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Item 1.01
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Entry into a Material Definitive Agreement.
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On September 21, 2018, Alcentra Capital Corporation (the “Company”)
entered into an Amended and Restated Senior Secured Revolving Credit Agreement (the “Amended Credit Agreement”) among
the Company, as borrower, the lenders party thereto, and ING Capital LLC, as administrative agent, arranger, and bookrunner. The
Amended Credit Agreement amends, restates, and replaces the Senior Secured Revolving Credit Agreement dated as of May 8, 2014,
among the Company, the lenders from time to time party thereto, and ING Capital LLC, as administrative agent, arranger, and bookrunner.
Under the Amended Credit Agreement, (i) revolving commitments
by lenders were reduced from $135 million to $115 million, with an accordion feature that allows for an increase in total commitments
up to $180 million, subject to satisfaction of certain conditions at the time of any such future increase, (ii) the maturity
date of the credit facility was extended to September 21, 2022 and the revolving period was extended to September 21, 2021, and
(iii) borrowings under the credit facility bear interest, at our election, at a rate per annum equal to (a) 2.50% if
the contribution to the borrowing base of eligible portfolio investments that are long-term U.S. government securities and first
lien bank loans is greater than or equal to 70% (or 2.75% if such contribution is less than 70%) plus the one, three or six month
LIBOR rate, as applicable, or (b) 1.50% if the contribution to the borrowing base of eligible portfolio investments that are long-term
U.S. government securities and first lien bank loans is greater than or equal to 70% (or 1.75% if such contribution is less than
70%) plus the highest of (A) a prime rate, (B) the Federal Funds rate plus 0.5%, (C) three month LIBOR plus 1.0%, and (D)
zero.
The Amended Credit Agreement also modifies certain covenants
in the credit facility, including to provide for a minimum asset coverage ratio of 2.00 to 1, a minimum interest coverage ratio
of 2.00 to 1 as of the last day of any fiscal quarter, and a requirement to maintain stockholder’s equity as of the last
day of any fiscal quarter to be no less than the greater of (i) 45% of the total assets of the Company and its subsidiaries
as at the last day of such fiscal quarter and (ii) the sum of (x) $120,000,000 plus (y) 65% of the aggregate net
proceeds of all sales of equity interests by the Company and its subsidiaries after the closing date of the Amended Credit Agreement.
In addition, the Amended Credit Agreement requires payment of a commitment fee ranging from 0.5% to 1.0% per annum based on the
size of the unused portion of the Credit Facility. The Credit Facility is secured by a first priority security interest in
all of our portfolio investments, the equity interests in certain of our direct and indirect subsidiaries, and substantially all
of our other assets.
The Amended Credit Agreement also contains customary terms and
conditions, including, without limitation, affirmative and negative covenants, including, without limitation, information reporting
requirements, a minimum liquidity test, and maintenance of RIC and BDC status. The Amended Credit Agreement also contains customary
events of default, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material
respect, breach of covenant, cross-default to other indebtedness, bankruptcy, and certain change in control events.
ING Capital LLC and the other lenders under the Amended Credit
Agreement, and their respective affiliates, may from time to time receive customary fees and expenses in the performance of investment
banking, financial advisory or other services for the Company.
The above summary is not complete and is qualified in its entirety to the full text of the Amended Credit Agreement and related
documents.