Ares Capital Corp. has agreed to sell $350 million of its 3.75% convertible notes due 2022 to initial purchasers in a private offering.
The company also granted the initial purchasers an option to purchase up to an additional $52.5 million of the notes.
The transaction is subject to closing conditions, and the notes are expected to be delivered and paid for Jan. 27.
The notes are unsecured; bear interest at an annual rate of 3.75%, payable semiannually; and will be convertible into cash, shares of Ares Capital's common stock or a combination of cash and common shares under certain circumstances.
The initial conversion rate is 51.5756 common shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of about $19.39 per share of Ares Capital common stock, subject to customary anti-dilution adjustments.
Ares Capital will not have the right to redeem the notes prior to maturity. The notes mature Feb. 1, 2022, unless repurchased or converted.
Ares Capital expects to use the net proceeds to repay certain outstanding debt under its debt facilities. The company may reborrow under its debt facilities for general corporate purposes, which include investing in portfolio companies.