Item 1.01. Entry into a Material Definitive Agreement.
On January 11, 2018, Ares Capital Corporation (the Company) and U.S. Bank National Association (the Trustee), entered into an Eighth Supplemental Indenture (the Eighth Supplemental Indenture) to the Indenture, dated October 21, 2010, between the Company and the Trustee (the Indenture). The Eighth Supplemental Indenture relates to the Companys issuance, offer and sale of $600,000,000 aggregate principal amount of its 4.250% notes due 2025 (the Notes).
The Notes will mature on March 1, 2025 and may be redeemed in whole or in part at the Companys option at any time at the redemption prices set forth in the Eighth Supplemental Indenture. The Notes bear interest at a rate of 4.250% per year payable semiannually on March 1 and September 1 of each year, commencing on September 1, 2018. The Notes are direct unsecured obligations of the Company.
The Company expects to use the net proceeds of this offering to repay certain outstanding indebtedness under its debt facilities. The Company may reborrow under its debt facilities for general corporate purposes, which include investing in portfolio companies in accordance with its investment objective.
The Indenture, as supplemented by the Eighth Supplemental Indenture, contains certain covenants including covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a)(1) of the Investment Company Act of 1940, as amended, or any successor provisions, giving effect to any exemptive relief granted to the Company by the SEC, and to provide financial information to the holders of the Notes and the Trustee if the Company should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934. These covenants are subject to important limitations and exceptions that are described in the Indenture.
In addition, upon the occurrence of a change of control repurchase event (which involves the occurrence of both a change of control and a below investment grade rating of the Notes by Fitch, Inc. and Standard & Poors Ratings Services), the Company will be required to make an offer to purchase the Notes at a price equal to 100% of the principal amount plus accrued and unpaid interest to the date of purchase.
The Notes were offered and sold pursuant to the Registration Statement on Form N-2 (File No. 333-212142), the preliminary prospectus supplement filed with the Securities and Exchange Commission on January 8, 2018 and the pricing term sheet filed with the Securities and Exchange Commission on January 8, 2018. The transaction closed on January 11, 2018.
The Trustee also serves as the Companys custodian under the terms of a custody agreement, pursuant to which it receives customary fees and expenses as custodian.
The foregoing descriptions of the Eighth Supplemental Indenture and the Notes do not purport to be complete and are qualified in their entirety by reference to the full text of the Eighth Supplemental Indenture and the Notes, respectively, each filed as exhibits hereto and incorporated by reference herein.