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As filed with the Securities and Exchange Commission on April 26, 2013

Registration No. 333-          

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM N-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

o PRE-EFFECTIVE AMENDMENT NO.


o POST-EFFECTIVE AMENDMENT NO.

ARES CAPITAL CORPORATION
(Exact Name of Registrant as Specified in Charter)

245 Park Avenue, 44th Floor
New York, New York 10167

(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: (212) 750-7300

Joshua M. Bloomstein
General Counsel
Ares Capital Corporation
245 Park Avenue, 44th Floor
New York, New York 10167
(212) 750-7300

(Name and Address of Agent for Service)

Copies of information to:

Monica J. Shilling
Proskauer Rose LLP
2049 Century Park East, 32nd Floor
Los Angeles, CA 90067-3206
(310) 557-2900

Approximate Date of Proposed Public Offering:
From time to time after the effective date of this Registration Statement.

                     If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box. ý

                     It is proposed that this filing will become effective (check appropriate box):

                     ý when declared effective pursuant to section 8(c).

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

               
 
Title of Securities Being Registered
  Amount Being
Registered

  Proposed Maximum
Offering Price
Per Unit

  Proposed Maximum
Aggregate Offering
Price(1)

  Amount of
Registration
Fee(2)

 

Common Stock, $0.001 par value per share(3)(4)

               
 

Preferred Stock, $0.001 par value per share(3)

               
 

Subscription Rights(3)

               
 

Warrants(5)

               
 

Debt Securities(6)

               
 

Units(7)

               
 

Total

          $3,000,000,000(8)   $409,200

 

(1)
Estimated pursuant to Rule 457(o) solely for the purpose of determining the registration fee. The proposed maximum offering price per security will be determined from time to time, by the Registrant in connection with the sale by the Registrant of the securities registered under this registration statement.

(2)
Prior to the initial filing of this registration statement, $2,045,353,775 aggregate principal amount of securities remained registered and unsold pursuant to Registration Statement No. 333-181563, which was initially filed by the Registrant on May 21, 2012. Pursuant to Rule 457(p), $234,397 of the total filing fee of $409,200 required in connection with the initial registration of $3,000,000,000 aggregate principal amount of securities under this registration statement is being offset against the $234,397 filing fee associated with the unsold securities registered under Registration Statement No. 333-181563, and an additional $174,803 is being paid in connection herewith.

(3)
Subject to Note 8 below, there is being registered hereunder an indeterminate number of shares of common stock or preferred stock, or subscription rights to purchase shares of common stock as may be sold, from time to time separately or as units in combination with other securities registered hereunder.

(4)
Includes such indeterminate number of shares of common stock as may, from time to time, be issued upon conversion or exchange of other securities registered hereunder, to the extent any such securities are, by their terms, convertible or exchangeable for common stock.

(5)
Subject to Note 8 below, there is being registered hereunder an indeterminate number of warrants as may be sold, from time to time separately or as units in combination with other securities registered hereunder, representing rights to purchase common stock, preferred stock or debt securities.

(6)
Subject to Note 8 below, there is being registered hereunder an indeterminate principal amount of debt securities as may be sold, from time to time separately or as units in combination with other securities registered hereunder. If any debt securities are issued at an original issue discount, then the offering price shall be in such greater principal amount as shall result in an aggregate price to investors not to exceed $3,000,000,000.

(7)
Subject to Note 8 below, there is being registered hereunder an indeterminate number of units. Each unit may consist of a combination of any one or more of the securities being registered hereunder and may also include securities issued by third parties, including the U.S. Treasury.

(8)
In no event will the aggregate offering price of all securities issued from time to time pursuant to this registration statement exceed $3,000,000,000.

                     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.

   


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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, dated April 26, 2013

PROSPECTUS

$3,000,000,000

LOGO

Common Stock
Preferred Stock
Debt Securities
Subscription Rights
Warrants
Units


              Ares Capital Corporation is a specialty finance company that is a closed-end, non-diversified management investment company incorporated in Maryland. We have elected to be regulated as a business development company under the Investment Company Act of 1940. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first and second lien senior secured loans (including "unitranche" loans, which are loans that combine both senior and mezzanine debt, generally in a first lien position) and mezzanine debt, which in some cases includes an equity component. To a lesser extent, we also make preferred and/or common equity investments.

              We are externally managed by our investment adviser, Ares Capital Management LLC, a wholly owned subsidiary of Ares Management LLC, a global alternative asset manager and a Securities and Exchange Commission ("SEC") registered investment adviser with approximately $59 billion of total committed capital under management as of December 31, 2012. Ares Operations LLC, a wholly owned subsidiary of Ares Management LLC, provides certain administrative and other services necessary for us to operate.

              Our common stock is traded on The NASDAQ Global Select Market under the symbol "ARCC." On April 25, 2013 the last reported sales price of our common stock on The NASDAQ Global Select Market was $17.76 per share. The net asset value per share of our common stock at December 31, 2012 (the last date prior to the date of this prospectus on which we determined net asset value) was $16.04.

              Investing in our securities involves risks that are described in the "Risk Factors" section beginning on page 24 of this prospectus, including the risk of leverage.

              We may offer, from time to time, in one or more offerings or series, up to $3,000,000,000 of our common stock, preferred stock, debt securities, subscription rights to purchase shares of our common stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, or units comprised of any combination of the foregoing, which we refer to, collectively, as the "securities." The preferred stock, debt securities, subscription rights and warrants (including as part of a unit) offered hereby may be convertible or exchangeable into shares of our common stock. The securities may be offered at prices and on terms to be described in one or more supplements to this prospectus. In the event we offer common stock, the offering price per share of our common stock less any underwriting commissions or discounts will generally not be less than the net asset value per share of our common stock at the time we make the offering. However, we may issue shares of our common stock pursuant to this prospectus at a price per share that is less than our net asset value per share (a) in connection with a rights offering to our existing stockholders, (b) with the prior approval of the majority of our common stockholders or (c) under such circumstances as the SEC may permit. This prospectus and the accompanying prospectus supplement concisely provide important information about us that you should know before investing in our securities. Please read this prospectus and the accompanying prospectus supplement before you invest and keep it for future reference. We file annual, quarterly and current reports, proxy statements and other information with the SEC. This information is available free of charge by calling us collect at (310) 201-4200 or on our website at www.arescapitalcorp.com. The SEC also maintains a website at www.sec.gov that contains such information.


              Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

              This prospectus may not be used to consummate sales of securities unless accompanied by a prospectus supplement.


The date of this prospectus is                    , 2013.


              You should rely only on the information contained in this prospectus and the accompanying prospectus supplement. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the accompanying prospectus supplement is accurate only as of the date on the front cover of this prospectus and the accompanying prospectus supplement, as applicable. Our business, financial condition, results of operations and prospects may have changed since that date.

