ACAS American Capital, Ltd.

Filed by Ares Capital Corporation

pursuant to Rule 425 under the Securities Act of 1933
and deemed filed under Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: American Capital, Ltd.

Commission File No. 814-00149

  SUPPLEMENT TO THE JOINT PROXY
STATEMENT/PROSPECTUS

FOR THE SPECIAL MEETING OF ARES CAPITAL STOCKHOLDERS

AND THE ANNUAL MEETING OF AMERICAN CAPITAL STOCKHOLDERS
TO BE HELD ON DECEMBER 15, 2016

This document supplements the joint proxy statement/prospectus, dated October 18, 2016 (the “Proxy Statement”), provided to you in connection with the proposed mergers (the “mergers”) of (1) Orion Acquisition Sub, Inc. (“Acquisition Sub”), a wholly owned subsidiary of Ares Capital Corporation (“Ares Capital”), with and into American Capital, Ltd. (“American Capital”), with American Capital being the surviving entity of such merger (the “merger”) and (2) American Capital Asset Management, LLC, a wholly owned portfolio company of American Capital (“ACAM”) with and into Ivy Hill Asset Management, L.P., a wholly owned portfolio company of Ares Capital (“IHAM”), with IHAM being the surviving entity in such merger, each pursuant to the Agreement and Plan of Merger, as such agreement may be amended from time to time (the “merger agreement”), dated as of May 23, 2016, among Ares Capital, American Capital, Acquisition Sub, IHAM, Ivy Hill Asset Management GP, LLC, ACAM, and solely for the limited purposes set forth therein, Ares Capital Management LLC.

Except as described in this document, the information provided in the Proxy Statement continues to apply. To the extent that information in this document differs from, updates or conflicts with information contained in the Proxy Statement, the information in this document is more current. This is the case even if such section of the Proxy Statement is not specifically referenced in this document. Terms used but not defined in this document shall have the meanings given to such terms in the Proxy Statement.

This document is dated November 22, 2016.

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SUPPLEMENTAL INFORMATION

The following supplemental information should be read in conjunction with the Proxy Statement, which you are urged to read in its entirety.

Comparative Fees and Expenses

The following information supplements the information provided in “Comparative Fees and Expenses” on pages 52 through 57 of the Proxy Statement, the first full question on page 15 of “Questions and Answers about the American Capital Annual Meeting, the Ares Capital Special Meeting and the Transactions” in the Proxy Statement and “Risk Factors—Risks Relating to the Transactions—Ares Capital may be unable to realize the benefits anticipated by the Transactions, including estimated cost savings and synergies, or it may take longer than anticipated to achieve such benefits” on pages 99 and 100 of the Proxy Statement:

COMPARATIVE FEES AND EXPENSES

The following tables are intended to assist you in understanding the costs and expenses that an investor in the common stock of American Capital and Ares Capital bears directly or indirectly and, based on the assumptions set forth below, the pro forma costs and expenses that an investor in the combined company following the completion of the Transactions may bear directly or indirectly. American Capital and Ares Capital caution you that some of the percentages indicated in the tables below are estimates and may vary. Except where the context suggests otherwise, whenever this document contains a reference to fees or expenses paid or to be paid by “you,” “American Capital” or “Ares Capital,” stockholders will indirectly bear such fees or expenses as investors in American Capital or Ares Capital, as applicable.

(1)                                  See the unaudited pro forma condensed consolidated financial information and explanatory notes included elsewhere in this document for more information illustrating the effect of the mergers on Ares Capital’s financial position and results of operations based upon Ares Capital’s and American Capital’s respective historical financial positions and results of operations.

(2)                                  Purchases of shares of common stock of American Capital or Ares Capital on the secondary market are not subject to sales charges, but may be subject to brokerage commissions or other charges. The table does not include any sales load (underwriting discount or commission) that stockholders may have paid in connection with their purchase of shares of American Capital or Ares Capital common stock.

(3)                                  The expenses of the dividend reinvestment plan are included in “Other expenses.”

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(4)                                  “Consolidated net assets attributable to common stock” equals stockholders’ equity at September 30, 2016. For Pro Forma Combined, the stockholders’ equity for Pro Forma Combined as of September 30, 2016 was used from the pro forma information included elsewhere in this document.

