Business Context and Reporting Period
This Form 8-K is filed by FS Investment Corporation (FSIC) for the reporting period ending June 9, 2011. The filing discloses a material definitive agreement entered into by a wholly-owned financing subsidiary, Arch Street Funding LLC, and the declaration of cash distributions by the board of directors.
Key Financial Metrics and Agreements
- Total Return Swap (TRS) Capacity: The maximum notional amount of the loan pool subject to the TRS with Citibank, N.A. was increased from $200 million to $300 million.
- Cash Distributions: Two regular semi-monthly cash distributions were declared at $0.033594 per share each.
- Payment Dates: Both distributions are scheduled for payment on June 30, 2011.
- Record Dates: The first distribution is for stockholders of record on June 14, 2011, and the second for stockholders of record on June 29, 2011.
Material Changes
The primary material change reported is the amendment and restatement of the confirmation letter agreement governing the TRS. This amendment increased the leverage capacity of the subsidiary's loan pool by $100 million. No other material terms of the TRS were altered. Additionally, the company announced a specific cash distribution schedule for the current period.
Guidance, Outlook, and Risks
The filing does not provide forward-looking guidance, management commentary on future outlook, or specific risk factors beyond the standard incorporation of the amended agreement by reference. The text notes that the description of the agreement is a summary qualified by the full provisions of the attached exhibit.
Investor Verification Checklist
- Verify the terms of the Amended and Restated Confirmation Letter Agreement (Exhibit 10.1) to confirm collateral requirements and margin calls associated with the increased $300 million notional amount.
- Confirm the exact record dates (June 14 and June 29, 2011) to ensure eligibility for the declared distributions.
- Review the attached press release (Exhibit 99.1) for any additional context regarding the distribution declaration.