Franklin Square BDC Secures $95 Million Credit Facility
FS Investment Corporation II, a publicly registered business development company sponsored by Franklin Square Capital Partners, entered into a revolving credit facility with ING Capital LLC in an initial aggregate amount of up to $95 million, with an option to provide up to $80 million in additional commitments.
The facility provides for the issuance of letters of credit in a total face amount of no more than $25 million if one of the lenders or another party assumes the role of letter of credit issuer.
The company’s obligations under the credit facility are guaranteed by all of its subsidiaries, other than its special-purpose financing subsidiaries, tax blocker subsidiaries and foreign subsidiaries, and are secured by a first priority security interest in substantially all of the company’s assets.
Interest for loans that the company elects the base rate option is payable at a rate equal to 0.75 percent per year plus the greatest of the U.S. prime rate as published in The Wall Street Journal, the federal funds effective rate plus 0.5 percent, or the three-month London Interbank Offered Rate plus 1 percent per year. Interest for loans where the company elects the Eurocurrency option is payable at a rate equal to LIBOR plus 1.75 percent per year.
The credit facility will be subject to a non-usage fee of 0.375 percent per year on the unused portion of the commitment during the revolving period.
To comply with the terms, the company’s minimum stockholders’ equity, measured at the end of each quarter, must be greater than or equal to $1.35 billion, plus 25 percent of the net proceeds of any post-closing equity offerings; and the company must maintain a 200 percent asset coverage ratio at all times.
FSIC II focuses primarily on investing in the debt securities of private companies throughout the United States. The company is advised by FSIC II Advisor, an affiliate of Franklin Square, and is sub-advised by GSO / Blackstone Debt Funds Management, an affiliate of GSO Capital Partners.
Franklin Square is a manager of alternative investment funds and introduced the industry’s first non-traded business development company. As of September 30, 2015, the firm managed approximately $17 billion in total assets, including $15.7 billion in BDC assets, making it the largest manager of BDCs.
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