TABLE OF CONTENTS

 
  Page

Prospectus Summary

  1

The Company

  1

Offerings

  14

Fees and Expenses

  16

Selected Condensed Consolidated Financial Data of Ares Capital

  20

Risk Factors

  24

Forward-Looking Statements

  49

Use of Proceeds

  51

Price Range of Common Stock and Distributions

  53

Ratios of Earnings to Fixed Charges

  55

Management's Discussion and Analysis of Financial Condition and Results of Operations

  56

Senior Securities

  86

Business

  88

Portfolio Companies

  105

Management

  117

Certain Relationships and Related Transactions

  144

Control Persons and Principal Stockholders

  146

Determination of Net Asset Value

  148

Dividend Reinvestment Plan

  150

Certain Material U.S. Federal Income Tax Considerations

  152

Description of Securities

  163

Description of Our Capital Stock

  164

Description of Our Preferred Stock

  171

Description of Our Subscription Rights

  172

Description of Our Warrants

  173

Description of Our Debt Securities

  175

Description of Our Units

  187

Sales of Common Stock Below Net Asset Value

  188

Issuance of Warrants or Securities to Subscribe For or Convertible Into Shares of Our Common Stock

  193

Regulation

  194

Custodian, Transfer and Dividend Paying Agent and Registrar

  200

Brokerage Allocation and Other Practices

  200

Plan of Distribution

  201

Legal Matters

  203

Independent Registered Public Accounting Firm

  203

Available Information

  203

Financial Statements

  F-1

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ABOUT THIS PROSPECTUS

              This prospectus is part of a registration statement that we have filed with the SEC, using the "shelf" registration process. Under the shelf registration process, we may offer, from time to time, in one or more offerings or series, up to $3,000,000,000 of our common stock, preferred stock, debt securities, subscription rights to purchase shares of our common stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, or units comprised of any combination of the foregoing, on terms to be determined at the time of the offering. The securities may be offered at prices and on terms described in one or more supplements to this prospectus. This prospectus provides you with a general description of the securities that we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. Please carefully read this prospectus and the prospectus supplement together with any exhibits and the additional information described under the headings "Available Information" and "Risk Factors" before you make an investment decision.

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PROSPECTUS SUMMARY

              This summary highlights some of the information contained elsewhere in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read carefully the more detailed information set forth under "Risk Factors" and the other information included in this prospectus. Except where the context suggests otherwise, the terms "we," "us," "our," "the Company" and "Ares Capital" refer to Ares Capital Corporation and its consolidated subsidiaries; "Ares Capital Management" and "our investment adviser" refer to Ares Capital Management LLC; "Ares Operations" and "our administrator" refer to Ares Operations LLC; and "Ares" and "Ares Management" refer to Ares Management LLC and its affiliated companies (other than portfolio companies of its affiliated funds).


THE COMPANY

Overview

              Ares Capital, a Maryland corporation, is a specialty finance company that is a closed-end, non-diversified management investment company. We have elected to be regulated as a business development company, or a "BDC," under the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder or the "Investment Company Act." We were founded on April 16, 2004, were initially funded on June 23, 2004 and completed our initial public offering on October 8, 2004. We are one of the largest BDCs with approximately $6.4 billion of total assets as of December 31, 2012.

              We are externally managed by our investment adviser, Ares Capital Management, a wholly owned subsidiary of Ares Management, a global alternative asset manager and an SEC registered investment adviser with approximately $59 billion of total committed capital under management as of December 31, 2012. Our administrator, Ares Operations, a wholly owned subsidiary of Ares Management, provides certain administrative and other services necessary for us to operate.

              Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in U.S. middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive. However, we may from time to time invest in larger or smaller (in particular, for investments in early-stage and/or venture capital-backed) companies. We generally use the term "middle-market" to refer to companies with annual EBITDA between $10 million and $250 million. As used herein, EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization.

              We invest primarily in first lien senior secured loans (including unitranche loans), second lien senior secured loans and mezzanine debt, which in some cases includes an equity component. First and second lien senior secured loans generally are senior debt instruments that rank ahead of subordinated debt of a given portfolio company. Mezzanine debt is subordinated to senior loans and is generally unsecured. Our investments in corporate borrowers generally range between $30 million and $400 million each, investments in project finance/power generation projects generally range between $10 million and $200 million each and investments in early-stage and/or venture capital-backed companies generally range between $1 million and $25 million each. However, the investment sizes may be more or less than these ranges and may vary based on, among other things, our capital availability, the composition of our portfolio and general micro- and macro-economic factors.

              To a lesser extent, we also make preferred and/or common equity investments, which have generally been non-control equity investments of less than $20 million (usually in conjunction with a concurrent debt investment). However, we may increase the size or change the nature of these investments.

              The proportion of these types of investments will change over time given our views on, among other things, the economic and credit environment in which we are operating. In connection with our

 

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investing activities, we may make commitments with respect to indebtedness or securities of a potential portfolio company substantially in excess of our final investment. In such situations, while we may initially agree to fund up to a certain dollar amount of an investment, we may subsequently syndicate a portion of such amount (including, without limitation, to vehicles managed by our portfolio company, Ivy Hill Asset Management, L.P. ("IHAM")), such that we are left with a smaller investment than what was reflected in our original commitment. In addition to originating investments, we may also acquire investments in the secondary market.

              The first and second lien senior secured loans in which we invest generally have stated terms of three to 10 years and the mezzanine debt investments in which we invest generally have stated terms of up to 10 years, but the expected average life of such first and second lien loans and mezzanine debt is generally between three and seven years. However, we may invest in loans and securities with any maturity or duration. The instruments in which we invest typically are not rated by any rating agency, but we believe that if such instruments were rated, they would be below investment grade (rated lower than "Baa3" by Moody's Investors Service, lower than "BBB-" by Fitch Ratings or lower than "BBB-" by Standard & Poor's Ratings Services), which, under the guidelines established by these entities, is an indication of having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. Bonds that are rated below investment grade are sometimes referred to as "high yield bonds" or "junk bonds." We may invest without limit in debt or other securities of any rating, as well as debt or other securities that have not been rated by any nationally recognized statistical rating organization.

              We believe that our investment adviser, Ares Capital Management, is able to leverage the current investment platform, resources and existing relationships of Ares with financial sponsors, financial institutions, hedge funds and other investment firms to provide us with attractive investment opportunities. In addition to deal flow, the Ares investment platform assists our investment adviser in analyzing, structuring and monitoring investments. Ares has been in existence for more than 15 years and its senior partners have an average of over 23 years experience in leveraged finance, private equity, distressed debt, commercial real estate finance, investment banking and capital markets. The Company has access to Ares' investment professionals and administrative professionals, who provide assistance in accounting, finance, legal, compliance, operations, information technology and investor relations. As of December 31, 2012, Ares had approximately 240 investment professionals and approximately 320 administrative professionals.

