Ares Capital (ARCC) 8-KEntry into a Material Definitive Agreement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

_____________________________________________________________________  

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported) March 31, 2022

 

ARES CAPITAL CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

 

(Former Name or Former Address, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

 

    On March 31, 2022, Ares Capital Corporation (the “Registrant”) amended and restated its senior secured credit facility, among the Registrant, the lenders party thereto, and JPMorgan Chase Bank, N.A., as the administrative agent (as amended and restated, the “A&R Credit Facility”). The A&R Credit Facility, among other things, (a) increased the total commitment under the A&R Credit Facility from approximately $4.2 billion to approximately $4.8 billion, (b) extended the expiration of the revolving period for lenders electing to extend their revolving commitments in an amount equal to approximately $3.5 billion from March 31, 2025 to March 31, 2026, during which period the Registrant, subject to certain conditions, may make borrowings under the A&R Credit Facility, (c) extended the stated maturity date for lenders electing to extend their revolving commitments in an amount equal to approximately $3.5 billion from March 31, 2026 to March 31, 2027, (d) extended the stated maturity date for $995 million of the lenders electing to extend their term loan commitments from March 31, 2026 to March 31, 2027 and (e) updated certain currency reference rates, including replacing the LIBOR rate with Term SOFR plus an applicable credit spread adjustment. Lenders who elected not to extend their revolving commitments in an amount equal to approximately $150 million and $114 million will remain subject to a revolving period expiration of March 30, 2024 and March 31, 2025, respectively, and a stated maturity date of March 30, 2025 and March 31, 2026, respectively. Lenders who elected not to extend their term loan commitments in an amount equal to $50 million and $34 million will remain subject to a maturity date of March 30, 2025 and March 31, 2026, respectively

    The A&R Credit Facility is composed of a revolving loan tranche equal to approximately $3.7 billion and a term loan tranche in an amount equal to approximately $1.1 billion. The A&R Credit Facility includes an “accordion” feature that allows the Registrant, under certain circumstances, to increase the size of the facility by an amount up to approximately $2.4 billion.

 

    The A&R 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.

 

    Under the A&R 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 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 not representing indebtedness) to total indebtedness, of the Registrant and its subsidiaries (subject to certain exceptions), of not less than 1.5:1.0, 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 Credit Facility also continues to include usual and customary events of default for senior secured credit facilities of this nature.

 

    In addition to the asset coverage ratio described above, borrowings under the A&R 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.

 

    The description above is only a summary of the material provisions of the A&R Credit Facility and is qualified in its entirety by reference to a copy of the A&R Credit Facility, which is filed as Exhibit 10.1 to this current report on Form 8-K and incorporated by reference herein.