Terms

Series

6.625% Series A Preferred Units

Liquidation Preference

$25.00

Coupon Rate

6.625%

Rate Type

Fixed

Annual Dividend

$1.66

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

June 15, 2023

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Indebtedness And Other Non-Equity Claims On Oaktree; Pari Passu With: Other Series Of Parity Units; Senior To: Class A Units, Class B Units, Junior Units

Regulatory (Basel III) Call

No

Tax Classification

Other

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

7,200,000

Prospectus Summary

Oaktree Capital Group, LLC — a leading alternative investment manager with $121 billion in AUM — is offering 7,200,000 units of its 6.625% Series A Preferred Units at a liquidation preference of $25.00 per unit, listed on the NYSE under 'OAK PR A.' Distributions are paid quarterly on March 15, June 15, September 15, and December 15, beginning September 15, 2018. The units are perpetual with no maturity date and are optionally redeemable at par on or after June 15, 2023. Critically, distributions are non-cumulative: if the board does not declare a distribution for any quarter, that payment is permanently lost and holders have no right to recover it in future periods. The Series A Preferred Units sit above common and junior units in Oaktree's capital stack but rank junior to all existing and future debt obligations and non-equity claims on the company. Because Oaktree conducts operations primarily through subsidiary entities (the Oaktree Operating Group), the preferred units are structurally subordinated — cash to pay distributions must first be earned and distributed up through those subsidiaries. There is no regulatory capital trigger provision (Oaktree is an investment manager, not a bank), but the issuer may redeem prior to June 15, 2023 upon a Rating Agency Event (at $25.50), a Tax Redemption Event (at $25.50), or a Change of Control Event (at $25.25). If a Change of Control occurs and Oaktree does not redeem within 31 days, the distribution rate steps up by 500 basis points. At the $25.00 offering price, the Series A Preferred Units yield 6.625% annually, implying approximately $0.414 per unit per quarter. Because Oaktree is a partnership/LLC for U.S. tax purposes, distributions are generally not 'qualified dividends' eligible for the 15%/20% preferential QDI rate; investors should consult the Material U.S. Federal Tax Considerations section for pass-through tax treatment details. The dividend stopper prevents Oaktree from paying distributions on common or junior units in any quarter where Series A preferred distributions have not been declared and paid, except for permitted carve-outs such as tax distributions to unitholders — meaning even if common distributions are suspended for this reason, certain cash can still flow out of the company to other parties.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If distributions on the Series A Preferred units are not declared and paid (or set apart) for a quarter, Oaktree is blocked from paying distributions on or repurchasing common units and junior units for the remainder of that quarter, except for certain 'Permitted Distributions' such as tax distributions.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 67 (Strong)