Business Context and Reporting Period
Ares Capital Corporation (ARCC), a Maryland-based business development company, filed this Form 8-K on June 10, 2019. The report details the entry into a material definitive agreement regarding a new debt issuance.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, or operating margins. The primary financial metric disclosed is the creation of a new debt obligation:
- New Debt Issuance: $650,000,000 aggregate principal amount of 4.200% Notes due 2024.
- Interest Rate: 4.200% per annum, payable semiannually.
- Maturity Date: June 10, 2024.
- Debt Type: Direct unsecured obligations.
Material Changes
The material change reported is the execution of the Tenth Supplemental Indenture with U.S. Bank National Association. The Company intends to use the net proceeds from this offering to repay certain outstanding indebtedness under its existing debt facilities. The Company may subsequently reborrow under these facilities for general corporate purposes, including investments in portfolio companies.
Guidance, Risks, and Covenants
The filing outlines specific covenants and contingencies associated with the new Notes:
- Change of Control Repurchase: Upon a change of control repurchase event (defined as a change of control combined with a below investment-grade rating by Fitch and S&P), the Company must offer to purchase the Notes at 100% of the principal amount plus accrued interest.
- Regulatory Compliance: The Indenture requires compliance with Section 18(a)(1)(A) of the Investment Company Act of 1940.
- Reporting Obligations: The Company must provide financial information to Note holders and the Trustee if it ceases to be subject to reporting requirements under the Securities Exchange Act of 1934.
- Redemption: The Notes may be redeemed in whole or in part at the Company's option at redemption prices set forth in the Indenture.
Investor Verification Checklist
- Verify the exact amount of outstanding indebtedness repaid with the net proceeds from the $650 million offering.
- Review the full text of the Tenth Supplemental Indenture (Exhibit 4.1) for specific redemption price schedules and limitations on covenants.
- Confirm the Company's current credit ratings with Fitch and S&P to assess the risk of a change of control repurchase event.
- Check subsequent filings to determine if the Company has reborrowed under its debt facilities as permitted.