Apollo Origination II (UL) Capital Trust

Type and regulation

• Delaware statutory trust formed on June 26, 2024.
• Newly organized, non-diversified, closed-end management investment company.
• Elects to be regulated as a Business Development Company (BDC) under the Investment Company Act of 1940.
• Elects to be treated as a Regulated Investment Company (RIC) under Subchapter M of the Internal Revenue Code.
• Externally managed and administered (no company employees).

Corporate history and structure

• Predecessor restructuring: merged with AOP II Capital Trust Two; the Company survived as a wholly owned subsidiary of Apollo Origination Partnership II (Unlevered AIV).
• Board of Trustees: three members, two of whom are Independent Trustees.
• Committees: Audit Committee and Nominating and Corporate Governance Committee established.
• Adviser: Apollo Credit Management, LLC (ACM), an affiliate of Apollo Global Management, Inc. (Apollo).
• Administrator: ACM acts as Administrator and provides office space at 9 West 57th Street, New York, NY.
• License: granted to use the “Apollo” name.

Investment objective and strategy

• Objective: generate current income and, to a lesser extent, long-term capital appreciation.
• Focus: global private credit, primarily originated secured loans or similar debt instruments (e.g., bonds, debentures) to corporate borrowers with EBITDA generally $100 million or greater.
• Geography: predominantly private U.S. companies, with the ability to invest in European and other non-U.S. issuers.
• Portfolio guidance:
  • At least 80% of the portfolio to loans to large private U.S. borrowers (EBITDA ≥ $100 million, subject to adjustments).
  • Up to 20% in other private credit investments (including private middle-market U.S. and European borrowers and structured financing solutions such as syndicated loans and CLOs).
• Equity participation: may include equity interests (common stock, preferred stock, warrants, options) as part of financing solutions.
• Co-investments and related investments: may invest in loans or securities that refinance or repay debt owned by other Apollo funds and may co-invest with other Apollo funds.
• Approach: private equity–style, downside-protected, asset-level due diligence using Apollo’s platform and relationships.

Portfolio construction and risk management

• Loan profile: primarily secured senior loans (first or second lien) with covenants and collateral; focus on downside protection.
• Equity and registration rights: potential use of warrants or equity rights and potential registration rights on equity.
• Diversification: preference for diversified portfolio and avoidance of outsized industry or borrower concentration.
• Investment terms: generally five- to eight-year terms on senior loans, with many investments having shorter expected average lives; some instruments may be covenant-lite.
• Liquidity and valuation: most investments are illiquid and not publicly traded; valuations are fair value determined by the Adviser under Board oversight, with independent valuation firms assisting as needed (Level 3).
• Leverage: does not intend to leverage to the extent typical for other BDCs; targets 150% asset coverage after any leverage (allowed up to 2x debt per $1 of net assets, subject to compliance).
• Derivatives: intends to be a limited derivatives user under Rule 18f-4; hedging allowed but generally limited to 10% of net assets (excluding certain hedges).

Capital raise and capital structure

• Private offering of Common Shares; capital commitments and draws governed by a Subscription Agreement.
• Initial closing (Closing Date): January 21, 2025; one shareholder admitted in exchange for $800 million in capital commitments.
• Drawdown history under the Commitment Period:
  • March 6, 2025: 711,181 shares issued; $18 million paid.
  • March 24, 2025: 983,362 shares issued; $25 million paid.
  • August 6, 2025: 570,342 shares issued; $15 million paid.
  • September 11, 2025: 1,508,865 shares issued; $40 million paid.
  • November 21, 2025: 1,114,827 shares issued; $30 million paid.
  • December 19, 2025: 3,143,491 shares issued; $85 million paid.
• Drawdown pricing: Capital Drawdown Purchases priced at NAV per Common Share as of the drawdown date (calculated within 48 hours, excluding Sundays and holidays), subject to exceptions.
• Commitment Period: ends on the three-year anniversary of the Closing Date (around January 21, 2028), with possible extensions.
• Term: ends on August 1, 2030, with a one-year extension at the Adviser’s discretion and possible additional extension by the Board.
• Distributions: generally paid quarterly, subject to asset coverage, excise tax considerations, and regulatory requirements.