(5)                                  American Capital does not have an investment adviser and is internally managed by its management team under the supervision of its board of directors. Therefore, American Capital pays operating costs associated with employing a management team and investment professionals instead of paying investment advisory fees. As a result, the estimate of the annual expenses American Capital incurs in connection with the employment of such employees is included in the line item “Other expenses” and, accordingly, any comparison of the individual items of American Capital and Ares Capital set forth under “Estimated annual expenses” above may not be informative because American Capital is internally managed and Ares Capital is externally managed. The pro forma combined company estimated annual expenses are consistent with the information presented in the unaudited pro forma condensed consolidated financial statements included in this document. See “Unaudited Selected Pro Forma Consolidated Financial Data” in this document.

(6)                                  Ares Capital is externally managed by its investment adviser, Ares Capital Management LLC (“Ares Capital Management”). Following completion of the Transactions, the combined company will continue to be externally managed by Ares Capital Management and the pro forma combined company management fee has been calculated in a manner consistent with Ares Capital’s investment advisory and management agreement. Ares Capital’s base management fee is currently 1.5% of its total assets (other than cash and cash equivalents) (which includes assets purchased with borrowed amounts). Ares Capital’s base management fee has been estimated by multiplying its total assets as of September 30, 2016 (assuming it maintains no cash or cash equivalents) by 1.5%. The 2.63% and 2.63% reflected on the table are higher than 1.5% because they are calculated on Ares Capital’s and the pro forma combined company’s net assets, respectively, as of September 30, 2016 (rather than its total assets). See “Management of Ares Capital—Investment Advisory and Management Agreement” in the Proxy Statement.

(7)                                  This item represents Ares Capital’s investment adviser’s income based fees and capital gains incentive fees estimated by annualizing income based fees for the nine months ended September 30, 2016 and the capital gains incentive fee expense accrued in accordance with generally accepted accounting principles (“GAAP”) for the nine months ended September 30, 2016, even though no capital gains incentive fee was actually payable under the investment advisory and management agreement as of September 30, 2016.

GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Company Act or Ares Capital’s investment advisory and management agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains incentive fee actually payable under the investment advisory and management agreement plus the aggregate cumulative unrealized capital appreciation. If such amount is positive at the end of a period, then GAAP requires Ares Capital to record a capital gains incentive fee equal to 20% of such cumulative amount, less the aggregate amount of actual capital gains incentive fees paid or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future or that the amount accrued for will ultimately be paid.

For purposes of this table, Ares Capital has assumed that these fees will be payable (in the case of the capital gains incentive fee) and that they will remain constant, although they are based on Ares Capital’s performance and will not be paid unless Ares Capital achieves certain goals. For more detailed information on the calculation of Ares Capital’s income based fees and capital gains incentive fees, please see below. The pro forma combined company’s income based fees and capital gains incentive fees have been calculated in a manner consistent with Ares Capital’s investment advisory and management agreement.  For more detailed information about income based fees and capital gains incentive fees previously incurred by Ares Capital, please see Note 3 to Ares Capital’s consolidated financial statements included in the Proxy Statement.

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Income based fees are payable quarterly in arrears in an amount equal to 20% of Ares Capital’s pre-incentive fee net investment income (including interest that is accrued but not yet received in cash), subject to a 1.75% quarterly (7.0% annualized) hurdle rate and a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, Ares Capital’s investment adviser receives no income based fees until Ares Capital’s net investment income equals the hurdle rate of 1.75% but then receives, as a “catch-up,” 100% of Ares Capital’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875%. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.1875% in any calendar quarter, Ares Capital’s investment adviser will receive 20% of Ares Capital’s pre-incentive fee net investment income as if a hurdle rate did not apply.

Ares Capital’s investment adviser has agreed to waive, for each of the first ten calendar quarters beginning with the first full calendar quarter after the closing of the Transactions, the lesser of (1) $10 million of the income based fees and (2) the amount of income based fees for such quarter, in each case, to the extent earned and payable by Ares Capital in such quarter pursuant to and as calculated under Ares Capital’s investment advisory and management agreement (the “Fee Waiver”). The impact of the Fee Waiver is not included in the estimates above.

Capital gains incentive fees are payable annually in arrears in an amount equal to 20% of Ares Capital’s realized capital gains on a cumulative basis from inception through the end of the year, if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of capital gains incentive fees paid in all prior years.