              Since our initial public offering on October 8, 2004 through December 31, 2012, our realized gains have exceeded our realized losses by approximately $194 million (excluding the one-time gain on the acquisition of Allied Capital Corporation (the "Allied Acquisition") and gains/losses from the extinguishment of debt and other assets). For this same time period, our exited investments have resulted in an aggregate cash flow realized internal rate of return to us of approximately 13% (based on original cash invested, net of syndications, of approximately $6.8 billion and total proceeds from such exited investments of approximately $8.3 billion). Approximately 72% of these exited investments resulted in an aggregate cash flow realized internal rate of return to us of 10% or greater. Internal rate of return is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. Internal rate of return is gross of expenses related to investments as these expenses are not allocable to specific investments. Investments are considered to be exited when the original investment objective has been achieved through the receipt of cash and/or non-cash consideration upon the repayment of a debt investment or sale of an investment or through the determination that no further consideration was collectible and, thus, a loss may have been realized. These internal rates of return results are historical results relating to our past performance and are not necessarily indicative of future results, the achievement of which cannot be assured.

              We and General Electric Capital Corporation and GE Global Sponsor Finance LLC (collectively, "GE") also co-invest through an unconsolidated vehicle, the Senior Secured Loan

 

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Fund LLC, which operates using the name "Senior Secured Loan Program" (the "SSLP"). The SSLP was initially formed in December 2007 by Allied Capital Corporation ("Allied Capital") and GE to co-invest in first lien senior secured loans of middle-market companies. In October 2009, we acquired from Allied Capital subordinated certificates issued by the SSLP and management rights in respect thereto. As of December 31, 2012, the SSLP had available capital of $9.0 billion of which approximately $6.3 billion in aggregate principal amount was funded at December 31, 2012. As of December 31, 2012, we had agreed to make available to the SSLP approximately $1.8 billion, of which approximately $1.2 billion was funded. The SSLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SSLP must be approved by an investment committee of the SSLP consisting of representatives of the Company and GE (with approval from a representative of each required). As of December 31, 2012, our investment in the SSLP was approximately $1.3 billion at fair value (including unrealized appreciation of $25.8 million), which represented approximately 21% of our total portfolio at fair value.

              While our primary focus is to generate current income and capital appreciation through investments in first and second lien senior secured loans and mezzanine debt and, to a lesser extent, equity securities of eligible portfolio companies, we also may invest up to 30% of our portfolio in non-qualifying assets, as permitted by the Investment Company Act. See "Regulation." Specifically, as part of this 30% basket, we may invest in entities that are not considered "eligible portfolio companies" (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act.

              In the first quarter of 2011, the staff of the SEC (the "Staff") informally communicated to certain BDCs the Staff's belief that certain entities, which would be classified as an "investment company" under the Investment Company Act but for the exception from the definition of "investment company" set forth in Rule 3a-7 promulgated under the Investment Company Act, could not be treated as "eligible portfolio companies" (as defined in Section 2(a)(46) under the Investment Company Act) (i.e., in a BDC's 70% basket of "qualifying assets"). Subsequently, in August 2011 the SEC issued a concept release (the "Concept Release") which stated that "[a]s a general matter, the Commission presently does not believe that Rule 3a-7 issuers are the type of small, developing and financially troubled businesses in which the U.S. Congress intended BDCs primarily to invest" and requested comment on whether or not a 3a-7 issuer should be considered an "eligible portfolio company." We provided a comment letter in respect of the Concept Release and continue to believe that the language of Section 2(a)(46) of the Investment Company Act permits a BDC to treat as "eligible portfolio companies" entities that rely on the 3a-7 exception. However, given the current uncertainty in this area (including the language in the Concept Release), we have, solely for purposes of calculating the composition of our portfolio pursuant to Section 55(a) of the Investment Company Act, identified such entities, which include the SSLP, as "non-qualifying assets" should the Staff ultimately take an official view that 3a-7 issuers are not "eligible portfolio companies."

              As of December 31, 2012, our portfolio company, IHAM, which became an SEC registered investment adviser effective March 30, 2012, managed 13 credit vehicles and served as the sub-manager/sub-servicer for three other credit vehicles (these vehicles managed or sub-managed/sub-serviced by IHAM are collectively referred to as the "IHAM Vehicles"), which are described in more detail under "Business—Investments—Ivy Hill Asset Management, L.P." below. As of December 31, 2012, IHAM had total committed capital under management of approximately $3.3 billion, which included approximately $0.2 billion invested by Ares Capital in IHAM. In connection with IHAM's registration as a registered investment adviser, on March 30, 2012, we received exemptive relief from the SEC allowing us to, subject to certain conditions, own directly or indirectly up to 100% of IHAM's outstanding equity interests and make additional investments in IHAM.

 

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About Ares

              Founded in 1997, Ares is a global alternative asset manager and an SEC registered investment adviser with approximately $59 billion of total committed capital under management and approximately 560 employees as of December 31, 2012.

              Ares specializes in originating and managing assets in the leveraged finance, commercial real estate and private equity markets. Ares' leveraged finance activities include the origination, acquisition and management of senior loans, high yield bonds, mezzanine debt and special situation investments. Ares' commercial real estate activities generally focus on lending to U.S. middle-market real estate projects. Ares' private equity activities generally focus on control-oriented equity investments in under-capitalized companies with capital structure issues. Ares has the ability to invest across a capital structure, from senior debt to common equity. This flexibility, combined with Ares' "buy and hold" philosophy, enables Ares to structure an investment to meet the specific needs of a company rather than the less flexible demands of the public markets.

              The following chart shows the structure and various investment strategies of Ares as of December 31, 2012:

GRAPHIC

              Ares is organized around four primary investment platforms: Private Equity, Capital Markets, Private Debt and Commercial Real Estate. Ares' senior partners have been working together as a group for many years and have an average of over 23 years of experience in leveraged finance, private equity, distressed debt, commercial real estate, investment banking and capital markets. They are backed by a team of approximately 240 highly disciplined investment professionals which as of December 31, 2012 covered investments in more than 1,100 companies across over 30 industries. Ares' rigorous investment approach is based upon an intensive, independent financial analysis, with a focus on preservation of capital, diversification and active portfolio management. These fundamentals underlie Ares' investment strategy and have resulted in large pension funds, banks, insurance companies, endowments and high net worth individuals investing in Ares' funds.

