940		7,900		7,911
Supermoose Borrower, LLC	First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025	3.90	%	Application Software	4,888		4,575		4,407		(4)
Surgery Center Holdings, Inc.	First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024	4.25	%	Health Care Facilities	4,962		4,943		4,691		(4)
Uber Technologies, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025	5.00	%	Application Software	2,997		2,959		2,980
UFC Holdings, LLC	First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026	4.25	%	Movies & Entertainment	2,856		2,816		2,814
Veritas US Inc.	First Lien Term Loan, LIBOR+5.50% cash due 9/1/2025	6.50	%	Application Software	6,500		6,371		6,375
Verscend Holding Corp.	First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025	4.65	%	Health Care Technology	4,112		4,080		4,084		(4)
VM Consolidated, Inc.	First Lien Term Loan, LIBOR+3.25% cash due 2/28/2025	3.40	%	Data Processing & Outsourced Services	10,487		10,495		10,291
Windstream Services II, LLC	First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027	7.25	%	Integrated Telecommunication Services	7,980		7,662		7,744		(4)
WP CPP Holdings, LLC	Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026	8.75	%	Aerospace & Defense	6,000		5,956		4,680		(4)
					$	307,579	$	311,428	$	298,771

__________

(1) Represents the interest rate as of September 30, 2020. All interest rates are payable in cash, unless otherwise noted.

(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of September 30, 2020, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.

(3) Represents the current determination of fair value as of September 30, 2020 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company's Board of Directors' valuation process described elsewhere herein.

(4) This investment was held by both the Company and SLF JV I as of September 30, 2020.

(6) This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

Both the cost and fair value of the Company's debt investment in SLF JV I were $96.3 million as of each of December 31, 2020 and September 30, 2020. The Company earned interest income of $1.8 million and $2.2 million on its debt investment in the SLF JV I for the three months ended December 31, 2020 and 2019, respectively. The Company's debt investment in SLF JV I bears interest at a rate of one-month LIBOR plus 7.0% per annum and matures on December 29, 2028.

The cost and fair value of the LLC equity interests in SLF JV I held by the Company were $49.3 million and $29.3 million, respectively, as of December 31, 2020 and $49.3 million and $21.2 million, respectively, as of September 30, 2020. The Company did not earn dividend income for the three months ended December 31, 2020 and 2019, with respect to its investment in the LLC equity interests of SLF JV I. The LLC equity interests of SLF JV I are generally dividend producing to the extent SLF JV I has residual cash to be distributed on a quarterly basis.

Below is certain summarized financial information for SLF JV I as of December 31, 2020 and September 30, 2020 and for the three months ended December 31, 2020 and 2019:


	December 31, 2020		September 30, 2020
Selected Balance Sheet Information:
Investments at fair value (cost December 31, 2020: $317,432; cost September 30, 2020: $311,428)	$	313,261	$	298,771
Cash and cash equivalents	20,575		5,389
Restricted cash	4,262		4,211
Other assets	3,147		5,093
Total assets	$	341,245	$	313,464

Senior credit facility payable	$	175,410	$	167,910
Debt securities payable at fair value (proceeds December 31, 2020: $110,000; proceeds September 30, 2020: $110,000)	110,000		110,000
Other liabilities	22,390		11,336
Total liabilities	$	307,800	$	289,246
Members' equity	33,445		24,218
Total liabilities and members' equity	$	341,245	$	313,464


	Three months ended December 31, 2020		Three months ended December 31, 2019
Selected Statements of Operations Information:
Interest income	$	4,475	$	5,393
Other income	54		6
Total investment income	4,529		5,399
Interest expense	3,581		4,641
Other expenses	62		67
Total expenses (1)	3,643		4,708
Net unrealized appreciation (depreciation)	8,486		2,941
Net realized gains (losses)	(144)		(1,152)
Net income (loss)	$	9,228	$	2,480

__________

(1) There are no management fees or incentive fees charged at SLF JV I.

For the three months ended December 31, 2020, SLF JV I's interest expense included $1.6 million related to the Deutsche Bank I Facility and $2.0 million related to the SLF JV I Notes, of which $1.8 million was payable to the Company and $0.2 million was payable to Kemper.

SLF JV I has elected to fair value the debt securities issued to the Company and Kemper under FASB ASC Topic 825, Financial Instruments - Fair Value Option. The debt securities are valued based on the total assets less the total liabilities senior to the subordinated notes of SLF JV I in an amount not exceeding par under the EV technique.

During the three months ended December 31, 2020 and 2019, the Company did not sell any debt investments to SLF JV I.

Note 4. Fee Income

For the three months ended December 31, 2020 and 2019, the Company recorded total fee income of $3.4 million and $1.1 million, respectively, of which $0.1 million and $0.2 million, respectively, was recurring in nature. Recurring fee income primarily consisted of servicing fees and exit fees.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Note 5. Share Data and Net Assets

Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share, pursuant to ASC Topic 260-10, Earnings per Share, for the three months ended December 31, 2020 and 2019:


(Share amounts in thousands)	Three months ended December 31, 2020		Three months ended December 31, 2019
Earnings (loss) per common share — basic and diluted:
Net increase (decrease) in net assets resulting from operations	$	65,544	$	13,843
Weighted average common shares outstanding — basic and diluted	140,961		140,961
Earnings (loss) per common share — basic and diluted	$	0.46	$	0.10

Changes in Net Assets

The following table presents the changes in net assets for the three months ended December 31, 2020:


	Common Stock
	Shares	Par Value		Additional paid-in-capital		Accumulated Overdistributed Earnings		Total Net Assets
Balance as of September 30, 2020	140,961	$	1,409	$	1,487,774	$	(574,304)	$	914,879
Net investment income	—	—		—		10,018		10,018
Net unrealized appreciation (depreciation)	—	—		—		47,556		47,556
Net realized gains (losses)	—	—		—		8,215		8,215
Provision for income tax (expense) benefit	—	—		—		(245)		(245)
Distributions to stockholders	—	—		—		(15,506)		(15,506)
Issuance of common stock under dividend reinvestment plan	94	1		527		—		528
Repurchases of common stock under dividend reinvestment plan	(94)	(1)		(527)		—		(528)
Balance as of December 31, 2020	140,961	$	1,409	$	1,487,774	$	(524,266)	$	964,917

The following table presents the changes in net assets for the three months ended December 31, 2019:


	Common Stock
	Shares	Par Value		Additional paid-in-capital		Accumulated Overdistributed Earnings		Total Net Assets
Balance as of September 30, 2019	140,961	$	1,409	$	1,487,774	$	(558,553)	$	930,630
Net investment income	—	—		—		7,836		7,836
Net unrealized appreciation (depreciation)	—	—		—		2,879		2,879
Net realized gains (losses)	—	—		—		3,288		3,288
Provision for income tax (expense) benefit	—	—		—		(160)		(160)
Distributions to stockholders	—	—		—		(13,391)		(13,391)
Issuance of common stock under dividend reinvestment plan	88	1		480		—		481
Repurchases of common stock under dividend reinvestment plan	(88)	(1)		(480)		—		(481)
Balance as of December 31, 2019	140,961	$	1,409	$	1,487,774	$	(558,101)	$	931,082

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Distributions

Distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by the Board of Directors and is based on management’s estimate of the Company’s annual taxable income. Net realized capital gains, if any, may be distributed to stockholders or retained for reinvestment.

The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Company’s Board of Directors declares a cash distribution, then the Company’s stockholders who have not “opted out” of the Company’s DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. If the Company’s shares are trading at a premium to net asset value, the Company typically issues new shares to implement the DRIP with such shares issued at the greater of the most recently computed net asset value per share of common stock or 95% of the current market price per share of common stock on the payment date for such distribution. If the Company’s shares are trading at a discount to net asset value, the Company typically purchases shares in the open market in connection with the Company’s obligations under the DRIP.

For income tax purposes, the Company has reported its distributions for the 2020 calendar year as ordinary income. The character of such distributions was appropriately reported to the Internal Revenue Service and stockholders for the 2020 calendar year. To the extent the Company’s taxable earnings for a fiscal and taxable year fall below the amount of distributions paid for the fiscal and taxable year, a portion of the total amount of the Company’s distributions for the fiscal and taxable year is deemed a return of capital for tax purposes to the Company’s stockholders.

The following table reflects the distributions per share that the Company has paid, including shares issued under the DRIP, on its common stock during the three months ended December 31, 2020 and 2019:

Date Declared

Record Date

Payment Date

Amount
per Share

Cash
Distribution

DRIP Shares
Issued (1)

DRIP Shares
Value

November 13, 2020

December 15, 2020

December 31, 2020

0.11

$ 15.0 million

93,964

$ 0.5 million

Total for the three months ended December 31, 2020

0.11

$ 15.0 million

93,964

$ 0.5 million

Date Declared

Record Date

Payment Date

Amount
per Share

Cash
Distribution

DRIP Shares
Issued (1)

DRIP Shares
Value

November 12, 2019

December 13, 2019

December 31, 2019

0.095

$ 12.9 million

87,747

$ 0.5 million

Total for the three months ended December 31, 2019

0.095

$ 12.9 million

87,747

$ 0.5 million

__________

(1) Shares were purchased on the open market and distributed.

Common Stock Offering

There were no common stock offerings during the three months ended December 31, 2020 and 2019.

Note 6. Borrowings

Credit Facility

On November 30, 2017, the Company entered into a senior secured revolving credit facility (as amended and restated, the “Credit Facility”) pursuant to a Senior Secured Revolving Credit Agreement with the lenders party thereto, ING Capital LLC, as administrative agent, ING Capital LLC, JPMorgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. and Bank of America, N.A., as syndication agents. The Credit Facility provides that the Company may use the proceeds of the loans and issuances of letters of credit under the Credit Facility for general corporate purposes, including acquiring and funding leveraged loans, mezzanine loans, high-yield securities, convertible securities, preferred stock, common stock and other investments. The Credit Facility further allows the Company to request letters of credit from ING Capital LLC, as the issuing bank.

On October 28, 2020, the Company entered into an incremental commitment and assumption agreement in connection with the Company’s exercise of $75 million of the accordion feature under the Credit Facility. On December 28, 2020, the Company entered into an incremental commitment agreement pursuant to which a lender under the Credit Facility increased its commitment amount under the Credit Facility by $25 million. As a result of such agreements, as of December 31, 2020, the size of the Credit Facility was $800 million (with an “accordion” feature that permits the Company, under certain

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

circumstances, to increase the size of the facility to up to the amount of the Company’s net worth (as defined in the Credit Facility) on the date of such increase).

As of December 31, 2020, (i) the period during which the Company may make drawings will expire on February 25, 2023 and the maturity date is February 25, 2024 and (ii) the interest rate margin for (a) LIBOR loans (which may be 1-, 2-, 3- or 6-month, at the Company’s option) was 2.00% (which can be increased up to 2.25%) and (b) alternate base rate loans was 1.00% (which can be increased up to 1.25%); provided that the interest margin will increase to 2.75% and 1.75% for LIBOR loans and alternative base rate loans, respectively, if the Company’s stockholders’ equity is below $700 million, each depending on the Company’s senior debt coverage ratio.

The Credit Facility is secured by substantially all of the Company’s assets (excluding, among other things, investments held in and by certain subsidiaries of the Company or investments in certain portfolio companies of the Company) and guaranteed by certain subsidiaries of the Company. As of December 31, 2020, except for assets that were held by certain immaterial subsidiaries, substantially all of the Company's assets are pledged as collateral under the Credit Facility.

The Credit Facility requires the Company to, among other things, (i) make representations and warranties regarding the collateral as well as each of the Company’s portfolio companies’ businesses, (ii) agree to certain indemnification obligations, and (iii) comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including covenants related to: (A) limitations on the incurrence of additional indebtedness and liens, (B) limitations on certain investments, (C) limitations on certain asset transfers and restricted payments, (D) maintaining a certain minimum stockholders’ equity, (E) maintaining a ratio of total assets (less total liabilities) to total indebtedness, of the Company and its subsidiaries (subject to certain exceptions), of not less than 1.50 to 1.00, (F) maintaining a ratio of consolidated EBITDA to consolidated interest expense, of the Company and its subsidiaries (subject to certain exceptions), of not less than 2.25 to 1.00, (G) maintaining a minimum liquidity and net worth, and (H) limitations on the creation or existence of agreements that prohibit liens on certain properties of the Company and certain of its subsidiaries. The Credit Facility also includes usual and customary default provisions such as the failure to make timely payments under the facility, the occurrence of a change in control, and the failure by the Company to materially perform under the agreements governing the facility, which, if not complied with, could accelerate repayment under the facility. As of December 31, 2020, the Company was in compliance with all financial covenants under the Credit Facility. In addition to the asset coverage ratio described above, borrowings under the Credit Facility (and the incurrence of certain other permitted debt) are subject to compliance with a borrowing base that will apply different advance rates to different types of assets in the Company’s portfolio. Each loan or letter of credit originated or assumed under the Credit Facility is subject to the satisfaction of certain conditions. On December 10, 2020, the Company entered into an amendment to the Credit Facility that, among other things, (i) increases the minimum stockholders’ equity covenant as of closing of the Mergers; (ii) increases the minimum obligors’ net worth covenant as of the date of the closing of the Mergers; (iii) modifies the covenants, including the negative covenants relating to investments and transactions with affiliates, to permit the Mergers; and (iv) adds provisions relating to the transition from the LIBOR to the Secured Overnight Financing Rate.

As of December 31, 2020 and September 30, 2020, the Company had $400.0 million and $414.8 million of borrowings outstanding under the Credit Facility, respectively, which had a fair value of $400.0 million and $414.8 million, respectively. The Company's borrowings under the Credit Facility bore interest at a weighted average interest rate of 2.323% and 3.983% for the three months ended December 31, 2020 and 2019, respectively. For the three months ended December 31, 2020 and 2019, the Company recorded interest expense (inclusive of fees) of $3.2 million and $4.0 million, respectively, related to the Credit Facility.

2025 Notes

On February 25, 2020, the Company issued $300.0 million in aggregate principal amount of the 2025 Notes for net proceeds of $293.8 million after deducting OID of $2.5 million, underwriting commissions and discounts of $3.0 million and offering costs of $0.7 million. The OID on the 2025 Notes is amortized based on the effective interest method over the term of the 2025 Notes.

The 2025 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the fifth supplemental indenture, dated February 25, 2020 (collectively, the "2025 Notes Indenture"), between the Company and Deutsche Bank Trust Company Americas (the "Trustee"). The 2025 Notes are the Company's general unsecured obligations that rank senior in right of payment to all of the Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2025 Notes. The 2025 Notes rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated. The 2025 Notes effectively rank junior to any of the Company's secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness. The 2025

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Notes rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company's subsidiaries, financing vehicles or similar facilities.

Interest on the 2025 Notes is paid semi-annually on February 25 and August 25 at a rate of 3.500% per annum. The 2025 Notes mature on February 25, 2025 and may be redeemed in whole or in part at any time or from time to time at the Company's option prior to maturity at par plus a “make-whole” premium, if applicable. In addition, holders of the 2025 Notes can require the Company to repurchase the 2025 Notes at 100% of their principal amount upon the occurrence of certain change of control events as described in the 2025 Notes Indenture. The 2025 Notes were issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. During the three months ended December 31, 2020, the Company did not repurchase any of the 2025 Notes in the open market.

The 2025 Notes Indenture contains certain covenants, including covenants requiring the Company's compliance with the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the Investment Company Act or any successor provisions (but giving effect to any exemptive relief granted to the Company by the U.S. Securities and Exchange Commission ("SEC")), as well as covenants requiring the Company to provide financial information to the holders of the 2025 Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. These covenants are subject to limitations and exceptions that are described in the 2025 Notes Indenture.

For the three months ended December 31, 2020, the Company recorded interest expense (inclusive of fees) of $2.9 million related to the 2025 Notes.

As of December 31, 2020, there were $300.0 million of 2025 Notes outstanding, which had a carrying value and fair value of $294.8 million and $311.3 million, respectively. As of September 30, 2020, there were $300.0 million of 2025 Notes outstanding, which had a carrying value and fair value of $294.5 million and $301.4 million, respectively. The carrying value represents the aggregate principal amount outstanding less unamortized deferred financing costs and the unaccreted discount recorded upon the issuance of the 2025 Notes. As of December 31, 2020, the total unamortized deferred financing costs and the net unaccreted discount were $3.1 million and $2.1 million, respectively. As of September 30, 2020, the total unamortized deferred financing costs and the net unaccreted discount were $3.3 million and $2.2 million, respectively.

2024 Notes

On October 18, 2012, the Company issued $75.0 million in aggregate principal amount of the 5.875% notes due 2024 (the "2024 Notes") for net proceeds of $72.5 million after deducting underwriting commissions of $2.2 million and offering costs of $0.3 million. The 2024 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the first supplemental indenture, dated October 18, 2012, between the Company and the Trustee.

