Fifth Street Asset Management Inc (NASDAQ:FSAM) has finalized a definitive asset purchase deal with Oaktree Capital Management, L.P., an associate of Oaktree Capital Group, LLC, under which Oaktree will turn the new investment consultant to 2 Business Development Companies: Fifth Street Finance Corp. and Fifth Street Senior Floating Rate Corp.
Oaktree will compensate gross cash consideration of $320 million to Fifth Street Management LLC, an affiliate of FSAM, upon the completion of the deal. The shares of common stock of FSFR and FSC owned by Fifth Street Holdings L.P. are not part of this deal. This transaction is projected to be completed in Q4 2017.
The deal follows a strategic assessment performed by the Board of Directors and FSAM management team, including a Special Committee, together with financial and legal advisors, of a range of options to increase the value of the Fifth Street platform. It was reported that a Special Committee of Fifth Street Asset Management’s Board of Directors, established to assess the asset sale deal and pertinent matters, and Board of Directors each consistently decided that this deal is in the best interest of company and its stockholders.
Leonard M. Tannenbaum, the CEO and Chairman of Fifth Street Asset Management, reported that they consider this deal combining company’s established presence in the BDC division and Oaktree’s extensive credit expertise presents a compelling value for company’s assets and enables the FSFR and FSC stockholders to participate in the upcoming growth prospect of the portfolio under a diversified manager headed by an experienced investment team.
Oaktree’s long-term investment mechanism, focusing on downside protection and return consistency, along with its intended fee structure, made Oaktree the suitable manager to grow and stabilize the BDC portfolios, which should offer improved returns for FSFR and FSC stockholders in the coming period. They have suggested and fully support the FSFR and FSC boards’ decision to allow the deals with Oaktree.