DIVIDEND DECLARATIONS

Ares Capital Corporation (“Ares Capital”) (NASDAQ: ARCC) announced that its Board of Directors has declared a second quarter 2023 dividend of $0.48 per share. The second quarter 2023 dividend is payable on June 30, 2023 to stockholders of record as of June 15, 2023.

MARCH 31, 2023 FINANCIAL RESULTS

Ares Capital also announced financial results for its first quarter ended March 31, 2023.

OPERATING RESULTS

“Our first quarter results reflect a strong start to 2023 with year-over-year growth of more than 35% in core earnings per share,” said Kipp deVeer, Chief Executive Officer of Ares Capital. “With tighter credit conditions prevalent in the market, we believe our ability to provide certainty of execution and flexible capital solutions to borrowers will enhance our competitive position and enable us to make attractive investments for this market cycle.”

“We have further strengthened our balance sheet thus far this year by reducing our leverage and increasing our available liquidity,” said Penni Roll, Chief Financial Officer of Ares Capital. “We believe that our fortified balance sheet with leverage of less than 1.1x net debt to equity leaves us well-positioned to continue to support our existing portfolio companies and to be opportunistic investors in this environment.”

PORTFOLIO AND INVESTMENT ACTIVITY

In the first quarter of 2023, Ares Capital made new investment commitments of approximately $766 million, of which approximately $636 million were funded. Total new investment commitments included approximately $283 million of new investment commitments to IHAM. New investment commitments included 8 new portfolio companies and 24 existing portfolio companies. As of March 31, 2023, 218 separate private equity sponsors were represented in Ares Capital’s portfolio. Of the $766 million in new commitments made during the first quarter of 2023, 49% were in first lien senior secured loans, 7% were in subordinated certificates of the Senior Direct Lending Program (the “SDLP”), 3% were in preferred equity, 37% were for Ares Capital’s subordinated loan and equity investments in IHAM and 4% were in other equity. Of these commitments, 73% were in floating rate debt securities, of which 88% contained interest rate floors. Ares Capital may seek to sell all or a portion of these new investment commitments, although there can be no assurance that Ares Capital will be able to do so. Also in the first quarter of 2023, Ares Capital funded approximately $454 million related to previously existing unfunded revolving and delayed draw loan commitments.

Also in the first quarter of 2023, Ares Capital exited approximately $1.9 billion of investment commitments, including approximately $652 million of loans sold to IHAM or certain vehicles managed by IHAM. Of the total investment commitments exited, 72% were first lien senior secured loans, 10% were senior subordinated loans, 10% were Ares Capital’s subordinated loan investment in IHAM, 6% were preferred equity and 2% were subordinated certificates of the SDLP. Of the approximately $1.9 billion of exited investment commitments, 90% were floating rate, 4% were fixed rate and 6% were non-income producing.

As of March 31, 2023 and December 31, 2022, the weighted average grade of the portfolio at fair value was 3.1 and 3.2, respectively, and loans on non-accrual status represented 2.3% of the total investments at amortized cost (or 1.3% at fair value) and 1.7% at amortized cost (or 1.1% at fair value), respectively. For more information on Ares Capital’s portfolio investment grades and loans on non-accrual status, see “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Portfolio and Investment Activity” in Ares Capital’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on April 25, 2023.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2023, Ares Capital had $359 million in cash and cash equivalents and $11.2 billion in total aggregate principal amount of debt outstanding ($11.2 billion at carrying value). Subject to borrowing base and other restrictions, Ares Capital had approximately $4.4 billion available for additional borrowings under its existing credit facilities as of March 31, 2023.

In January 2023, Ares Capital and ARCC FB Funding LLC (“AFB”), a wholly owned subsidiary of Ares Capital, entered into an agreement to amend AFB’s revolving funding facility (the “BNP Funding Facility”) that among other things, (a) increased the commitments under the facility from $300 million to $500 million and (b) adjusted the interest rate charged on the BNP Funding Facility from an applicable LIBOR or a "base rate" plus a margin of (i) 1.80% during the reinvestment period and (ii) 2.30% following the reinvestment period to an applicable SOFR or a "base rate" plus a margin of (i) 2.30% during the reinvestment period and (ii) 2.80% following the reinvestment period.

