Varagon Capital Corporation

11/01/2024 | Press release | Distributed by Public on 11/01/2024 15:01

Material Event Form 8 K

Item 8.01. Other Events

On October 31, 2024, Varagon Capital Corporation(the "Company"), through VCC CLO 1, LLC (the "Issuer"), a limited liability company formed under the laws of the State of Delaware and a wholly-owned indirect subsidiary of the Company, priced its $493.770 million term debt securitization (the "CLO Transaction"). The CLO Transaction is expected to close on or about November 26, 2024 (the "Closing"). The VCC CLO 1 Secured Debt (as defined below) to be issued by the Issuer in the CLO Transaction will be secured by a portfolio of collateral obligations consisting primarily of middle market loans and participation interests therein.

The CLO Transaction is expected to be executed through (i) a private placement of Class A-1 Senior Secured Floating Rate Notes, Class A-2 Senior Secured Floating Rate Loans, Class B Senior Secured Floating Rate Notes, Class B Senior Secured Floating Rate Loans and the Class C Mezzanine Secured Deferrable Floating Rate Notes (collectively, the "VCC CLO 1 Secured Debt"), and (ii) a purchase by the Depositor (as defined below) of the subordinated notes issued by the Issuer (the "Subordinated Notes" and, together with the VCC CLO 1 Secured Debt, the "VCC CLO 1 Debt"), the terms of which are summarized in the table below:

Class

Par Size ($)

Expected Ratings (S&P)(1)

Expected Ratings (Fitch)(1)

Coupon

Price

Class A-1 Notes

280,000,000

AAA (sf)

AAA (sf)

SOFR + 1.71%

100.0000

Class A-2 Loans

30,000,000

AAA (sf)

N/A

SOFR + 1.85%

100.0000

Class B Notes

7,000,000

AA (sf)

N/A

SOFR + 2.15%

100.0000

Class B Loans

23,000,000

AA (sf)

N/A

SOFR + 2.15%

100.0000

Class C Notes

37,500,000

A (sf)

N/A

SOFR + 2.65%

100.0000

Subordinated Notes

116,270,000

N/A

N/A

N/A

N/A

(1)
Initial ratings expected to be issued by S&P Global Ratings and Fitch Ratings Inc. at the Closing.

The Company, through VCC CLO 1 Depositor, LLC, (the "Depositor"), a limited liability company formed under the laws of the State of Delaware and a wholly-owned direct subsidiary of the Company, is expected to acquire 100% of the Subordinated Notes at the Closing and will be required to retain the Subordinated Notes in accordance with the U.S. Risk Retention Rules at and after the Closing. The Subordinated Notes will not bear interest. The Company expects that the VCC CLO 1 Debt will mature on October 20, 2036, unless otherwise redeemed earlier in accordance with the terms of the indenture governing the VCC CLO 1 Debt, to be executed on the Closing (the "Indenture").

The VCC CLO 1 Secured Debt will be the secured obligations of the Issuer, and the Indenture will include customary covenants and events of default. The VCC CLO 1 Debt have not been, and will not be, registered under the Securities Act of 1933, as amended, or any state securities or "blue sky" laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission (the "SEC") or an applicable exemption from registration. This report is not a solicitation for or an offer to purchase the VCC CLO 1 Debt.