Oaktree Specialty Lending Corporation (“OCSL”)and Oaktree Strategic Income II, Inc. (“OSI II”) entered into an agreement to merge together with OCSL as the surviving company, subject to stockholder approval and customary closing conditions. The Boards of Directors of both OCSL and OSI II, on the recommendation of separate special committees consisting only of certain independent directors, have unanimously approved the transaction.

Under the terms of the proposed merger, OSI II stockholders will receive an amount of shares of OCSL common stock with a net asset value (“NAV”) equal to the NAV of shares of OSI II common stock that they hold at the time of closing. The exchange ratio will result in an ownership split of the combined company based on the respective NAVs of each of OCSL and OSI II, each as determined shortly before closing. For illustrative purposes, based on June 30, 2022 NAVs and excluding transaction costs and tax-related distributions, OCSL would issue approximately 2.71 shares of its common stock for each share of OSI II common stock outstanding, resulting in pro forma ownership of 79.5% for current OCSL stockholders and 20.5% for current OSI II stockholders.

In support of the transaction, Oaktree Fund Advisors, LLC (“Oaktree”), the investment adviser for each of OCSL and OSI II, has agreed to waive $9.0 million of OCSL’s base management fees as follows: $6.0 million at a rate of $1.5 million per quarter (with such amount appropriately prorated for any partial quarter) in the first year following closing of the merger and $3.0 million at a rate of $750,000 per quarter (with such amount appropriately prorated for any partial quarter) in the second year following closing of the merger.

Armen Panossian, Chief Executive Officer and Chief Investment Officer of OCSL and OSI II and Chairman of OSI II, said, “We are delighted to announce the merger of OCSL and OSI II. Oaktree has managed both companies with similar investment mandates for several years, and, given the significant overlap in portfolio holdings, it makes sense to combine them. We look forward to leveraging the benefits of the combined company with greater scale and financial flexibility, while focusing on delivering the strong investment performance to which both sets of stockholders are accustomed.”

Key Transaction Highlights

• The merger is expected to be accretive to the net investment income of the combined company, reflecting anticipated operational synergies through the elimination of duplicative expenses, interest expense savings resulting from a streamlined capital structure and the waiver of $9.0 million of base management fees.

• The larger market capitalization following completion of the merger may result in greater secondary market trading liquidity and broader equity research coverage.

• The combination of two known, complimentary portfolios – including over 97% of OSI II’s investments that overlap with those of OCSL – will help to facilitate a seamless portfolio integration.

• The combined portfolio will result in improved portfolio metrics, including a reduced concentration of top-ten investment holdings.

• The combined company is expected to have improved access to more diverse, lower cost sources of debt capital and may provide it with a better opportunity for further debt optimization.

• On a pro-forma basis, the combined company had over $3 billion of assets invested in 158 portfolio companies as of June 30, 2022. The pro-forma investment portfolio is composed of 89% senior secured loans, 2% unsecured debt, 4% equity and 5% in joint venture interests. Credit quality of the combined portfolio is strong with no investments on non-accrual. On a pro-forma basis, the concentration of the top ten investments would be 21.8%, down from 22.6% and 23.6% for OCSL and OSI II, respectively.

• Prior to the anticipated closing in the second fiscal quarter of 2023, each of the OCSL and OSI II Boards of Directors intends to declare and pay ordinary course quarterly distributions. Additionally, to the extent necessary, the OSI II Board of Directors intends to declare a special distribution that will represent any previously undistributed taxable income. This distribution will help ensure that OSI II maintains its regulated investment company status and avoids paying excise tax.

The combined company will continue to be externally managed by Oaktree and all current OCSL officers and directors will remain in their current positions. The combined company will trade under the ticker symbol “OCSL” on the Nasdaq Global Select Market.

The transaction, which is intended to be treated as a tax-free reorganization, is subject to approval by OCSL and OSI II stockholders and other customary closing conditions. The transaction is expected to close in the second fiscal quarter of 2023.

Houlihan Lokey served as financial advisor and Stradley Ronon Stevens & Young, LLP serves as the legal counsel to the special committee of OCSL. Keefe, Bruyette & Woods, a Stifel Company, served as financial advisor and Sullivan & Cromwell LLP serves as the legal counsel to OSI II and its special committee. Kirkland & Ellis LLP serves as the legal counsel to OCSL and Oaktree.