What are the key terms of the Series B Mandatory Convertible Preferred Stock?

The Series B Mandatory Convertible Preferred Stock carries a 6.75% annual dividend rate, payable quarterly. It ranks senior to common stock in liquidation and dividend rights. A key feature is its mandatory conversion into Ares' common stock on or around October 1, 2027, with the conversion rate determined by the average volume-weighted average price of the common stock over a 20-day period prior to conversion.

How will the dividends on the Series B Mandatory Convertible Preferred Stock be paid?

Dividends are cumulative and accrue at a rate of 6.75% per annum. Ares Management has the option to pay these dividends in cash, shares of its Common Stock, or a combination of both. If paid in common stock, the valuation is set at 97% of the average volume-weighted average price over the five trading days before the dividend payment date, subject to a floor price.

What are the potential implications for common stockholders?

The issuance represents potential future dilution of common stock upon mandatory conversion in 2027. The exact conversion rate depends on the common stock's trading price at that time. Additionally, if dividends are paid in common stock, it can increase the outstanding share count. The preferred stock's senior ranking means common stockholders would receive distributions only after preferred stockholders in the event of liquidation.

ARES 8-K: Material Agreements & Shareholder Matters

01—Abstract

Summary

Summary of the 8-K filed October 10, 2024. Cited figures are marked; the original filing is the authoritative source.

Ares Management Corporation (ARES) has filed an 8-K report detailing the issuance of its new 6.75%^a Series B Mandatory Convertible Preferred Stock.

This offering, which successfully closed on October 10, 2024, raised approximately $1.5 billion^b in aggregate liquidation preference, with an additional $150 million potentially raised from the underwriters' over-allotment option. The net proceeds are earmarked for the acquisition of the international business of GLP Capital Partners Ltd. and related fees, as well as general corporate purposes such as debt repayment and strategic growth initiatives. The Series B Mandatory Convertible Preferred Stock carries a significant liquidation preference and ranks senior to the Company's common stock regarding dividends and asset distribution.

The preferred stock accumulates cumulative dividends at a 6.75%^c annual rate, payable quarterly, with the option for Ares to pay these dividends in cash, common stock, or a combination thereof. A critical feature is the mandatory conversion into common stock on or about October 1, 2027, with the conversion rate dependent on the average common stock price over a specified period, subject to anti-dilution adjustments and potential adjustments for unpaid dividends.

02—Key points

Key Highlights

Ares Management Corp successfully issued 30,000,000 shares of 6.75% Series B Mandatory Convertible Preferred Stock, raising approximately $1.5 billion.
The offering included the full exercise of the underwriters' option to purchase an additional 3,000,000 shares, bringing the total shares issued to 33,000,000.
Proceeds will primarily fund the acquisition of GLP Capital Partners' international business and related expenses, with remaining funds for general corporate purposes, including debt repayment.
The Series B Mandatory Convertible Preferred Stock accrues cumulative dividends at 6.75% per annum, payable quarterly, with flexibility for Ares to pay in cash, common stock, or a mix.
Each share will automatically convert into Ares' common stock around October 1, 2027, with the conversion rate determined by the average stock price over a 20-day period prior to conversion.
The preferred stock ranks senior to common stock in liquidation preference and dividend payments.
The company's limited partnership agreement for Ares Holdings L.P. was amended to mirror the economic terms of the Series B Mandatory Convertible Preferred Stock with preferred units.

03—Questions

Frequently Asked Questions

What is the primary purpose of the new Series B Mandatory Convertible Preferred Stock issuance?
The primary purpose of the issuance is to fund a portion of the cash consideration for Ares Management's previously announced acquisition of the international business of GLP Capital Partners Ltd. and related fees and expenses. Remaining proceeds may be used for general corporate purposes, including debt repayment and strategic growth initiatives.
What are the key terms of the Series B Mandatory Convertible Preferred Stock?
The Series B Mandatory Convertible Preferred Stock carries a 6.75% annual dividend rate, payable quarterly. It ranks senior to common stock in liquidation and dividend rights. A key feature is its mandatory conversion into Ares' common stock on or around October 1, 2027, with the conversion rate determined by the average volume-weighted average price of the common stock over a 20-day period prior to conversion.
How will the dividends on the Series B Mandatory Convertible Preferred Stock be paid?
Dividends are cumulative and accrue at a rate of 6.75% per annum. Ares Management has the option to pay these dividends in cash, shares of its Common Stock, or a combination of both. If paid in common stock, the valuation is set at 97% of the average volume-weighted average price over the five trading days before the dividend payment date, subject to a floor price.
What are the potential implications for common stockholders?
The issuance represents potential future dilution of common stock upon mandatory conversion in 2027. The exact conversion rate depends on the common stock's trading price at that time. Additionally, if dividends are paid in common stock, it can increase the outstanding share count. The preferred stock's senior ranking means common stockholders would receive distributions only after preferred stockholders in the event of liquidation.

04—Continue

← View all 8-K filings