8-KMaterial AgreementsFinancial EventsExhibits & Filings

Ares Management Corp 8-K Report, Material Agreement (Jul 1, 2021)

Filed July 1, 2021For Securities:ARESARES-PB

Summary

Ares Management Corp (ARES) announced via an 8-K filing on July 1, 2021, that its indirect subsidiary, Ares Finance Co. III LLC, has issued $450 million in 4.125% Fixed-Rate Resettable Subordinated Notes due 2051. The issuance, detailed in an indenture with U.S. Bank National Association, involves several Ares subsidiaries acting as guarantors for the notes. This move represents a financing activity aimed at securing long-term capital. Key features of these subordinated notes include a fixed interest rate of 4.125% for the first five years, after which the rate resets based on the Five-Year U.S. Treasury Rate plus a spread of 3.237%. The notes offer optional interest payment deferral for up to five years, with accrued interest compounding. The company has call options on the notes, exercisable on or after the fifth anniversary of issuance, and under specific conditions such as tax events, rating agency events, or a change of control, which could result in early redemption.

Key Highlights

  • 1Ares Finance Co. III LLC issued $450 million in 4.125% Fixed-Rate Resettable Subordinated Notes due 2051.
  • 2The notes are guaranteed by several indirect subsidiaries of Ares Management Corporation.
  • 3The initial interest rate is 4.125% for the first five years (until June 30, 2026).
  • 4Post-2026, the interest rate will reset every five years based on the Five-Year U.S. Treasury Rate plus a 3.237% spread.
  • 5The issuer has the option to defer interest payments for up to five consecutive years, with deferred interest compounding.
  • 6Ares Management Corp. has the option to redeem the notes in whole or in part starting from the first call date (June 30, 2026).
  • 7Redemption options also exist upon specific events, including tax events, rating agency events, and change of control events, with varying call premiums.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose the entry into a material definitive agreement, specifically the issuance of $450 million in subordinated notes by a subsidiary of Ares Management Corporation.

The notes have a 4.125% fixed interest rate until June 30, 2026. After this 'First Call Date,' the interest rate becomes variable, resetting every five years based on the Five-Year U.S. Treasury Rate plus a 3.237% spread. The notes mature in 2051 but can be redeemed early by the issuer under certain conditions. They are subordinated and unsecured obligations.

Ares Management has significant flexibility. They can choose to defer interest payments for up to five years, with deferred interest compounding. Additionally, the company can redeem the notes on or after June 30, 2026, at par, or earlier under specific trigger events like a tax event, rating agency event, or change of control, sometimes with a premium.

The notes are unsecured obligations of the issuer, Ares Finance Co. III LLC. However, they are fully and unconditionally guaranteed jointly and severally by several other indirect subsidiaries of Ares Management Corporation, making the guarantees also unsecured and subordinated.