ING to Provide Sustainability Linked Revolving Credit Facility for Lafayette Square

Rhea-AI Summary

Lafayette Square announced a new sustainability-linked revolving credit facility with ING Capital. The facility, secured by Lafayette's portfolio and unused capital commitments, aims to support their direct lending activities, primarily focusing on first lien senior secured loans. It matures in June 2029 and can grow up to $250 million through an uncommitted accordion feature. The annual interest rate is based on various rates, including term SOFR plus a 2.70% margin. This rate adjusts through a sustainability linked loan (SLL) pricing structure, with ING as the sole Sustainability Structuring Agent. The SLL aligns with Lafayette's 2030 goals to support 100,000 working-class jobs, invest 50% of capital in working-class communities, and enhance benefits for 50% of its portfolio companies.

Moreover, Lafayette Square offers its portfolio companies access to Worker Solutions, a platform designed to reduce turnover and increase benefit adoption. Both companies emphasize the importance of this partnership in creating stronger, more productive businesses in local communities while generating economic benefits for shareholders.

Positive

• Lafayette Square secures a new sustainability-linked revolving credit facility with ING Capital, maturing in June 2029.
• The facility can grow up to $250 million through an uncommitted accordion feature.
• The annual interest rate includes term SOFR plus a margin of 2.70%, adjustable through an innovative sustainability-linked loan (SLL) pricing structure.
• The credit facility supports Lafayette's direct lending activities with a focus on first lien senior secured loans.
• The SLL aligns with Lafayette Square's 2030 goals, which include supporting 100,000 working-class jobs and investing 50% of capital in working-class communities.

Negative

• None.

MIAMI and NEW YORK, June 25, 2024 /PRNewswire/ -- Lafayette Square USA, Inc. ("Lafayette Square"), a business development company, announced today that it has entered into a new hybrid credit facility with ING Capital LLC ("ING"). The facility will be secured by a combination of Lafayette's Square's portfolio and the unused capital commitments of its investors and will support Lafayette Square's direct lending activities, with a primary focus on first lien senior secured loans.

The credit facility, which matures in June 2029, will provide Lafayette Square with access to a revolving line of credit, initially committed by ING and expected to grow through an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing up to $250 million. The annual interest rate applicable to borrowings under the facility will be based on a range of alternative rates, including term SOFR plus a margin of 2.70%.

In addition, the annual interest rate will be adjustable based on an innovative sustainability linked loan ("SLL") pricing structure, with ING acting as the sole Sustainability Structuring Agent. The SLL's key performance indicators directly reference Lafayette Square's 2030 goals to 1) support 100,000 working-class jobs, 2) invest 50 percent of capital to support working-class communities, and 3) curate benefits for 50 percent of its portfolio companies through its Worker Solutions platform. 

Along with financing, Lafayette Square offers its portfolio companies access to Worker Solutions, a custom-built platform offering interest rate step-downs to portfolio companies adopting services and HR policies designed to measurably reduce turnover and increase adoption of healthcare and retirement benefits. 

"We look forward to partnering with ING as we pursue our 2030 goals regarding working class people and places," said Damien Dwin, Founder & CEO of Lafayette Square's parent company. "On behalf of the shareholders at Lafayette Square USA, Inc, I thank ING for creating this innovative structure aligned with our mission to stimulate economic activity in working class places while creating economic benefits for our shareholders."

"Lafayette Square's credit strategy is very well aligned with our worldview and approach. By simultaneously providing middle market companies liquidity and credit, alongside resources to improve the financial resiliency of their workforces, Damien and his team are creating stronger, more productive businesses in local communities." said Grace Fu, head of Fund Finance Americas at ING. "This SLL marks a significant milestone in the BDC market, driving credit to companies that create positive social impact," further added Cindy Jia, director, Sustainable Finance, Americas at ING.

About ING Capital LLC
ING Capital LLC is a financial services firm offering a full array of wholesale financial lending products and advisory services to its corporate and institutional clients. ING Capital LLC is an indirect U.S. subsidiary of ING Bank NV, part of ING Groep NV (NYSE: ING), a global financial institution with a strong European base. The purpose of ING Bank is empowering people to stay a step ahead in life and in business. ING Bank's more than 60,000 employees offer retail and wholesale banking services to customers in over 40 countries. Please note that neither ING Groep NV nor ING Bank NV have a banking license in the U.S. and are therefore not permitted to conduct banking activities in the U.S.

About Lafayette Square
Lafayette Square invests in middle market companies while positively supporting people and communities. We believe the demand for capital in businesses headquartered outside of high-income places is an overlooked opportunity. We seek investment opportunities that stimulate economic growth across the United States through the creation and preservation of working-class jobs. For more information, please visit www.lafayettesquare.com.

Media Contact:
Jansel Murad
Dukas Linden Public Relations
646-722-6537
lafayettesquare@dlpr.com

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SOURCE Lafayette Square Holding Company

FAQ

What kind of credit facility has Lafayette Square entered into with ING?

Lafayette Square has entered into a sustainability-linked revolving credit facility with ING Capital.

When does the credit facility between Lafayette Square and ING mature?

The credit facility matures in June 2029.

What is the maximum potential size of the credit facility arranged by Lafayette Square and ING?

The credit facility can grow up to $250 million through an uncommitted accordion feature.

How is the interest rate determined for Lafayette Square's new credit facility with ING?

The interest rate is based on alternative rates, including term SOFR plus a 2.70% margin, and is adjustable via a sustainability-linked loan (SLL) pricing structure.

What are the key performance indicators for the sustainability-linked loan (SLL) that ING structured for Lafayette Square?

The SLL's key performance indicators include supporting 100,000 working-class jobs, investing 50% of capital in working-class communities, and curating benefits for 50% of portfolio companies.