Blue Owl Capital (OBDC) risk factors, 2025 10-K

Other

1. 01We are subject to risks related to the economy
2. 02We are subject to risks related to our business and operations
3. 03We are subject to risks related to the Mergers
4. 04We are subject to risks related to our Adviser and its affiliates
5. 05We are subject to risks related to business development companies
6. 06We are subject to risks related to our investments
7. 07We are subject to risks related to an investment in our common stock
8. 08We are subject to risks related to an investment in our unsecured notes
9. 09We are subject to risks related to U.S. federal income tax
10. 10We are subject to general risks

Risks Related to the Economy

1. 11Global economic, political and market conditions, including uncertainty about the financial stability of the United States, could have a significant adverse effect on our business, financial condition and results of operations
2. 12The current period of capital markets disruption and economic uncertainty could have a material adverse effect on our business, financial condition or results of operations
3. 13Economic recessions or downturns could impair our portfolio companies and harm our operating results
4. 14Inflation may adversely affect the business, results of operations and financial condition of our portfolio companies
5. 15Fluctuations in interest rates could have a material adverse effect on our business and that of our portfolio companies
6. 16Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail

Risks Related to Our Business

1. 17The lack of liquidity in our investments may adversely affect our business
2. 18We borrow money, which magnifies the potential for gain or loss and may increase the risk of investing in us
3. 19In addition to having fixed-dollar claims on our assets that are superior to the claims of our common shareholders, obligations to lenders may be secured by a first priority security interest in our portfolio of investments and cash
4. 20(1)Assumes, as of December 31, 2024, (i) $13.9 billion in total assets, (ii) $7.6 billion in outstanding indebtedness, (iii) $6.0 billion in net assets and (iv) weighted average interest rate, excluding amortization of financing costs and marking to market value on fair value of interest rate swaps, of 5.6%
5. 21Defaults under our current borrowings or any future borrowing facility or notes may adversely affect our business, financial condition, results of operations and cash flows
6. 22Provisions in our current borrowings or any other future borrowings may limit discretion in operating our business
7. 23the Revolving Credit Facility which could have a material adverse impact on our ability to fund future investments and to make distributions
8. 24If we are unable to obtain additional debt financing, or if our borrowing capacity is materially reduced, our business could be materially adversely affected
9. 25We may face increasing competition for investment opportunities, which could delay further deployment of our capital, reduce returns and result in losses
10. 26Our investment portfolio is recorded at fair value as determined in good faith by our Adviser in accordance with procedures approved by our Board and, as a result, there is and will be uncertainty as to the value of our portfolio investments
11. 27Our Board may change our operating policies and strategies without prior notice or shareholder approval, the effects of which may be adverse to our shareholders
12. 28Any unrealized depreciation we experience on our portfolio may be an indication of future realized losses, which could reduce our income available for distribution
13. 29We are subject to risks associated with the market’s limited experience with SOFR, which will affect our cost of capital and results of operations
14. 30Beginning in the first quarter of 2022, we transitioned any LIBOR-based investments to SOFR and currently none of our investments are indexed to LIBOR
15. 31Internal and external cybersecurity threats and risks, as well as other disasters, may adversely affect our business or the business of our portfolio companies by impairing the ability to conduct business effectively
16. 32We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect our liquidity, financial condition or results of operations
17. 33Increased data protection regulation may result in increased complexities and risk in connection with the operation of our business
18. 34We and our portfolio companies are subject to increasing scrutiny from certain investors, third party assessors and our shareholders with respect to ESG-related topics
19. 35We are subject to increasing scrutiny with respect to ESG-related issues and the regulatory disclosure landscape surrounding related topics continues to evolve

Risks Related to the Mergers

1. 36We may be unable to realize the benefits anticipated by the Mergers, including estimated cost savings, or it may take longer than anticipated to achieve such benefits
2. 37We may be the target of litigation or similar proceedings in the future

