Business Context and Reporting Period
Company: Ares Capital Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: January 25, 2013
Event: Entry into a Material Definitive Agreement regarding a revolving funding facility.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, or overall liquidity metrics. It specifically details the terms of a debt facility amendment:
- Facility: Revolving funding facility (CP Funding Facility) with Wells Fargo Securities, LLC.
- Interest Rate Spreads (Post-Amendment):
- LIBOR-based: Ranges from 2.25% to 2.50% over LIBOR.
- Base Rate-based: Ranges from 1.25% to 1.50% over "base rate."
- Effective Rates as of Jan 25, 2013:
- Spread over one-month LIBOR: 2.25% (LIBOR was 0.2037%).
- Spread over "base rate": 1.25% (Base rate was 3.25%).
Material Changes Versus Prior Period
The filing reports a reduction in the interest rate spreads charged on the CP Funding Facility compared to the previous terms:
- Previous LIBOR Spread: 2.50% over LIBOR.
- New LIBOR Spread: Reduced to a range of 2.25% to 2.50% over LIBOR.
- Previous Base Rate Spread: 1.50% over base rate.
- New Base Rate Spread: Reduced to a range of 1.25% to 1.50% over base rate.
The specific spread applied is determined monthly based on the composition of the borrowing base relative to outstanding borrowings.
Guidance, Outlook, and Risks
Management Commentary: The filing summarizes the amendment to the loan agreement but does not provide forward-looking guidance or general outlook commentary.
Risks and Contingencies:
- Borrowings remain subject to the facility's various covenants.
- Borrowings are subject to leverage restrictions contained in the Investment Company Act of 1940, as amended.
Unusual Items: None reported in this filing.
Investor Verification Checklist
- Verify the full text of Exhibit 10.1 (Amendment No. 6 to Loan and Servicing Agreement) for complete covenant details.
- Confirm the current "borrowing base" composition to determine the exact applicable interest spread for the current month.
- Review the company's most recent 10-Q or 10-K for total outstanding borrowings under the CP Funding Facility to assess the impact of the rate change on interest expense.
- Check compliance status with leverage restrictions under the Investment Company Act of 1940.