Slide 1: Presentation to Institutional Shareholder Services Inc.
May 16, 2011 Presentation to Institutional Shareholder Services Inc. ARES CAPITAL CORPORATION
Slide 2: Important Notice
Important Notice FORWARD-LOOKING STATEMENTS Statements included herein and in the Proxy Statement filed by Ares Capital Corporation on April 28, 2011 (the “Proxy Statement”) may constitute “forward-looking statements,” which relate to future events or the future performance or financial condition of
Slide 3: Current Proposals
Current Proposals Proposal 1: Election of Class I Directors To elect Michael J. Arougheti, Ann Torre Bates and Kenneth R. Heitz as directors for a three year term Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm To ratify the selection of KPMG LLP as the Company
Slide 4: Summary of Proposal to Issue Shares Below NAV
Summary of Proposal to Issue Shares Below NAV We are requesting authorization to issue our shares at a price below our then current NAV subject to certain limitations: In one or more offerings, the number of shares issued cannot exceed 25% of our then outstanding common stock A “required majority” o
Slide 5: Summary of Hurdle Amendment
Summary of Hurdle Amendment Our investment adviser, ACM, provides investment advisory and management services to us in exchange for a base management fee and an incentive fee comprised of an income fee and a capital gains fee (1): A base management fee of 1.5% based on the average value of our total
Slide 6: Rationale for Hurdle Amendment
The reduced hurdle rate better aligns our and ACM’s interests by not disincentivizing ACM, where market conditions warrant it, from seeking to invest in more conservative senior assets with lower absolute, yet potentially higher risk-adjusted long term returns when compared to higher yielding, yet p
Slide 7: Rationale for Hurdle Amendment (continued)
Rationale for Hurdle Amendment (continued) As shown below, the Hurdle Amendment would reduce ACM’s hurdle rate to be more in line with our peer group (1) All of these companies currently pay a 2.0% base management fee and four of the six currently pay incentive fees based on 7.0% hurdle rates In add
Slide 8: ARCC Performance Compared to BDC Peer Group
ARCC Performance Compared to BDC Peer Group (1)(2) Total Stock Price Return with Dividends (3) 2008 – 2010 Total Stock Price Return with Dividends (3) Last Twelve Months through 5/11/11 Cumulative Net Investment Gains/(Losses) 2008 - 2010 GAAP Return on Equity (4) 2008 – 2010 1) All information prov
Slide 9: Summary of Capital Gains Amendment
The capital gains fee is calculated at the end of each year by subtracting (a) our cumulative realized capital losses and unrealized capital depreciation from (b) our cumulative realized capital gains; capital gains, capital losses and capital depreciation are measured against the “accreted or amort
Slide 10: Financial Impact of Capital Gains Amendment
Financial Impact of Capital Gains Amendment Since the cost basis of the acquired Allied assets would be reduced by approximately $130 million under the Capital Gains Amendment calculation, an accrual of approximately $26 million (approximately $0.13 per share) would be required under GAAP in the qua
Slide 11: Appendix
OARES Appendix
Slide 12: 2009 Offering Below NAV and Subsequent Performance
As a result of the credit market disruption during 2009, competition declined, interest spreads widened and generally more conservative capital structures and deal terms were available, which we believe created favorable opportunities to invest at attractive risk-adjusted returns Acting pursuant to
Slide 13: Investments Acquired in the Allied Acquisition
Investments Acquired in the Allied Acquisition (Dollar amounts in 000s) Investments at Fair Value as of April 1, 2010 Investments at Fair Value as of March 31, 2011 Net Change in Fair Value (1) $ % of Total Yield (2) $ % of Total Yield (2) $ Lower Yielding / Non-Yielding Debt Securities Yielding < 1