Risks Related to Our Adviser and Its Affiliates

1. 38Our Adviser and its affiliates, including our officers and some of our directors, may face conflicts of interest caused by compensation arrangements with us and our affiliates, which could result in increased risk-taking or speculative investments, or cause our Adviser to use substantial leverage
2. 39These compensation arrangements could affect our Adviser’s or its affiliates’ judgment with respect to public offerings of equity, incurrence of debt, and investments made by us, which allow our Adviser to earn increased asset management fees
3. 40Our Adviser and its affiliates may face conflicts of interest with respect to services performed for issuers in which we may invest
4. 41Our Adviser or its affiliates may have incentives to favor their respective other accounts and clients and/or Blue Owl over us, which may result in conflicts of interest that could be harmful to us
5. 42other clients, subject to applicable law; restrictions on our Adviser’s use of “inside information” with respect to potential investments by us; the allocation of certain expenses; and cross transactions
6. 43Reductions, waivers or absorptions of fees and costs can temporarily result in higher returns to shareholders than they would otherwise receive if full fees and costs were charged
7. 44Products within Blue Owl’s Real Assets platform may enter into sale lease-back transactions with our portfolio companies or with borrowers under our credit facilities
8. 45Our access to confidential information may restrict our ability to take action with respect to some investments, which, in turn, may negatively affect our results of operations
9. 46We may be obligated to pay our Adviser incentive fees even if we incur a net loss due to a decline in the value of our portfolio and even if our earned interest income is not payable in cash
10. 47Our ability to enter into transactions with our affiliates is restricted
11. 48We may make investments that could give rise to a conflict of interest
12. 49The recommendations given to us by our Adviser may differ from those rendered to their other clients
13. 50Our Adviser’s liability is limited under the Investment Advisory Agreement, and we are required to indemnify our Adviser against certain liabilities, which may lead our Adviser to act in a riskier manner on our behalf than it would when acting for its own account
14. 51There are risks associated with any potential merger with or purchase of assets of another fund
15. 52Our Adviser’s failure to comply with pay-to-play laws, regulations and policies could have an adverse effect on our Adviser, and thus, us
16. 53Our Adviser’s inability to attract, retain and develop human capital in a highly competitive talent market could have an adverse effect on our Adviser, and thus us

Risks Related to Business Development Companies

1. 54The requirement that we invest a sufficient portion of our assets in qualifying assets could preclude us from investing in accordance with our current business strategy; conversely, the failure to invest a sufficient portion of our assets in qualifying assets could result in our failure to maintain our status as a BDC
2. 55Failure to maintain our status as a BDC would reduce our operating flexibility

Risks Related to Our Investments

1. 56Our investments in portfolio companies may be risky, and we could lose all or part of our investments
2. 57We have invested and may continue to invest through joint ventures, partnerships and other special purpose vehicles and our investments through these vehicles may entail greater risks, or risks that we otherwise would not incur, if we otherwise made such investments directly
3. 58Any strategic investments that we pursue are subject to risks and uncertainties
4. 59Broadly syndicated loans, including “covenant-lite” loans, may expose us to different risks, including with respect to liquidity, price volatility, ability to restructure loans, credit risks and less protective loan documentation, than is the case with loans that contain financial maintenance covenants
5. 60or we act together with other holders of the indebtedness. If we are unable to direct such actions, we cannot assure shareholders that the actions taken will be in our best interests
6. 61We may be subject to risks associated with our investments in bank loans
7. 62To attempt to mitigate credit risks, we intend to take a security interest in the available assets of our portfolio companies. There is no assurance that we will obtain sufficient collateral to cover losses or properly perfect our liens
8. 63We may suffer a loss if a portfolio company defaults on a loan and the underlying collateral is not sufficient
9. 64company prior to a default, and as a result the value of the collateral may be reduced by acts or omissions by owners or managers of the assets
10. 65If the value of collateral underlying our loan declines or interest rates increase during the term of our loan, a portfolio company may not be able to obtain the necessary funds to repay our loan at maturity through refinancing
11. 66We may not realize any income or gains from our equity investments
12. 67cumulative preferred stock, there is no assurance that any dividends will ever be paid by a portfolio company. Dividends to any equity holders may be suspended or cancelled at any time
13. 68An investment strategy focused primarily on privately held companies presents certain challenges, including the lack of available information about these companies
14. 69To the extent we invest in publicly traded companies, we may be unable to obtain financial covenants and other contractual rights, which subjects us to additional risks
15. 70The credit ratings of certain of our investments may not be indicative of the actual credit risk of such rated instruments
16. 71Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity
17. 72A redemption of convertible securities held by us could have an adverse effect on our ability to achieve our investment objective
18. 73To the extent original issue discount (“OID”) and payment-in-kind (“PIK”) interest income constitute a portion of our income, we will be exposed to risks associated with the deferred receipt of cash representing such income
19. 74Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies
20. 75Our portfolio companies may be highly leveraged
21. 76If we cannot obtain debt financing or equity capital on acceptable terms, our ability to acquire investments and to expand our operations will be adversely affected
22. 77Defaults by our portfolio companies could jeopardize a portfolio company’s ability to meet its obligations under the debt or equity investments that we hold which could harm our operating results
23. 78Subordinated liens on collateral securing debt investments that we may make to portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us
24. 79Certain of our investments may be adversely affected by laws relating to fraudulent conveyance or voidable preferences
25. 80There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims
26. 81characterize our debt investment and subordinate all or a portion of our claim to that of other creditors. In situations where a bankruptcy carries a high degree of political significance, our legal rights may be subordinated to other creditors
27. 82We generally will not control the business operations of our portfolio companies and, due to the illiquid nature of our holdings in our portfolio companies, we may not be able to dispose of our interests in our portfolio companies
28. 83We and our portfolio companies are, and will continue to be, exposed to risks associated with changes in interest rates
29. 84International investments create additional risks
30. 85We expose ourselves to risks when we engage in risk management activities
31. 86between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary, as may the time period in which the hedge is effective relative to the time period of the related exposure
32. 87The market structure applicable to derivatives imposed by the Dodd-Frank Act, the U.S. Commodity Futures Trading Commission (“CFTC”) and the SEC may affect our ability to use over-the-counter (“OTC”) derivatives for hedging purposes
33. 88Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited
34. 89We may enter into total return swaps that would expose us to certain risks, including market risk, liquidity risk and other risks similar to those associated with the use of leverage
35. 90Our portfolio may be focused on a limited number of industries, which will subject us to a risk of significant loss if there is a downturn in a particular industry
36. 91We cannot guarantee that we will be able to obtain various required licenses in U.S. states or in any other jurisdiction where they may be required in the future
37. 92Certain investment analyses and decisions by our Adviser may be required to be undertaken on an expedited basis
38. 93We may not have the funds or ability to make additional investments in our portfolio companies
39. 94We are subject to certain risks as a result of our interests in the CLO Preferred Shares
40. 95The subordination of the CLO Preferred Shares will affect our right to payment
41. 96The holders of certain CLO Debt will control many rights under the CLO Indentures and therefore, we will have limited rights in connection with an event of default or distributions thereunder
42. 97The CLO Indentures require mandatory redemption of the respective CLO Debt for failure to satisfy coverage tests, which would reduce the amounts available for distribution to us
43. 98Our investments in portfolio companies may expose us to environmental risks
44. 99Climate change and climate-related effects may expose us to systemic, global, macroeconomic risks and could adversely affect our business and the businesses of our products’ portfolio companies