 

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Ares Capital Management

              Ares Capital Management, our investment adviser, is served by an origination, investment and portfolio management team of approximately 80 U.S.-based investment professionals as of December 31, 2012 and led by the senior partners of the Ares Management Private Debt Group: Michael Arougheti, Eric Beckman, Kipp deVeer, Mitchell Goldstein and Michael Smith. Ares Capital Management leverages off of Ares' investment platform and benefits from the significant capital markets, trading and research expertise of Ares' investment professionals. Ares Capital Management's investment committee has eight members, including the senior partners of the Ares Management Private Debt Group, senior partners in the Ares Management Private Equity Group and a senior adviser to the Ares Management Capital Markets Group.

MARKET OPPORTUNITY

              We believe that current market conditions present attractive opportunities for us to invest in middle-market companies; specifically:

 

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COMPETITIVE ADVANTAGES

              We believe that we have the following competitive advantages over other capital providers to middle-market companies:

The Ares Platform

              As of December 31, 2012, Ares had approximately $59 billion of total committed capital under management in the related asset classes of non-syndicated first and second lien corporate and commercial real estate loans, syndicated corporate and commercial real estate loans, high yield bonds, corporate and commercial real estate mezzanine debt and private equity. We believe Ares' current investment platform provides a competitive advantage in terms of access to origination and marketing activities and diligence for us. In particular, we believe that the Ares platform provides us with an advantage through its deal flow generation and investment evaluation process. Ares' asset management platform also provides additional market information, company knowledge and industry insight that benefit our investment and due diligence process. Ares' professionals maintain extensive financial sponsor and intermediary relationships, which provide valuable insight and access to transactions and information.

Seasoned Management Team

              The investment professionals in the Ares Management Private Debt Group and members of our investment adviser's investment committee also have significant experience investing across market cycles. This experience also provides us with a competitive advantage in identifying, originating, investing in and managing a portfolio of investments in middle-market companies.

Broad Origination Strategy

              We focus on self-originating most of our investments by pursuing a broad array of investment opportunities in middle-market companies across multiple channels. We also leverage off of the extensive relationships of the broader Ares platform, including relationships with the portfolio companies in the IHAM Vehicles, to identify investment opportunities. We believe that this allows for asset selectivity and that there is a significant relationship between proprietary deal origination and credit performance. We believe that our focus on generating proprietary deal flow and lead investing also gives us greater control over capital structure, deal terms, pricing and documentation and enables us to actively manage our portfolio investments. Moreover, by leading the investment process, we are often able to secure controlling positions in credit tranches, thereby providing additional control in investment outcomes. We also have originated substantial proprietary deal flow from middle-market intermediaries, which often allows us to act as the sole or principal source of institutional capital to the borrower.

Scale and Flexible Transaction Structuring

              We believe that being one of the largest BDCs makes us a more desirable and flexible capital provider, especially in competitive markets. We are flexible and have significant experience in structuring investments, including the types of investments and the terms associated with such investments. We believe this approach and experience enables our investment adviser to identify attractive investment opportunities throughout economic cycles and across a company's capital structure so we can make investments consistent with our stated investment objective and preserve principal while seeking appropriate risk adjusted returns. In addition, we have the ability to provide "one stop" financing with the ability to invest capital across the balance sheet and syndicate and hold larger investments than many of our competitors. We believe that the ability to underwrite, syndicate and hold larger investments benefits our stockholders by (a) potentially increasing net income and earnings

 

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through syndication, (b) increasing originated deal flow flexibility, (c) broadening market relationships and deal flow, (d) allowing us to optimize our portfolio composition and (e) allowing us to provide capital to a broader spectrum of middle-market companies, which we believe currently have limited access to capital from traditional lending sources. In addition, we believe that the ability to provide capital at every level of the balance sheet provides a strong value proposition to middle-market borrowers and our senior debt capabilities provide superior deal origination and relative value analysis capabilities compared to traditional "mezzanine only" lenders.

Experience with and Focus on Middle-Market Companies

              Ares has historically focused on investments in middle-market companies and we benefit from this experience. In sourcing and analyzing deals, our investment adviser benefits from Ares' extensive network of relationships focused on middle-market companies, including management teams, members of the investment banking community, private equity groups and other investment firms with whom Ares has had long-term relationships. We believe this network enables us to identify well-positioned prospective portfolio company investments. The Ares Management Private Debt Group works closely with Ares' other investment professionals. As of December 31, 2012, Ares oversaw a portfolio of investments in over 1,100 companies across over 30 industries, which provides access to an extensive network of relationships and insights into industry trends and the state of the capital markets.

Disciplined Investment Philosophy

              In making its investment decisions, our investment adviser has adopted Ares' long-standing, consistent, credit-based investment approach that was developed over 23 years ago by its founders. Specifically, our investment adviser's investment philosophy, portfolio construction and portfolio management involve an assessment of the overall macroeconomic environment and financial markets and company-specific research and analysis. Its investment approach emphasizes capital preservation, low volatility and minimization of downside risk. In addition to engaging in extensive due diligence from the perspective of a long-term investor, our investment adviser's approach seeks to reduce risk in investments by focusing on:

Extensive Industry Focus

              We seek to concentrate our investing activities in industries with a history of predictable and dependable cash flows and in which the Ares investment professionals have had extensive investment experience. Ares investment professionals have developed long-term relationships with management teams and management consultants in over 30 industries, and have accumulated substantial information and identified potential trends within these industries. In turn, we benefit from these relationships, information and identification of potential trends in making investments.

 

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OPERATING AND REGULATORY STRUCTURE

              Our investment activities are managed by Ares Capital Management, which is wholly owned by Ares, and supervised by our board of directors, a majority of whom are independent of Ares and its affiliates. Ares Capital Management is registered under the Investment Advisers Act of 1940, or the "Advisers Act." Under our Amended and Restated Investment Advisory and Management Agreement with Ares Capital Management, referred to herein as our "investment advisory and management agreement," we have agreed to pay Ares Capital Management an annual base management fee based on our total assets, as defined under the Investment Company Act (other than cash and cash equivalents, but including assets purchased with borrowed funds), and an incentive fee based on our performance. See "Management—Investment Advisory and Management Agreement." Ares Operations provides us with certain administrative and other services necessary for us to operate pursuant to an Amended and Restated Administration Agreement, referred to herein as our "administration agreement." See "Administration Agreement."

              As a BDC, we are required to comply with certain regulatory requirements. For example, we are not generally permitted to invest in any portfolio company in which a fund managed by Ares or any of its downstream affiliates (other than us and our downstream affiliates) currently has an investment. However, we may co-invest on a concurrent basis with funds managed by Ares or any of its downstream affiliates, subject to compliance with existing regulatory guidance, applicable regulations and our allocation procedures. Certain types of co-investment transactions would only be permitted pursuant to an exemptive order from the SEC, for which we have applied. Any such order will be subject to certain terms and conditions. Further there is no assurance that this application for exemptive relief will be granted by the SEC.