Interest on the 2024 Notes was paid quarterly in arrears on January 30, April 30, July 30 and October 30 at a rate of 5.875% per annum. On March 2, 2020, the Company redeemed 100%, or $75.0 million aggregate principal amount, of the issued and outstanding 2024 Notes, following which they were delisted from the New York Stock Exchange. The redemption price per 2024 Note was $25 plus accrued and unpaid interest.

For the three months ended December 31, 2019, the Company recorded interest expense of $1.2 million (inclusive of fees) related to the 2024 Notes. As of December 31, 2020 and September 30, 2020, there were no 2024 Notes outstanding.

2028 Notes

In April and May 2013, the Company issued $86.3 million in aggregate principal amount of the 6.125% notes due 2028 (the "2028 Notes") for net proceeds of $83.4 million after deducting underwriting commissions of $2.6 million and offering costs of $0.3 million. The 2028 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the second supplemental indenture, dated April 4, 2013, between the Company and the Trustee.

Interest on the 2028 Notes was paid quarterly in arrears on January 30, April 30, July 30 and October 30 at a rate of 6.125% per annum. On March 13, 2020, the Company redeemed 100%, or $86.3 million aggregate principal amount, of the issued and outstanding 2028 Notes, following which they were delisted from the Nasdaq Global Select Market. The redemption price per 2028 Note was $25 plus accrued and unpaid interest.

For the three months ended December 31, 2019, the Company recorded interest expense of $1.4 million (inclusive of fees) related to the 2028 Notes. As of December 31, 2020 and September 30, 2020, there were no 2028 Notes outstanding.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Note 7. Interest and Dividend Income

As of December 31, 2020 and September 30, 2020, there were one and two investments, respectively, on which the Company had stopped accruing cash and/or PIK interest or OID income. The percentages of the Company's debt investments at cost and fair value by accrual status as of December 31, 2020 and September 30, 2020 were as follows:


	December 31, 2020								September 30, 2020
	Cost		% of Debt Portfolio		Fair Value		% of Debt Portfolio		Cost		% of Debt Portfolio		Fair Value		% of Debt Portfolio
Accrual	$	1,609,920	99.96	%	$	1,616,023	99.97	%	$	1,500,364	98.79	%	$	1,483,284	99.89	%
PIK non-accrual (1)	—		—		—		—		12,661		0.83		—		—
Cash non-accrual (2)	588		0.04		470		0.03		5,712		0.38		1,571		0.11
Total	$	1,610,508	100.00	%	$	1,616,493	100.00	%	$	1,518,737	100.00	%	$	1,484,855	100.00	%

___________________

(1)PIK non-accrual status is inclusive of other non-cash income, where applicable.

(2)Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

Note 8. Taxable/Distributable Income and Dividend Distributions

Taxable income differs from net increase (decrease) in net assets resulting from operations primarily due to: (1) unrealized appreciation (depreciation) on investments and foreign currency, as gains and losses are not included in taxable income until they are realized; (2) origination and exit fees received in connection with investments in portfolio companies; (3) organizational costs; (4) income or loss recognition on exited investments; (5) recognition of interest income on certain loans; and (6) investments in controlled foreign corporations.

As of September 30, 2020, the Company had net capital loss carryforwards of $515.3 million to offset net capital gains that will not expire, to the extent available and permitted by U.S. federal income tax law, of which $84.3 million are available to offset future short-term capital gains and $431.0 million are available to offset future long-term capital gains.

Listed below is a reconciliation of "net increase (decrease) in net assets resulting from operations" to taxable income for the three months ended December 31, 2020 and 2019.


	Three months ended December 31, 2020		Three months ended December 31, 2019
Net increase (decrease) in net assets resulting from operations	$	65,544	$	13,843
Net unrealized (appreciation) depreciation	(47,556)		(2,879)
Book/tax difference due to organizational costs	(22)		(22)
Book/tax difference due to interest income on certain loans	130		—
Book/tax difference due to capital losses utilized	(9,943)		(3,977)
Other book/tax differences	5,614		5,144
Taxable/Distributable Income (1)	$	13,767	$	12,109

__________

(1) The Company's taxable income for the three months ended December 31, 2020 is an estimate and will not be finally determined until the Company files its tax return for the fiscal year ending September 30, 2021. Therefore, the final taxable income may be different than the estimate.

The Company uses the liability method to account for its taxable subsidiaries' income taxes. Using this method, the Company recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between financial reporting and tax bases of assets and liabilities. In addition, the Company recognizes deferred tax benefits associated with net loss carry forwards that it may use to offset future tax obligations. The Company measures deferred tax assets and liabilities using the enacted tax rates expected to apply to taxable income in the years in which it expects to recover or settle those temporary differences.

When assessing the realizability of deferred tax assets, the Company considers whether it is probable that some or all of the deferred tax assets will not be realized. In determining whether the deferred tax assets are realizable, the Company considers the period of expiration of the tax asset, historical and projected taxable income and tax liabilities for the tax jurisdiction in

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

which the tax asset is located. The deferred tax asset recognized by the Company, as it relates to the higher tax basis in the carrying value of certain assets compared to the book basis of those assets, will be recognized in future years by these taxable entities. Deferred tax assets are based on the amount of the tax benefit that the Company’s management has determined is more likely than not to be realized in future periods. In determining the realizability of this tax benefit, management considered numerous factors that will give rise to pre-tax income in future periods. Among these are the historical and expected future book and tax basis pre-tax income of the Company and unrealized gains in the Company’s assets at the determination date. Based on these and other factors, the Company determined that, as of December 31, 2020, $1.8 million of the $2.9 million net deferred tax assets would not more likely than not be realized in future periods. As of December 31, 2020, the Company recorded a deferred tax asset of $1.1 million on the Consolidated Statements of Assets and Liabilities.

For the three months ended December 31, 2020, the Company recognized a total provision for income tax expense of $0.2 million, which was comprised of (i) a current income tax expense of approximately $0.5 million, and (ii) a deferred income tax benefit of approximately $0.3 million, which resulted from unrealized depreciation on investments held by the Company’s wholly-owned taxable subsidiaries.

As of September 30, 2020, the Company's last tax year end, the components of accumulated overdistributed earnings on a tax basis were as follows:


Undistributed ordinary income, net	$	9,392
Net realized capital losses	515,255
Unrealized losses, net	68,439

The aggregate cost of investments for income tax purposes was $1.6 billion as of September 30, 2020. As of September 30, 2020, the aggregate gross unrealized appreciation for all investments in which there was an excess of value over cost for income tax purposes was $300.3 million. As of September 30, 2020, the aggregate gross unrealized depreciation for all investments in which there was an excess of cost for income tax purposes over value was $368.7 million. Net unrealized depreciation based on the aggregate cost of investments for income tax purposes was $68.4 million.

Note 9. Realized Gains or Losses and Net Unrealized Appreciation or Depreciation

Realized Gains or Losses

Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption and the cost basis of the investment without regard to unrealized appreciation or depreciation previously recognized, and include investments written-off during the period, net of recoveries. Realized losses may also be recorded in connection with the Company's determination that certain investments are considered worthless securities and/or meet the conditions for loss recognition per the applicable tax rules.

During the three months ended December 31, 2020, the Company recorded an aggregate net realized gain of $8.2 million, which consisted of the following:


($ in millions)
Portfolio Company	Net Realized Gain (Loss)
PLATO Learning Inc.	$	7.8
L Squared Capital	1.4
BX Commercial Mortgage Trust 2020-VIVA	1.2
ExamSoft Worldwide Inc.	0.9
California Pizza Kitchen Inc.	(2.1)
99 Cents Only Stores	(0.9)
Other, net	(0.1)
Total, net	$	8.2

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

During the three months ended December 31, 2019, the Company recorded an aggregate net realized gain of $3.3 million, which consisted of the following:


($ in millions)
Portfolio Company	Net Realized Gain (Loss)
YETI Holdings, Inc.	$	3.4
Other, net	(0.1)
Total, net	$	3.3

Net Unrealized Appreciation or Depreciation

Net unrealized appreciation or depreciation reflects the net change in the valuation of the portfolio pursuant to the Company's valuation guidelines and the reclassification of any prior period unrealized appreciation or depreciation.

During the three months ended December 31, 2020 and 2019, the Company recorded net unrealized appreciation of $47.6 million and $2.9 million, respectively. For the three months ended December 31, 2020, this consisted of $27.2 million of net unrealized appreciation on debt investments, $12.8 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses) and $9.9 million of net unrealized appreciation on equity investments, partially offset by $2.4 million of net unrealized depreciation of foreign currency forward contracts. For the three months ended December 31, 2019, this consisted of $3.9 million of net unrealized appreciation on equity investments and $2.2 million of net unrealized appreciation on debt investments, partially offset by $1.7 million of net unrealized depreciation related to exited investments (a portion of which resulted in a reclassification to realized gains) and $1.5 million of net unrealized depreciation of foreign currency forward contracts.

Note 10. Concentration of Credit Risks

The Company deposits its cash with financial institutions and at times such balances may be in excess of the FDIC insurance limit. The Company limits its exposure to credit loss by depositing its cash with high credit quality financial institutions and monitoring their financial stability.

Note 11. Related Party Transactions

As of December 31, 2020 and September 30, 2020, the Company had a liability on its Consolidated Statements of Assets and Liabilities in the amount of $20.2 million and $11.2 million, respectively, reflecting the unpaid portion of the base management fees and incentive fees payable to Oaktree.

Investment Advisory Agreement

The Company is party to the Investment Advisory Agreement. Under the Investment Advisory Agreement, the Company pays Oaktree a fee for its services under the Investment Advisory Agreement consisting of two components: a base management fee and an incentive fee. The cost of both the base management fee payable to Oaktree and any incentive fees earned by Oaktree is ultimately borne by common stockholders of the Company.

From October 17, 2017 through May 3, 2020, the Company was externally managed by OCM pursuant to an investment advisory agreement. On May 4, 2020, OCM effected the novation of such investment advisory agreement to Oaktree. Immediately following such novation, the Company and Oaktree entered into a new investment advisory agreement with the same terms, including fee structure, as the investment advisory agreement with OCM. The term “Investment Advisory Agreement” refers collectively to the agreements with Oaktree and, prior to its novation, with OCM. Prior to October 17, 2017, the Company was externally managed by Fifth Street Management LLC (the "Former Adviser”), an indirect, partially-owned subsidiary of Fifth Street Asset Management Inc., pursuant to an investment advisory agreement between the Company and the Former Adviser, which was terminated on October 17, 2017.

Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect until September 30, 2021 and thereafter from year-to-year if approved annually by the Board of Directors of the Company or by the affirmative vote of the holders of a majority of the Company’s outstanding voting securities, including, in either case, approval by a majority of the directors of the Company who are not interested persons. The Investment Advisory Agreement will automatically terminate in the event of its assignment. The Investment Advisory Agreement may be terminated by

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

either party without penalty upon 60 days’ written notice to the other. The Investment Advisory Agreement may also be terminated, without penalty, upon the vote of a majority of the outstanding voting securities of the Company.

Base Management Fee

Under the Investment Advisory Agreement, the base management fee is calculated at an annual rate of 1.50% of total gross assets, including any investment made with borrowings, but excluding cash and cash equivalents. The base management fee is payable quarterly in arrears and the fee for any partial month or quarter is appropriately prorated. Effective May 3, 2019, the base management fee on the Company’s gross assets, including any investments made with borrowings, but excluding any cash and cash equivalents, that exceed the product of (A) 200% and (B) the Company’s net asset value will be 1.00%. For the avoidance of doubt, the 200% will be calculated in accordance with the Investment Company Act and will give effect to exemptive relief the Company received from the SEC with respect to debentures issued by a small business investment company subsidiary. In connection with entry into the Merger Agreement, Oaktree has agreed to waive $750,000 of base management fees payable to it under the Investment Advisory Agreement in each of the eight quarters immediately following the closing of the Mergers (for an aggregate waiver of $6.0 million of base management fees).

For the three months ended December 31, 2020 and 2019, the base management fee incurred under the Investment Advisory Agreement was $6.5 million and $5.6 million, respectively.

Incentive Fee

The incentive fee consists of two parts. Under the Investment Advisory Agreement, the first part of the incentive fee (the “incentive fee on income” or "Part I incentive fee") is calculated and payable quarterly in arrears based upon the “pre-incentive fee net investment income” of the Company for the immediately preceding quarter. The payment of the incentive fee on income is subject to payment of a preferred return to investors each quarter (i.e., a “hurdle rate”), expressed as a rate of return on the value of the Company’s net assets at the end of the most recently completed quarter, of 1.50%, subject to a “catch up” feature.

For this purpose, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies, other than fees for providing managerial assistance) accrued during the fiscal quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as OID debt, instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

Under the Investment Advisory Agreement, the calculation of the incentive fee on income for each quarter is as follows:

•No incentive fee is payable to Oaktree in any quarter in which the Company’s pre-incentive fee net investment income does not exceed the preferred return rate of 1.50% (the “preferred return”) on net assets;

•100% of the Company’s pre-incentive fee net investment income, if any, that exceeds the preferred return but is less than or equal to 1.8182% in any fiscal quarter is payable to Oaktree. This portion of the incentive fee on income is referred to as the “catch-up” provision, and it is intended to provide Oaktree with an incentive fee of 17.5% on all of the Company’s pre-incentive fee net investment income when the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets in any fiscal quarter; and

•For any quarter in which the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets, the incentive fee on income is equal to 17.5% of the amount of the Company’s pre-incentive fee net investment income, as the preferred return and catch-up will have been achieved.

There is no accumulation of amounts on the hurdle rate from quarter to quarter and accordingly there is no clawback of amounts previously paid if subsequent quarters are below the quarterly hurdle.

For the three months ended December 31, 2020 and 2019, the first part of the incentive fee (incentive fee on income) incurred under the Investment Advisory Agreement was $4.1 million and $3.0 million, respectively.

Under the Investment Advisory Agreement, the second part of the incentive fee (the "capital gains incentive fee") is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement,

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

as of the termination date) commencing with the fiscal year ended September 30, 2019 and equals 17.5% of the Company’s realized capital gains, if any, on a cumulative basis from the beginning of the fiscal year ended September 30, 2019 through the end of each subsequent fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees under the Investment Advisory Agreement. Any realized capital gains, realized capital losses, unrealized capital appreciation and unrealized capital depreciation with respect to the Company’s portfolio as of the end of the fiscal year ended September 30, 2018 are excluded from the calculations of the second part of the incentive fee. As of December 31, 2020, the Company incurred $4.6 million of capital gains incentive fees cumulatively under the Investment Advisory Agreement (prior to waivers). For the three months ended December 31, 2020, the Company did not incur any capital gains incentive fees under the Investment Advisory Agreement.

GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized on a theoretical "liquidation basis." A fee so calculated and accrued would not be payable under applicable law and may never be paid based upon the computation of capital gains incentive fees in subsequent periods. Amounts ultimately paid under the Investment Advisory Agreement will be consistent with the formula reflected in the Investment Advisory Agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains incentive fee plus the aggregate cumulative unrealized capital appreciation. Any realized capital gains and losses and cumulative unrealized capital appreciation and depreciation with respect to the Company’s portfolio as of the end of the fiscal year ended September 30, 2018 are excluded from the GAAP accrual. If such amount is positive at the end of a period, then GAAP requires the Company to record a capital gains incentive fee equal to 17.5% of such cumulative amount, less the aggregate amount of actual capital gains incentive fees payable or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future or any accrued capital gains incentive fee will become payable under the Investment Advisory Agreement. For the three months ended December 31, 2020 and 2019, the Company recorded $9.5 million and $1.1 million of accrued capital gains incentive fees, respectively.

Any amounts resulting solely from the new cost basis of the acquired OCSI investments established by ASC 805-50 (as defined in Note 15) as a result of the Mergers will be excluded from the calculation of the incentive fee on income and the incentive fee on capital gains, with such exclusion to be implemented either through an amendment to the Investment Advisory Agreement or a waiver of such amounts by Oaktree.

To ensure compliance with Section 15(f) of the Investment Company Act, OCM entered into a two-year contractual fee waiver with the Company, which ended on October 17, 2019, pursuant to which OCM waived any management or incentive fees payable under the Investment Advisory Agreement that exceeded what would have been paid to the Former Adviser in the aggregate under the Former Investment Advisory Agreement. The contractual amount of fees permanently waived at the end of the two-year period was $3.9 million. Prior to the end of the two-year period, amounts potentially subject to waiver under the two-year contractual fee waiver were accrued quarterly based on a theoretical “liquidation basis.” As of September 30, 2019, the Company had accrued cumulative fee waivers of $9.1 million. During the three months ended December 31, 2019, the Company reversed $5.2 million of previously accrued fee waivers since the two-year fee waiver period has ended.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

The following table provides a roll-forward of the accrued waiver balance and illustrates the impact of the end of the two-year contractual fee waiver period:


($ in millions)
Accrued fee waivers as of September 30, 2019 (1)	$	9.1
Reversal of previously accrued fee waivers (2)	(5.2)
Contractual fees waived under the Investment Advisory Agreement (3)	(3.9)
Accrued fee waivers as of December 31, 2019	$	—

(1)Calculated in accordance with GAAP as of September 30, 2019 and is based on a hypothetical liquidation basis.

