Item 1.01 Entry into a Material Definitive Agreement.
On June 11, 2020, Ares Capital Corporation (the "Company") entered into (i) a
Purchase and Sale Agreement (the "Purchase and Sale Agreement") with ARCC FB
Funding LLC, a wholly owned subsidiary of the Company ("AFB LLC"), pursuant to
which the Company will sell to AFB LLC certain loans it has originated or
acquired, or will originate or acquire (the "Loans") from time to time, (ii) a
Revolving Credit and Security Agreement (the "Credit and Security Agreement"
and, together with the Purchase and Sale Agreement, the "Agreements") with AFB
LLC, as the borrower, BNP Paribas ("BNP"), as the administrative agent and
lender, the Company, as the equityholder and as the servicer, and U.S. Bank
National Association, as collateral agent, pursuant to which BNP has agreed to
extend credit to AFB LLC in an aggregate principal amount up to $300,000,000 at
any one time outstanding (the "BNP Funding Facility") and (iii) various
supporting documentation, including an account control agreement.
The obligations of AFB LLC under the BNP Funding Facility are secured by all of
the assets held by AFB LLC, including the Loans sold or transferred by the
Company to AFB LLC. The BNP Funding Facility is a revolving funding facility
with a reinvestment period ending June 11, 2023 and a final maturity date of
June 11, 2025. The reinvestment period and final maturity are both subject to a
one-year extension by mutual agreement. Subject to certain exceptions, the
interest charged on the BNP Funding Facility is based on LIBOR, or, if LIBOR is
not available, a "base rate" (which is the greater of a prime rate and the
federal funds rate plus 0.50%), plus a margin that generally ranges between
2.65% and 3.15% (depending on the types of assets such advances relate to), with
a weighted average margin floor for all classes of advances of (i) 2.75% during
the reinvestment period and (ii) 3.25% following the reinvestment period. Under
the Agreements, the Company and AFB LLC, as applicable, have made
representations and warranties regarding the Loans, as well as their businesses,
and are required to comply with various covenants, servicing procedures,
limitations on disposition of Loans, reporting requirements and other customary
requirements for similar revolving funding facilities. The Credit and Security
Agreement includes usual and customary events of default for revolving funding
facilities of this nature, including allowing BNP, upon a default, to accelerate
and foreclose on the Loans and to pursue the rights under the Loans directly
with the obligors thereof.
Borrowings under the BNP Funding Facility are subject to various covenants under
the Agreements as well as 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 BNP
Funding Facility and is qualified in its entirety by reference to copies of the
Credit and Security Agreement and the Purchase and Sale Agreement, which are
filed as Exhibits 10.1 and 10.2, respectively, to this current report on
Form 8-K and incorporated by reference herein.
As of June 11, 2020, following the closing of the BNP Funding Facility, the
Company had an aggregate total of $10.8 billion of committed debt capital, of
which $7.6 billion of principal debt was outstanding. As of this same date, the
Company had available liquidity of approximately $3.5 billion, including
approximately $300 million in cash and cash equivalents and $3.2 billion
available for additional borrowings under its credit facilities, subject to
borrowing base and other restrictions.
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 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit Number Description
10.1 Revolving Credit and Security Agreement, dated as of June 11,
2020, among ARCC FB Funding LLC, as borrower, the lenders from
time to time parties thereto, BNP Paribas, as administrative
agent and lender, Ares Capital Corporation, as equityholder and
servicer, and U.S. Bank National Association, as collateral
agent.
10.2 Purchase and Sale Agreement, dated as of June 11, 2020, between
ARCC FB Funding LLC, as purchaser, and Ares Capital Corporation,
as seller.
2
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses