Capital Southwest Increases Corporate Credit Facility to $485 million

Rhea-AI Summary

Capital Southwest (CSWC) has announced a significant expansion of its Corporate Credit Facility. The company has increased total commitments from $460 million to $485 million, representing a $25 million increase under the existing accordion feature. This expansion was facilitated by the addition of one new lender, bringing the total number of participants in the bank syndicate to 11. The Corporate Credit Facility's accordion feature allows for potential future growth, with maximum commitments of up to $750 million.

This increase in the credit facility enhances Capital Southwest's capacity to provide flexible financing solutions for middle market businesses, supporting their acquisition and growth strategies. The expansion of the credit facility demonstrates the company's continued ability to attract lender support and potentially signals confidence in its business model and growth prospects.

Positive

• Increased Corporate Credit Facility by $25 million to $485 million total commitments
• Added one new lender to the bank syndicate, now totaling 11 participants
• Existing accordion feature allows for potential growth up to $750 million in total commitments

Negative

• None.

Insights

Financial Analyst

Capital Southwest's credit facility expansion to $485 million signals enhanced financial flexibility and potential for growth. The $25 million increase, provided by a new lender, broadens the company's banking relationships and diversifies its funding sources. This move could support more aggressive deal-making in the middle market space, potentially boosting CSWC's loan portfolio and revenue streams.

The expanded facility, with room to grow to $750 million, positions CSWC well in the competitive BDC landscape. However, investors should monitor the company's leverage ratios and credit quality as it deploys this additional capital. The ability to attract new lenders in the current economic climate is a positive indicator of CSWC's creditworthiness and market standing.

Market Research Analyst

This credit facility expansion aligns with the broader trend in the BDC sector of increasing dry powder to capitalize on potential market dislocations. With 5.4% more capital at its disposal, CSWC is better equipped to compete for quality deals in the middle market segment, which could translate to improved earnings potential.

However, the impact on stock performance may be in the short term, as the market often prices in such incremental improvements. Investors should focus on CSWC's ability to maintain its dividend yield and NAV stability while deploying this additional capital effectively. The expanded syndicate of 11 banks also suggests growing institutional confidence in CSWC's business model and risk management practices.

DALLAS, Sept. 12, 2024 (GLOBE NEWSWIRE) -- Capital Southwest Corporation (“Capital Southwest”) (Nasdaq: CSWC), an internally managed business development company focused on providing flexible financing solutions to support the acquisition and growth of middle market businesses, today announced an increase to the total commitments under its senior secured credit facility (the “Corporate Credit Facility”). The Corporate Credit Facility was increased under the existing accordion feature by $25 million, bringing total commitments from $460 million to $485 million. The $25 million increase was provided by one new lender, bringing the total bank syndicate to 11 participants. The existing Corporate Credit Facility accordion feature allows for maximum commitments of up to $750 million.

About Capital Southwest

Capital Southwest Corporation (Nasdaq: CSWC) is a Dallas, Texas-based, internally managed business development company with approximately $1.5 billion in investments at fair value as of June 30, 2024. Capital Southwest is a middle market lending firm focused on supporting the acquisition and growth of middle market businesses with $5 million to $35 million investments across the capital structure, including first lien, second lien and non-control equity co-investments. As a public company with a permanent capital base, Capital Southwest has the flexibility to be creative in its financing solutions and to invest to support the growth of its portfolio companies over long periods of time.

Investor Relations Contact:

Michael S. Sarner, Chief Financial Officer
214-884-3829

FAQ

What is the new total commitment under Capital Southwest's (CSWC) Corporate Credit Facility?

Capital Southwest (CSWC) has increased its Corporate Credit Facility total commitments to $485 million, up from $460 million previously.

How much did Capital Southwest (CSWC) increase its Corporate Credit Facility by on September 12, 2024?

Capital Southwest (CSWC) increased its Corporate Credit Facility by $25 million on September 12, 2024.

What is the maximum potential commitment allowed under Capital Southwest's (CSWC) Corporate Credit Facility accordion feature?

The existing accordion feature of Capital Southwest's (CSWC) Corporate Credit Facility allows for maximum commitments of up to $750 million.

How many lenders are now part of Capital Southwest's (CSWC) bank syndicate after the recent increase?

After the recent increase, Capital Southwest's (CSWC) bank syndicate now includes 11 participants, with one new lender added.