(2)Reflects the reversal of fee waivers that were previously accrued based on a hypothetical liquidation basis when the two-year contractual fee waiver was in effect. This reversal was recognized in connection with the expiration of the two-year contractual fee waiver, which ended on October 17, 2019, and is reflected in reversal of fees waived in the Consolidated Statement of Operations for the three months ended December 31, 2019.

(3)Reflects the amount of fees permanently waived pursuant to the two-year contractual fee waiver.

As of September 30, 2019, the capital gains incentive fee payable under the Investment Advisory Agreement (net of waivers) was $0.8 million as shown below:


($ in millions)	September 30, 2019 (1)
Capital gains incentive fee payable under the Investment Advisory Agreement (prior to waivers)	$	4.6
Contractual fees waived	(3.9)
Capital gains incentive fee payable under the Investment Advisory Agreement (net of waivers)	$	0.8

(1)Amounts may not sum due to rounding.

Indemnification

The Investment Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, Oaktree and its officers, managers, partners, members (and their members, including the owners of their members), agents, employees, controlling persons and any other person or entity affiliated with it, are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of Oaktree's services under the Investment Advisory Agreement or otherwise as investment adviser.

Administrative Services

The Company is party to the Administration Agreement with Oaktree Administrator. Pursuant to the Administration Agreement, Oaktree Administrator provides administrative services to the Company necessary for the operations of the Company, which include providing office facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and such other services as Oaktree Administrator, subject to review by the Company’s Board of Directors, shall from time to time deem to be necessary or useful to perform its obligations under the Administration Agreement. Oaktree Administrator may, on behalf of the Company, conduct relations and negotiate agreements with custodians, trustees, depositories, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. Oaktree Administrator makes reports to the Company’s Board of Directors of its performance of obligations under the Administration Agreement and furnishes advice and recommendations with respect to such other aspects of the Company’s business and affairs, in each case, as it shall determine to be desirable or as reasonably required by the Company’s Board of Directors; provided that Oaktree Administrator shall not provide any investment advice or recommendation.

Oaktree Administrator also provides portfolio collection functions for interest income, fees and warrants and is responsible for the financial and other records that the Company is required to maintain and prepares, prints and disseminates reports to the Company’s stockholders and all other materials filed with the SEC. In addition, Oaktree Administrator assists the Company in determining and publishing the Company’s net asset value, overseeing the preparation and filing of the Company’s tax returns, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Oaktree Administrator may also offer to provide, on the Company’s behalf, managerial assistance to the Company’s portfolio companies.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For providing these services, facilities and personnel, the Company reimburses Oaktree Administrator the allocable portion of overhead and other expenses incurred by Oaktree Administrator in performing its obligations under the Administration Agreement, including the Company’s allocable portion of the rent of the Company’s principal executive offices (which are located in a building owned by a Brookfield affiliate) at market rates and the Company’s allocable portion of the costs of compensation and related expenses of its Chief Financial Officer, Chief Compliance Officer, their staffs and other non-investment professionals at Oaktree that perform duties for the Company. Such reimbursement is at cost, with no profit to, or markup by, Oaktree Administrator. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other. The Administration Agreement may also be terminated, without penalty, upon the vote of a majority of the Company’s outstanding voting securities.

For the three months ended December 31, 2020 and 2019, the Company accrued administrative expenses of $0.4 million and $0.5 million, respectively, including $0.1 million and $0.1 million of general and administrative expenses, respectively.

As of December 31, 2020 and September 30, 2020, $2.4 million and $2.1 million, respectively, was included in “Due to affiliate” in the Consolidated Statements of Assets and Liabilities, reflecting the unpaid portion of administrative expenses and other reimbursable expenses payable to Oaktree Administrator.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Note 12. Financial Highlights


(Share amounts in thousands)	Three months ended December 31, 2020	Three months ended December 31, 2019
Net asset value per share at beginning of period	$6.49	$6.60
Net investment income (1)	0.07	0.06
Net unrealized appreciation (depreciation) (1)	0.34	0.03
Net realized gains (losses) (1)	0.06	0.02
Distributions of net investment income to stockholders	(0.11)	(0.10)
Net asset value per share at end of period	$6.85	$6.61
Per share market value at beginning of period	$4.84	$5.18
Per share market value at end of period	$5.57	$5.46
Total return (2)	17.34%	7.23%
Common shares outstanding at beginning of period	140,961	140,961
Common shares outstanding at end of period	140,961	140,961
Net assets at beginning of period	$914,879	$930,630
Net assets at end of period	$964,917	$931,082
Average net assets (3)	$944,955	$934,932
Ratio of net investment income to average net assets (4)	4.21%	3.33%
Ratio of total expenses to average net assets (4)	11.83%	7.61%
Ratio of net expenses to average net assets (4)	11.83%	9.81%
Ratio of portfolio turnover to average investments at fair value	10.34%	6.68%
Weighted average outstanding debt (5)	$703,403	$489,564
Average debt per share (1)	$4.99	$3.47
Asset coverage ratio at end of period (6)	236.67%	271.92%

__________


(1)			Calculated based upon weighted average shares outstanding for the period.
(2)			Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company's DRIP. Total return does not include sales load.
(3)			Calculated based upon the weighted average net assets for the period.
(4)			Interim periods are annualized.
(5)			Calculated based upon the weighted average of debt outstanding for the period.
(6)			Based on outstanding senior securities of $702.2 million and $540.0 million as of December 31, 2020 and 2019, respectively.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Note 13. Derivative Instruments

The Company enters into forward currency contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies.

In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company entered into an International Swaps and Derivatives Association, Inc. Master Agreement (the "ISDA Master Agreement") with its derivative counterparty, JPMorgan Chase Bank, N.A. The ISDA Master Agreement permits a single net payment in the event of a default or similar event. As of December 31, 2020, no cash collateral has been pledged to cover obligations and no cash collateral has been received from the counterparty with respect to the Company's forward currency contracts.

Net unrealized gains or losses on foreign currency contracts are included in “net unrealized appreciation (depreciation)” and net realized gains or losses on forward currency contracts are included in “net realized gains (losses)” in the accompanying Consolidated Statements of Operations. Forward currency contracts are considered undesignated derivative instruments.

Certain information related to the Company’s foreign currency forward contracts is presented below as of December 31, 2020.


Description	Notional Amount to be Purchased		Notional Amount to be Sold		Maturity Date	Gross Amount of Recognized Assets		Gross Amount of Recognized Liabilities		Balance Sheet Location of Net Amounts
Foreign currency forward contract	$	36,999	£	27,894	2/11/2021	$	—	$	(1,141)	Derivative liability
Foreign currency forward contract	$	30,308	€	25,614	2/11/2021	$	—	$	(1,062)	Derivative liability
						$	—	$	(2,203)

Certain information related to the Company’s foreign currency forward contracts is presented below as of September 30, 2020.


Description	Notional Amount to be Purchased		Notional Amount to be Sold		Maturity Date	Gross Amount of Recognized Assets		Gross Amount of Recognized Liabilities		Balance Sheet Location of Net Amounts
Foreign currency forward contract	$	35,577	£	27,494	11/12/2020	$	25	$	—	Derivative asset
Foreign currency forward contract	$	30,260	€	25,614	11/12/2020	$	198	$	—	Derivative asset
						$	223	$	—

Note 14. Commitments and Contingencies

Merger Litigation

On December 18, 2020, putative stockholder Oklahoma Firefighters Pension and Retirement System filed a complaint on behalf of itself and all other similarly situated holders of the Company’s common stock and derivatively on behalf of us as nominal defendant in the Delaware Court of Chancery, captioned Oklahoma Firefighters Pension and Retirement System v. Frank, et al., No. 2020-1075-VCM (Del. Ch.). This lawsuit is referred to herein as the “Merger Litigation”. The Merger Litigation alleges a direct breach of fiduciary duty claim against the Board of Directors in connection with the solicitation of the approval by the Company’s stockholders of the issuance of shares of the Company’s common stock to be issued pursuant to the Merger Agreement and a derivative breach of fiduciary duty claim against the Board of Directors in connection with its negotiation and approval of the Mergers. The Merger Litigation alleges, among other things, that the members of the Board of Directors had certain conflicts of interest in the negotiation and approval of the Mergers and that the initial filing of the joint proxy statement/prospectus relating to the Mergers omitted certain information that the plaintiff claims is material. The Merger Litigation, among other things, requests that the court enjoin the vote of the Company’s stockholders with respect to the approval of the issuance of shares of the Company’s common stock to be issued pursuant to the Merger Agreement and award attorneys’ fees and damages in an unspecified amount.

The defendants believe that the Company previously made complete disclosure of all information required to be disclosed to ensure that the Company’s stockholders can make an informed vote at the Company’s Annual Meeting of Stockholders and that the additional disclosures requested by the plaintiff are immaterial and/or were included in the preliminary joint proxy statement/prospectus filed as part of the Company’s Registration Statement on Form N-14 on November 23, 2020.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Accordingly, the defendants believe these claims are without merit and intend to vigorously defend against them. However, in an attempt to reduce the costs, risks and uncertainties inherent in litigation and to maximize the Company’s net asset value at the time of the Mergers, the Company determined to voluntarily include certain supplemental disclosures in the amendment to its Registration Statement on Form N-14 filed on January 19, 2021. The inclusion of such disclosures shall not be deemed an admission of the legal necessity or materiality of any of these disclosures under applicable law. Rather, the Company and its Board of Directors specifically deny all allegations in the Merger Litigation that any additional disclosure was or is required.

Neither the outcome of the lawsuit nor an estimate of any reasonably possible losses is determinable as of December 31, 2020. No provision for any losses related to the lawsuit has been recorded in the consolidated financial statements as of December 31, 2020. In connection with the lawsuit, the Company incurred professional fees of $0.2 million during the three months ended December 31, 2020.

Off-Balance Sheet Arrangements

The Company may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its portfolio companies. As of December 31, 2020, the Company's only off-balance sheet arrangements consisted of $197.6 million of unfunded commitments, which was comprised of $192.8 million to provide debt financing to certain of its portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests. As of September 30, 2020, the Company's only off-balance sheet arrangements consisted of $157.5 million of unfunded commitments, which was comprised of $152.7 million to provide debt financing to certain of its portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests. Such commitments are subject to the portfolio companies' satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company's Consolidated Statements of Assets and Liabilities.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

A list of unfunded commitments by investment (consisting of revolvers, term loans with delayed draw components, SLF JV I LLC subordinated notes and LLC equity interests and limited partnership interests) as of December 31, 2020 and September 30, 2020 is shown in the table below:


	December 31, 2020		September 30, 2020
Assembled Brands Capital LLC	$	33,326	$	36,079
WPEngine, Inc.	26,348		26,348
NuStar Logistics, L.P.	17,911		17,911
Athenex, Inc.	17,085		22,780
FFI Holdings I Corp	16,529		—
Thrasio, LLC	11,355		—
Jazz Acquisition, Inc.	10,147		—
Gulf Operating, LLC	10,064		—
Latam Airlines Group S.A.	8,177		—
MRI Software LLC	6,473		7,239
NeuAG, LLC	4,382		4,382
Corrona, LLC	3,968		5,189
Olaplex, Inc.	3,834		1,917
Pingora MSR Opportunity Fund I-A, LP	3,500		3,500
Dominion Diagnostics, LLC	3,449		5,887
Mindbody, Inc.	3,048		3,048
Ardonagh Midco 3 PLC	2,506		3,007
Accupac, Inc.	2,346		2,346
Acquia Inc.	2,240		2,240
New IPT, Inc.	2,229		2,229
ADB Companies, LLC	1,667		—
Apptio, Inc.	1,538		1,538
Telestream Holdings Corporation	1,417		—
Senior Loan Fund JV I, LLC	1,328		1,328
Ministry Brands, LLC	1,000		425
Coyote Buyer, LLC	942		942
Immucor, Inc.	541		541
GKD Index Partners, LLC	231		231
A.T. Holdings II SÀRL	—		7,541
iCIMs, Inc.	—		882
Total	$	197,581	$	157,530

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Note 15. Pending Merger with OCSI

On October 28, 2020, the Company entered into the Merger Agreement, which provides that, subject to the conditions set forth in the Merger Agreement, at the Effective Time Merger Sub will merge with and into OCSI, with OCSI continuing as the surviving company and as a wholly-owned subsidiary of the Company and, immediately thereafter, OCSI will merge with and into the Company, with the Company continuing as the surviving company.

At the Effective Time, each share of common stock, par value $0.01 per share, of OCSI (“OCSI Common Stock”) issued and outstanding immediately prior to the Effective Time (other than shares owned by the Company or any of its consolidated subsidiaries (the “Cancelled Shares”)) will be converted into the right to receive a number of shares of the Company’s common stock equal to the Exchange Ratio (as defined below), plus any cash (without interest) in lieu of fractional shares.

As of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the Effective Time (such date, the “Determination Date”), each of the Company and OCSI will deliver to the other a calculation of its net asset value as of such date (such calculation with respect to the Company, the “Closing OCSL Net Asset Value” and such calculation with respect to OCSI, the “Closing OCSI Net Asset Value”), in each case using a pre-agreed set of assumptions, methodologies and adjustments. Based on such calculations, the parties will calculate the “OCSI Per Share NAV”, which will be equal to (i) the Closing OCSI Net Asset Value divided by (ii) the number of shares of OCSI Common Stock issued and outstanding as of the Determination Date (excluding any Cancelled Shares), and the “OCSL Per Share NAV”, which will be equal to (A) the Closing OCSL Net Asset Value divided by (B) the number of shares of the Company’s common stock issued and outstanding as of the Determination Date. The “Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the OCSI Per Share NAV divided by (ii) the OCSL Per Share NAV.

The Company and OCSI will update and redeliver the Closing OCSL Net Asset Value or the Closing OCSI Net Asset Value, respectively, in the event of a material change to such calculation between the Determination Date and the closing of the Mergers and if needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the Effective Time.

The Merger Agreement contains customary representations and warranties by each of the Company, OCSI and Oaktree. The Merger Agreement also contains customary covenants, including, among others, covenants relating to the operation of each of the Company’s and OCSI’s businesses during the period prior to the closing of the Mergers.

Consummation of the Mergers, which is currently anticipated to occur during the first half of calendar year 2021, is subject to certain closing conditions, including requisite approvals of the Company’s and OCSI’s stockholders and certain other closing conditions.

The Merger Agreement also contains certain termination rights in favor of the Company and OCSI, including if the Mergers are not completed on or before July 28, 2021 or if the requisite approvals of the Company’s or OCSI’s stockholders are not obtained. The Merger Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring OCSI may be required to pay the Company a termination fee of approximately $5.7 million. The Merger Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring the Company may be required to pay OCSI a termination fee of approximately $20.0 million.

The Mergers are expected to be accounted for as an asset acquisition of OCSI by the Company in accordance with the asset acquisition method of accounting as detailed in ASC 805-50, Business Combinations—Related Issues, with the fair value of total consideration paid in conjunction with the Mergers allocated to the assets acquired and liabilities assumed based on their relative fair values as of the date of the Mergers. Under asset acquisition accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. The consideration paid by the Company will be allocated to the individual assets acquired or liabilities assumed based on their relative fair values of net identifiable assets acquired other than “non-qualifying” assets (for example, cash) and does not give rise to goodwill. The Company has determined the fair value of its shares of common stock to be issued pursuant to the Merger Agreement plus transaction costs (“purchase price”) to be most evident of fair value for measuring the consideration given in connection with the Mergers. To the extent that the purchase price does not closely approximate the net asset value of the Company’s common stock at such time, the difference between the purchase price and the fair value of OCSI’s net assets acquired would result in a purchase discount or premium (henceforth referred to as the (“purchase discount (or premium)”). The purchase discount (or premium) will be allocated to the acquired assets and assumed liabilities of OCSI based on their relative fair values as of the Effective Time. Immediately following the Mergers, the Company will record its investments, including the acquired OCSI investments, at their respective fair values and, as a result, the purchase discount (or premium) allocated to the cost basis of the investments acquired from OCSI will be recognized as unrealized appreciation (or depreciation). The purchase discount (or premium) allocated to the acquired OCSI investments in

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

loans would accrete (or amortize) over the life of the loans through interest income with a corresponding reversal of the initial unrealized appreciation (or depreciation) on the acquired OCSI loans through their ultimate disposition. The purchase discount (or premium) allocated to the acquired OCSI investments in equity securities would not accrete (or amortize) over the life of the equity securities through interest income and, assuming no subsequent change to the fair value of the acquired OCSI equity securities and disposition of such equity securities at fair value, would be recognized as realized gain (or loss) with a corresponding reversal of the unrealized appreciation (or depreciation) upon disposition of such equity securities. The final allocation of the purchase price will be determined after the Mergers are completed and after completion of a final analysis to determine the estimated relative fair values of OCSI’s assets and liabilities.

