Item 1.01 Entry into a Material Definitive Agreement.
On March 31, 2014, Ares Capital Corporation (the “Registrant”) entered into an agreement to amend and restate its senior secured revolving credit facility (as amended and restated, the “A&R Revolving Credit Facility”). The A&R Revolving Credit Facility, among other things, (a) increased the size of the facility from $1.06 billion to $1.17 billion, (b) increased the size of the letter of credit sub-facility from $125 million to $200 million, (c) extended the expiration of the revolving period from May 4, 2017 to May 4, 2018, during which period the Registrant, subject to certain conditions, may make borrowings under the facility and (d) extended the stated maturity date from May 4, 2018 to May 4, 2019.
Subject to certain exceptions, the stated borrowing rate under the A&R Revolving Credit Facility continues to be based on LIBOR plus an applicable spread of 2.00% or on an “alternate base rate” (as defined in the agreements governing the A&R Revolving Credit Facility) plus an applicable spread of 1.00%. The A&R Revolving Credit Facility continues to be secured by a material portion of the Registrant’s assets (excluding, among other things, investments held in and by certain subsidiaries of the Registrant or investments in certain portfolio companies of the Registrant) and guaranteed by certain subsidiaries of the Registrant.
The A&R Revolving Credit Facility includes an “accordion” feature that allows the Registrant, under certain circumstances, to increase the size of the facility to a maximum of approximately $1.76 billion.
Under the A&R Revolving Credit Facility, the Registrant has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation, covenants related to: (a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain investments, (c) limitations on certain asset transfers and restricted payments, (d) maintaining a certain minimum stockholders’ equity, (e) maintaining a ratio of total assets (less total liabilities) to total indebtedness, of the Registrant and its subsidiaries, of not less than 2.0:1.0, and (f) limitations on the creation or existence of agreements that prohibit liens on certain properties of the Registrant and certain of its subsidiaries. The A&R Revolving Credit Facility also continues to include usual and customary events of default for senior secured revolving credit facilities of this nature.
In addition to the asset coverage ratio described above, borrowings under the A&R Revolving Credit Facility (and the incurrence of certain other permitted debt) will continue to be subject to compliance with a borrowing base that will apply different advance rates to different types of assets in the Registrant’s portfolio.
Borrowings under the A&R Revolving Credit Facility will also continue to be subject to the leverage restrictions contained in the Investment Company Act of 1940, as amended.
The description above is only a summary of the material provisions of the A&R Revolving Credit Facility and is qualified in its entirety by reference to a copy of the A&R Revolving Credit Facility, which is filed as Exhibit 10.1 to this current report on Form 8-K and incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of Registrant.
The information contained in Item 1.01 to this current report on Form 8-K is by this reference incorporated in this Item 2.03.
Item 7.01 Regulation FD Disclosure.
On April 1, 2014, the Registrant issued a press release announcing that it entered into the A&R Revolving Credit Facility. A copy of the press release is filed herewith as Exhibit 99.1 and incorporated herein by reference.
The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.