Ares Capital will defer cash payment of any income based fees and capital gains incentive fees otherwise earned by Ares Capital’s investment adviser if, during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made, the sum of (1) Ares Capital’s aggregate distributions to its stockholders and (2) Ares Capital’s change in net assets (defined as total assets less indebtedness and before taking into account any income based fees or capital gains incentive fees accrued during the period) is less than 7.0% of Ares Capital’s net assets (defined as total assets less indebtedness) at the beginning of such period. Any deferred income based fees and capital gains incentive fees are carried over for payment in subsequent calculation periods to the extent such payment is payable under the investment advisory and management agreement. These calculations will be adjusted for any share issuances or repurchases. See “Management of Ares Capital—Investment Advisory and Management Agreement” in the Proxy Statement.

(8)                                  “Interest payments on borrowed funds” represents interest expenses estimated by annualizing actual interest and credit facility expenses incurred for the nine months ended September 30, 2016. During the nine months ended September 30, 2016, American Capital’s average outstanding borrowings were approximately $0.7 billion and cash paid for interest expense was $35.4 million and Ares Capital’s average outstanding borrowings were approximately $3.9 billion and cash paid for interest expense was $139.0 million. American Capital had no outstanding borrowings as of September 30, 2016. Ares Capital had outstanding borrowings of approximately $3.8 billion (with a carrying value of approximately $3.7 billion) as of September 30, 2016. The amount of leverage that American Capital or Ares Capital may employ at any particular time will depend on, among other things, American Capital and Ares Capital’s boards of directors’ and, in the case of Ares Capital, its investment adviser’s assessment of market and other factors at the time of any proposed borrowing. See “Risk Factors—Risks Relating to Ares Capital—Ares Capital borrows money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with Ares Capital” in the Proxy Statement. See “Risk Factors—Risks Relating to American Capital—American Capital may incur debt that could increase stockholder investment risks” in the Proxy Statement.

(9)                                  Includes certain transactions that are reflected in the pro forma combined company’s interest and credit facility fees for the nine months ended September 30, 2016, as described in more detail in “Unaudited Pro Forma Condensed Consolidated Financial Statements” in this document.

(10)                           Includes overhead expenses, including, in the case of Ares Capital, payments under its administration agreement based on its allocable portion of overhead and other expenses incurred by Ares Operations LLC (“Ares Operations”) in performing its obligations under such administration agreement, and income taxes. In the case of American Capital, such expenses are based on annualized employee, employee stock options and administrative expenses for the nine months ended September 30, 2016. In the case of Ares Capital, such expenses are estimated by annualizing “Other expenses” for the nine months ended September 30, 2016. See “Management of Ares Capital—Administration Agreement” in the Proxy Statement. In the case of Ares Capital and American Capital, “Other expenses” excludes any actual expenses incurred related to the mergers for the nine months ended September 30, 2016. For the pro forma combined company, “Other expenses” were based on the annualized amounts reflected in the unaudited pro forma condensed consolidated financial statements for the nine months ended September 30, 2016. Ares Capital expects that the combined company will achieve certain synergies and cost savings following completion of the Transactions and accordingly believes that estimated total pro forma combined other expenses will be lower than reflected (similar to or lower than Ares Capital’s historical other expenses) if such synergies and cost savings are achieved. The holders of shares of American Capital and Ares Capital common stock (and not the holders of their debt securities or preferred stock, if any) indirectly bear the cost associated with their annual expenses.

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(11)                           With respect to “Acquired fund fees and expenses,” American Capital and Ares Capital stockholders indirectly bear the expenses of underlying funds or other investment vehicles that would be investment companies under section 3(a) of the Investment Company Act but for the exceptions to that definition provided for in sections 3(c)(1) and 3(c)(7) of the Investment Company Act in which American Capital or Ares Capital invests. Such underlying funds or other investment vehicles are referred to in this document as “Acquired Funds.” This amount includes the estimated annual fees and operating expenses of Acquired Funds as of September 30, 2016. Certain of these Acquired Funds are subject to management fees, which generally range from 1% to 2.5% of total net assets, or incentive fees, which generally range between 15% to 25% of net profits. When applicable, fees and operating expenses estimates are based on historic fees and operating expenses for the Acquired Funds. For those Acquired Funds with little or no operating history, fees and operating expenses are based on expected fees and operating expenses stated in the Acquired Funds’ offering memorandum, private placement memorandum or other similar communication without giving effect to any performance. Future fees and operating expenses for these Acquired Funds may be substantially higher or lower because certain fees and operating expenses are based on the performance of the Acquired Funds, which may fluctuate over time. Also included with the amount is an estimate of the annual fees and operating expenses of the SDLP (as defined below), which was initially funded in July 2016. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Ares Capital—Portfolio and Investment Activity—Senior Direct Lending Program” in the Ares Capital 9/30 10-Q (as defined below) for more information on the SDLP. The annual fees and operating expenses of the SDLP were estimated based on the initially funded portfolio of the SDLP and are primarily comprised of management fees and administrative expenses of the SDLP. For the purpose of this line item, interest payments on borrowed funds are not included in operating expenses.

