Ares BDC expands debt capacity by $1.3 billion

The New York-based mid-market lender’s acquisition of American Capital has upped its borrowing capacity to an aggregate $3.5bn. 

Following its merger with American Capital this week, Ares Capital Corporation has increased its total debt capacity by $1.3 billion from expanding two of its three facilities, the firm said on Wednesday.

As a result, Ares Capital’s borrowing abilities increased from an aggregate $2.2 billion to $3.5 billion and also extended the maturity dates on those two loans.

Kipp deVeer, chief executive officer of Ares, said in a statement that these facility expansions, along with the firm’s $600 million of senior secured notes issued in September, allowed the firm to “lock in attractive funding, extend the tenor of our financings and further improve our liquidity position”.

He added that the BDC’s balance sheet has grown “significantly larger” after the recent acquisition of American Capital. That $3.62 billion acquisition closed Tuesday, boosting Ares’ assets by more than $3 billion to $12.3 billion in assets, as Private Debt Investor reported yesterday.

The firm did not respond to requests to comment further.

A senior secured facility led by several banks, including JPMorgan, was among those altered, according to a statement. Ares upped that loan from $1.27 billion to $2.01 billion and extended its final maturity from May 2021 to January 2022 (on $2 billion of the commitments). The stated interest rate will remain at LIBOR plus 1.75 percent.

Additionally, the BDC changed its revolving credit facility with Wells Fargo and Bank of America Merrill Lynch. Ares can now tap total commitments of $1.0 billion on the loan, up from $540 million, and extended the final maturity from May 2019 to January 2022.  The facility interest rate changed as well, from LIBOR plus a 2.25 percentto2.5-percent to LIBOR plus 2.3 percent.