Note 16. Subsequent Events

The Company’s management evaluated subsequent events through the date of issuance of the Consolidated Financial Statements. There have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in the Consolidated Financial Statements as of and for the three months ended December 31, 2020, except as discussed below.

Distribution Declaration

On January 29, 2021, the Company’s Board of Directors declared a quarterly distribution of $0.12 per share, payable in cash on March 31, 2021 to stockholders of record on March 15, 2021.

Schedule 12-14

Oaktree Specialty Lending Corporation

Schedule of Investments in and Advances to Affiliates

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Three months ended December 31, 2020


Portfolio Company/Type of Investment (1)	Cash Interest Rate		Industry	Principal		Net Realized Gain (Loss)		Amount of Interest, Fees or Dividends Credited in Income (2)		Fair Value as of October 1, 2020		Gross Additions (3)		Gross Reductions (4)		Fair Value as of December 31, 2020		% of Total Net Assets
Control Investments
C5 Technology Holdings, LLC			Data Processing & Outsourced Services
829 Common Units						$	—	$	—	$	—	$	—	$	—	$	—	—	%
34,984,460.37 Preferred Units						—		—		27,638		—		—		27,638		2.9	%
Dominion Diagnostics, LLC			Health Care Services
First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024	6.00	%		$	27,590	—		437		27,660		—		(70)		27,590		2.9	%
First Lien Revolver, LIBOR+5.00% cash due 2/28/2024	6.00	%		7,699		—		111		5,260		2,439		—		7,699		0.8	%
30,030.8 Common Units in DD Healthcare Services Holdings, LLC						—		—		7,667		—		—		7,667		0.8	%

First Star Speir Aviation Limited (5)			Airlines
First Lien Term Loan, 9.00% cash due 12/15/2025				7,500		—		130		11,510		—		(4,010)		7,500		0.8	%
100% equity interest						—		—		1,622		2,204		(2,145)		1,681		0.2	%
New IPT, Inc.			Oil & Gas Equipment & Services
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.00	%		2,154		—		37		1,800		33		(150)		1,683		0.2	%
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021	6.00	%		1,009		—		17		788		—		—		788		0.1	%
50.087 Class A Common Units in New IPT Holdings, LLC						—		—		—		—		—		—		—	%
Senior Loan Fund JV I, LLC (6)			Multi-Sector Holdings
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028	7.14	%		96,250		—		1,756		96,250		—		—		96,250		10.0	%
87.5% LLC equity interest						—		—		21,190		8,074		—		29,264		3.0	%
Total Control Investments				$	142,202	$	—	$	2,488	$	201,385	$	12,750	$	(6,375)	$	207,760	21.5	%

Affiliate Investments
Assembled Brands Capital LLC			Specialized Finance
First Lien Revolver, LIBOR+6.00% cash due 10/17/2023	7.00	%		$	7,440	$	—	$	110	$	4,194	$	2,755	$	—	$	6,949	0.7	%
1,609,201 Class A Units						—		—		483		—		(65)		418		—	%
1,019,168.80 Preferred Units, 6%						—		—		1,091		10		—		1,101		0.1	%
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029						—		—		—		—		—		—		—	%
Caregiver Services, Inc.			Health Care Services
1,080,399 shares of Series A Preferred Stock, 10%				—		—		—		741		—		(238)		503		0.1	%
Total Affiliate Investments				$	7,440	$	—	$	110	$	6,509	$	2,765	$	(303)	$	8,971	0.9	%
Total Control & Affiliate Investments				$	149,642	$	—	$	2,598	$	207,894	$	15,515	$	(6,678)	$	216,731	22.5	%

This schedule should be read in connection with the Company's Consolidated Financial Statements, including the Consolidated Schedules of Investments and Notes to the Consolidated Financial Statements.

______________________

(1)The principal amount and ownership detail are shown in the Company's Consolidated Schedules of Investments.

(2)Represents the total amount of interest (net of non-accrual amounts), fees and dividends credited to income for the portion of the period an investment was included in the Control or Affiliate categories.

(3)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, accrued PIK interest (net of non-accrual amounts) and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category.

(4)Gross reductions include decreases in the cost basis of investments resulting from principal payments or sales and exchanges of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

(5)First Star Speir Aviation Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.

(6)Together with Kemper, the Company co-invests through SLF JV I. SLF JV I is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF JV I must be approved by the SLF JV I investment committee consisting of representatives of the Company and Kemper (with approval from a representative of each required).

Schedule 12-14

Oaktree Specialty Lending Corporation

Schedule of Investments in and Advances to Affiliates

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Three months ended December 31, 2019


Portfolio Company/Type of Investment (1)	Cash Interest Rate		Industry	Principal		Net Realized Gain (Loss)		Amount of Interest, Fees or Dividends Credited in Income (2)		Fair Value as of October 1, 2019		Gross Additions (3)		Gross Reductions (4)		Fair Value as of December 31, 2019		% of Total Net Assets
Control Investments
C5 Technology Holdings, LLC			Data Processing & Outsourced Services
829 Common Units						$	—	$	—	$	—	$	—	$	—	$	—	—	%
34,984,460.37 Preferred Units						—		—		34.984		—		—		34,984		3.8	%
First Star Speir Aviation Limited (5)			Airlines
First Lien Term Loan, 9.00% cash due 12/15/2020				$	11,510	—		323		11,510		—		—		11,510		1.2	%
100% equity interest				—		—		—		4,630		—		(174)		4,456		0.5	%
New IPT, Inc.			Oil & Gas Equipment & Services
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.94	%		2,755		—		61		3,256		—		(501)		2,755		0.3	%
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021	6.94	%		1,009		—		20		1,009		—		—		1,009		0.1	%
50.087 Class A Common Units in New IPT Holdings, LLC						—		—		2,903		—		—		2,903		0.3	%
Senior Loan Fund JV I, LLC (6)			Multi-Sector Holdings
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028	9.01	%		96,250		—		2,217		96,250		—		—		96,250		10.3	%
87.5% LLC equity interest						—		—		30,052		2,171		—		32,223		3.5	%
Thruline Marketing, Inc.			Advertising
First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022				—		—		257		18,146		—		(18,146)		—		—	%
First Lien Revolver, LIBOR+7.75% cash due 4/3/2022				—		—		2		—		—		—		—		—	%
9,073 Class A Units in FS AVI Holdco, LLC						—		—		6,438		—		—		6,438		0.7	%
Total Control Investments				$	111,524	$	—	$	2,880	$	209,178	$	2,171	$	(18,821)	$	192,528	20.7	%

Affiliate Investments
Assembled Brands Capital LLC			Specialized Finance
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 10/17/2023	7.94	%		$	5,585	$	—	$	119	$	5,585	$	—	$	—	$	5,585	0.6	%
1,609,201 Class A Units						—		—		782		135		—		917		0.1	%
1,019,168.80 Preferred Units, 6%						—		—		1,019		21		—		1,040		0.1	%
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029						—		—		—		—		—		—		—	%
Caregiver Services, Inc.			Health Care Services
1,080,399 shares of Series A Preferred Stock, 10%				—		—		—		1,784		—		(220)		1,564		0.2	%
Total Affiliate Investments				$	5,585	$	—	$	119	$	9,170	$	156	$	(220)	$	9,106	1.0	%
Total Control & Affiliate Investments				$	117,109	$	—	$	2,999	$	218,348	$	2,327	$	(19,041)	$	201,634	21.7	%

______________________

(1)The principal amount and ownership detail are shown in the Company's Consolidated Schedules of Investments as of December 31, 2019 included in the Company's quarterly report on Form 10-Q for the quarter ended December 31, 2019.

Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category.

(4)Gross reductions include decreases in the cost basis of investment resulting from principal payments or sales and exchanges of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

(5)First Star Speir Aviation Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the holding company is disregarded for accounting purposes since the economic substance of this instrument is an equity investment in the operating entity.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in connection with our Consolidated Financial Statements and the notes thereto included elsewhere in this quarterly report on Form 10-Q.

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:

•our future operating results and distribution projections;

•the ability of Oaktree Fund Advisors, LLC, or Oaktree, to reposition our portfolio and to implement Oaktree's future plans with respect to our business;

•the ability of Oaktree and its affiliates to attract and retain highly talented professionals;

•our business prospects and the prospects of our portfolio companies;

•the impact of the investments that we expect to make;

•the ability of our portfolio companies to achieve their objectives;

•our expected financings and investments and additional leverage we may seek to incur in the future;

•the adequacy of our cash resources and working capital;

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

•the cost or potential outcome of any litigation to which we may be a party.

In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Item 1A. Risk Factors” in our annual report on Form 10-K for the year ended September 30, 2020 and elsewhere in this quarterly report on Form 10-Q.

Other factors that could cause actual results to differ materially include:

•changes or potential disruptions in our operations, the economy, financial markets or political environment;

•risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic;

•future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to Business Development Companies or regulated investment companies, or RICs;

•general considerations associated with the COVID-19 pandemic;

•the ability of the parties to consummate the Mergers (as defined below) on the expected timeline, or at all;

•the ability to realize the anticipated benefits of the Mergers;

•the effects of disruption on our business from the proposed Mergers;

•the combined company’s plans, expectations, objectives and intentions, as a result of the Mergers;

•any potential termination of the Merger Agreement;

•the actions of our stockholders or the stockholders of Oaktree Strategic Income Corporation, or OCSI, with respect to the proposals submitted for their approval in connection with the Mergers; and

•other considerations that may be disclosed from time to time in our publicly disseminated documents and filings.

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the Securities and Exchange Commission, or the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

All dollar amounts in tables are in thousands, except share and per share amounts and as otherwise indicated.

Business Overview

We are a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. We are a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a Business Development Company under the Investment Company Act

of 1940, as amended, or the Investment Company Act. In addition, we have qualified and elected to be treated as a RIC under the Internal Revenue Code of 1986, as amended, or the Code for tax purposes.

We are externally managed by Oaktree pursuant to an investment advisory agreement, as amended from time to time, or the Investment Advisory Agreement. Oaktree Fund Administration, LLC, or the Oaktree Administrator, an affiliate of Oaktree, provides certain administrative and other services necessary for us to operate pursuant to an administration agreement, as amended from time to time, or the Administration Agreement.

Our investment objective is to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments. We may also seek to generate capital appreciation and income through secondary investments at discounts to par in either private or syndicated transactions. Our portfolio may also include certain structured finance and other non-traditional structures. We invest in companies that typically possess resilient business models with strong underlying fundamentals. We intend to deploy capital across credit and economic cycles with a focus on long-term results, which we believe will enable us to build lasting partnerships with financial sponsors and management teams, and we may seek to opportunistically take advantage of dislocations in the financial markets and other situations that may benefit from Oaktree’s credit and structuring expertise, including during the COVID-19 pandemic. Sponsors may include financial sponsors, such as an institutional investor or a private equity firm, or a strategic entity seeking to invest in a portfolio company. Oaktree is generally focused on middle-market companies, which we define as companies with enterprise values of between $100 million and $750 million. We generally invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “high yield” and “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.

Oaktree intends to continue to rotate our portfolio into investments that are better aligned with Oaktree's overall approach to credit investing and that it believes have the potential to generate attractive returns across market cycles (which we call "core investments"). Oaktree has performed a comprehensive review of our portfolio and categorized our portfolio into core investments, non-core performing investments and underperforming investments. Certain additional information on such categorization and our portfolio composition is included in investor presentations that we file with the SEC. Since an Oaktree affiliate became our investment adviser in October 2017, Oaktree and its affiliates have reduced the investments identified as non-core by over $700 million at fair value. Over time, Oaktree intends to rotate us out of the remaining non-core investments, which were approximately $125 million at fair value as of December 31, 2020. Oaktree periodically reviews designations of investments as core and non-core and may change such designations over time.

On October 28, 2020, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with OCSI, Lion Merger Sub, Inc., a Delaware corporation and our wholly-owned subsidiary, or the Merger Sub, and, solely for the limited purposes set forth therein, Oaktree. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into OCSI, with OCSI continuing as the surviving company and as our wholly-owned subsidiary, or the Merger, and, immediately thereafter, OCSI will merge with and into us, with us continuing as the surviving company, or together with the Merger, the Mergers. Consummation of the Mergers, which is currently anticipated to occur during the first half of calendar year 2021, is subject to certain closing conditions, including requisite approvals of our and OCSI’s stockholders and certain other closing conditions. For more information about the Mergers, see Note 15 to our consolidated financial statements included in this quarterly report on Form 10-Q and our final joint proxy statement/prospectus filed with the SEC on January 21, 2021.

Business Environment and Developments

We believe that the COVID-19 pandemic may have lasting effects on the U.S. and global financial markets and may cause further economic uncertainties or deterioration in the performance of the middle market in the United States and worldwide. While the initial market disruptions have somewhat eased, the global economy continues to experience economic uncertainty, particularly due to difficulties in the reopening of certain economies, or portions thereof, and delays in vaccine rollout. This uncertainty can impact the overall supply and demand of the market through changing spreads, deal terms and structures, and equity purchase price multiples.

Despite this economic uncertainty, we believe attractive risk-adjusted returns can be achieved by making loans to companies in the middle market. Given the breadth of the investment platform of Oaktree and its affiliates, we believe that we have the resources and experience to source, diligence and structure investments in these companies and are well placed to generate attractive returns for investors.

We have proactively taken a number of actions to evaluate and support our portfolio companies in light of the COVID-19 pandemic, including outreach to a variety of management teams and sponsors. We have been in close contact with many of our portfolio companies to understand their liquidity and solvency positions. We believe that these efforts to closely monitor and identify vulnerable investments will allow us to address potential problems early and provide constructive solutions to our portfolio companies.

As of December 31, 2020, 88.8% of our debt investment portfolio (at fair value) and 89.6% of our debt investment portfolio (at cost) bore interest at floating rates indexed to the LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly or monthly at the borrower’s option. As a result of the COVID-19 pandemic and the related decision of the U.S. Federal Reserve to reduce certain interest rates, LIBOR decreased beginning in March 2020. A prolonged reduction in interest rates will result in a decrease in our total investment income and could result in a decrease in our net investment income to the extent the decreases are not offset by an increase in the spread on our floating rate investments, a decrease in our interest expense or a reduction of our incentive fee on income. In July 2017, the head of the United Kingdom Financial Conduct Authority, or the FCA, announced the desire to phase out the use of LIBOR by the end of 2021. However, the FCA recently announced that most US Dollar LIBOR would continue to be published through June 30, 2023. In anticipation of the cessation of LIBOR, we may need to renegotiate any credit agreements extending beyond the applicable phase out date with our prospective portfolio companies that utilize LIBOR as a factor in determining the interest rate. Certain of the loan agreements with our portfolio companies have included fallback language in the event that LIBOR becomes unavailable. This language generally provides that the administrative agent may identify a replacement reference rate, typically with the consent of (or prior consultation with) the borrower. In certain cases, the administrative agent will be required to obtain the consent of either a majority of the lenders under the facility, or the consent of each lender, prior to identifying a replacement reference rate. Certain of the loan agreements with our portfolio companies do not include any fallback language providing a mechanism for the parties to negotiate a new reference interest rate and will instead revert to the base rate in the event LIBOR ceases to exist.

Critical Accounting Policies

Basis of Presentation

Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of the Consolidated Financial Statements have been made. All intercompany balances and transactions have been eliminated. We are an investment company following the accounting and reporting guidance in Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 946, Financial Services-Investment Companies, or ASC 946.

Investment Valuation

We value our investments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments’ complexity.

Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

•Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.

•Level 3 — Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

includes investment securities that are valued using "bid" and "ask" prices obtained from independent third party pricing services or directly from brokers. These investments may be classified as Level 3 because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustments for investment-specific factors or restrictions.

Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, Oaktree obtains and analyzes readily available market quotations provided by pricing vendors and brokers for all of our investments for which quotations are available. In determining the fair value of a particular investment, pricing vendors and brokers use observable market information, including both binding and non-binding indicative quotations.

We seek to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If we are unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within our set threshold, we seek to obtain a quote directly from a broker making a market for the asset. Oaktree evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Oaktree also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, Oaktree performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process. Generally, we do not adjust any of the prices received from these sources.