(12)                           “Total annual expenses” as a percentage of consolidated net assets attributable to common stock are higher than the total annual expenses percentage would be for a company that is not leveraged. American Capital and Ares Capital borrow money to leverage and increase their total assets. The Securities and Exchange Commission (the “SEC”) requires that the “Total annual expenses” percentage be calculated as a percentage of net assets (defined as total assets less indebtedness and before taking into account any income based fees or capital gains incentive fees accrued during the period), rather than the total assets, including assets that have been funded with borrowed monies.

Example

The following example demonstrates the projected dollar amount of total cumulative expenses over various periods with respect to a hypothetical investment in American Capital, Ares Capital or, following the completion of the Transactions, the combined company’s common stock. In calculating the following expense amounts, each of American Capital and Ares Capital has assumed that it would have no additional leverage, that none of its assets are cash or cash equivalents and that its annual operating expenses would remain at the levels set forth in the tables above. Income based fees and the capital gains fees under Ares Capital’s investment advisory and management agreement, which, assuming a 5% annual return, would either not be payable or have an insignificant impact on the expense amounts shown below, are not included in the example, except as specifically set forth below. Transaction expenses related to the Transactions are not included in the following example.

(1)                                  The above illustration assumes that Ares Capital and, following the completion of the Transactions, the combined company, will not realize any capital gains computed net of all realized capital losses and no unrealized capital depreciation.

(2)                                  The above illustration assumes that Ares Capital and, following the completion of the Transactions, the combined company, has no unrealized capital depreciation and a 5% annual return resulting entirely from net realized capital gains and not otherwise deferrable under the terms of the investment advisory and management agreement and therefore subject to the capital gains incentive fee.

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The foregoing tables are to assist you in understanding the various costs and expenses that an investor in American Capital, Ares Capital or, following the completion of the Transactions, the combined company’s common stock will bear directly or indirectly. While the example assumes, as required by the SEC, a 5% annual return, performance will vary and may result in a return greater or less than 5%. If Ares Capital were to achieve sufficient returns on its investments, including through the realization of capital gains, to trigger income based fees or capital gains incentive fees of a material amount, its expenses, and returns to its investors, would be higher.

In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, if Ares Capital’s board of directors authorizes and Ares Capital declares a cash dividend, participants in its dividend reinvestment plan who have not otherwise elected to receive cash will receive a number of shares of its common stock determined by dividing the total dollar amount of the dividend payable to a participant by the market price per share of Ares Capital common stock at the close of trading on the valuation date for the dividend. See “Ares Capital Dividend Reinvestment Plan” for additional information regarding Ares Capital’s dividend reinvestment plan.

                This example and the expenses in the tables above should not be considered a representation of American Capital, Ares Capital or, following the completion of the Transactions, the combined company’s future expenses as actual expenses (including the cost of debt, if any, and other expenses) that it may incur in the future and such actual expenses may be greater or less than those shown.

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Unaudited Selected Pro Forma Consolidated Financial Data

The following information supplements the information provided in “Unaudited Selected Pro Forma Consolidated Financial Data” on page 114 of the Proxy Statement:

