Business Context and Reporting Period
Ares Capital Corporation filed a Form 8-K on March 30, 2018, reporting the amendment and restatement of its senior secured credit facility. The company is a Maryland-based business development company headquartered in New York.
Key Financial Metrics and Facility Details
The filing details the restructuring of the company's debt facility rather than reporting operational financial results such as revenue or profit.
- Total Facility Size: Increased by $25 million to $2.1 billion.
- Revolving Loan Tranche: $1.7 billion.
- Term Loan Tranche: $413.75 million.
- Accordion Feature: Allows for an increase of up to $1.0 billion under certain circumstances.
- Security: Secured by a material portion of assets and guaranteed by certain subsidiaries.
Material Changes Versus Prior Period
The primary material change is the extension of maturity dates and the increase in total commitment size:
- Revolving Period Extension: For $1.6 billion of commitments, the revolving period expiration was extended from January 4, 2021, to March 30, 2022.
- Maturity Date Extension: For the same $1.6 billion, the stated maturity date was extended from January 4, 2022, to March 30, 2023.
- Non-Extended Commitments: $45 million expires May 4, 2019 (maturity May 4, 2020); $50 million expires January 4, 2021 (maturity January 4, 2022).
- Covenants: The amendment did not change existing covenants, which include limitations on indebtedness, investments, and asset transfers.
Guidance, Risks, and Covenants
The filing outlines specific financial covenants and risks associated with the credit facility:
- Asset Coverage Ratio: The registrant must maintain a ratio of total assets (less total liabilities) to total indebtedness of not less than 2.0:1.0.
- Borrowing Base: Borrowings are subject to a borrowing base applying different advance rates to different asset types.
- Regulatory Leverage: Borrowings remain subject to leverage restrictions under the Investment Company Act of 1940.
- Events of Default: The facility includes usual and customary events of default for senior secured credit facilities.
The filing text does not provide specific revenue guidance, profit outlook, or cash flow projections for the reporting period.
Key Facts for Investor Verification
- Verify the exact terms of the "accordion" feature allowing for a $1.0 billion facility increase.
- Confirm the company's current compliance with the 2.0:1.0 asset coverage ratio covenant.
- Review the specific advance rates applied to the portfolio assets under the borrowing base.
- Check the status of the $95 million in commitments that were not extended to the 2022/2023 maturity dates.