If the quotations obtained from pricing vendors or brokers are determined to not be reliable or are not readily available, we value such investments using any of three different valuation techniques. The first valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The second valuation technique is an analysis of the enterprise value, or EV, of the portfolio company. EV means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The EV analysis is typically performed to determine (i) the value of equity investments, (ii) whether there is credit impairment for debt investments and (iii) the value for debt investments that we are deemed to control under the Investment Company Act. To estimate the EV of a portfolio company, Oaktree analyzes various factors, including the portfolio company’s historical and projected financial results, macroeconomic impacts on the company and competitive dynamics in the company’s industry. Oaktree also utilizes some or all of the following information based on the individual circumstances of the portfolio company: (i) valuations of comparable public companies, (ii) recent sales of private and public comparable companies in similar industries or having similar business or earnings characteristics, (iii) purchase prices as a multiple of their earnings or cash flow, (iv) the portfolio company’s ability to meet its forecasts and its business prospects, (v) a discounted cash flow analysis, (vi) estimated liquidation or collateral value of the portfolio company’s assets and (vii) offers from third parties to buy the portfolio company. We may probability weight potential sale outcomes with respect to a portfolio company when uncertainty exists as of the valuation date. The third valuation technique is a market yield technique, which is typically performed for non-credit impaired debt investments. In the market yield technique, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk, and we consider the current contractual interest rate, the capital structure and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the EV of the portfolio company. As debt investments held by us are substantially illiquid with no active transaction market, we depend on primary market data, including newly funded transactions and industry-specific market movements, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.

We estimate the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an EV analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk-free rate. Changes in the subjective input assumptions can materially affect the fair value estimates.

Our Board of Directors undertakes a multi-step valuation process each quarter in connection with determining the fair value of our investments:

•The quarterly valuation process begins with each portfolio company or investment being initially valued by Oaktree’s valuation team in conjunction with Oaktree’s portfolio management team and investment professionals responsible for each portfolio investment;

•Preliminary valuations are then reviewed and discussed with management of Oaktree;

•Separately, independent valuation firms engaged by our Board of Directors prepare valuations of our investments, on a selected basis, for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment, and submit the reports to us and provide such reports to Oaktree and the Audit Committee of our Board of Directors;

•Oaktree compares and contrasts its preliminary valuations to the valuations of the independent valuation firms and prepares a valuation report for the Audit Committee;

•The Audit Committee makes a recommendation to our full Board of Directors regarding the fair value of the investments in our portfolio; and

•Our Board of Directors discusses valuations and determines the fair value of each investment in our portfolio.

The fair value of our investments as of December 31, 2020 and September 30, 2020 was determined in good faith by our Board of Directors. Our Board of Directors has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of a portion of our portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board of Directors may reasonably rely on that assistance. As of December 31, 2020, 94.3% of our portfolio at fair value was valued either based on market quotations, the transactions precedent approach or corroborated by independent valuation firms. However, our Board of Directors is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to our valuation policy and a consistently applied valuation process.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.

As of December 31, 2020 and September 30, 2020, approximately 95.5% and 95.9%, respectively, of our total assets represented investments at fair value.

Revenue Recognition

Interest Income

Interest income, adjusted for accretion of original issue discount, or OID, is recorded on an accrual basis to the extent that such amounts are expected to be collected. We stop accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment. A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash, and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations. As of December 31, 2020, there was one investment on which we had stopped accruing cash and/or payment in kind, or PIK, interest or OID income.

In connection with our investment in a portfolio company, we sometimes receive nominal cost equity that is valued as part of the negotiation process with the portfolio company. When we receive nominal cost equity, we allocate our cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan.

PIK Interest Income

Our investments in debt securities may contain PIK interest provisions. PIK interest, which typically represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We generally cease accruing PIK interest if there is insufficient value to support the accrual or if we do not expect the portfolio company to be able to pay all principal and interest due. Our decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; our assessment of the portfolio company's business development success; information obtained by us in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. Our determination to cease accruing PIK interest is generally made well before our full write-down of a loan or debt security. In

addition, if it is subsequently determined that we will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on our debt investments increases the recorded cost bases of these investments in our Consolidated Financial Statements including for purposes of computing the capital gains incentive fee payable by us to Oaktree. To maintain our status as a RIC, certain income from PIK interest may be required to be distributed to our stockholders, even though we have not yet collected the cash and may never do so.

Fee Income

Oaktree or its affiliates may provide financial advisory services to portfolio companies and, in return, we may receive fees for capital structuring services. These fees are generally nonrecurring and are recognized by us upon the investment closing date. We may also receive additional fees in the ordinary course of business, including servicing, amendment and prepayment fees, which are classified as fee income and recognized as they are earned or the services are rendered.

We have also structured exit fees across certain of our portfolio investments to be received upon the future exit of those investments. These fees are typically paid to us upon the earliest to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. These fees are included in net investment income over the life of the loan.

Dividend Income

We generally recognize dividend income on the ex-dividend date for public securities and the record date for private equity investments. Distributions received from private equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from private equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

Portfolio Composition

Our investments principally consist of loans, common and preferred equity and warrants in privately-held companies and Senior Loan Fund JV I, LLC, or SLF JV I, a joint venture through which we and Trinity Universal Insurance Company, a subsidiary of Kemper Corporation, or Kemper, co-invest in senior secured loans of middle-market companies and other corporate debt securities. Our loans are typically secured by a first, second or subordinated lien on the assets of the portfolio company and generally have terms of up to ten years (but an expected average life of between three and four years).

During the three months ended December 31, 2020, we originated $286.3 million of investment commitments in 14 new and seven existing portfolio companies and funded $241.5 million of investments.

During the three months ended December 31, 2020, we received $160.7 million of proceeds from prepayments, exits, other paydowns and sales and exited 12 portfolio companies.

A summary of the composition of our investment portfolio at cost and fair value as a percentage of total investments is shown in the following tables:


	December 31, 2020		September 30, 2020
Cost:
Senior secured debt	83.31	%	80.58	%
Debt investment in SLF JV I	5.48		5.77
Common equity and warrants	3.32		3.69
Subordinated debt	2.83		4.64
LLC equity interests of SLF JV I	2.81		2.95
Preferred equity	2.25		2.37
Total	100.00	%	100.00	%


	December 31, 2020		September 30, 2020
Fair value:
Senior secured debt	85.70	%	84.06	%
Debt investment in SLF JV I	5.62		6.12
Subordinated debt	3.08		4.17
Common equity and warrants	2.15		2.40
Preferred equity	1.74		1.90
LLC equity interests of SLF JV I	1.71		1.35
Total	100.00	%	100.00	%

The industry composition of our portfolio at cost and fair value as a percentage of total investments was as follows:


	December 31, 2020		September 30, 2020
Cost:
Application Software	12.51	%	9.71	%
Multi-Sector Holdings (1)	8.38		8.87
Data Processing & Outsourced Services	7.50		6.57
Pharmaceuticals	6.35		5.96
Biotechnology	6.17		5.36
Health Care Services	4.20		4.26
Specialized Finance	3.98		3.11
Personal Products	3.13		3.00
Movies & Entertainment	2.86		2.68
Property & Casualty Insurance	2.73		2.88
Integrated Telecommunication Services	2.53		2.67
Real Estate Services	2.22		2.34
Specialty Chemicals	2.20		2.68
Fertilizers & Agricultural Chemicals	1.96		2.02
Aerospace & Defense	1.94		1.68
Auto Parts & Equipment	1.91		2.02
Internet Services & Infrastructure	1.91		1.72
Oil & Gas Refining & Marketing	1.77		1.87
Managed Health Care	1.56		1.65
Electronic Components	1.52		1.53
Oil & Gas Storage & Transportation	1.48		1.59
Research & Consulting Services	1.41		1.49
Airport Services	1.27		1.34
Health Care Supplies	1.24		1.30
Health Care Technology	1.22		1.29
Construction & Engineering	1.22		0.80
Independent Power Producers & Energy Traders	1.21		1.29
Diversified Support Services	1.07		1.13
Industrial Machinery	1.06		0.90
Insurance Brokers	0.96		1.05
Systems Software	0.96		1.24
Electrical Components & Equipment	0.91		1.25
Hotels, Resorts & Cruise Lines	0.87		0.92
IT Consulting & Other Services	0.85		0.89
Internet & Direct Marketing Retail	0.84		0.89
Airlines	0.81		0.63
Advertising	0.77		0.82
Health Care Distributors	0.73		0.77
Apparel, Accessories & Luxury Goods	0.72		0.82
Restaurants	0.59		0.61
Commercial Printing	0.45		0.47
Education Services	0.42		1.37
Food Retail	0.39		0.41
Diversified Real Estate Activities	0.36		0.92
Trading Companies & Distributors	0.33		0.61
Oil & Gas Equipment & Services	0.18		0.20
Construction Materials	0.12		0.13
Leisure Facilities	0.11		0.11
Specialty Stores	0.07		0.08
Thrifts & Mortgage Finance	0.04		0.06
Other Diversified Financial Services	0.01		0.01
General Merchandise Stores	—		1.15
Metal & Glass Containers	—		0.68
Health Care Facilities	—		0.19
Specialized REITs	—		0.01
Total	100.00	%	100.00	%


	December 31, 2020		September 30, 2020
Fair value:
Application Software	12.88	%	10.21	%
Multi-Sector Holdings (1)	7.54		7.74
Data Processing & Outsourced Services	7.14		6.33
Pharmaceuticals	6.91		6.55
Biotechnology	6.54		6.14
Specialized Finance	4.04		3.08
Health Care Services	3.64		3.81
Personal Products	3.27		3.24
Movies & Entertainment	3.00		2.77
Property & Casualty Insurance	2.81		2.97
Integrated Telecommunication Services	2.48		2.61
Real Estate Services	2.23		2.40
Specialty Chemicals	2.16		2.48
Fertilizers & Agricultural Chemicals	2.02		2.14
Auto Parts & Equipment	1.90		1.99
Aerospace & Defense	1.85		1.56
Internet Services & Infrastructure	1.83		1.69
Oil & Gas Refining & Marketing	1.73		1.90
Electronic Components	1.71		1.69
Managed Health Care	1.59		1.70
Research & Consulting Services	1.46		1.54
Oil & Gas Storage & Transportation	1.36		1.64
Health Care Technology	1.29		1.40
Construction & Engineering	1.28		0.86
Health Care Supplies	1.27		1.37
Airport Services	1.24		1.35
Independent Power Producers & Energy Traders	1.20		1.32
Insurance Brokers	1.10		1.15
Diversified Support Services	1.07		1.12
Airlines	1.03		0.83
Hotels, Resorts & Cruise Lines	1.00		1.09
Systems Software	0.99		1.30
Electrical Components & Equipment	0.95		1.30
Internet & Direct Marketing Retail	0.94		0.97
Industrial Machinery	0.91		0.74
IT Consulting & Other Services	0.83		0.88
Advertising	0.81		0.85
Health Care Distributors	0.73		0.78
Restaurants	0.60		0.50
Diversified Real Estate Activities	0.44		1.07
Commercial Printing	0.43		0.47
Food Retail	0.41		0.44
Apparel, Accessories & Luxury Goods	0.39		0.50
Education Services	0.39		0.45
Trading Companies & Distributors	0.33		0.64
Oil & Gas Equipment & Services	0.14		0.16
Construction Materials	0.13		0.13
Thrifts & Mortgage Finance	0.01		0.02
Leisure Facilities	—		—
General Merchandise Stores	—		1.14
Metal & Glass Containers	—		0.75
Health Care Facilities	—		0.23
Specialized REITs	—		0.01
Total	100.00	%	100.00	%

___________________

(1)This industry includes our investments in SLF JV I and certain limited partnership interests.

Loans and Debt Securities on Non-Accrual Status

As of December 31, 2020 and September 30, 2020, there were one and two investments, respectively, on which we had stopped accruing cash and/or PIK interest or OID income.

The percentages of our debt investments at cost and fair value by accrual status as of December 31, 2020 and September 30, 2020 were as follows:


	December 31, 2020								September 30, 2020
	Cost		% of Debt Portfolio		Fair Value		% of Debt Portfolio		Cost		% of Debt Portfolio		Fair Value		% of Debt Portfolio
Accrual	$	1,609,920	99.96	%	$	1,616,023	99.97	%	$	1,500,364	98.79	%	$	1,483,284	99.89	%
PIK non-accrual (1)	—		—		—		—		12,661		0.83		—		—
Cash non-accrual (2)	588		0.04		470		0.03		5,712		0.38		1,571		0.11
Total	$	1,610,508	100.00	%	$	1,616,493	100.00	%	$	1,518,737	100.00	%	$	1,484,855	100.00	%

___________________

(1)PIK non-accrual status is inclusive of other non-cash income, where applicable.

(2)Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

Senior Loan Fund JV I, LLC

In May 2014, we entered into a limited liability company, or LLC, agreement with Kemper to form SLF JV I. We co-invest in senior secured loans of middle-market companies and other corporate debt securities with Kemper through our investment in SLF JV I. SLF JV I is managed by a four person Board of Directors, two of whom are selected by us and two of whom are selected by Kemper. All portfolio decisions and investment decisions in respect of SLF JV I must be approved by the SLF JV I investment committee, which consists of one representative selected by us and one representative selected by Kemper (with approval from a representative of each required). Since we do not have a controlling financial interest in SLF JV I, we do not consolidate SLF JV I.

SLF JV I is capitalized pro rata with LLC equity interests as transactions are completed and may be capitalized with additional subordinated notes issued to us and Kemper by SLF JV I. The subordinated notes issued by SLF JV I are referred to as the SLF JV I Notes. The SLF JV I Notes are senior in right of payment to SLF JV I LLC equity interests and subordinated in right of payment to SLF JV I’s secured debt. As of December 31, 2020 and September 30, 2020, we and Kemper owned, in the aggregate, 87.5% and 12.5%, respectively, of the LLC equity interests of SLF JV I and the outstanding SLF JV I Notes.

SLF JV I has a senior revolving credit facility with Deutsche Bank AG, New York Branch, or, as amended, the Deutsche Bank I Facility, which permitted up to $225.0 million and $250.0 million of borrowings (subject to borrowing base and other limitations) as of December 31, 2020 and September 30, 2020, respectively. Borrowings under the Deutsche Bank I Facility are secured by all of the assets of SLF JV I Funding LLC, a special purpose financing subsidiary of SLF JV I. As of December 31, 2020, the reinvestment period of the Deutsche Bank I Facility was scheduled to expire June 28, 2021 and the maturity date for the Deutsche Bank I Facility was June 29, 2026. As of December 31, 2020, borrowings under the Deutsche Bank I Facility accrued interest at a rate equal to the 3-month LIBOR plus 1.85% per annum during the reinvestment period and 3-month LIBOR plus 2.00% per annum during the amortization period. Under the Deutsche Bank I Facility, $175.4 million and $167.9 million of borrowings were outstanding as of December 31, 2020 and September 30, 2020, respectively.

As of December 31, 2020 and September 30, 2020, SLF JV I had total assets of $341.2 million and $313.5 million, respectively. SLF JV I's portfolio primarily consisted of senior secured loans to 56 portfolio companies as of each of December 31, 2020 and September 30, 2020. The portfolio companies in SLF JV I are in industries similar to those in which we may invest directly. As of December 31, 2020, our investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of $125.5 million in aggregate at fair value. As of September 30, 2020, our investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of $117.4 million in aggregate at fair value.

As of each of December 31, 2020 and September 30, 2020, we and Kemper had funded approximately $165.5 million to SLF JV I, of which $144.8 million was from us. As of December 31, 2020 and September 30, 2020, we and Kemper had the option to fund additional SLF JV I Notes, subject to additional equity funding to SLF JV I. As of each of December 31, 2020 and September 30, 2020, we had commitments to fund LLC equity interests in SLF JV I of $17.5 million, of which $1.3 million was unfunded.

Below is a summary of SLF JV I's portfolio, followed by a listing of the individual loans in SLF JV I's portfolio as of December 31, 2020 and September 30, 2020:


	December 31, 2020	September 30, 2020
Senior secured loans (1)	$313,978	$307,579
Weighted average interest rate on senior secured loans (2)	5.65%	5.44%
Number of borrowers in SLF JV I	56	56
Largest exposure to a single borrower (1)	$9,879	$10,487
Total of five largest loan exposures to borrowers (1)	$46,981	$49,097

__________________

(1) At principal amount.

(2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value.

