Blue Owl Capital Corporation

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, ITEM 1A. RISK FACTORS in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Repo and in Part on Form 10-K for the fiscal year ended December 31, 2023 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Sales of shares of our common stock after the completion of the Mergers may cause the market price of our common stock to decline.

At the effective time of the Mergers, each share of OBDE common stock issued and outstanding immediately prior to such time (other than shares owned by us or any of our consolidated subsidiaries), will be converted into the right to receive a number of shares of our common stock equal to the Exchange Ratio, plus any cash (without interest) in lieu of fractional shares.

Former OBDE shareholders may decide not to hold the shares of our common stock that they will receive pursuant to the Merger Agreement. Depending on the closing date for the Mergers, a portion of the OBDE common stock outstanding prior to the Mergers may be subject to transfer restrictions (or lock-ups) that will be waived immediately prior to the closing. Certain of OBDEs shareholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of our common stock that they receive pursuant to the Merger Agreement. In addition, our shareholders may decide not to hold their shares of our common stock after completion of the Mergers. In each case, such sales of our common stock could have the effect of depressing the market price for our common stock and may take place soon after the completion of the Mergers.

Our shareholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the Mergers.

Our shareholders will experience a substantial reduction in their respective percentage ownership interests and effective voting power in respect of the combined company relative to their respective percentage ownership interests in us prior to the Mergers. Consequently, our shareholders should generally expect to exercise less influence over the management and policies of the combined company following the Mergers than they currently exercise over our management and policies.

Prior to completion of the Mergers, subject to certain restrictions in the Merger Agreement, and certain restrictions under the 1940 Act for issuances at prices below the then current NAV per share of our common stock and OBDEs common stock, we and OBDE may issue additional shares of our common stock and OBDE common stock, respectively, which would further reduce the percentage ownership of the combined company to be held by our current shareholders or to be held by OBDE shareholders, as applicable.

We 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.

The realization of certain benefits anticipated as a result of the Mergers will depend in part on the integration of OBDEs investment portfolio with our investment portfolio and the integration of OBDEs business with our business. There can be no assurance that OBDEs investment portfolio or business can be operated profitably or integrated successfully into our operations in a timely fashion or at all. The dedication of management resources to such integration may detract attention from the day-to-day business of the combined company and there can be no assurance that there will not be substantial costs associated with the transition process or that there will not be other material adverse effects as a result of these integration efforts. Such effects, including incurring unexpected costs or delays in connection with such integration and failure of OBDEs investment portfolio to perform as expected, could have a material adverse effect on the financial results of the combined company.

We also expect to achieve certain cost savings from the Mergers when the two companies have fully integrated their portfolios. It is possible that the estimates of the potential cost savings could ultimately be incorrect. The cost savings estimates also assume we will be able to combine our operations and OBDEs operations in a manner that permits those cost savings to be fully realized. If the estimates turn out to be incorrect or if we are not able to combine OBDEs investment portfolio or business with our operations, the anticipated cost savings may not be fully realized or realized at all or may take longer to realize than expected.

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The Mergers may trigger certain change of control provisions and other restrictions in our or OBDEs contracts or contracts of our respective affiliates, and the failure to obtain any reII, ITEM 1A. RISK FACTORS in our Quarterly Report on Form 10-Q for the fiscal quired consents or waivers could adversely impact the combined company.

Certain of our or OBDEs agreements or contracts of our respective affiliates, which may include agreements governing our indebtedness or the indebtedness of OBDE, will or may require the consent or waiver of one or more counterparties in connection with the Mergers. The failure to obtain any such consent or waiver may permit such counterparties to terminate, or otherwise increase their rights or our and OBDEs obligations under, any such agreement because the Mergers or other transactions contemplated by the Merger Agreement may violate an anti-assignment, change of control or other similar provision relating to any of such transactions. If this occurs, we may have to seek to replace that agreement with a new agreement or seek an amendment to such agreement. We cannot assure you that we will be able to replace or amend any such agreement on comparable terms or at all.

If any such agreement is material, the failure to obtain consents, amendments or waivers under, or to replace on similar terms or at all, any of these agreements could adversely affect the financial performance or results of operations of the combined company following the Mergers, including preventing us from operating a material part of OBDEs business.