              Also, while we may borrow funds to make investments, our ability to use debt is limited in certain significant aspects. See "Business—Operating and Regulatory Structure" and "Regulation." In particular, BDC's must have at least 200% asset coverage calculated pursuant to the Investment Company Act in order to incur debt or issue preferred stock (which we refer to collectively as "senior securities"), which requires us to finance our investments with at least as much equity as senior securities in the aggregate. Certain of our credit facilities also require that we maintain asset coverage of at least 200%.

              In addition, as a consequence of our being a regulated investment company ("RIC") for U.S. federal income tax purposes, as well as our status as a BDC, our asset growth is dependent on our ability to raise equity capital through the issuance of common stock. RICs generally must distribute substantially all of their earnings to stockholders as dividends in order to preserve their status as a RIC and avoid additional U.S. federal corporate-level income taxes. This requirement, in turn, generally prevents us from using earnings to support our operations including making new investments. See "Certain Material U.S. Federal Income Tax Considerations."

MARKET CONDITIONS

              Beginning in 2007, the global financial markets experienced stress, volatility, instability, illiquidity and disruption. While this volatility and disruption peaked in 2008 to 2009 and appears to have abated somewhat, the availability of capital and access to capital markets has been limited over the last several years. As the global liquidity situation and market conditions evolve, we will continue to monitor and adjust our approach to funding accordingly. Given the instability in the global markets over the past several years and the uncertainty around the strength of the U.S. economic recovery, there can be no assurances that these activities will be successful since such market conditions could worsen again in the future. If they do, we could face materially higher financing costs. Consequently, our operating strategy could be materially and adversely affected. See "Risk Factors—Risks Relating to Our Business—Capital markets have been in a period of disruption and instability for an extended

 

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period of time. These market conditions materially and adversely affected debt and equity capital markets in the United States, which had, and may in the future have, a negative impact on our business and operations."

              In connection with the prior depressed market conditions of the general economy, the stocks of BDCs as an industry have in the past traded at near historic lows as a result of concerns over liquidity, credit quality, leverage restrictions and distribution requirements. In some cases, certain BDCs became "forced sellers" of assets, defaulted on their indebtedness, decreased their distributions to stockholders or announced share repurchase programs. Although we believe that we currently have sufficient capital to fund our investments and operations, we cannot assure you that the market pressures we may face in the future will not have a material adverse effect on our business, financial condition and results of operations.

ACQUISITION OPPORTUNITIES

              We believe the volatility in the credit markets over the past several years has increased the likelihood of further consolidation in our industry. To that end, we are evaluating (and expect to continue to evaluate in the future) a number of potential strategic acquisition opportunities, including acquisitions of:

              We have been and from time to time engage in discussions with counterparties in respect of various potential strategic acquisition and investment transactions, including potential acquisitions of other finance companies. Some of these transactions could be material to our business and, if consummated, could be difficult to integrate, result in increased leverage or dilution and/or subject us to unexpected liabilities. However, none of these discussions has progressed to the point where the consummation of any such transaction could be deemed to be probable or reasonably certain as of the date of this prospectus. Consummation of any such transaction would be subject to completion of due diligence, finalization of key business and financial terms (including price) and negotiation of final definitive documentation as well as a number of other factors and conditions including, without limitation, the approval of our board of directors (after having determined that such transaction is in the best interest of our stockholders), any required third party consents and, in certain cases, the approval of our stockholders. We cannot predict how quickly the terms of any such transaction could be finalized, if at all. Accordingly, there can be no assurance that definitive documentation for any such transaction would be executed or even if executed, that any such transaction would be consummated. In connection with evaluating potential strategic acquisition and investment transactions, we have, and may in the future, incur significant expenses for the evaluation and due diligence investigation of these potential transactions.

LIQUIDITY

              As of December 31, 2012, we had approximately $2.3 billion in aggregate principal amount of total outstanding indebtedness, approximately $2.0 billion aggregate principal amount of which was unsecured indebtedness of Ares Capital and approximately $0.3 billion of which was secured indebtedness of our consolidated subsidiaries.

              As of December 31, 2012, of the $2.3 billion aggregate principal amount of total outstanding indebtedness: (i) no amounts were outstanding under our revolving credit facility (the "Revolving

 

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Credit Facility"), (ii) $300.0 million in aggregate principal amount was outstanding under the revolving funding facility of our consolidated subsidiary, Ares Capital CP Funding LLC ("Ares Capital CP") (as amended, the "Revolving Funding Facility"), (iii) no amounts were outstanding under the revolving funding facility of our consolidated subsidiary, Ares Capital JB Funding LLC ("ACJB"), with Sumitomo Mitsui Banking Corporation (the "SMBC Funding Facility" and, together with the Revolving Credit Facility and the Revolving Funding Facility, the "Facilities"), (iv) $575.0 million aggregate principal amount of our convertible senior unsecured notes that mature on February 1, 2016 (the "February 2016 Convertible Notes") were outstanding, (v) $230.0 million aggregate principal amount of our convertible senior unsecured notes that mature on June 1, 2016 (the "June 2016 Convertible Notes") were outstanding, (vi) $162.5 million aggregate principal amount of our convertible senior unsecured notes that mature on March 15, 2017 (the "2017 Convertible Notes") were outstanding, (vii) $270.0 million aggregate principal amount of our convertible senior unsecured notes that mature on January 15, 2018 (the "2018 Convertible Notes" and together with the February 2016 Convertible Notes, the June 2016 Convertible Notes and the 2017 Convertible Notes, the "Convertible Unsecured Notes") were outstanding, (viii) $143.8 million aggregate principal amount of our 7.00% senior notes that mature on February 15, 2022 (the "February 2022 Notes") were outstanding, (ix) $182.5 million aggregate principal amount of our 5.875% senior notes that mature on October 1, 2022 (the "October 2022 Notes") were outstanding, (x) $200.0 million aggregate principal amount of our 7.75% senior notes that mature on October 15, 2040 (the "2040 Notes") were outstanding and (xi) $230.0 million aggregate principal amount of our 6.875% senior notes due on April 15, 2047 (the "2047 Notes" and, together with the February 2022 Notes, the October 2022 Notes and the 2040 Notes, the "Unsecured Notes") were outstanding.

              For more information on the Company's debt, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources" and "Recent Developments."

RECENT DEVELOPMENTS

              On January 25, 2013, we and our wholly owned indirect subsidiary, Ares Capital CP, entered into an amendment to the Revolving Funding Facility. The amendment, among other things, modified the interest charged on the indebtedness incurred under the Revolving Funding Facility from the previous applicable spreads of 2.50% over LIBOR and 1.50% over "base rate" (as defined in the agreements governing the Revolving Funding Facility) to applicable spreads ranging from 2.25% to 2.50% over LIBOR and ranging from 1.25% to 1.50% over "base rate," in each case, determined monthly based on the composition of the borrowing base relative to outstanding borrowings under the facility. After giving effect to the amendment and the relevant borrowing base and amounts outstanding thereunder, the interest charged on the indebtedness incurred under the Revolving Funding Facility as of January 25, 2013 was based on a spread over one-month LIBOR of 2.25% or a spread over "base rate" of 1.25%. As of such date, one-month LIBOR was 0.2037% and the "base rate" was 3.25%.

