Summary
This 8-K filing from Ares Management Corp. (ARES) on May 23, 2016, details a significant transaction support and fee waiver agreement between Ares Capital Management LLC (ACM LLC), a subsidiary, and Ares Capital Corporation (ARCC). This agreement is in direct support of ARCC's proposed acquisition of American Capital, Ltd. (ACAP). The key financial commitment from ACM LLC involves providing $275 million in cash consideration towards the acquisition. Additionally, ACM LLC has agreed to waive certain performance fees (Part I Fees) for ARCC for up to ten calendar quarters following the transaction's closing, capped at $10 million per quarter. This proactive financial support from Ares Management aims to facilitate the successful integration of ACAP into ARCC, creating a combined entity with substantial pro forma investments.
Key Highlights
- 1Ares Capital Management LLC (ACM LLC), a subsidiary of Ares Management, entered into a Transaction Support and Fee Waiver Agreement with Ares Capital Corporation (ARCC).
- 2The agreement supports ARCC's proposed acquisition of American Capital, Ltd. (ACAP).
- 3ACM LLC will provide $275 million in cash consideration for the acquisition of ACAP.
- 4ACM LLC will waive up to $10 million per quarter in Part I Fees (performance fees) for ARCC for the first ten calendar quarters post-closing.
- 5The combined ARCC-ACAP entity is projected to have over $13 billion in pro forma investments at fair value.
- 6American Capital has already monetized approximately $700 million in balance sheet investments since March 31, 2016, to reduce debt or hold cash.