In February 2023, Ares Capital repaid in full the $750 million aggregate principal amount outstanding of its unsecured notes (the “2023 Notes”) upon their maturity. The 2023 Notes bore interest at a rate of 3.500% per annum, payable semi-annually.

In January 2023, Ares Capital completed a public underwritten equity offering pursuant to which Ares Capital sold approximately 12.1 million shares of common stock at a price of $18.53 per share to the participating underwriters, with net proceeds totaling approximately $223.4 million, after giving effect to underwriting fees and estimated offering expenses.

During the three months ended March 31, 2023, Ares Capital issued and sold approximately 13.2 million shares of common stock under its equity distribution agreements, with net proceeds totaling approximately $253.6 million, after giving effect to sales agents’ commissions and certain estimated offering expenses.

FIRST QUARTER 2023 DIVIDENDS PAID

On February 7, 2023, Ares Capital announced that its Board of Directors declared a first quarter 2023 dividend of $0.48 per share for a total of approximately $261 million. The first quarter 2023 dividend was paid on March 31, 2023 to stockholders of record as of March 15, 2023.

RECENT DEVELOPMENT

In April 2023, Ares Capital amended its Revolving Credit Facility. The amendment, among other things, (a) extended the expiration of the revolving period for lenders electing to extend their revolving commitments in an amount equal to approximately $2.9 billion from March 31, 2026 to April 19, 2027, during which period Ares Capital, subject to certain conditions, may borrow under the Revolving Credit Facility, (b) extended the stated maturity date for lenders electing to extend their revolving commitments in an amount equal to approximately $2.9 billion from March 31, 2027 to April 19, 2028 and (c) extended the stated maturity date for $908 million of the lenders electing to extend their term loan commitments from March 31, 2027 to April 19, 2028. Lenders who elected not to extend their revolving commitments in an amount equal to approximately $150 million, $107 million and $494 million will remain subject to a revolving period expiration of March 30, 2024, March 31, 2025 and March 31, 2026, respectively, and stated maturity dates of March 30, 2025, March 31, 2026 and March 31, 2027, respectively. Lenders who elected not to extend their term loan commitments in an amount equal to $50 million, $28 million and $116 million will remain subject to maturity dates of March 30, 2025, March 31, 2026 and March 31, 2027, respectively.

In April 2023, Ares Capital and AFB entered into an amendment to the BNP Funding Facility. The amendment among other things, (a) increased the commitments under the BNP Funding Facility from $500 million to $790 million, (b) extended the end of the reinvestment period from June 11, 2023 to April 20, 2026, (c) extended the stated maturity date from June 11, 2025 to April 20, 2028 and (d) adjusted the interest rate charged on the BNP Funding Facility from an applicable SOFR or a "base rate" (as defined in the BNP Funding Facility) plus a margin of (i) 2.30% during the reinvestment period and (ii) 2.80% following the reinvestment period to an applicable SOFR or a "base rate" plus a margin of (i) 2.80% during the reinvestment period and (ii) 3.30% following the reinvestment period.

In April 2023, Ares Capital’s board of directors authorized an amendment to Ares Capital’s stock repurchase program to increase the total authorization from $500 million to $1.0 billion. Under the stock repurchase program, Ares Capital may repurchase up to $1.0 billion in the aggregate of its outstanding common stock in the open market at a price per share that meets certain thresholds below its net asset value per share, in accordance with the guidelines specified in Rule 10b-18 of the Exchange Act. The timing, manner, price and amount of any share repurchases will be determined by Ares Capital, in its discretion, based upon the evaluation of economic and market conditions, stock price, applicable legal and regulatory requirements and other factors.

From April 1, 2023 through April 19, 2023, Ares Capital made new investment commitments of approximately $369 million, of which $311 million were funded. Of these new commitments, 66% were in first lien senior secured loans and 34% were in second lien senior secured loans. Of the approximately $369 million of new investment commitments, 67% were floating rate and 33% were fixed rate. The weighted average yield of debt and other income producing securities funded during the period at amortized cost was 11.4% and the weighted average yield on total investments funded during the period at amortized cost was 11.3%. Ares Capital may seek to sell all or a portion of these new investment commitments, although there can be no assurance that it will be able to do so.