SLF JV I Portfolio as of December 31, 2020


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Access CIG, LLC	First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025	3.98	%	Diversified Support Services	$	9,182	$	9,149	$	9,107
ADB Companies, LLC	First Lien Term Loan, LIBOR+6.25% cash due 12/18/2025	7.25	%	Construction & Engineering	6667		6,500		6,533		(4)
	First Lien Delayed Draw Term Loan, LIBOR+6.25% cash due 12/18/2025			Construction & Engineering	—		(33)		(27)		(4)(5)
Total ADB Companies, LLC							6,467		6,506
AdVenture Interactive, Corp.	927 shares of common stock			Advertising			1,390		1,416		(4)
AI Ladder (Luxembourg) Subco S.a.r.l.	First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025	4.65	%	Electrical Components & Equipment	6,011		5,894		5,974		(4)
Airbnb, Inc.	First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025	8.50	%	Hotels, Resorts & Cruise Lines	3,044		2,977		3,306		(4)
Altice France S.A.	First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026	4.24	%	Integrated Telecommunication Services	4,631		4,447		4,623
Alvogen Pharma US, Inc.	First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023	6.25	%	Pharmaceuticals	9,879		9,643		9,500
Amplify Finco Pty Ltd.	First Lien Term Loan, LIBOR+4.25% cash due 11/26/2026	5.00	%	Movies & Entertainment	7,940		7,861		7,384		(4)
Anastasia Parent, LLC	First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025			Personal Products	2,821		2,247		1,890		(6)
Apptio, Inc.	First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025	8.25	%	Application Software	4,615		4,554		4,529		(4)
	First Lien Revolver, LIBOR+7.25% cash due 1/10/2025			Application Software	—		(5)		(7)		(4)(5)
Total Apptio, Inc.							4,549		4,522
Aurora Lux Finco S.À.R.L.	First Lien Term Loan, LIBOR+5.75% cash due 12/24/2026	6.75	%	Airport Services	6,451		6,314		6,013		(4)
Blackhawk Network Holdings, Inc.	First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025	3.15	%	Data Processing & Outsourced Services	9,750		9,734		9,517
Boxer Parent Company Inc.	First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025	4.40	%	Systems Software	7,513		7,430		7,497		(4)
Brazos Delaware II, LLC	First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025	4.15	%	Oil & Gas Equipment & Services	7,311		7,288		6,405
C5 Technology Holdings, LLC	171 Common Units			Data Processing & Outsourced Services			—		—		(4)
	7,193,539.63 Preferred Units			Data Processing & Outsourced Services			7,194		5,683		(4)
Total C5 Technology Holdings, LLC							7,194		5,683
Carrols Restaurant Group, Inc.	First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026	7.25	%	Restaurants	3,980		3,792		3,965
CITGO Petroleum Corp.	First Lien Term Loan, LIBOR+6.25% cash due 3/28/2024	7.25	%	Oil & Gas Refining & Marketing	7,165		7,094		7,140		(4)
Clear Channel Outdoor Holdings, Inc.	First Lien Term Loan, LIBOR+3.50% cash due 8/21/2026	3.71	%	Advertising	330		291		318
Connect U.S. Finco LLC	First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026	5.50	%	Alternative Carriers	7,418		7,252		7,462
Curium Bidco S.à.r.l.	First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026	4.00	%	Biotechnology	5,925		5,881		5,890
Dcert Buyer, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026	4.15	%	Internet Services & Infrastructure	7,940		7,920		7,945
Dealer Tire, LLC	First Lien Term Loan, LIBOR+4.25% cash due 12/12/2025	4.40	%	Distributors	940		902		937


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
eResearch Technology, Inc.	First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027	5.50	%	Application Software	$	7,463	$	7,388	$	7,411
Gigamon, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024	5.25	%	Systems Software	7,762		7,717		7,708
Global Medical Response, Inc.	First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025	5.75	%	Health Care Services	2,231		2,188		2,221
Guidehouse LLP	Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026	8.15	%	Research & Consulting Services	6,000		5,980		6,000		(4)
Helios Software Holdings, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025	4.52	%	Systems Software	3,960		3,920		3,946
Intelsat Jackson Holdings S.A.	First Lien Term Loan, PRIME+4.75% cash due 11/27/2023	8.00	%	Alternative Carriers	3,568		3,543		3,628
	First Lien Term Loan, LIBOR+5.50% cash due 7/13/2022	6.50	%	Alternative Carriers	1,943		1,762		1,988
Total Intelsat Jackson Holdings S.A.							5,305		5,616
LogMeIn, Inc.	First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027	4.90	%	Application Software	5,000		4,880		4,994
Maravai Intermediate Holdings, LLC	First Lien Term Loan, LIBOR+4.25% cash due 10/19/2027	5.25	%	Biotechnology	6,875		6,806		6,952
Mindbody, Inc.	First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025	8.00	%	Internet Services & Infrastructure	4,564		4,502		4,181		(4)
	First Lien Revolver, LIBOR+8.00% cash due 2/14/2025			Internet Services & Infrastructure	—		(7)		(40)		(4)(5)
Total Mindbody, Inc.							4,495		4,141
MRI Software LLC	First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026	6.50	%	Application Software	3,863		3,829		3,854		(4)
	First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026			Application Software	—		(1)		—		(4)(5)
	First Lien Revolver, LIBOR+5.50% cash due 2/10/2026			Application Software	—		(3)		(1)		(4)(5)
Total MRI Software LLC							3,825		3,853
Navicure, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026	4.15	%	Health Care Technology	5,955		5,925		5,955
New IPT, Inc.	First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.00	%	Oil & Gas Equipment & Services	941		941		735		(4)
	21.876 Class A Common Units in New IPT Holdings, LLC			Oil & Gas Equipment & Services			—		—		(4)
Total New IPT, Inc.							941		735
Northern Star Industries Inc.	First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025	5.75	%	Electrical Components & Equipment	6,807		6,787		6,671
Northwest Fiber, LLC	First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027	5.65	%	Integrated Telecommunication Services	2,394		2,311		2,406
Novetta Solutions, LLC	First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022	6.00	%	Application Software	5,915		5,897		5,903
OEConnection LLC	First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026	4.15	%	Application Software	7,879		7,843		7,820
	First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026			Application Software	—		—		—		(5)
Total OEConnection LLC							7,843		7,820
Olaplex, Inc.	First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026	7.50	%	Personal Products	6,395		6,298		6,395		(4)
	First Lien Revolver, LIBOR+6.50% cash due 1/8/2025			Personal Products	—		(9)		—		(4)(5)
Total Olaplex, Inc.							6,289		6,395
Park Place Technologies, LLC	First Lien Term Loan, LIBOR+5.00% cash due 11/10/2027	6.00	%	Internet Services & Infrastructure	5,000		4,804		4,817		(4)
PetVet Care Centers, LLC	First Lien Term Loan, LIBOR+4.25% cash due 2/14/2025	5.25	%	Specialized Consumer Services	2,736		2,729		2,753


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
PG&E Corporation	First Lien Term Loan, LIBOR+4.50% cash due 6/23/2025	5.50	%	Electric Utilities	$	5,970	$	5,889	$	6,051
Planview Parent, Inc.	Second Lien Term Loan, LIBOR+7.25% cash due 12/18/2028	8.00	%	Application Software	4,503		4,435		4,503		(4)
Recorded Books Inc.	First Lien Term Loan, LIBOR+4.25% cash due 8/29/2025	4.75	%	Publishing	6,000		5,940		6,025
RS Ivy Holdco, Inc.	First Lien Term Loan, LIBOR+5.50% cash due 12/23/2027	6.50	%	Oil & Gas Exploration & Production	7,000		6,895		6,965
Sabert Corporation	First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026	5.50	%	Metal & Glass Containers	2,742		2,714		2,743
Salient CRGT, Inc.	First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022	7.50	%	Aerospace & Defense	2,080		2,070		2,002		(4)
SHO Holding I Corporation	First Lien Term Loan, LIBOR+5.25% cash due 4/27/2024	6.25	%	Footwear	8,445		8,430		7,347
Signify Health, LLC	First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024	5.50	%	Health Care Services	9,725		9,669		9,433
Sirva Worldwide, Inc.	First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025	5.65	%	Diversified Support Services	4,750		4,679		4,352
Star US Bidco LLC	First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027	5.25	%	Industrial Machinery	3,709		3,529		3,649
Sunshine Luxembourg VII SARL	First Lien Term Loan, LIBOR+4.00% cash due 10/1/2026	5.00	%	Personal Products	7,920		7,880		7,969
Supermoose Borrower, LLC	First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025	4.00	%	Application Software	4,876		4,580		4,574		(4)
Surgery Center Holdings, Inc.	First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024	4.25	%	Health Care Facilities	4,949		4,931		4,876
Veritas US Inc.	First Lien Term Loan, LIBOR+5.50% cash due 9/1/2025	6.50	%	Application Software	6,484		6,362		6,475
Verscend Holding Corp.	First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025	4.65	%	Health Care Technology	4,101		4,070		4,107		(4)
Windstream Services II, LLC	First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027	7.25	%	Integrated Telecommunication Services	7,960		7,654		7,808		(4)
WP CPP Holdings, LLC	Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026	8.75	%	Aerospace & Defense	6,000		5,959		5,085		(4)
					$	313,978	$	317,432	$	313,261

__________________

(1) Represents the interest rate as of December 31, 2020. All interest rates are payable in cash, unless otherwise noted.

(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of December 31, 2020, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.25%, the 180-day LIBOR at 0.26% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.

(3) Represents the current determination of fair value as of December 31, 2020 utilizing a similar technique as us in accordance with ASC 820. However, the determination of such fair value is not included in our Board of Directors' valuation process described elsewhere herein.

(4) This investment is held by both us and SLF JV I as of December 31, 2020.

(5) Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.

(6) This investment was on cash non-accrual status as of December 31, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

SLF JV I Portfolio as of September 30, 2020


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Access CIG, LLC	First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025	3.91	%	Diversified Support Services	$	9,206	$	9,170	$	9,029
AdVenture Interactive, Corp.	927 shares of common stock			Advertising			1,390		1,373		(4)
AI Ladder (Luxembourg) Subco S.a.r.l.	First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025	4.65	%	Electrical Components & Equipment	6,038		5,914		5,781		(4)
Airbnb, Inc.	First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025	8.50	%	Hotels, Resorts & Cruise Lines	3,051		2,981		3,311		(4)
Altice France S.A.	First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026	4.15	%	Integrated Telecommunication Services	4,643		4,450		4,527
Alvogen Pharma US, Inc.	First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023	6.25	%	Pharmaceuticals	9,879		9,623		9,566
Amplify Finco Pty Ltd.	First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026	4.75	%	Movies & Entertainment	7,960		7,880		6,846		(4)
Anastasia Parent, LLC	First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025			Personal Products	2,828		2,282		1,248		(6)
Apptio, Inc.	First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025	8.25	%	Application Software	4,615		4,550		4,526		(4)
	First Lien Revolver, LIBOR+7.25% cash due 1/10/2025			Application Software	—		(5)		(8)		(4)(5)
Total Apptio, Inc.							4,545		4,518
Aurora Lux Finco S.À.R.L.	First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026	7.00	%	Airport Services	6,468		6,324		6,015		(4)
Blackhawk Network Holdings, Inc.	First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025	3.15	%	Data Processing & Outsourced Services	9,775		9,758		9,251
Boxer Parent Company Inc.	First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025	4.40	%	Systems Software	7,532		7,448		7,331		(4)
Brazos Delaware II, LLC	First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025	4.16	%	Oil & Gas Equipment & Services	7,331		7,306		5,600
C5 Technology Holdings, LLC	171 Common Units			Data Processing & Outsourced Services			—		—		(4)
	7,193,539.63 Preferred Units			Data Processing & Outsourced Services			7,194		5,683		(4)
Total C5 Technology Holdings, LLC							7,194		5,683
Carrols Restaurant Group, Inc.	First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026	7.25	%	Restaurants	3,990		3,792		3,960
CITGO Petroleum Corp.	First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024	6.00	%	Oil & Gas Refining & Marketing	7,184		7,112		6,842		(4)
Clear Channel Outdoor Holdings, Inc.	First Lien Term Loan, LIBOR+3.50% cash due 8/21/2026	3.76	%	Advertising	331		290		302
Connect U.S. Finco LLC	First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026	5.50	%	Alternative Carriers	7,437		7,262		7,228
Curium Bidco S.à.r.l.	First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026	3.97	%	Biotechnology	5,940		5,895		5,895
Dcert Buyer, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026	4.15	%	Internet Services & Infrastructure	7,960		7,940		7,879
Dealer Tire, LLC	First Lien Term Loan, LIBOR+4.25% cash due 12/12/2025	4.40	%	Distributors	943		902		924
eResearch Technology, Inc.	First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027	5.50	%	Application Software	7,481		7,406		7,461
Frontier Communications Corporation	First Lien Term Loan, PRIME+2.75% cash due 6/15/2024	6.00	%	Integrated Telecommunication Services	3,939		3,901		3,887
Gigamon, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024	5.25	%	Systems Software	7,781		7,734		7,684


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Global Medical Response, Inc.	First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025	5.75	%	Health Care Services	$	2,231	$	2,187	$	2,185
Guidehouse LLP	Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026	8.15	%	Research & Consulting Services	6,000		5,979		5,790		(4)
Helios Software Holdings, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025	4.52	%	Systems Software	3,970		3,930		3,923
Intelsat Jackson Holdings S.A.	First Lien Term Loan, PRIME+4.75% cash due 11/27/2023	8.00	%	Alternative Carriers	3,568		3,541		3,598
	First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 7/13/2022	6.50	%	Alternative Carriers	971		801		1,011		(5)
Total Intelsat Jackson Holdings S.A.							4,342		4,609
KIK Custom Products Inc.	First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023	5.00	%	Household Products	5,322		5,308		5,302
LogMeIn, Inc.	First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027	4.91	%	Application Software	5,000		4,876		4,842
Mindbody, Inc.	First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025	8.00	%	Internet Services & Infrastructure	4,546		4,481		4,192		(4)
	First Lien Revolver, LIBOR+8.00% cash due 2/14/2025			Internet Services & Infrastructure	—		(7)		(38)		(4)(5)
Total Mindbody, Inc.							4,474		4,154
MRI Software LLC	First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026	6.50	%	Application Software	3,830		3,795		3,737		(4)
	First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026			Application Software	—		(1)		(4)		(4)(5)
	First Lien Revolver, LIBOR+5.50% cash due 2/10/2026			Application Software	—		(3)		(8)		(4)(5)
Total MRI Software LLC							3,791		3,725
Navicure, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026	4.15	%	Health Care Technology	5,970		5,940		5,849
New IPT, Inc.	First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.00	%	Oil & Gas Equipment & Services	1,006		1,006		786		(4)
	21.876 Class A Common Units in New IPT Holdings, LLC			Oil & Gas Equipment & Services			—		—		(4)
Total New IPT, Inc.							1,006		786
Northern Star Industries Inc.	First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025	5.75	%	Electrical Components & Equipment	6,825		6,803		6,518
Northwest Fiber, LLC	First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027	5.66	%	Integrated Telecommunication Services	2,400		2,314		2,403
Novetta Solutions, LLC	First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022	6.00	%	Application Software	5,931		5,909		5,827
OEConnection LLC	First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026	4.15	%	Application Software	7,455		7,418		7,371
	First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026			Application Software	—		(2)		(5)		(5)
Total OEConnection LLC							7,416		7,366
Olaplex, Inc.	First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026	7.50	%	Personal Products	4,938		4,851		4,938		(4)
	First Lien Revolver, LIBOR+6.50% cash due 1/8/2025	7.50	%	Personal Products	270		261		270		(4)(5)
Total Olaplex, Inc.							5,112		5,208
PetVet Care Centers, LLC	First Lien Term Loan, LIBOR+4.25% cash due 2/14/2025	5.25	%	Specialized Consumer Services	2,743		2,736		2,747
PG&E Corporation	First Lien Term Loan, LIBOR+4.50% cash due 6/23/2025	5.50	%	Electric Utilities	5,985		5,899		5,875
Recorded Books, Inc.	First Lien Term Loan, LIBOR+4.25% cash due 8/31/2025	4.75	%	Publishing	6,000		5,940		5,940
Sabert Corporation	First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026	5.50	%	Metal & Glass Containers	2,828		2,800		2,791


Portfolio Company	Investment Type	Cash Interest Rate (1)(2)		Industry	Principal		Cost		Fair Value (3)		Notes
Salient CRGT, Inc.	First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022	7.50	%	Aerospace & Defense	$	2,111	$	2,099	$	1,963	(4)
SHO Holding I Corporation	First Lien Term Loan, LIBOR+3.00% cash PIK 2.25% due 4/27/2024	4.00	%	Footwear	8,396		8,380		5,898
Signify Health, LLC	First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024	5.50	%	Health Care Services	9,750		9,690		9,409
Sirva Worldwide, Inc.	First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025	5.65	%	Diversified Support Services	4,781		4,709		3,992
Star US Bidco LLC	First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027	5.25	%	Industrial Machinery	3,718		3,532		3,551
Sunshine Luxembourg VII SARL	First Lien Term Loan, LIBOR+4.25% cash due 10/1/2026	5.25	%	Personal Products	7,940		7,900		7,911
Supermoose Borrower, LLC	First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025	3.90	%	Application Software	4,888		4,575		4,407		(4)
Surgery Center Holdings, Inc.	First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024	4.25	%	Health Care Facilities	4,962		4,943		4,691		(4)
Uber Technologies, Inc.	First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025	5.00	%	Application Software	2,997		2,959		2,980
UFC Holdings, LLC	First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026	4.25	%	Movies & Entertainment	2,856		2,816		2,814
Veritas US Inc.	First Lien Term Loan, LIBOR+5.50% cash due 9/1/2025	6.50	%	Application Software	6,500		6,371		6,375
Verscend Holding Corp.	First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025	4.65	%	Health Care Technology	4,112		4,080		4,084		(4)
VM Consolidated, Inc.	First Lien Term Loan, LIBOR+3.25% cash due 2/28/2025	3.40	%	Data Processing & Outsourced Services	10,487		10,495		10,291
Windstream Services II, LLC	First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027	7.25	%	Integrated Telecommunication Services	7,980		7,662		7,744		(4)
WP CPP Holdings, LLC	Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026	8.75	%	Aerospace & Defense	6,000		5,956		4,680		(4)
					$	307,579	$	311,428	$	298,771

__________________

(1) Represents the interest rate as of September 30, 2020. All interest rates are payable in cash, unless otherwise noted.

