Business Context and Reporting Period
Company: Ares Capital Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: February 2, 2012
Event: Entry into a Material Definitive Agreement and creation of a direct financial obligation.
Key Financial Metrics
This filing details a debt issuance rather than periodic operating results. Specific revenue, profit, or cash flow figures are not provided in this document.
- Debt Issuance: $143,750,000 aggregate principal amount of 7.00% Senior Notes due 2022.
- Overallotment: Includes $18,750,000 issued pursuant to the full exercise of the underwriters' overallotment option.
- Interest Rate: 7.00% per annum, payable quarterly.
- Maturity Date: February 15, 2022.
- First Interest Payment: May 15, 2012.
- Redemption Terms: Callable at the Company's option on or after February 15, 2015, at a redemption price of $25 per security plus accrued interest.
Material Changes and Use of Proceeds
The Company entered into a Second Supplemental Indenture with U.S. Bank National Association to facilitate the note issuance. The transaction closed on February 2, 2012.
Use of Proceeds: The Company expects to use net proceeds to:
- Repay outstanding indebtedness under its revolving credit facility.
- Repay outstanding indebtedness under its revolving funding facility.
- Fund general corporate purposes, including investments in its investment backlog and pipeline.
Guidance, Risks, and Covenants
Covenants: The Indenture requires compliance with Section 18(a)(1)(A) as modified by Section 61(a)(1) of the Investment Company Act of 1940. It also mandates the provision of financial information to Note holders and the Trustee if the Company ceases to be subject to reporting requirements under the Securities Exchange Act of 1934.
Risks and Contingencies: The filing notes that covenants are subject to important limitations and exceptions described in the full Indenture text. The Notes are direct unsecured obligations of the Company.
Investor Verification Checklist
- Verify the full text of the Second Supplemental Indenture (Exhibit 4.1) for specific covenant limitations and exceptions.
- Confirm the impact of the $143.75 million debt issuance on the Company's leverage ratios and liquidity position in subsequent 10-Q or 10-K filings.
- Review the Registration Statement on Form N-2 (File No. 333-174716) for detailed risk factors associated with the Notes.
- Monitor the Company's ability to service the 7.00% interest payments commencing May 15, 2012.