Blue Owl Capital Reportedly Provides Update on Pending Merger and Shareholder Claims
According to the DI Wire today, Blue Owl Capital Corporation (OBDC) and Blue Owl Capital Corporation III (OBDE), two middle-market lending business development companies, reportedly shared updates on their pending merger.
Both companies reportedly addressed shareholder claims alleging the merger’s registration statement was misleading and incomplete. While reportedly denying the shareholder claims, the companies reportedly voluntarily supplemented disclosures to mitigate potential litigation costs.
Key updates include:
- OBDE declared a special dividend of $0.52 per share, payable by Jan. 31, 2025.
- Disclosure of the OBDC special committee members and additional financial details.
The merger, reportedly announced in August 2024, will make Blue Owl Capital Corporation the surviving entity, managed by Blue Owl Credit Advisors LLC, with current OBDC leadership retaining their roles. The transaction reportedly awaits shareholder and regulatory approvals and is expected to close in Q1 2025.
Blue Owl Capital, Inc., the parent company, was created in 2021.
Higher Interest Rates Effect on BDCs
According to a report from BlueVault, there has been a shift in the performance of non-traded BDCs. A forecast from Fitch for BDCs in 2024 reported that things might get worse, with the quality of assets possibly going down.
This could happen because the companies BDCs invest in might have more debt due to higher interest rates, and it might be harder for them to get money because the economy is slowing down. Investing in non-traded Business Development Companies (BDCs) is similar to investing in non-traded Real Estate Investment Trusts (REITs). BDCs gather money from investors to invest in various businesses, especially small and medium-sized ones, with the goal of helping them grow. Successful investments can bring good returns and tax benefits.
However, BDCs often provide high-risk loans to private equity-backed companies, which can be risky. If interest rates rise or there’s inflation, BDCs might face tough times.
Risks of Investing in BDCs
BDCs are high risk, complex investments. You should be aware of the following:
- Risk of losing money if the financial institutions where they keep their money fail.
- Uncertainty in the economy could harm their business.
- If corporate loans lose value, it could reduce their overall investment value and lead to losses.
- Economic downturns could hurt the businesses they invest in, affecting their profits.
Broker Due Diligence
Broker dealers are required to perform adequate due diligence on any investment they recommend. They must ensure that all recommendations are suitable for the investor. Recommendations should be appropriate in light of the investor’s age, risk tolerance, net worth, and investment experience. Broker dealers that fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses in a FINRA arbitration claim.
Potential Lawsuits to Recover Investment Losses
The White Law Group continues to investigate potential claims against the broker dealers that sold high risk BDCs to investors. The high commission structure of these products leads to the possibility that unscrupulous financial advisors will push these products unsuitably to maximize their own commissions.
If you have suffered losses with Blue Owl Capital and would like to speak to a securities attorney about the potential to recover your investment losses, please call The White Law Group at 1-888-637-5510 for a free consultation.
About The White Law Group
The White Law Group, LLC is a national law firm in securities fraud, securities arbitration, investor protection, and securities regulation and compliance. With offices in Chicago, Illinois and Seattle, Washington, the firm is dedicated to assisting investors across all 50 states with claims against their brokerage firms. Since its founding in 2010, The White Law Group has handled over 800 FINRA arbitration cases.
With more than 35 years of experience in securities law, The White Law Group has the knowledge and expertise to help investors recover losses resulting from securities fraud.
Last modified: January 3, 2025