Fees and payments

• Adviser: Apollo Credit Management, LLC (ACM) provides management services under an Advisory Agreement.
• Base management fee: 0.70% per year of the Company’s net assets (calculated monthly and paid quarterly in arrears).
• Administrator: ACM provides administrative and compliance services; the Company reimburses the Administrator for expenses, including personnel and overhead.
• Expense allocation: the Company bears most operating costs (valuation, professional fees, transfer agent, custodial fees, insurance, taxes, audits, etc.), including the Adviser’s and Administrator’s allocable costs not covered by the Adviser.
• Trustees: Independent Trustees’ fees and expenses are borne by the Company; Trustees receive no direct compensation beyond those fees and expense reimbursements.

Tax status and distributions

• Tax election: intends to be treated as a RIC for U.S. federal income tax purposes and to qualify annually.
• RIC requirements:
  • At least 90% of gross income from qualifying categories (dividends, interest, gains, etc.).
  • Quarterly diversified asset tests limiting exposure to single issuers and sectors.
  • Distribute at least 90% of investment company taxable income to shareholders to avoid corporate-level tax.
• If not qualified as a RIC, the Company would be taxed at corporate rates with distributions taxed to shareholders accordingly.
• U.S. shareholders: distributions generally taxed as ordinary income or, for certain income components, as qualified dividends; capital gains distributions taxed as long-term capital gains.
• Non-U.S. shareholders: subject to U.S. withholding taxes on distributions unless exemptions or treaty benefits apply; pass-through provisions, withholding, and required forms (e.g., Form W-8BEN-E) can apply.
• Taxable subsidiaries: the Company may invest through taxable subsidiaries, which could be subject to corporate taxes at the subsidiary level.
• Tax law changes: potential changes to tax law could affect distributions, taxes, and compliance.

Employees and resources

• The Company has no employees.
• Investment activities and day-to-day management are performed by ACM (the Adviser) and the Administrator.
• The Adviser accesses Apollo’s broader platform and resources; potential conflicts of interest may arise from allocation of opportunities and related-party transactions.

Key risks and regulatory/operational details

• Investments are largely illiquid; Common Shares have limited or no redemption rights.
• Competition from larger funds, banks, and other financing sources.
• Potential conflicts of interest from allocation of opportunities, co-investments, and related-party arrangements.
• ERISA and Section 4975 compliance and plan asset considerations for Benefit Plan Investors.
• Dependence on information systems and third-party service providers, including cybersecurity risks.
• Governance provisions include exclusive forum provisions and derivative action limitations in the Declaration of Trust.
• Leverage and collateral exposure: adverse asset value movements can affect NAV and distributions.
• Adviser and Administrator may resign with notice (120 days for the Adviser; 60 days for the Administrator), which could disrupt operations.

Notable numbers and recent activity

• Initial capital commitments: $800 million.
• Drawdown dates with share counts and amounts as listed above.
• Board composition: three Trustees; two Independent.
• No employees; operations rely on ACM and the Administrator.
• Private offering status and NAV-based pricing for drawdowns; Commitment Period and Term dates as described.

Summary

Apollo Origination II (UL) Capital Trust is a non-diversified, externally managed BDC/RIC focused on private U.S. and select non-U.S. private credit investments, primarily secured loans to large corporate borrowers. The Company may include equity components and engage in occasional co-investments with other Apollo funds. Investment sourcing, due diligence, portfolio management, and administration are provided by ACM and Apollo’s platform, with a goal of producing current income and some capital appreciation while operating within regulatory liquidity and asset-coverage constraints.