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Stag-Parkway Corp. Parent Merger Completed

April 5, 2010 by · Leave a Comment 

Ares Capital Corp. announced April 1 that it has completed its merger with Allied Capital Corp., parent company of Stag-Parkway Corp., becoming the largest business development company measured by market capitalization and total portfolio companies under management, according to a press release.

“We are very excited to close our merger with Allied, which we expect to be transformational for our business and beneficial to all of our shareholders,” stated Michael Arougheti, president of Ares Capital. “With this combination, we believe that Ares Capital is now the clear leader in the middle market sector — with significant market coverage, increased scale, a stronger capital base and competitive relevance, all of which we anticipate will allow us to more fully take advantage of the current attractive investment environment.”

The merger increases Ares Capital’s estimated committed capital under management to approximately $12 billion as of March 31, and expands its market coverage to a total of 61 dedicated investment professionals located in five offices in New York, Washington, D.C., Los Angeles, Chicago and Atlanta. With a larger capital base and expanded portfolio as a result of the merger, Ares Capital has the opportunity to substantially increase its average commitment sizes and final investment positions.

As previously announced, Allied Capital stockholders received the right to 0.325 shares of Ares Capital common stock for each share of Allied Capital common stock held immediately prior to the merger (subject to adjustment for fractional shares to be paid in cash), resulting in approximately 58.5 million newly issued shares of Ares Capital common stock.

“Since the signing of the merger agreement, tremendous progress has been made to better position Ares Capital for future growth,” added Arougheti. “We are already hard at work to continue executing our stated strategy to optimize Allied’s portfolio for higher returns as well as to take advantage of favorable market opportunities.”

At closing, Ares Capital retired in full Allied Capital’s $250 million senior secured term loan arranged by J.P. Morgan Securities Inc. on January 29, 2010. Ares Capital also assumed all of Allied Capital’s other outstanding debt obligations, including approximately $745 million in Allied’s publicly traded unsecured notes. As previously disclosed, Ares Capital’s revolving commitments increased by $75 million to $690 million with the closing of the Allied merger.

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