              In April 2013, we completed a public add-on equity offering (the "April 2013 Offering") pursuant to which we sold 19,147,500 shares of common stock at a price of $17.43 per share to the participating underwriters. Total proceeds from the April 2013 Offering, net of estimated offering expenses payable by us, were approximately $333.2 million.

RISK FACTORS

              Investing in Ares Capital involves risks. The following is a summary of certain risks that you should carefully consider before investing in our securities. In addition, see "Risk Factors" beginning on page 24 for a more detailed discussion of the factors you should carefully consider before deciding to invest in our securities.

 

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Risks Relating to Our Business

 

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Risks Relating to Our Investments

Risks Relating to Offerings Pursuant to this Prospectus

 

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OUR CORPORATE INFORMATION

              Our administrative offices are located at 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067, telephone number (310) 201-4200, and our executive offices are located at 245 Park Avenue, 44th Floor, New York, New York 10167, telephone number (212) 750-7300.

 

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OFFERINGS

              We may offer, from time to time, in one or more offerings or series, up to $3,000,000,000 of our common stock, preferred stock, debt securities, subscription rights to purchase shares of our common stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, or units comprised of any combination of the foregoing, on terms to be determined at the time of the offering. We will offer our securities at prices and on terms to be set forth in one or more supplements to this prospectus. The offering price per share of our common stock, less any underwriting commissions or discounts, generally will not be less than the net asset value per share of our common stock at the time of an offering. However, we may issue shares of our common stock pursuant to this prospectus at a price per share that is less than our net asset value per share (a) in connection with a rights offering to our existing stockholders, (b) with the prior approval of the majority of our common stockholders or (c) under such other circumstances as the SEC may permit. Any such issuance of shares of our common stock below net asset value may be dilutive to the net asset value of our common stock. See "Risk Factors—Risks Relating to Offerings Pursuant to this Prospectus."

              At our 2012 annual stockholders meeting, subject to certain determinations required to be made by our board of directors, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common stock, at a price below the then current net asset value per share during a period that began on June 4, 2012 and expires on the earlier of June 4, 2013 and the date of our 2013 annual stockholders meeting. On April 19, 2013, we filed our definitive proxy statement (the "2013 Proxy Statement") for our 2013 annual stockholders meeting. The 2013 Proxy Statement sets forth certain proposals to be voted upon at our 2013 annual stockholders meeting (currently expected to take place on June 4, 2013), including a proposal that, if approved by stockholders, would have the effect of extending this approval to the earlier of the one-year anniversary of the date of our 2013 annual stockholders meeting and the date of our 2014 annual stockholders meeting.

              We may offer our securities directly to one or more purchasers, including existing stockholders in a rights offering, through agents that we designate from time to time or to or through underwriters or dealers. The prospectus supplement relating to each offering will identify any agents or underwriters involved in the sale of our securities, and will set forth any applicable purchase price, fee, commission or discount arrangement between us and our agents or underwriters or among our underwriters or the basis upon which such amount may be calculated. See "Plan of Distribution." We may not sell any of our securities through agents, underwriters or dealers without delivery of a prospectus supplement describing the method and terms of the offering of our securities.

              Set forth below is additional information regarding offerings of our securities:

Use of proceeds

  Unless otherwise specified in a prospectus supplement, we intend to use the net proceeds from the sale of our securities for general corporate purposes, which includes, among other things, (a)  investing in portfolio companies in accordance with our investment objective and (b) repaying indebtedness. Each supplement to this prospectus relating to an offering will more fully identify the use of the proceeds from such offering. See "Use of Proceeds."

Distributions

 

We currently intend to distribute dividends or make distributions to our stockholders on a quarterly basis out of assets legally available for distribution. We may also distribute additional dividends or make additional distributions to our stockholders from time to time. Our quarterly and additional dividends or distributions, if any, will be determined by our board of directors. For more information, see "Price Range of Common Stock and Distributions."

 

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Taxation

 

We have elected to be treated as a RIC for U.S. federal income tax purposes. As a RIC, we generally will not pay U.S. federal corporate-level income taxes on any income and gain that we distribute to our stockholders as dividends on a timely basis. Among other things, in order to maintain our RIC status, we must meet specified source of income and asset diversification requirements and distribute annually generally an amount equal to at least 90% of our investment company taxable income, out of assets legally available for distribution. See "Risk Factors—Risks Relating to Our Business—We may be subject to additional U.S. federal corporate-level taxes if we fail to maintain our status as a RIC" and "Price Range of Common Stock and Distributions."

Dividend reinvestment plan

 

We have a dividend reinvestment plan for our stockholders. This is an "opt out" dividend reinvestment plan. As a result, if we declare a cash dividend, then stockholders' dividends will be automatically reinvested in additional shares of our common stock, unless they specifically "opt out" of the dividend reinvestment plan so as to receive cash. Stockholders whose cash dividends are reinvested in additional shares of our common stock will be subject to the same U.S. federal, state and local tax consequences as stockholders who elect to receive their dividends in cash. See "Dividend Reinvestment Plan."

The NASDAQ Global Select Market symbol

 

"ARCC"

Anti-takeover provisions

 

Our board of directors is divided into three classes of directors serving staggered three-year terms. This structure is intended to provide us with a greater likelihood of continuity of management, which may be necessary for us to realize the full value of our investments. A staggered board of directors also may serve to deter hostile takeovers or proxy contests, as may certain other measures adopted by us. See "Description of Our Capital Stock."

Leverage

 

We borrow funds to make additional investments. We use this practice, which is known as "leverage," to attempt to increase returns to our common stockholders, but it involves significant risks. See "Risk Factors," "Senior Securities" and "Regulation—Indebtedness and Senior Securities." With certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the Investment Company Act, equals at least 200% after such borrowing. The amount of leverage that we employ at any particular time will depend on our investment adviser's and our board of directors' assessments of market and other factors at the time of any proposed borrowing.

Management arrangements

 

Ares Capital Management serves as our investment adviser. Ares Operations serves as our administrator. For a description of Ares Capital Management, Ares Operations, Ares and our contractual arrangements with these companies, see "Management—Investment Advisory and Management Agreement," and "—Administration Agreement."

Available information

 

We are required to file periodic reports, proxy statements and other information with the SEC. This information is available free of charge by calling us collect at (310) 201-4200 or on our website at www.arescapitalcorp.com. The information on our website is not deemed incorporated by reference in this prospectus. The SEC also maintains a website at www.sec.gov that contains this information.