UNAUDITED SELECTED PRO FORMA CONSOLIDATED FINANCIAL DATA

The following tables set forth unaudited pro forma condensed consolidated financial data for Ares Capital and American Capital as a combined company after giving effect to the mergers. The information as of September 30, 2016 is presented as if the mergers had been completed on September 30, 2016 and after giving effect to certain transactions that occurred or are expected to occur subsequent to September 30, 2016 (collectively, the “Other Pro Forma Transactions”). The unaudited pro forma condensed consolidated financial data for the nine months ended September 30, 2016 and for the year ended December 31, 2015 are presented as if the mergers and the Other Pro Forma Transactions had been completed on December 31, 2014. Such unaudited pro forma condensed consolidated financial data is based on the historical financial statements of Ares Capital and American Capital from publicly available information and certain assumptions and adjustments as discussed in Note 3 of the accompanying notes to the pro forma condensed consolidated financial statements in the section entitled “Unaudited Pro Forma Condensed Consolidated Financial Statements” in this document. In the opinion of management, adjustments necessary to reflect the direct effect of these transactions have been made. The merger of Acquisition Sub with and into American Capital will be accounted for under the acquisition method of accounting as provided by ASC 805-50, Business Combinations-Related Issues . See section entitled “Accounting Treatment” in the Proxy Statement for additional information.

The unaudited pro forma condensed consolidated financial data should be read together with the respective historical audited and unaudited consolidated financial statements and related notes of American Capital and Ares Capital in the Quarterly Report of American Capital on Form 10-Q filed with the SEC on November 3, 2016 (the “American Capital 9/30 10-Q) and the Quarterly Report of Ares Capital on Form 10-Q filed with the SEC on November 2, 2016 (the “Ares Capital 9/30 10-Q”), respectively, and the Proxy Statement. The unaudited pro forma condensed consolidated financial data are presented for illustrative purposes only and do not necessarily indicate what the future operating results or financial position of the combined company will be following completion of the mergers. The unaudited pro forma condensed consolidated financial data does not include adjustments to reflect any cost savings or other operational efficiencies that may be realized as a result of the mergers or any future restructuring or integration expenses related to the mergers. Additionally, the unaudited pro forma condensed consolidated financial data does not include any estimated net increase (decrease) in stockholders’ equity resulting from operations or other asset sales and repayments that are not already reflected that may occur between September 30, 2016 and the completion of the mergers.

Ares Capital and American Capital cannot assure you that the mergers and the other transactions contemplated by the merger agreement (collectively, the “Transactions”) will be completed as scheduled, or at all. See “Description of the Transactions” in the Proxy Statement for a description of the terms of the Transactions, “Risk Factors—Risks Relating to Ares Capital—Ares Capital may fail to complete the Transactions” in the Proxy Statement for a description of the risks associated with a failure to complete the Transactions and “Risk Factors—Risks Relating to the Transactions” in the Proxy Statement for a description of the risks that the combined company may face if the Transactions are completed.

(dollar amounts in millions)

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Unaudited Pro Forma Per Share Data

The following information supplements the information provided in “Unaudited Pro Forma Per Share Data” on page 116 of the Proxy Statement:

UNAUDITED PRO FORMA PER SHARE DATA

The following selected unaudited consolidated pro forma per share information for the nine months ended September 30, 2016 and for the year ended December 31, 2015 is presented as if the mergers and the Other Pro Forma Transactions had been completed on December 31, 2014. The unaudited pro forma consolidated net asset value per common share outstanding reflects the mergers and the Other Pro Forma Transactions as if they had been completed on September 30, 2016.

Such unaudited pro forma consolidated per share information is based on the historical financial statements of Ares Capital and American Capital from publicly available information and certain assumptions and adjustments as discussed in the section entitled “Unaudited Pro Forma Condensed Consolidated Financial Statements” in this document. This unaudited pro forma consolidated per share information is provided for illustrative purposes only and is not necessarily indicative of what the operating results or financial position of Ares Capital or American Capital would have been had the mergers and the Other Pro Forma Transactions been completed at the beginning of the periods or on the dates indicated, nor are they necessarily indicative of any future operating results or financial position of the combined company following the completion of the mergers. The following should be read in connection with the section entitled “Unaudited Pro Forma Condensed Consolidated Financial Statements” in this document and other information included in or incorporated by reference into this document.

Ares Capital and American Capital cannot assure you that the Transactions will be completed as scheduled, or at all. See “Description of the Transactions” in the Proxy Statement for a description of the terms of the Transactions, “Risk Factors—Risks Relating to Ares Capital—Ares Capital may fail to complete the Transactions” in the Proxy Statement for a description of the risks associated with a failure to complete the Transactions and “Risk Factors—Risks Relating to the Transactions” in the Proxy Statement for a description of the risks that the combined company may face if the Transactions are completed.

(1)                                  The cash dividends declared per share represent the actual dividends declared per share for the period presented. The pro forma consolidated cash dividends declared are the dividends per share as declared by Ares Capital.