(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of September 30, 2020, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.

(4) This investment was held by both the Company and SLF JV I as of September 30, 2020.

(6) This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

Both the cost and fair value of our debt investment in the SLF JV I were $96.3 million as of each of December 31, 2020 and September 30, 2020. We earned interest income of $1.8 million and $2.2 million on our investments in the SLF JV I Subordinated Notes for the three months ended December 31, 2020 and 2019, respectively. The SLF JV I Subordinated Notes bear interest at a rate of one-month LIBOR plus 7.0% per annum and mature on December 29, 2028.

The cost and fair value of the LLC equity interests in SLF JV I held by us was $49.3 million and $29.3 million, respectively, as of December 31, 2020 and $49.3 million and $21.2 million, respectively, as of September 30, 2020. We did not earn dividend income for the three months ended December 31, 2020 and 2019 with respect to our investment in the LLC equity interests of SLF JV I. The LLC equity interests of SLF JV I are dividend producing to the extent SLF JV I has residual cash to be distributed on a quarterly basis.

Below is certain summarized financial information for SLF JV I as of December 31, 2020 and September 30, 2020 and for the three months ended December 31, 2020 and 2019:


	December 31, 2020		September 30, 2020
Selected Balance Sheet Information:
Investments at fair value (cost December 31, 2020: $317,432; cost September 30, 2020: $311,428)	$	313,261	$	298,771
Cash and cash equivalents	20,575		5,389
Restricted cash	4,262		4,211
Other assets	3,147		5,093
Total assets	$	341,245	$	313,464

Senior credit facility payable	$	175,410	$	167,910
Debt securities payable at fair value (proceeds December 31, 2020: $110,000; proceeds September 30, 2020: $110,000)	110,000		110,000
Other liabilities	22,390		11,336
Total liabilities	307,800		289,246
Members' equity	33,445		24,218
Total liabilities and members' equity	$	341,245	$	313,464


	Three months ended December 31, 2020		Three months ended December 31, 2019
Selected Statements of Operations Information:
Interest income	$	4,475	$	5,393
Other income	54		6
Total investment income	4,529		5,399
Interest expense	3,581		4,641
Other expenses	62		67
Total expenses (1)	3,643		4,708
Net unrealized appreciation (depreciation)	8,486		2,941
Net realized gains (losses)	(144)		(1,152)
Net income (loss)	$	9,228	$	2,480

__________

(1) There are no management fees or incentive fees charged at SLF JV I.

SLF JV I has elected to fair value the debt securities issued to us and Kemper under FASB ASC Topic 825, Financial Instruments - Fair Value Option. The debt securities are valued based on the total assets less the total liabilities senior to the SLF JV I Notes in an amount not exceeding par under the enterprise value technique.

During the three months ended December 31, 2020 and 2019, we did not sell any debt investments to SLF JV I.

Discussion and Analysis of Results and Operations

Results of Operations

Net increase (decrease) in net assets resulting from operations includes net investment income, net realized gains (losses) and net unrealized appreciation (depreciation). Net investment income is the difference between our income from interest, dividends and fees and net expenses. Net realized gains (losses) is the difference between the proceeds received from dispositions of investment related assets and liabilities and their stated costs. Net unrealized appreciation (depreciation) is the net change in the fair value of our investment related assets and liabilities carried at fair value during the reporting period, including the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized.

Comparison of three months ended December 31, 2020 and December 31, 2019

Total Investment Income

Total investment income includes interest on our investments, fee income and dividend income.

Total investment income for the three months ended December 31, 2020 and 2019 was $38.2 million and $31.0 million, respectively. For the three months ended December 31, 2020, this amount consisted of $34.7 million of interest income from

portfolio investments (which included $3.1 million of PIK interest), $3.4 million of fee income and $0.1 million of dividend income. For the three months ended December 31, 2019, this amount consisted of $29.6 million of interest income from portfolio investments (which included $1.2 million of PIK interest), $1.1 million of fee income and $0.3 million of dividend income. The increase of $7.2 million, or 23.4%, in our total investment income for the three months ended December 31, 2020, as compared to the three months ended December 31, 2019, was due primarily to (1) a $5.2 million increase in interest income, which was primarily attributable to a larger investment portfolio, and (2) a $2.3 million increase in fee income primarily due to higher prepayment fees.

Expenses

Net expenses (expenses net of fee waivers) for the three months ended December 31, 2020 and December 31, 2019 were $28.2 million and $23.1 million, respectively. Net expenses increased for the three months ended December 31, 2020, as compared to the three months ended December 31, 2019, by $5.1 million, or 21.9%, primarily due to (1) a $3.3 million increase in Part II fees (net of fee waivers) as a result of higher capital gains earned during the current quarter offset by a reversal of fee waivers in the prior year comparable quarter, (2) a $1.2 million increase in Part I incentive fees mainly due to higher investment income and (3) a $0.9 million increase in management fees as a result of a larger investment portfolio. This was partially offset by a $0.4 million decrease in interest expense primarily due to decreases in LIBOR.

Net Investment Income

As a result of the $7.2 million increase in total investment income and the $5.1 million increase in net expenses, net investment income for the three months ended December 31, 2020 increased by $2.2 million, or 27.8%, compared to the three months ended December 31, 2019.

Realized Gain (Loss)

Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of investments and foreign currency and the cost basis without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period, net of recoveries. Realized losses may also be recorded in connection with our determination that certain investments are considered worthless securities and/or meet the conditions for loss recognition per the applicable tax rules.

During the three months ended December 31, 2020 and 2019, we recorded aggregate net realized gains of $8.2 million and $3.3 million, respectively, in connection with the exits or restructurings of various investments. See “Note 9. Realized Gains or Losses and Net Unrealized Appreciation or Depreciation” in the notes to the accompanying Consolidated Financial Statements for more details regarding investment realization events for the three months ended December 31, 2020 and 2019.

Net Unrealized Appreciation (Depreciation)

Net unrealized appreciation or depreciation is the net change in the fair value of our investments and foreign currency during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

During the three months ended December 31, 2020 and 2019, we recorded net unrealized appreciation (depreciation) of $47.6 million and $2.9 million, respectively. For the three months ended December 31, 2020, this consisted of $27.2 million of net unrealized appreciation on debt investments, $12.8 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses) and $9.9 million of net unrealized appreciation on equity investments, partially offset by $2.4 million of net unrealized depreciation of foreign currency forward contracts. For the three months ended December 31, 2019, this consisted of $3.9 million of net unrealized appreciation on equity investments and $2.2 million of net unrealized appreciation on debt investments, partially offset by $1.7 million of net unrealized depreciation related to exited investments (a portion of which results in a reclassification to realized gains) and $1.5 million net unrealized depreciation of foreign currency forward contracts.

Financial Condition, Liquidity and Capital Resources

We have a number of alternatives available to fund our investment portfolio and our operations, including raising equity, increasing or refinancing debt and funding from operational cash flow. We generally expect to fund the growth of our investment portfolio through additional debt and equity capital, which may include securitizing a portion of our investments. We cannot assure you, however, that our efforts to grow our portfolio will be successful. For example, our common stock has generally traded at prices below net asset value for the past several years, and we are currently limited in our ability to raise additional equity at prices below the then-current net asset value per share. We intend to continue to generate cash primarily from cash flows from operations, including interest earned, and future borrowings. We intend to fund our future distribution

obligations through operating cash flow or with funds obtained through future equity and debt offerings or credit facilities, as we deem appropriate.

Our primary uses of funds are investments in our targeted asset classes and cash distributions to holders of our common stock. We may also from time to time repurchase or redeem some or all of our outstanding notes. At a special meeting of our stockholders held on June 28, 2019, our stockholders approved the application of the reduced asset coverage requirements in Section 61(a)(2) of the Investment Company Act to us effective as of June 29, 2019. As a result of the reduced asset coverage requirement, we can incur $2 of debt for each $1 of equity as compared to $1 of debt for each $1 of equity. As of December 31, 2020, we had $702.2 million in senior securities and our asset coverage ratio was 236.7%. As of December 31, 2020, our debt to equity ratio was 0.73x. Our target debt to equity ratio is 0.85x to 1.0x (i.e., one dollar of equity for each $0.85 to $1.00 of debt outstanding) as we plan to continue to opportunistically deploy capital into the markets.

For the three months ended December 31, 2020, we experienced a net decrease in cash and cash equivalents of $14.9 million. During that period, we received $16.1 million of net cash from operating activities, primarily from $169.8 million of principal payments and sale proceeds received, $100.3 million of net increase in payables from unsettled transactions and the cash activities related to $10.0 million of net investment income, partially offset by funding $243.7 million of investments and $26.3 million of net increase in other assets. During the same period, net cash used by financing activities was $30.6 million, primarily consisting of $15.0 million of cash distributions paid to our stockholders, $14.8 million of net repayments under the Credit Facility (as defined below), $0.5 million of repurchases of common stock under our dividend reinvestment plan, or DRIP, and $0.3 million of deferred financing costs paid.

For the three months ended December 31, 2019, we experienced a net increase in cash and cash equivalents of $6.1 million. During that period, we used $43.5 million of net cash from operating activities, primarily from funding $115.8 million of investments, a $35.8 million of net decrease in payables from unsettled transactions and the cash activities related to $7.8 million of net investment income, partially offset by $97.0 million of principal payments and sale proceeds received. During the same period, net cash provided by financing activities was $49.6 million, primarily consisting of $63.0 million of net borrowings under the Credit Facility (as defined below), partially offset by $12.9 million of cash distributions paid to our stockholders and $0.5 million of repurchases of common stock under our DRIP.

As of December 31, 2020, we had $24.2 million in cash and cash equivalents, portfolio investments (at fair value) of $1.7 billion, $9.0 million of interest, dividends and fees receivable, $400.0 million of undrawn capacity on the Credit Facility (subject to borrowing base and other limitations), $91.7 million of net payables from unsettled transactions, $400.0 million of borrowings outstanding under our Credit Facility, $294.8 million of unsecured notes payable (net of unamortized financing costs and unaccreted discount) and unfunded commitments to portfolio companies of $197.6 million. As of December 31, 2020, we have analyzed cash and cash equivalents, availability under the Credit Facility, the ability to rotate out of certain assets and amounts of unfunded commitments that could be drawn and believe our liquidity and capital resources are sufficient to take advantage of market opportunities in the current economic climate.

As of September 30, 2020, we had $39.1 million in cash and cash equivalents, portfolio investments (at fair value) of $1.6 billion, $6.9 million of interest, dividends and fees receivable, $285.2 million of undrawn capacity on the Credit Facility (subject to borrowing base and other limitations), $8.6 million of net receivables from unsettled transactions, $414.8 million of borrowings outstanding under our Credit Facility, $294.5 million of unsecured notes payable (net of unamortized financing costs and unaccreted discount) and unfunded commitments to portfolio companies of $157.5 million.

Significant Capital Transactions

The following table reflects the distributions per share that we have paid, including shares issued under our DRIP, on our common stock since October 1, 2018:

Date Declared

Record Date

Payment Date

Amount
per Share

Cash
Distribution

DRIP Shares
Issued (1)

DRIP Shares
Value

November 19, 2018

December 17, 2018

December 28, 2018

0.095

$ 13.0 million

87,429

$ 0.4 million

February 1, 2019

March 15, 2019

March 29, 2019

0.095

13.1 million

59,603

0.3 million

May 3, 2019

June 14, 2019

June 28, 2019

0.095

13.1 million

61,093

0.3 million

August 2, 2019

September 13, 2019

September 30, 2019

0.095

13.1 million

61,205

0.3 million

November 12, 2019

December 13, 2019

December 31, 2019

0.095

12.9 million

87,747

0.5 million

January 31, 2020

March 13, 2020

March 31, 2020

0.095

12.9 million

157,523

0.5 million

April 30, 2020

June 15, 2020

June 30, 2020

0.095

13.0 million

87,351

0.4 million

July 31, 2020

September 15, 2020

September 30, 2020

0.105

14.3 million

102,404

0.5 million

November 13, 2020

December 15, 2020

December 31, 2020

0.11

15.0 million

93,964

0.5 million

______________

(1)Shares were purchased on the open market and distributed.

Indebtedness

See “Note 6. Borrowings” in the Consolidated Financial Statements for more details regarding our indebtedness.

Credit Facility

As of December 31, 2020, (i) the size of our senior secured revolving credit facility, or, as amended and restated, the Credit Facility, pursuant to a senior secured revolving credit agreement, with the lenders party thereto, ING Capital LLC, as administrative agent, ING Capital LLC, JPMorgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. and Bank of America, N.A., as syndication agents, was $800 million (with an “accordion” feature that permits us, under certain circumstances, to increase the size of the facility to up to our net worth (as defined in the Credit Facility) on the date of such increase, (ii) the period during which we may make drawings will expire on February 25, 2023 and the maturity date was February 25, 2024 and (iii) the interest rate margin for (a) LIBOR loans (which may be 1-, 2-, 3- or 6-month, at our option) was 2.00% (which can be increased up to 2.25%) and (b) alternate base rate loans was 1.00% (which can be increased up to 1.25%); provided that the interest margin will increase to 2.75% and 1.75% for LIBOR loans and alternative base rate loans, respectively, if our stockholders’ equity is below $700 million, each depending on our senior debt coverage ratio.

Each loan or letter of credit originated or assumed under the Credit Facility is subject to the satisfaction of certain conditions. Borrowings under the Credit Facility are subject to the facility’s various covenants and the leverage restrictions contained in the Investment Company Act. We cannot assure you that we will be able to borrow funds under the Credit Facility at any particular time or at all.

The following table describes significant financial covenants, as of December 31, 2020, with which we must comply under the Credit Facility on a quarterly basis:

Financial Covenant

Description

Target Value

September 30, 2020 Reported Value (1)

Minimum shareholders' equity

Net assets shall not be less than the sum of (x) $550 million, plus (y) 50% of the aggregate net proceeds of all sales of equity interests after May 6, 2020

$550 million

$915 million

Asset coverage ratio

Asset coverage ratio shall not be less than the greater of 1.50:1 and the statutory test applicable to us

1.50:1

2.27:1

Interest coverage ratio

Interest coverage ratio shall not be less than 2.25:1

2.25:1

3.69:1

Minimum net worth

Net worth shall not be less than $500 million

$500 million

$911 million

___________

(1) As contractually required, we report financial covenants based on the last filed quarterly or annual report, in this case our Annual Report on Form 10-K for the year ended September 30, 2020. We were in compliance with all financial covenants under the Credit Facility based on the financial information contained in this Quarterly Report on Form 10-Q.

As of December 31, 2020 and September 30, 2020, we had $400.0 million and $414.8 million of borrowings outstanding under the Credit Facility, respectively, which had a fair value of $400.0 million and $414.8 million, respectively. Our

borrowings under the Credit Facility bore interest at a weighted average interest rate of 2.323% and 3.983% for the three months ended December 31, 2020 and 2019, respectively. For the three months ended December 31, 2020 and 2019, we recorded interest expense (inclusive of fees) of $3.2 million and $4.0 million, respectively, related to the Credit Facility.

2025 Notes

On February 25, 2020, we issued $300.0 million in aggregate principal amount of our 3.500% notes due 2025, or the 2025 Notes, for net proceeds of $293.8 million after deducting OID of $2.5 million, underwriting commissions and discounts of $3.0 million and offering costs of $0.7 million. The OID on the 2025 Notes is amortized based on the effective interest method over the term of the notes.

For the three months ended December 31, 2020, we recorded interest expense of $2.9 million related to the 2025 Notes. As of December 31, 2020, there were $300.0 million of 2025 Notes outstanding, which had a carrying value and fair value of $294.8 million and $311.3 million, respectively. As of September 30, 2020, there were $300.0 million of 2025 Notes outstanding, which had a carrying value and fair value of $294.5 million and $301.4 million, respectively.

2024 Notes

For the three months ended December 31, 2019, we recorded interest expense of $1.2 million (inclusive of fees) related to our 5.875% notes due 2024, or the 2024 Notes.

