Business Context and Reporting Period
Ares Capital Corporation filed a Form 8-K Current Report on September 25, 2012. The filing documents the entry into a material definitive agreement regarding a new debt issuance.
Key Financial Metrics and Transaction Details
- Debt Issuance: The Company issued $175,000,000 aggregate principal amount of 5.875% senior notes due 2022.
- Overallotment Option: Underwriters were granted an option to purchase up to an additional $26,250,000 of the notes.
- Interest Rate: 5.875% per annum, payable quarterly commencing January 1, 2013.
- Maturity Date: October 1, 2022.
- Redemption Terms: Notes may be redeemed in whole or in part at the Company's option on or after October 1, 2015, at a redemption price of $25 per security plus accrued interest.
- Use of Proceeds: Net proceeds are intended to repay certain outstanding indebtedness under existing debt facilities and for general corporate purposes, including potential investments in portfolio companies.
Note: This filing does not provide specific values for revenue, profit, cash flow, margins, or overall liquidity positions.
Material Changes
The primary material change is the creation of a new direct financial obligation through the issuance of the 2022 senior notes. This transaction closed on September 25, 2012, pursuant to a Registration Statement on Form N-2.
Outlook, Risks, and Covenants
- Covenants: The Indenture includes covenants requiring compliance with Section 18(a)(1)(A) of the Investment Company Act of 1940 (as modified by Section 61(a)(1)) and mandates the provision of financial information to noteholders if the Company ceases to be subject to Exchange Act reporting requirements.
- Trustee Role: U.S. Bank National Association serves as both the Trustee for the notes and the Company's custodian.
- Unusual Items: None reported in this specific filing.
Investor Verification Checklist
- Verify the final amount of the overallotment option exercised by underwriters.
- Confirm the specific outstanding indebtedness under existing facilities that was repaid with the net proceeds.
- Review the full text of the Third Supplemental Indenture (Exhibit 4.1) for detailed limitations and exceptions to covenants.
- Check subsequent filings for the impact of this new debt on the Company's leverage ratios and liquidity.