Main Street Capital (NYSE:MAIN) Corporation MAIN has completed the modification of its existing Revolving Credit Facility, which raised the company’s capacity to borrow from $780 million to $855 million. The company was also able to extend the final maturity period to April 2026.
Further, it will maintain an expanded accordion feature permitting it an increase of credit of up to $1.2 billion of total commitments from new and existing lenders on the same conditions and terms as the current obligations.
However, the interest rate for outstanding borrowings under the credit facility remains unaltered at the appropriate LIBOR rate plus 1.875%, on grounds that Main Street meets the stipulated excess collateral and leverage requirements, coherent with the past requisites of the credit facility.
Main Street also continues to sustain two, one-year extension options under the altered credit facility, which might elongate the final maturity of the credit facility for up to two additional years, contingent on lender approval and other conditions.
Our Take
Main Street is a business development company which invests highly in lower-middle-market companies, offering higher growth potential. Thus, the extension and increment in the revolving credit facility can further strengthen its financial position by providing ample liquidity and flexibility.
Main Street’s efforts to grow the loan portfolio through its several marketing efforts are likely to attract new clients and reflect in higher loans originations, especially in lower middle market. Also, rise in prepayment activities, on account of low rates, aids fee income growth.
The company's shares have gained 41.6% over the past six months compared with 42.7% growth recorded by the industry.
Main Street currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks Taking Similar Actions
Some companies in the financial space that have recently amended its revolving credit facility are Sixth Street Specialty Lending, Inc. TSLX, Ares Capital Corporation ARCC and Apollo Investment Corporation AINV.
This March, Ares Capital increased commitments under its revolving credit facility to $3.6 billion and extended the maturity date to Mar 30, 2025.
In February 2021, Sixth Street upsized its revolving credit facility from $1.34 billion to $1.49 billion, apart from elongating the final maturity date by over one year on $1.39 billion of commitments to Feb 4, 2026.
In December 2020, Apollo Investment extended the final maturity if its senior secured revolving credit facility by nearly two years to Dec 22, 2025. The commitments will however, remain $1.81 billion until Nov 19, 2022 and thereafter, decrease to $1.71 billion.
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