In addition, the consummation of the Mergers may violate, conflict with, result in a breach of provisions of, or the loss of any benefit under, constitute a default (or an event that, with or without notice or lapse of time or both, would constitute a default) under, or result in the termination, cancellation, acceleration or other change of any right or obligation (including any payment obligation) under, certain agreements of us and OBDE. Any such violation, conflict, breach, loss, default or other effect could, either individually or in the aggregate, have a material adverse effect on the financial condition, results of operations, assets or business of the combined company following completion of the Mergers.

The opinion delivered to our Board and the Cardinal Special Committee from its financial advisor prior to the signing of the Merger Agreement will not reflect changes in circumstances since the date of the opinion.

The opinion of the financial advisor to the Special Committee of the Companys Board (the Cardinal Special Committee) was delivered to the Cardinal Special Committee and our Board on, and was dated, August 6, arter ended June 30, 2024. Changes in our or OBDEs operations and prospects, general market and economic conditions and other factors that may be beyond the control of us or OBDE may significantly alter our or OBDEs respective value or the respective price of shares of our common stock or OBDEs common stock by the time the Mergers are completed. The opinion does not speak as of the time the Mergers will be completed or as of any date other than the date of such opinion.

The announcement and pendency of the Mergers could adverse, which could materially affect both oour and OBDEs business, financial results and operations.

The announcement and pendency of the Mergers could cause disruptions in and create uncertainty surrounding both our and OBDEs business, including affecting relationships with existing and future borrowers, which could have a significant negative impact on future revenues and results of operations, regardless of whether the Mergers are completed. In addition, we and OBDE have diverted, and will continue to divert, management resources towards the completion of the Mergers, which could have a negative impact on each of our and OBDEs future revenues and results of operations.

We and OBDE are also subject to restrictions on the conduct of each of our and OBDEs businesses prior to the completion of the Mergers as provided in the Merger Agreement, generally requiring OBDE and us to conduct business only in the ordinary course and subject to specific limitations, including, among other things, certain restrictions on each of our and OBDEs respective ability to make certain investments and acquisitions, sell, transfer or dispose of our and OBDEs respective assets, amend each of our and OBDEs respective organizational documents and enter into or modify certain material contracts. condition and/or operating results. These restrictions could prevent OBDE or us from pursuing otherwise attractive business opportunities, industry developments and future opportunities and may otherwise have a significant negative impact on the respective future investment income and results of operations of each of us and/or the combined company following the Mergers.

If the Mergers do not close, we will not benefit from the expenses incurred in pursuit of the Mergers.

The Mergers may not be completed. If the Mergers are not completed, we will have incurred substantial expenses for which no ultimate benefit will have been received. We have incurred out-of-pocket expenses in connection with the Mergers for investment banking, legal and accounting fees and financial printing and other related charges, much of which will be incurred even if the Mergers are not completed. 

The termination of the Merger Agreement could negatively impact us.

If the Merger Agreement is terminated, there may be various consequences, including:

our business may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Mergers, without realizing any of the anticipated benefits of completing the Mergers;

the market price of our common stock might decline to the extent that the market price prior to termination reflects a market assumption that the Mergers will be completed; and

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the risks described in our Annual Report on Form 10-K payment of any termination fee, if required under the circumstances, could adversely affect our financial condition and liquidity.

The Merger Agreement limits our ability to pursue alternatives to the Mergers.

The Merger Agreement contains provisions that limit our ability to discuss, facilitate or commit to competing third party proposals to acquire all or a significant part of us. These provisions, which are typical for transactions of this type, include a termination fee of $57.6 million payable by third parties to OBDE under certain circumstances. Such provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of us from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the Mergers or might result in a potential competing acquirer proposing to pay a lower per share price to acquire us than it might otherwise have proposed to pay.

The Mergers are subject to closing conditions, including shareholder approvals, that, if not satisfied or (to the extent legally allowed) waived, will result in the Mergers not being completed, which may result in material adverse consequences to our business and operations.

The Mergers are subject to closing conditions, including certain approvals of our and OBDEs respective shareholders that, if not satisfied, will prevent the Mergers from being completed. The closing condition that OBDEs shareholders adopt the Merger Agreement and approve the Mergers may not be waived under applicable law and must be satisfied for the Mergers to be completed. If OBDE shareholders do not adopt the Merger Agreement and approve the Mergers and the Mergers are not completed, the resulting failure of the Mergers could have a material adverse impact on our business and operations. In addition, the closing condition that our shareholders approve the issuance of shares of our common stock pursuant to tand in our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024 for the fiscal year ended December 31, 2023 are not the Merger Agreement may not be waived and must be satisfied for the Mergers to be completed. If our shareholders do not approve the issuance of shares of our common stock pursuant to the Merger Agreement and the Mergers are not completed, the resulting failure of the Mergers could have a material adverse impact on our business and operations. In addition to the required approvals of our and OBDEs shareholders, the Mergers are subject to a number of other conditions beyond our control that may prevent, delay or otherwise materially adversely affect completion of the Mergers. We cannot predict whether and when these other condonly risks facing us. Additions will be satisfied.