(2)                                  The pro forma consolidated net asset value per share is computed by dividing the pro forma consolidated net assets as of September 30, 2016 by the pro forma consolidated number of shares outstanding.

(3)                                  The American Capital equivalent pro forma per share amount is calculated by multiplying the pro forma consolidated Ares Capital per share amounts by the common stock exchange ratio of 0.483.

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Unaudited Pro Forma Condensed Consolidated Financial Statements

The following information supplements the information provided in “Unaudited Pro Forma Condensed Consolidated Financial Statements” on pages 256 through 294 of the Proxy Statement and in “Accounting Treatment” on page 241 of the Proxy Statement:

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Under the merger agreement, subject to the completion of the mergers, American Capital stockholders will receive $1.49 billion in cash from Ares Capital, or $6.41 per share, plus certain Ares Capital make-up dividend amounts, plus 0.483 shares of Ares Capital common stock for each share of American Capital common stock, subject to the payment of cash instead of fractional shares, resulting in approximately 111.3 million shares of Ares Capital common stock issued in exchange for approximately 230.5 million shares of American Capital common stock. The purchase price is approximately $3.2 billion in total cash and stock consideration from Ares Capital which is based upon a closing price of $15.30 per share of Ares Capital common stock as of October 31, 2016 and an implied value per share of American Capital common stock of $13.87. Additionally as part of the total merger consideration received by American Capital stockholders, Ares Capital Management will provide approximately $275 million of cash, or $1.20 per fully diluted share, to American Capital stockholders at closing. Separately, upon completion of the mergers, each share of American Capital common stock will also be entitled to receive $2.45 per share in cash (representing an aggregate amount of approximately $562 million), which amount represents the per share cash consideration to be paid to American Capital as a result of the completion of the Mortgage Manager Sale, which was completed on July 1, 2016. The unaudited pro forma condensed consolidated financial information has been derived from and should be read in conjunction with the historical consolidated financial statements and the related notes of American Capital and Ares Capital in the American Capital 9/30 10-Q and the Ares Capital 9/30 10-Q, respectively, and the Proxy Statement.

The following unaudited pro forma condensed consolidated financial information and explanatory notes illustrate the effect of the mergers on Ares Capital’s financial position and results of operations based upon Ares Capital’s and American Capital’s respective historical financial positions and results of operations under the acquisition method of accounting with Ares Capital treated as the acquirer.

In accordance with GAAP, the acquired assets and assumed liabilities of American Capital will be recorded by Ares Capital at their estimated fair values as of the effective time. The unaudited pro forma condensed consolidated financial information of Ares Capital and American Capital reflects the unaudited pro forma condensed consolidated balance sheet as of September 30, 2016 and the unaudited pro forma condensed consolidated income statements for the nine months ended September 30, 2016 and the year ended December 31, 2015. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2016 assumes the mergers and the Other Pro Forma Transactions had been completed on September 30, 2016. The unaudited pro forma condensed consolidated statements of income for the nine months ended September 30, 2016 and the year ended December 31, 2015 assumes the mergers and the Other Pro Forma Transactions had been completed on December 31, 2014.

The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and does not necessarily indicate the results of operations or the combined financial position that would have resulted had the mergers and the Other Pro Forma Transactions been completed at the beginning of the applicable period presented, nor the impact of potential expense efficiencies of the mergers, certain potential asset dispositions and other factors. In addition, as explained in more detail in the accompanying notes to the unaudited pro forma condensed consolidated financial information, the allocation of the pro forma purchase price reflected in the unaudited pro forma condensed consolidated financial information involves estimates, is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the mergers and the Other Pro Forma Transactions. Additionally, the unaudited pro forma condensed consolidated financial data does not include any estimated net increase (decrease) in stockholders’ equity resulting from operations or other asset sales and repayments that are not already reflected that may occur between September 30, 2016 and the completion of the mergers.

Ares Capital cannot assure you that the Transactions will be completed as scheduled, or at all. See “Description of the Transactions” in the Proxy Statement for a description of the terms of the Transactions, “Risk Factors—Risks Relating to Ares Capital—Ares Capital may fail to complete the Transactions” in the Proxy Statement for a description of the risks associated with a failure to complete the Transactions and “Risk Factors—Risks Relating to the Transactions” in the Proxy Statement for a description of the risks that the combined company may face if the Transactions are completed.

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See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

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See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

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See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

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