From April 1, 2023 through April 19, 2023, Ares Capital exited approximately $397 million of investment commitments, including $4 million of loans sold to IHAM or certain vehicles managed by IHAM. Of the total investment commitments exited, 78% were first lien senior secured loans, 21% were second lien senior secured loans and 1% were senior subordinated loans. Of the approximately $397 million of exited investment commitments, 99% were floating rate and 1% were fixed rate. The weighted average yield of debt and other income producing securities exited or repaid during the period at amortized cost was 10.8% and the weighted average yield on total investments exited or repaid during the period at amortized cost was 10.8%. Of the approximately $397 million of investment commitments exited from April 1, 2023 through April 19, 2023, Ares Capital recognized total net realized losses of approximately $1 million, with no realized gains or losses recognized from the sale of loans to IHAM or certain vehicles managed by IHAM.

In addition, as of April 19, 2023, Ares Capital had an investment backlog and pipeline of approximately $310 million and $190 million, respectively. Investment backlog includes transactions approved by Ares Capital’s investment adviser’s investment committee and/or for which a formal mandate, letter of intent or a signed commitment have been issued, and therefore Ares Capital believes are likely to close. Investment pipeline includes transactions where due diligence and analysis are in process, but no formal mandate, letter of intent or signed commitment have been issued. The consummation of any of the investments in this backlog and pipeline depends upon, among other things, one or more of the following: satisfactory completion of Ares Capital due diligence investigation of the prospective portfolio company, Ares Capital’s acceptance of the terms and structure of such investment and the execution and delivery of satisfactory transaction documentation. In addition, Ares Capital may sell all or a portion of these investments and certain of these investments may result in the repayment of existing investments. Ares Capital cannot assure you that it will make any of these investments or that Ares Capital will sell all or any portion of these investments.

WEBCAST / CONFERENCE CALL

Ares Capital will host a webcast/conference call on Tuesday, April 25, 2023 at 11:00 a.m. (Eastern Time) to discuss its quarter ended March 31, 2023 financial results. PLEASE VISIT ARES CAPITAL’S WEBCAST LINK LOCATED ON THE HOME PAGE OF THE INVESTOR RESOURCES SECTION OF ARES CAPITAL’S WEBSITE FOR A SLIDE PRESENTATION THAT COMPLEMENTS THE EARNINGS CONFERENCE CALL.

All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Home page of the Investor Resources section of Ares Capital’s website at www.arescapitalcorp.com. Please visit the website to test your connection before the webcast. Domestic callers can access the conference call toll free by dialing +1 (877) 407-0312. International callers can access the conference call by dialing +1 (201) 389-0899. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected. For interested parties, an archived replay of the call will be available approximately one hour after the end of the call through May 23, 2023 at 5:00 p.m. (Eastern Time) to domestic callers by dialing toll free +1 (877) 660-6853 and to international callers by dialing +1 (201) 612-7415. For all replays, please reference access code 13736873. An archived replay will also be available through May 23, 2023 on a webcast link located on the Home page of the Investor Resources section of Ares Capital’s website.

ABOUT ARES CAPITAL CORPORATION

Founded in 2004, Ares Capital is a leading specialty finance company focused on providing direct loans and other investments in private middle market companies in the United States. Ares Capital’s objective is to source and invest in high-quality borrowers that need capital to achieve their business goals, which often leads to economic growth and employment. Ares Capital believes its loans and other investments in these companies can generate attractive levels of current income and potential capital appreciation for investors. Ares Capital, through its investment manager, utilizes its extensive, direct origination capabilities and incumbent borrower relationships to source and underwrite predominantly senior secured loans but also subordinated debt and equity investments. Ares Capital has elected to be regulated as a business development company (“BDC”) and was the largest publicly traded BDC by market capitalization as of March 31, 2023. Ares Capital is externally managed by a subsidiary of Ares Management Corporation (NYSE: ARES), a publicly traded, leading global alternative investment manager. For more information about Ares Capital, visit www.arescapitalcorp.com.

FORWARD-LOOKING STATEMENTS

Statements included herein or on the webcast/conference call may constitute “forward-looking statements,” which relate to future events or Ares Capital’s future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results and conditions may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Ares Capital’s filings with the SEC. Ares Capital undertakes no duty to update any forward-looking statements made herein or on the webcast/conference call.

SCHEDULE 1

Reconciliations of Core EPS to basic GAAP net income per share

Reconciliations of Core EPS to basic GAAP net income per share, the most directly comparable GAAP financial measure, for the three months ended March 31, 2023 and 2022 are provided below.

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