 

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FEES AND EXPENSES

              The following table is intended to assist you in understanding the costs and expenses that an investor in our common stock will bear, directly or indirectly, based on the assumptions set forth below. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this table contains a reference to our fees or expenses, we will pay such fees and expenses out of our net assets and, consequently, stockholders will indirectly bear such fees or expenses as investors in Ares Capital.

Stockholder transaction expenses (as a percentage of offering price):

       

Sales load

        (1)

Offering expenses

        (2)

Dividend reinvestment plan expenses

    None     (3)
       

Total stockholder transaction expenses paid

        (4)
       

Annual expenses (as a percentage of consolidated net assets attributable to common stock)(5):

       

Management fees

    2.47% (6)

Incentive fees

    3.56% (7)

Interest payments on borrowed funds

    4.00% (8)

Other expenses

    1.20% (9)

Acquired fund fees and expenses

    0.03% (10)
       

Total annual expenses

    11.26% (11)
       

(1)
In the event that the securities to which this prospectus relates are sold to or through underwriters, a corresponding prospectus supplement will disclose the applicable sales load (underwriting discount or commission). Purchases of shares of our common stock on the secondary market are not subject to sales charges but may be subject to brokerage commissions or other charges. The table does not include any sales load that stockholders may have paid in connection with their purchase of shares of our common stock.

(2)
The related prospectus supplement will disclose the estimated amount of offering expenses, the offering price and the offering expenses borne by us as a percentage of the offering price.

(3)
The expenses of the dividend reinvestment plan are included in "Other expenses."

(4)
The related prospectus supplement will disclose the offering price and the total stockholder transaction expenses as a percentage of the offering price.

(5)
The "consolidated net assets attributable to common stock" used to calculate the percentages in this table is our average net assets of $3.6 billion for the year ended December 31, 2012.

(6)
Our management fee is currently 1.5% of our total assets (other than cash and cash equivalents, which includes assets purchased with borrowed amounts). For the purposes of this table, we have assumed that we maintain no cash or cash equivalents. The 2.47% reflected on the table is higher than 1.5% because it is calculated on our average net assets (rather than our average total assets). See "Management—Investment Advisory and Management Agreement."

(7)
This item represents our investment adviser's incentive fees based on pre-incentive fee net investment income for the year ended December 31, 2012 and our accrual in accordance with U.S. generally accepted accounting principles ("GAAP") of a capital gains incentive fee of $31.9 million for the year ended December 31, 2012, even though the capital gains incentive fee actually payable

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GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Company Act or the investment advisory and management agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the Capital Gains Fee plus the aggregate cumulative unrealized capital appreciation. If such amount is positive at the end of a period, then GAAP requires us to record a capital gains incentive fee equal to 20% of such cumulative amount, less the aggregate amount of actual Capital Gains Fees paid or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future or that the amount accrued for will ultimately be paid.


For purposes of this table, we have assumed that these fees will be payable (in the case of the capital gains incentive fee) and that they will remain constant, although they are based on Ares Capital's performance and will not be paid unless Ares Capital achieves certain goals. We expect to invest or otherwise utilize all of the net proceeds from securities registered under the registration statement of which this prospectus is a part pursuant to a particular prospectus supplement within three months of the date of the offering pursuant to such prospectus supplement and may have capital gains and interest income that could result in the payment of an incentive fee to our investment adviser in the first year after completion of offerings pursuant to this prospectus. Since our initial public offering through December 31, 2012, the average quarterly incentive fee accrued (including capital gains incentive fees accrued under GAAP even though they may not be payable) has been approximately 0.79% of our weighted average net assets (3.18% on an annualized basis). For more detailed information on the calculation of our incentive fees, please see below. For more detailed information about incentive fees previously incurred by us, please see Note 3 to our consolidated financial statements for the year ended December 31, 2012.


The incentive fee consists of two parts:


The first, payable quarterly in arrears, equals 20% of our pre-incentive fee net investment income (including interest that is accrued but not yet received in cash), subject to a 1.75% quarterly (7.0% annualized) hurdle rate and a "catch-up" provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, our investment adviser receives no incentive fee until our net investment income equals the hurdle rate of 1.75% but then receives, as a "catch-up," 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875%. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.1875% in any calendar quarter, our investment adviser will receive 20% of our pre-incentive fee net investment income as if a hurdle rate did not apply.


The second part, the Capital Gains Fee, payable annually in arrears, equals 20% of our realized capital gains on a cumulative basis from inception through the end of the year, if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid Capital Gains Fees.

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We will defer cash payment of any incentive fee otherwise earned by our investment adviser if, during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) is less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period.


These calculations will be adjusted for any share issuances or repurchases.


See "Management—Investment Advisory and Management Agreement."

(8)
"Interest payments on borrowed funds" represents an estimate of our interest expenses based on actual interest and credit facility expenses incurred for the year ended December 31, 2012. During the year ended December 31, 2012, our average outstanding borrowings were $2,195.2 million and cash paid for interest expense was $108.8 million. We had outstanding borrowings of $2,293.8 million (with a carrying value of $2,195.9 million) at December 31, 2012. This item is based on our assumption that our borrowings and interest costs after an offering will remain similar to those prior to such offering. The amount of leverage that we employ at any particular time will depend on, among other things, our board of directors' and our investment adviser's assessment of market and other factors at the time of any proposed borrowing. See "Risk Factors—Risks Relating to Our Business—We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with us."

(9)
Includes our overhead expenses, including payments under our administration agreement, based on our allocable portion of overhead and other expenses incurred by Ares Operations in performing its obligations under the administration agreement, and income taxes. Such expenses are estimated based on "Other expenses" for the year ended December 31, 2012. The holders of shares of our common stock (and not the holders of our debt securities or preferred stock, if any) indirectly bear the cost associated with our annual expenses. See "Management—Administration Agreement."

(10)
The Company's stockholders indirectly bear the expenses of underlying funds or other investment vehicles that would be investment companies under section 3(a) of the Investment Company Act but for the exceptions to that definition provided for in sections 3(c)(1) and 3(c)(7) of the Investment Company Act ("Acquired Funds") in which the Company invests. This amount includes the estimated annual fees and expenses of Acquired Funds in which the Company is invested as of December 31, 2012. Certain of these Acquired Funds are subject to management fees, which generally range from 1% to 2.5% of total net assets, or incentive fees, which generally range between 15% to 25% of net profits. When applicable, fees and expenses estimates are based on historic fees and expenses for the Acquired Funds. For those Acquired Funds with little or no operating history, fees and expenses are estimates based on expected fees and expenses stated in the Acquired Funds' offering memorandum, private placement memorandum or other similar communication without giving effect to any performance. Future fees and expenses for these Acquired Funds may be substantially higher or lower because certain fees and expenses are based on the performance of the Acquired Funds, which may fluctuate over time.

