Business Development signs $150 million financing facility with UBS

By Marisa Wong

Madison, Wis., April 7 – Business Development Corp. of America entered into a $150 million debt financing facility with UBS AG, London Branch on April 7, according to an 8-K filing with the Securities and Exchange Commission.

Pricing is based on Libor plus a spread of 390 basis points.

The debt financing facility will be used to fund investments in new securities and for other general corporate purposes.

The facility involves a repurchase agreement between Business Development and UBS on some notes issued by BDCA’s wholly-owned special purpose subsidiary, BDCA Helvetica Funding, Ltd.

Under the facility, Business Development will sell loans in its portfolio having an aggregate market value of up to $300 million to BDCA Helvetica under a master loan purchase agreement dated April 7.

From time to time, the company may designate additional loans to sell to the subsidiary.

The purchase price for the initial loans will consist of one or a combination of the following: cash, an increase in the equity value in BDCA Helvetica and Business Development’s acquisition of certain class A notes.

The class A notes will be issued in the amount of up to $300 million and will be purchased by Business Development under a subscription agreement dated April 7 between BDCA Helvetica and Business Development.

The purchase price for additional loans will consist of one or a combination of the following: cash in an amount equal to the fair market value of those loans or, with the consent of BDCA Helvetica, by means of an increase in the equity value in the subsidiary held by Business Development.

“We are excited to partner with UBS for this debt financing facility,” Robert K. Grunewald, president, chief operating officer and chief investment officer of BDCA, said in a press release.

Peter M. Budko, chairman and chief executive officer of BDCA, added, “With the closing of this financing arrangement with UBS, we are now well on the path to diversifying and differentiating our debt financing arrangements. We believe BDCA’s ability to raise debt financing from multiple independent financial institutions and our recently announced investment-grade rating further demonstrates BDCA’s position as a leading non-traded business development company and is a reflection of the quality of its loan portfolio and our management team.”

The New York company received a rating of BBB from Kroll Bond Rating Agency, Inc. on Tuesday, the filing said.

Business Development was established to provide capital primarily in the form of senior secured loans to middle-market enterprises. It invests in both the debt and equity of private middle-market companies.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.