Wow! Oaktree Earns Back 58% of Osmose Investment in Less than a Year

In just 11 months of ownership, Oaktree Capital Management has gotten two dividends from Osmose Holdings that have returned more than half of Oaktree’s equity investment in the company, peHUB has learned.

The two dividends total $110 million. Oaktree made a $189 million equity investment in Osmose in May 2012, according to Thomson Reuters Loan Pricing Corp.

Osmose this week boosted a $355 million term loan by $50 million to $405 million, Moody’s Investors Service said in an April 16 note. The company will use the increase to fund a sponsor dividend and lower pricing across the entire $405 million loan, Moody’s says. After fees and expenses, most of the additional $50 million will be used to pay the distribution, peHUB has learned. This would be the second payout for Oaktree.

“Two returns of capital in less than a year would be considered aggressive,” says Ben Nelson, a Moody’s corporate finance analyst.

The first distribution came last November. Osmose, at the time, increased a $255 million loan to $315 million, Moody’s says. The boost was used to fund a “return of capital” to Oaktree, a November Moody’s report says.

Moody’s says the second dividend is “credit negative” but doesn’t impact the company’s ratings or outlook. Osmose has a ‘B2’ corporate family rating and ‘B2’ senior secured rating, Moody’s says.

Officials for Osmose and Oaktree couldn’t be reached for comment.

Osmose, based in Buffalo, N.Y., makes wood preservation chemicals and provides infrastructure services to utilities and railroads.

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