Risks Related to an Investment in Our Common Stock

1. 100We cannot assure you that the market price of shares of our common stock will not decline
2. 101A shareholder’s interest in us will be diluted if we issue additional shares, which could reduce the overall value of an investment in us
3. 102Certain provisions of our charter and actions of our Board could deter takeover attempts and have an adverse impact on the value of shares of our common stock
4. 103Investing in our securities involves a high degree of risk
5. 104The market value of our common stock may fluctuate significantly
6. 105We may experience fluctuations in our quarterly results
7. 106Our stockholders could receive shares of our common stock as dividends, which could result in adverse tax consequences to them
8. 107Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock
9. 108Our stock repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock
10. 109Preferred stock could be issued with rights and preferences that would adversely affect holders of our common stock
11. 110If we issue preferred stock or convertible debt securities, the net asset value of our common stock may become more volatile
12. 111preferred stock or debt securities. This decline in net asset value would also tend to cause a greater decline in the market price, if any, for our common stock
13. 112Holders of any preferred stock that we may issue will have the right to elect certain members of the Board and have class voting rights on certain matters

Risks Related to an Investment in our Unsecured Notes

1. 113Our unsecured notes are effectively subordinated to any secured indebtedness we have currently incurred or may incur in the future
2. 114Our unsecured notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries
3. 115A downgrade, suspension or withdrawal of the credit rating assigned by a rating agency to us or our notes, if any, or change in the debt markets, could cause the liquidity or market value of our notes to decline significantly
4. 116An increase in market interest rates could result in a decrease in the market value of our unsecured notes
5. 117The indenture under which the unsecured notes were issued contains limited protection for holders of our unsecured notes
6. 118The optional redemption provision may materially adversely affect your return on the unsecured notes
7. 119We may not be able to repurchase the unsecured notes upon a Change of Control Repurchase Event
8. 120If an active trading market does not develop for the unsecured notes, you may not be able to resell them

Risks Related to U.S. Federal Income Tax

1. 121We cannot predict how new tax legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business
2. 122We will be subject to U.S. federal income tax imposed at corporate rates if we are unable to maintain our tax treatment as a RIC under Subchapter M of the Code or if we make investments through taxable subsidiaries
3. 123If we fail to qualify for or maintain RIC tax treatment for any reason and are subject to U.S. federal income tax imposed at corporate rates, the resulting taxes could substantially reduce our net assets, the amount of income available for distribution, and the amount of our distributions
4. 124We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income
5. 125Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy
6. 126Heightened scrutiny of the financial services industry by regulators may materially and adversely affect our business
7. 127Further, the SEC has highlighted BDC board oversight and valuation practices as one of its areas of focus in investment adviser examinations and has instituted enforcement actions against advisers for misleading investors about valuation
8. 128Government intervention in the credit markets could adversely affect our business
9. 129Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse effect on the price of our common stock
10. 130Our Bylaws include an exclusive forum selection provision, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or other agents
11. 131We expend significant financial and other resources to comply with the requirements of being a public entity
12. 132We may experience fluctuations in our operating results
13. 133We are subject to risks in using custodians, counterparties, administrators and other agents