On March 2, 2020, we redeemed 100%, or $75.0 million aggregate principal amount, of the issued and outstanding 2024 Notes. The redemption price per 2024 Note was $25 plus accrued and unpaid interest. As of December 31, 2020 and September 30, 2020, there were no 2024 Notes outstanding.

2028 Notes

For the three months ended December 31, 2019, we recorded interest expense of $1.4 million (inclusive of fees) related to our 6.125% notes due 2028, or the 2028 Notes.

On March 13, 2020, we redeemed 100%, or $86.3 million aggregate principal amount, of the issued and outstanding 2028 Notes. The redemption price per 2028 Note was $25 plus accrued and unpaid interest. As of December 31, 2020 and September 30, 2020, there were no 2028 Notes outstanding.

Off-Balance Sheet Arrangements

We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of December 31, 2020, our only off-balance sheet arrangements consisted of $197.6 million of unfunded commitments, which was comprised of $192.8 million to provide debt financing to certain of our portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests. As of September 30, 2020, our only off-balance sheet arrangements consisted of $157.5 million of unfunded commitments, which was comprised of $152.7 million to provide debt financing to certain of our portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests. Such commitments are subject to our portfolio companies' satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in our Consolidated Statements of Assets and Liabilities.

A list of unfunded commitments by investment (consisting of revolvers, term loans with delayed draw components, SLF JV I subordinated notes and LLC equity interests, and limited partnership interests) as of December 31, 2020 and September 30, 2020 is shown in the table below:


	December 31, 2020		September 30, 2020
Assembled Brands Capital LLC	$	33,326	$	36,079
WPEngine, Inc.	26,348		26,348
NuStar Logistics, L.P.	17,911		17,911
Athenex, Inc.	17,085		22,780
FFI Holdings I Corp	16,529		0
Thrasio, LLC	11,355		0
Jazz Acquisition, Inc.	10,147		0
Gulf Operating, LLC	10,064		0
Latam Airlines Group S.A.	8,177		0
MRI Software LLC	6,473		7,239
NeuAG, LLC	4,382		4,382
Corrona, LLC	3,968		5,189
Olaplex, Inc.	3,834		1,917
Pingora MSR Opportunity Fund I-A, LP	3,500		3,500
Dominion Diagnostics, LLC	3,449		5,887
Mindbody, Inc.	3,048		3,048
Ardonagh Midco 3 PLC	2,506		3,007
Accupac, Inc.	2,346		2,346
Acquia Inc.	2,240		2,240
New IPT, Inc.	2,229		2,229
ADB Companies, LLC	1,667		—
Apptio, Inc.	1,538		1,538
Telestream Holdings Corporation	1,417		—
Senior Loan Fund JV I, LLC	1,328		1,328
Ministry Brands, LLC	1,000		425
Coyote Buyer, LLC	942		942
Immucor, Inc.	541		541
GKD Index Partners, LLC	231		231
A.T. Holdings II SÀRL	—		7,541
iCIMs, Inc.	—		882
Total	$	197,581	$	157,530

Contractual Obligations

The following table reflects information pertaining to our principal debt outstanding under the Credit Facility and 2025 Notes:


	Debt Outstanding as of September 30, 2020		Debt Outstanding as of December 31, 2020		Weighted average debt outstanding for the three months ended December 31, 2020		Maximum debt outstanding for the three months ended December 31, 2020
Credit Facility	$	414,825	$	400,025	$	403,403	$	414,825
2025 Notes	300,000		300,000		300,000		300,000
Total debt	$	714,825	$	700,025	$	703,403

The following table reflects our contractual obligations arising from the Credit Facility and the 2025 Notes:


	Payments due by period as of December 31, 2020
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Credit Facility	$	400,025	$	—	$	—	$	400,025	$	—
Interest due on Credit Facility	27,570		8,751		17,501		1,318		—
2025 Notes	300,000		—		—		300,000		—
Interest due on 2025 Notes	43,640		10,500		21,000		12,140		—
Total	$	771,235	$	19,251	$	38,501	$	713,483	$	—

Regulated Investment Company Status and Distributions

We have qualified and elected to be treated as a RIC under Subchapter M of the Code for tax purposes. As long as we continue to qualify as a RIC, we will not be subject to tax on our investment company taxable income (determined without regard to any deduction for dividends paid) or realized net capital gains, to the extent that such taxable income or gains is distributed, or deemed to be distributed as dividends, to stockholders on a timely basis.

Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation. Distributions declared and paid by us in a taxable year may differ from taxable income for that taxable year as such distributions may include the distribution of taxable income derived from the current taxable year or the distribution of taxable income derived from the prior taxable year carried forward into and distributed in the current taxable year. Distributions also may include returns of capital.

To maintain RIC tax treatment, we must, among other things, distribute dividends, with respect to each taxable year, of an amount at least equal to 90% of our investment company taxable income (i.e., our net ordinary income and our realized net short-term capital gains in excess of realized net long-term capital losses, if any), determined without regard to any deduction for dividends paid. As a RIC, we are also subject to a federal excise tax, based on distribution requirements of our taxable income on a calendar year basis. We anticipate timely distribution of our taxable income in accordance with tax rules. We did not incur a U.S. federal excise tax for calendar years 2019 and 2020. We may incur a federal excise tax in future years.

We intend to distribute at least 90% of our annual taxable income (which includes our taxable interest and fee income) to our stockholders. The covenants contained in the Credit Facility may prohibit us from making distributions to our stockholders, and, as a result, could hinder our ability to satisfy the distribution requirement associated with our ability to be subject to tax as a RIC. In addition, we may retain for investment some or all of our net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) and treat such amounts as deemed distributions to our stockholders. If we do this, our stockholders will be treated as if they received actual distributions of the capital gains we retained and then reinvested the net after-tax proceeds in our common stock. Our stockholders also may be eligible to claim tax credits (or, in certain circumstances, tax refunds) equal to their allocable share of the tax we paid on the capital gains deemed distributed to them. To the extent our taxable earnings for a fiscal and taxable year fall below the total amount of our dividend distributions for that fiscal and taxable year, a portion of those distributions may be deemed a return of capital to our stockholders.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage test for borrowings applicable to us as a Business Development Company under the Investment Company Act and due to provisions in our credit facilities and debt instruments. If we do not distribute a certain percentage of our taxable income annually, we will suffer adverse tax consequences, including possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions or distributions at a particular level.

A RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder elects to receive his or her entire distribution in either cash or stock of the RIC, subject to certain limitations regarding the aggregate amount of cash to be distributed to all stockholders. If these and certain other requirements are met, for U.S federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock.

We may generate qualified net interest income or qualified net short-term capital gains that may be exempt from U.S. withholding tax when distributed to foreign stockholders. A RIC is permitted to designate distributions of qualified net interest income and qualified short-term capital gains as exempt from U.S. withholding tax when paid to non-U.S. shareholders with proper documentation. The following table, which may be subject to change as we finalize our annual tax filings, lists the percentage of qualified net interest income and qualified short-term capital gains for the year ended September 30, 2020, our last tax year end.


Year Ended	Qualified Net Interest Income		Qualified Short-Term Capital Gains
September 30, 2020	83.4	%	—

We have adopted a DRIP that provides for the reinvestment of any distributions that we declare in cash on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, if our Board of Directors declares a cash distribution, then our stockholders who have not “opted out” of the DRIP will have their cash distributions automatically reinvested in additional shares of our common stock, rather than receiving a cash distribution. If our shares are trading at a premium to net asset value, we typically issue new shares to implement the DRIP, with such shares issued at the greater of the most recently computed net asset value per share of our common stock or 95% of the current market value per share of our common stock on the payment date for such distribution. If our shares are trading at a discount to net asset value, we typically purchase shares in the open market in connection with our obligations under the DRIP.

Related Party Transactions

We have entered into the Investment Advisory Agreement with Oaktree and the Administration Agreement with Oaktree Administrator, an affiliate of Oaktree. Mr. John B. Frank, an interested member of our Board of Directors, has an indirect pecuniary interest in Oaktree. Oaktree is a registered investment adviser under the Investment Advisers Act of 1940, as amended, that is partially and indirectly owned by OCG. See “Note 11. Related Party Transactions – Investment Advisory Agreement” and “– Administrative Services” in the notes to the accompanying Consolidated Financial Statements.

Recent Developments

Registration Statement on Form N-14 and Stockholder Meetings

On January 19, 2021, we filed an amended registration statement on Form N-14, which included a joint proxy statement of us and OCSI and our prospectus. The registration statement on Form N-14 was declared effective by the SEC on January 21, 2021. On January 21, 2021, we filed our final joint proxy statement/prospectus with the SEC, which was mailed on or about January 21, 2021 to our stockholders of record as of January 19, 2021. Our annual meeting of stockholders and OCSI’s special meeting of stockholders are both scheduled for March 15, 2021 to vote on the matters described in the joint proxy statement/prospectus as required by the Merger Agreement.

Distribution Declaration

On January 29, 2021, our Board of Directors declared a quarterly distribution of $0.12 per share, payable in cash on March 31, 2021 to stockholders of record on March 15, 2021.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, including changes in the valuations of our investment portfolio and interest rates.

Valuation Risk

Our investments may not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board of Directors, with the assistance of the Audit Committee and Oaktree. There is no single standard for determining fair value in good faith and valuation methodologies involve a significant degree of management judgment. In addition, our valuation methodology utilizes discount rates in part in valuing our investments, and changes in those discount rates may have an impact on the valuation of our investments. Accordingly, valuations by us do not necessarily represent the amounts which may eventually be realized from sales or other dispositions of investments. Estimated fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the financial statements.

Interest Rate Risk

We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments, cash and cash equivalents and idle fund investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs. Our investment income will be affected by changes in various interest rates, including LIBOR and prime rates, to the extent our debt investments include floating interest rates.

As of December 31, 2020, 88.8% of our debt investment portfolio (at fair value) and 89.6% of our debt investment portfolio (at cost) bore interest at floating rates. The composition of our floating rate debt investments by interest rate floor as of December 31, 2020 and September 30, 2019 was as follows:


	December 31, 2020				September 30, 2020
($ in thousands)	Fair Value		% of Floating Rate Portfolio		Fair Value		% of Floating Rate Portfolio
0%	$	528,798	36.8	%	$	553,829	42.2	%
>0% and <1%	111,845		7.8	%	39,789		3.0	%
1%	748,573		52.1	%	672,529		51.3	%
>1%	46,855		3.3	%	45,362		3.5	%
Total Floating Rate Investments	$	1,436,071	100.0	%	$	1,311,509	100.0	%

Based on our Consolidated Statement of Assets and Liabilities as of December 31, 2020, the following table shows the approximate annualized net increase (decrease) in net assets resulting from operations of hypothetical base rate changes in interest rates, assuming no changes in our investment and capital structure. However, there can be no assurances our portfolio companies will be able to meet their contractual obligations at any or all levels on increases in interest rates.


($ in thousands)
Basis point increase	Increase in Interest Income		(Increase) in Interest Expense		Net increase (decrease) in net assets resulting from operations
250	$	29,066	$	(10,001)	$	19,065
200	21,838		(8,001)		13,837
150	14,610		(6,000)		8,610
100	7,471		(4,000)		3,471
50	2,703		(2,000)		703

The net effect of any decrease in interest rates is limited and would not be of significance due to interest rate floors on investments and borrowings outstanding.

We regularly measure exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on this review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates. The following table shows a comparison of the interest rate base for our interest-bearing cash and outstanding investments, at principal, and our outstanding borrowings as of December 31, 2020 and September 30, 2020:


	December 31, 2020				September 30, 2020
($ in thousands)	Interest Bearing Cash and Investments		Borrowings		Interest Bearing Cash and Investments		Borrowings
Money market rate	$	20,966	$	—	$	35,248	$	—
Prime rate	305		—		305		—
LIBOR
30 day	749,525		400,025		717,576		414,825
60 day	9,000		—		6,861		—
90 day	466,373		—		362,141		—
180 day	167,349		—		201,699		—
360 day	15,007		—		23,351		—
EURIBOR
30 day	30,391		—		29,126		—
180 day	1,762		—		1,689		—
UK LIBOR
30 day	24,605		—		23,270		—
180 day	15,450		—		14,612		—
Fixed rate	162,980		300,000		171,976		300,000
Total	$	1,663,713	$	700,025	$	1,587,854	$	714,825

Item 4. Controls and Procedures

Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Based on the evaluation of our disclosure controls and procedures as of December 31, 2020, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, in timely identifying, recording, processing, summarizing and reporting any material information relating to us that is required to be disclosed in the reports we file or submit under the Exchange Act.

There were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings

Other than as described below, we are currently not a party to any pending material legal proceedings.

On December 18, 2020, putative stockholder Oklahoma Firefighters Pension and Retirement System filed a complaint on behalf of itself and all other similarly situated holders of our common stock and derivatively on behalf of us as nominal defendant in the Delaware Court of Chancery, captioned Oklahoma Firefighters Pension and Retirement System v. Frank, et al., No. 2020-1075-VCM (Del. Ch.). This lawsuit is referred to herein as the “Merger Litigation”. The Merger Litigation alleges a direct breach of fiduciary duty claim against our board of directors in connection with the solicitation of the approval by our stockholders of the issuance of shares of our common stock to be issued pursuant to the Merger Agreement and a derivative breach of fiduciary duty claim against our board of directors in connection with its negotiation and approval of the Mergers. The Merger Litigation alleges, among other things, that the members of our board of directors had certain conflicts of interest in the negotiation and approval of the Mergers and that the initial filing of the joint proxy statement/prospectus relating to the Mergers omitted certain information that the plaintiff claims is material. The Merger Litigation, among other things, requests that the court enjoin the vote of our stockholders with respect to the approval of the issuance of shares of our common stock to be issued pursuant to the Merger Agreement and award attorneys’ fees and damages in an unspecified amount.

The defendants believe that we previously made complete disclosure of all information required to be disclosed to ensure that our stockholders can make an informed vote at the Annual Meeting of Stockholders and that the additional disclosures requested by the plaintiff are immaterial and/or were included in the preliminary joint proxy statement/prospectus filed as part of our Registration Statement on Form N-14 on November 23, 2020. Accordingly, the defendants believe these claims are without merit and intend to vigorously defend against them. However, in an attempt to reduce the costs, risks and uncertainties inherent in litigation and to maximize our net asset value at the time of the Mergers, we determined to voluntarily include certain supplemental disclosures in the amendment to our Registration Statement on Form N-14 filed on January 19, 2021. The inclusion of such disclosures shall not be deemed an admission of the legal necessity or materiality of any of these disclosures under applicable law. Rather, we and our board of directors specifically deny all allegations in the Merger Litigation that any additional disclosure was or is required.

Item 1A. Risk Factors

There have been no material changes during the three months ended December 31, 2020 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended September 30, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

100

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits


2.1^						Agreement and Plan of Merger among Oaktree Strategic Income Corporation, the Registrant, Lion Merger Sub, Inc. and Oaktree Fund Advisors LLC (for the limited purposes set forth therein), dated as of October 28, 2020 (Incorporated by reference to Exhibit 2.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-00755) filed on October 29, 2020).

10.1						Incremental Commitment and Assumption Agreement, dated as of October 28, 2020, made by the Registrant, as Borrower, the assuming lender party hereto, as assuming lender, and ING Capital LLC, as administrative agent and issuing bank relating to the Amended and Restated Senior Secured Revolving Credit Agreement, dated as of February 25, 2019 among the Registrant, as Borrower, the lenders party thereto, ING Capital LLC, as administrative agent, ING Capital LLC, JPMorgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. and Bank of America, N.A., as syndication agents (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-00755) filed on October 29, 2020).

10.2						Amendment No. 3 to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of December 10, 2020, among the Registrant, as Borrower, the lenders party thereto from time to time and ING Capital LLC, as administrative agent for the lenders thereunder (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-00755) filed on December 14, 2020).

10.3						Incremental Commitment Agreement, dated as of December 28, 2020, made by the Registrant, as Borrower, MUFG Union Bank, N.A., as increasing lender, and ING Capital LLC, as administrative agent and issuing bank relating to the Amended and Restated Senior Secured Revolving Credit Agreement, dated as of February 25, 2019 among the Registrant, as Borrower, the lenders party thereto, ING Capital LLC, as administrative agent, ING Capital LLC, JPMorgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. and Bank of America, N.A., as syndication agents (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-00755) filed on December 29, 2020).

31.1*						Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*						Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1*						Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

32.2*						Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).


*			Filed herewith.
^			Exhibits and schedules to Exhibit 2.1 have been omitted in accordance with Item 601 of Regulation S-K. The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request.

101

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



OAKTREE SPECIALTY LENDING CORPORATION

By:						/s/ Armen Panossian
						Armen Panossian
						Chief Executive Officer

By:						/s/ Mel Carlisle
						Mel Carlisle
						Chief Financial Officer and Treasurer

Date: February 3, 2021

102

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