Ares Capital Corporation Prices Public Offering of $850 Million 5.950% Unsecured Notes Due 2029

Rhea-AI Summary

Ares Capital (ARCC) has priced a public offering of $850 million 5.950% unsecured notes due 2029. The notes mature on July 15, 2029, with options for redemption. Various institutions are involved in managing the offering. The proceeds will be used to repay existing debt and for general corporate purposes, including investments in portfolio companies.

Positive

• Ares Capital successfully priced a public offering of $850 million in unsecured notes due 2029, indicating strong investor interest.

• The offering is expected to provide Ares Capital with additional capital for general corporate purposes and investments in portfolio companies.

Negative

• The issuance of the notes may result in increased debt for Ares Capital, impacting its financial leverage.

• There is a risk associated with the redemption of notes at a 'make-whole' premium, potentially increasing financial liabilities for Ares Capital.

Financial Analyst

The move by Ares Capital Corporation to price a public offering of unsecured notes at a significant volume indicates their need to manage liquidity and restructure debt. The offered interest rate of 5.950% suggests the company's assessment of current market conditions and their credit worthiness, which can be compared to prevailing interest rates to gauge investor appetite. Furthermore, the involvement of high-profile joint book-running managers and lead managers, such as BofA Securities and J.P. Morgan, adds a layer of credibility to the offering. Investors should note that the decision to repay outstanding indebtedness could be a strategic endeavor to improve the balance sheet and future reborrowing implies an ongoing need for capital to maintain or expand operations. The closure of the offering without delays or complications could be seen as a positive sign, while any deviations might raise concerns about market reception or the company's financial strategy.

Debt Market Analyst

Ares Capital's issuance aligns with typical corporate strategies to optimize capital structure by replacing existing debt with new issuance, potentially at more favorable terms. The 'make-whole' premium ensures that investors are compensated for any early redemption, which is a common protection feature in debt markets. This issuance could be an indicator of the company's proactive financial management, yet the long-term implications will largely depend on the deployment of the proceeds towards generating adequate returns. For retail investors, it's important to understand that such corporate actions can affect the company's interest coverage ratio and credit rating, which in turn can influence stock performance.

NEW YORK--(BUSINESS WIRE)-- Ares Capital Corporation (Nasdaq: ARCC) announced that it has priced an underwritten public offering of $850 million in aggregate principal amount of 5.950% notes due 2029. The notes will mature on July 15, 2029, and may be redeemed in whole or in part at Ares Capital’s option at any time at par plus a “make-whole” premium, if applicable.

BofA Securities, Inc., J.P. Morgan Securities LLC, SMBC Nikko Securities America, Inc., Wells Fargo Securities, LLC, Mizuho Securities USA LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC and Truist Securities, Inc. are acting as joint book-running managers for this offering. CIBC World Markets Corp., ICBC Standard Bank Plc, Morgan Stanley & Co. LLC, Barclays Capital Inc., BNP Paribas Securities Corp., BNY Mellon Capital Markets, LLC, Capital One Securities, Inc., Goldman Sachs & Co. LLC, Natixis Securities Americas LLC, Regions Securities LLC, SG Americas Securities, LLC and U.S. Bancorp Investments, Inc. are acting as joint lead managers for this offering. ING Financial Markets LLC, R. Seelaus & Co., LLC, Academy Securities, Inc., Citigroup Global Markets Inc., Comerica Securities, Inc., Deutsche Bank Securities Inc., Keefe, Bruyette & Woods, Inc., Loop Capital Markets LLC, Samuel A. Ramirez & Company, Inc. and Siebert Williams Shank & Co., LLC are acting as co-managers for this offering. The offering is expected to close on May 13, 2024, subject to customary closing conditions.

Ares Capital expects to use the net proceeds of this offering to repay certain outstanding indebtedness under its debt facilities. Ares Capital may reborrow under its debt facilities for general corporate purposes, which include investing in portfolio companies in accordance with its investment objective.

Investors are advised to carefully consider the investment objective, risks, charges and expenses of Ares Capital before investing. The pricing term sheet dated May 6, 2024, the preliminary prospectus supplement dated May 6, 2024, and the accompanying prospectus dated May 1, 2024, each of which have been filed with the Securities and Exchange Commission, contain this and other information about Ares Capital and should be read carefully before investing.

The information in the pricing term sheet, the preliminary prospectus supplement, the accompanying prospectus and this press release is not complete and may be changed. The pricing term sheet, the preliminary prospectus supplement, the accompanying prospectus and this press release are not offers to sell any securities of Ares Capital and are not soliciting an offer to buy such securities in any jurisdiction where such offer and sale is not permitted.

The offering may be made only by means of a preliminary prospectus supplement and an accompanying prospectus. Copies of the preliminary prospectus supplement (and accompanying prospectus) may be obtained from BofA Securities, Inc., NC1-022-02-25, 201 North Tryon Street, Charlotte NC 28255-0001, Attn: Prospectus Department, or by calling 1-800-294-1322, or email dg.prospectus_requests@bofa.com; J.P. Morgan Securities LLC, 383 Madison Avenue, New York NY 10179, Attn: Investment Grade Syndicate Desk, 1-212-834-4533; SMBC Nikko Securities America, Inc. at 277 Park Avenue, New York, New York 10172, Attn: Debt Capital Markets, 1-888-868-6856; or Wells Fargo Securities, LLC at 1-800-645-3751.

ABOUT ARES CAPITAL CORPORATION

Founded in 2004, Ares Capital is a leading specialty finance company focused on providing direct loans and other investments in private middle market companies in the United States. Ares Capital’s objective is to source and invest in high-quality borrowers that need capital to achieve their business goals, which often times can lead to economic growth and employment. Ares Capital believes its loans and other investments in these companies can help generate attractive levels of current income and potential capital appreciation for investors. Ares Capital, through its investment manager, utilizes its extensive, direct origination capabilities and incumbent borrower relationships to source and underwrite predominantly senior secured loans but also subordinated debt and equity investments. Ares Capital has elected to be regulated as a business development company (“BDC”) and was the largest publicly traded BDC by market capitalization as of March 31, 2024. Ares Capital is externally managed by a subsidiary of Ares Management Corporation (NYSE: ARES), a publicly traded, leading global alternative investment manager.

FORWARD-LOOKING STATEMENTS

Statements included herein may constitute “forward-looking statements,” which relate to future events or Ares Capital’s future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results and conditions may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Ares Capital’s filings with the Securities and Exchange Commission. Ares Capital undertakes no duty to update any forward-looking statements made herein.

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INVESTOR RELATIONS

Ares Capital Corporation

John Stilmar or Carl Drake

888-818-5298

irarcc@aresmgmt.com

Source: Ares Capital Corporation

FAQ

<p>What is the total amount of the public offering of Ares Capital ?</p>

Ares Capital priced a public offering of $850 million in unsecured notes.

<p>When do the notes issued by Ares Capital mature?</p>

The notes issued by Ares Capital mature on July 15, 2029.

<p>What will Ares Capital do with the net proceeds from the offering?</p>

Ares Capital plans to use the net proceeds to repay existing debt and for general corporate purposes, including investments in portfolio companies.

<p>Who are the joint book-running managers for the offering?</p>

BofA Securities, J.P. Morgan Securities, SMBC Nikko Securities America, Wells Fargo Securities, and others are acting as joint book-running managers for the offering.