Business Context and Reporting Period
Company: Ares Capital Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: August 10, 2017
Event: Entry into a Material Definitive Agreement and creation of a direct financial obligation.
Key Financial Metrics
This filing reports a specific debt issuance event rather than periodic financial performance metrics (e.g., revenue, profit, or cash flow).
- Debt Issuance: $750,000,000 aggregate principal amount of 3.500% Notes due 2023.
- Interest Rate: 3.500% per annum.
- Interest Payment Schedule: Semiannually on February 10 and August 10, commencing February 10, 2018.
- Maturity Date: February 10, 2023.
- Debt Type: Direct unsecured obligations.
- Use of Proceeds: Repayment of certain outstanding indebtedness under existing debt facilities; potential reborrowing for general corporate purposes and portfolio investments.
Material Changes
The primary material change is the execution of the Seventh Supplemental Indenture with U.S. Bank National Association (Trustee) to facilitate the $750 million note offering. The transaction closed on August 10, 2017.
Guidance, Outlook, and Risks
Management Commentary: The Company intends to use net proceeds to refinance existing debt. Any reborrowed funds may be used for general corporate purposes, including investing in portfolio companies.
Covenants and Contingencies:
- Change of Control Repurchase: If a change of control occurs and the Notes are downgraded to below investment grade by Fitch, Inc. and Standard & Poor's, the Company must offer to repurchase the Notes at 100% of principal plus accrued interest.
- Reporting Requirements: The Indenture requires compliance with specific Investment Company Act provisions and mandates the provision of financial information to Note holders if the Company ceases to be subject to Exchange Act reporting requirements.
Investor Verification Checklist
- Verify the closing of the $750 million 3.500% Notes due 2023.
- Confirm the specific outstanding indebtedness being repaid with the net proceeds.
- Review the full text of the Seventh Supplemental Indenture (Exhibit 4.1) for detailed covenants and redemption terms.
- Monitor the Company's credit ratings with Fitch and Standard & Poor's to assess exposure to the change of control repurchase provision.