Ares Capital Corporation ARCC modified and extended its $400 million revolving funding facility with Sumitomo Mitsui Banking Corporation along with lowering the price.
Per the amendment and restatement by Ares Capital, the maturity date of the facility was extended by one year to Sep 14, 2022. Moreover, the reinvestment period was stretched by one year as well to Sep 14, 2017.
In addition, the interest rate on the facility will now be calculated based on usage levels. Accordingly, the interest rate will either be LIBOR plus 1.75% or LIBOR plus 2.00%. Previously, the interest rate charged was LIBOR plus 2.00%.
Ares Capital looks forward to a strong investment portfolio, driven by the new improved borrowing terms and flexibility provided by extension of the maturity date. Also, the reduction in pricing indicates enhanced confidence of the lender bank, which will assist the company in availing revolving debt capital at lower costs.
Along with the current amended funding facility, Ares Capital also possesses two more revolving credit facilities. These additional facilities augment the total credit capacity of the company by $1.8 billion worth of commitments, taking the total up to around $2.2 billion.
Currently, Ares Capital holds a Zacks Rank #4 (Sell). Some better-ranked companies in the same space include American Capital, Ltd. ACAS, WhiteHorse Finance, Inc. WHF and Garrison Capital Inc. GARS. While Garrison Capital sports a Zacks Rank #1 (Strong Buy), American Capital and WhiteHorse Finance carry a Zacks Rank #2 (Buy).
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