Terms

Series

6.550% Series B Preferred Units

Liquidation Preference

$25.00

Coupon Rate

6.55%

Rate Type

Fixed

Annual Dividend

$1.64

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

September 15, 2023

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Indebtedness And Other Non-Equity Claims; Pari Passu With: Series A Preferred Units, Other 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

9,400,000

Prospectus Summary

Oaktree Capital Group, LLC — a Delaware LLC and leading alternative investment manager with $121.6 billion AUM — is offering 9,400,000 units of its 6.550% Series B Preferred Units at a liquidation preference of $25.00 per unit. The units are perpetual with no maturity date, and Oaktree may optionally redeem them at par on or after September 15, 2023. These are non-cumulative preferred units: if the board does not declare a distribution for any quarter, that payment is permanently lost and holders have no claim to it in future periods, creating meaningful income uncertainty relative to cumulative structures. The Series B Preferred Units sit above Oaktree's common (Class A and Class B) units and on a parity with the existing Series A Preferred Units in the LLC's capital stack, but they are fully subordinated to all indebtedness and other non-equity claims against Oaktree. Importantly, Oaktree is a holding company that conducts substantially all operations through subsidiaries (the Oaktree Operating Group); distributions on the preferred units depend on cash flowing up from those subsidiaries, creating structural subordination to any obligations at the subsidiary level. There is no bank regulatory capital call provision — instead, the issuer has special redemption rights triggered by a Change of Control Event (at $25.25/unit), a Tax Redemption Event (at $25.50/unit), or a Rating Agency Event (at $25.50/unit), each exercisable before September 15, 2023 with at least 30 days' notice. If a Change of Control occurs and Oaktree does not redeem within 31 days, the distribution rate steps up by 5.00% per annum. At the $25.00 offering price, the stated yield is exactly 6.550%, equating to approximately $0.409 per unit per quarter, payable on March 15, June 15, September 15, and December 15, beginning December 15, 2018. Because Oaktree is a LLC taxed as a partnership, distributions are not 'qualified dividends' for U.S. federal income tax purposes and do not qualify for the 15%/20% QDI rate or the corporate dividends-received deduction; investors should expect partnership-style tax treatment and consult the Material U.S. Federal Tax Considerations section. The dividend stopper provision means that if Oaktree skips a Series B distribution in any quarter, it cannot pay distributions on or repurchase its common or junior units for the remainder of that quarter, though broad carve-outs for Permitted Distributions (including tax distributions to Class A and OCGH unitholders) substantially limit the practical force of this restriction.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If distributions on the Series B Preferred units have not been declared and paid for a quarterly period, Oaktree may not pay or declare distributions on, or repurchase, its common (Class A/B) units or any junior units for the remainder of that period, except for certain Permitted Distributions (including tax distributions and payments to subsidiaries).

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 68 (Strong)