Item 1.01
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Entry into a Material Definitive Agreement
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On December 21, 2012, Oaktree Capital Management, L.P., Oaktree Capital II, L.P., Oaktree AIF Investments, L.P., and Oaktree Capital I, L.P. (collectively, the Borrowers) entered into a
Credit Agreement (the Credit Agreement) with Wells Fargo Bank, National Association (Wells Fargo) and the other lenders party thereto. Wells Fargo serves as administrative agent for a 13-bank syndicate and as letter of credit
issuer and swing line lender. Each of the Borrowers is an indirect subsidiary of Oaktree Capital Group, LLC (the Company). The new Credit Agreement replaces the Borrowers Credit Agreement dated as of January 7, 2011 with Wells
Fargo and the lenders party thereto (the Prior Credit Facility).
The Credit Agreement provides for an unsecured
term loan of $250 million (the Term Loan), which was fully funded at the closing and which replaced a term loan under the Prior Credit Facility with a remaining balance of $247.5 million, as well as an unsecured revolving credit facility
of up to $500 million (the Revolver), which was undrawn at the closing and which replaced an undrawn revolving loan of up to $250 million under the Prior Credit Facility. The Revolver includes a $20 million letter of credit subfacility.
The loans under the Credit Agreement mature in December 2017. The Term Loan amortizes quarterly in an amount equal to 2.5% of the original principal amount of $250 million, with remaining principal and accrued interest payable upon maturity.
Borrowings under the Credit Agreement generally bear interest at a spread to either LIBOR or an alternate base rate,
depending upon the credit ratings of Oaktree Capital Management, L.P. Based on current credit ratings, the interest rate on borrowings is LIBOR plus 1.0% per annum, and the commitment on the unused portions of the Revolver accrues at a rate of
0.125% per annum. The Borrowers intend to maintain an existing interest-rate swap that, based on the current credit ratings of Oaktree Capital Management, L.P., fixes the Term Loans annual interest rate at 2.69% through the expiration of
the swap in January 2016. The Borrowers may enter into an additional interest-rate swap for all or a portion of the final two years of the Term Loans five-year term. Borrowings under the Credit Agreement will be used for working capital and
general corporate purposes of the Borrowers and their subsidiaries, including to repay the term loan outstanding under the Prior Credit Facility, to make capital contributions to investment funds, accounts or investment companies managed by a
Borrower or certain affiliates of a Borrower, to make permitted distributions or equity repurchases, and for other specified uses.
The Credit Agreement provides for certain affirmative and negative covenants, including financial covenants relating to the Borrowers combined leverage ratio, combined fixed charge coverage ratio,
combined net worth and minimum assets under management. In addition, the Credit Agreement contains customary representations and warranties of the Borrowers, which must be true and correct at the time of any draw under the Revolver or the issuance
of a letter of credit. The Credit Agreement also contains customary events of default, in certain cases subject to periods to cure. Upon the occurrence and continuance of an event of default, the required lenders may terminate the commitments under
the Credit Agreements and declare the outstanding loans due and payable, require cash collateralization of all outstanding letters of credit, and exercise other rights and remedies. Such termination and declaration will occur automatically in the
event of certain insolvency related events of default.
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Certain of the lenders under the Credit Agreement, or their affiliates, have in the past
performed, and may in the future from time to time perform, investment banking, financial advisory, commercial banking, and other services in the ordinary course of business for the Company and its subsidiaries, for which they have received, and may
in the future receive, customary compensation and, in some cases, customary indemnification and/or reimbursement of expenses.
The foregoing description is a summary and is qualified in its entirety by reference to the complete text of the Credit Agreement filed
as Exhibit 10.1 hereto and incorporated herein by reference.