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ING Capital Leads Upsize to Capital Southwest Credit Facility

November 21, 2017, 07:00 AM
Filed Under: Lender Finance

Capital Southwest Corporation, an internally managed Business Development Company focused on providing flexible financing solutions to support the acquisition and growth of middle market businesses, announced an amendment to its Senior Secured Credit Facility. The amended Credit Facility provides total commitments of $180 million and an expansion of the accordion feature to $250 million to accommodate future growth of the Company. The amendment also includes, among other things, a reduction in pricing, an extension to the revolving period and final maturity, and an increase in advance rates on first lien loans made by the Company. The financing was led by ING Capital LLC.

Total commitments under the amended Credit Facility increased by $65 million, to an aggregate of $180 million, provided by a diversified group of eight lenders. The accordion feature of the amended Credit Facility allows for an increase in total commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments.  As of quarter end September 30, 2017, Capital Southwest had $56 million outstanding on the Credit Facility.

The pricing on the facility was reduced from LIBOR plus 3.25% to LIBOR plus 3.00%, with a step-down to LIBOR plus 2.75% when certain conditions, as outlined in the credit agreement, are met. Unused commitment fees were also reduced.

The Credit Facility’s revolving period was extended from August 30, 2019 to November 16, 2020; and the final maturity was extended from August 30, 2020 to November 16, 2021.

Michael Sarner, Chief Financial Officer, commented, “We were pleased with the substantial interest in the amendment and upsize of our credit facility.  This amendment provides us significant funding capacity to continue to grow our investment portfolio and increase balance sheet leverage towards our target, while lowering the facility cost and increasing advance rates.  Improving the cost and efficiency of our financing sources allows us to generate attractive risk adjusted returns for our shareholders without reaching for yield in our investment portfolio.  We value our relationships with our existing and new lenders and are grateful for their continued support.”

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