We will be subject to operational uncertainties and contractual restrictions while the Mergers are pending.

Uncertainty about the effect of the Mergers may have an adverse effect on us and, consequently, on the combined company following completion of the Mergers.

These uncertainties may cause those that deal with us to seek to change their existing business relationships with us. In addition, the Merger Agreement restricts us from taking actions that we might otherwise consider to be in our best interests. These restrictions may prevent us from pursuing certain business opportunities that may arise prior to the completion of the Mergers.

Litigation filed against us and OBDE in connection with the Mergers could result in substantial costs and could delay or prevent the Mergers from being completed.

From time to time, we and OBDE may be subject to legal actions, including securities class action lawsuits and derivative lawsuits, as well as various regulatory, governmental and law enforcement inquiries, investigations and subpoenas in connection with the Mergers. These or any similar securities class action lawsuits and derivative lawsuits, regardless of their merits, may result in substantial costs and divert management time and resources. An adverse judgment in such cases could have a negative impact on the liquidity and financial condition of us and/or the combined company following the Mergers or could prevent the Mergers from being completed.

We and OBDE may, to the extent legally allowed, waive one or more conditions to the Mergers without resoliciting shareholder approval.

Certain conditions to our and OBDEs obligations to complete the Mergers may be waived, in whole or in part, to the extent legally allowed, either unilaterally or by agreement of us and OBDE. In the event that any such waiver does not require resolicitation of shareholders, the parties to the Merger Agreement will have the discretion to complete the Mergers without seeking further shareholder approval. The conditions in the Merger Agreement requiring the approval of our shareholders and OBDE shareholders, however, cannot be waived.

The market price of our common stock after the Mergers may be affected by factors different from those affecting our common stock currently.

Our business and OBDEs business differ in some respects and, accordingly, the results of operations of the combined companal risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and the market price of our common stock after the Mergers may be affected by factors different from those currently affecting the independent results of operations of each of us and OBDE and the market prices of our common stock. These factors include a larger shareholder base and a different capital structure. Accordingly, our historical trading prices and financial results may not be indicative of these matters for the combined company following the Mergers.

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Our shareholders and OBDE shareholders do not have appraisal rights in connection with the Mergers.

Appraisal rights are statutoradversely rights that enable shareholders to dissent from certain extraordinary transactions, such as certain mergers, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the applicable transaction. Under Maryland law, holders of shares of OBDE common stock and oaffect our shareholders will not have rights to an appraisal of the fair value of their shares in connection with the Mergers.

The Mergers may not be treated as a tax-free reorganization under Section 368(a) of the Code.

We and OBDE intend that the Mergers will qualify as a tax-free reorganization under Section 368(a) of the Code, and each expect to receive a customary legal opinion to that effect. However, if the IRS or a court determines that the Mergers should not be treated as a tax-free reorganization under Section 368(a) of the Code, then a shareholder would generally recognize gains or losses for U.S. federal income tax purposes upon the exchange of OBDE common stock for our common stock in the Mergers.

The combined company may incur adverse tax consequences if either us or OBDE have failed or fails to qualify for taxation as a RIC for United States federal income tax purposes.

Each of us and OBDE have operated in a manner that it believes has allowed it to qualify as a RIC for U.S. federal income tax purposes under the Code and intends to continue to do so through and (with respect to us) following the Mergers. In order to qualify as a RIC, a corporation must satisfy numerous requirements relbusiness, financial condition and/or operating to, among other things, the nature of its assets and income and its distribution levels. If we or OBDE have failed or fails to qualify as a RIC for U.S. federal income tax purposes, the combined company may have significant tax liabilities, or may have to make significant distributions and pay penalty or excise taxes in order to maintain RIC qualification. These liabilities could substantially reduce the combined companys cash available for distribution to its shareholders and the value of our common stock. In addition, if either we or OBDE have failed or fail to qualify as a RIC for U.S. federal income tax purposes, the analysis of the Mergers as a tax-free reorganization could be impacted.results.