(11)
"Total annual expenses" as a percentage of consolidated net assets attributable to common stock are higher than the total annual expenses percentage would be for a company that is not leveraged. We borrow money to leverage and increase our total assets. The SEC requires that the "Total annual expenses" percentage be calculated as a percentage of net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period), rather than the total assets, including assets that have been funded with borrowed monies.

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Example

              The following example demonstrates the projected dollar amount of total cumulative expenses over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that we would have no additional leverage, that none of our assets are cash or cash equivalents, and that our annual operating expenses would remain at the levels set forth in the table above. Transaction expenses are not included in the following example. In the event that shares to which this prospectus relates are sold to or through underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.

 
  1 year   3 years   5 years   10 years  

You would pay the following expenses on a $1,000 common stock investment, assuming a 5% annual return(1)

  $ 79   $ 230   $ 372   $ 694  

(1)
The above illustration assumes that we will not realize any capital gains computed net of all realized capital losses and unrealized capital depreciation. The expenses you would pay, based on a $1,000 investment and assuming a 5% annual return resulting entirely from net realized capital gains (and therefore subject to the capital gains incentive fee), and otherwise making the same assumptions in the example above, would be: 1 year, $89; 3 years, $258; 5 years, $416; and 10 years, $767. However, cash payment of the capital gains incentive fee would be deferred if, during the most recent four full calendar quarter period ending on or prior to the date the payment set forth in the example is to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) was less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period (as adjusted for any share issuances or repurchases).

              The foregoing table is to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. The incentive fee under the investment advisory and management agreement, which, assuming a 5% annual return, would either not be payable or have an insignificant impact on the expense amounts shown above, is not included in the example. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses, and returns to our investors, would be higher. In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, if our board of directors authorizes and we declare a cash dividend, participants in our dividend reinvestment plan who have not otherwise elected to receive cash will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by the market price per share of our common stock at the close of trading on the valuation date for the dividend. See "Dividend Reinvestment Plan" for additional information regarding our dividend reinvestment plan.

              This example and the expenses in the table above should not be considered a representation of our future expenses as actual expenses (including the cost of debt, if any, and other expenses) that we may incur in the future and such actual expenses may be greater or less than those shown.

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SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA OF ARES CAPITAL

              The following selected financial and other data as of and for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 are derived from our consolidated financial statements, which have been audited by KPMG LLP, an independent registered public accounting firm whose report thereon is included elsewhere in this prospectus. The quarterly financial information is derived from our unaudited financial statements, but in the opinion of management, reflects all adjustments (consisting only of normal recurring adjustments) that are necessary to present fairly the results of such interim periods. The data should be read in conjunction with our consolidated financial statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Senior Securities," which are included elsewhere in this prospectus or the accompanying prospectus supplement.

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ARES CAPITAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
As of and For the Years Ended December 31, 2012, 2011, 2010, 2009 and 2008
(dollar amounts in millions, except per share data and as otherwise indicated)

 
  As of and For
the Year Ended
December 31,
2012
  As of and For
the Year Ended
December 31,
2011
  As of and For
the Year Ended
December 31,
2010
  As of and For
the Year Ended
December 31,
2009
  As of and For
the Year Ended
December 31,
2008
 

Total Investment Income

  $ 748.0   $ 634.5   $ 483.4   $ 245.3   $ 240.4  

Total Expenses

    387.9     344.6     262.2     111.3     113.2  
                       

Net Investment Income Before Income Taxes

    360.1     289.9     221.2     134.0     127.2  

Income Tax Expense (Benefit), Including Excise Tax

    11.2     7.5     5.4     0.6     0.2  
                       

Net Investment Income

    348.9     282.4     215.8     133.4     127.0  
                       

Net Realized and Unrealized Gains (Losses) on Investments, Foreign Currencies, Extinguishment of Debt and Other Assets

    159.3     37.1     280.1     69.3     (266.5 )

Gain on the Allied Acquisition(1)

            195.9          
                       

Net Increase (Decrease) in Stockholders' Equity Resulting from Operations

  $ 508.2   $ 319.5   $ 691.8   $ 202.7   $ (139.5 )
                       

Per Share Data:

                               

Net Increase (Decrease) in Stockholder's Equity Resulting from Operations:

                               

Basic(2)

  $ 2.21   $ 1.56   $ 3.91   $ 1.99   $ (1.56 )

Diluted(2)

  $ 2.21   $ 1.56   $ 3.91   $ 1.99   $ (1.56 )

Cash Dividend Declared

  $ 1.60   $ 1.41   $ 1.40   $ 1.47   $ 1.68  

Net Asset Value

  $ 16.04   $ 15.34   $ 14.92   $ 11.44   $ 11.27  

Total Assets

  $ 6,401.2   $ 5,387.4   $ 4,562.5   $ 2,313.5   $ 2,091.3  

Total Debt (Carrying Value)

  $ 2,195.9   $ 2,073.6   $ 1,378.5   $ 969.5   $ 908.8  

Total Debt (Principal Amount)

  $ 2,293.8   $ 2,170.5   $ 1,435.1   $ 969.5   $ 908.8  

Total Stockholders' Equity

  $ 3,988.3   $ 3,147.3   $ 3,050.5   $ 1,257.9   $ 1,094.9  

Other Data:

                               

Number of Portfolio Companies at Period End(3)

    152     141     170     95     91  

Principal Amount of Investments Purchased

  $ 3,161.6   $ 3,239.0   $ 1,583.9   $ 575.0   $ 925.9  

Principal Amount of Investments Acquired as part of the Allied Acquisition

  $   $   $ 1,833.8   $   $  

Principal Amount of Investments Sold and Repayments

  $ 2,482.9   $ 2,468.2   $ 1,555.9   $ 515.2   $ 485.3  

Weighted Average Yield of Debt and Other Income Producing Securities at Fair Value(4):

    11.3 %   12.0 %   12.9 %   12.7 %   12.8 %

Weighted Average Yield of Debt and Other Income Producing Securities at Amortized Cost(4):

    11.4 %   12.1 %   13.2 %   12.1 %   11.7 %

Total Return Based on Market Value(5)

    23.6 %   2.3 %   43.6 %   119.9 %   (45.3 )%

Total Return Based on Net Asset Value(6)

    14.3 %   10.5 %   31.6 %   17.8 %   (11.2 )%

(1)
See Note 17 to our consolidated financial statements for the year ended December 31, 2012 for more information on the Allied Acquisition.

(2)
In accordance with Accounting Standards Codification ("ASC") 260-10, the weighted average shares of common stock outstanding used in computing basic and diluted earnings per common share have been adjusted retroactively by a factor of 1.02% to recognize the bonus element associated with rights to acquire shares of common stock that we issued to stockholders of record as of March 24, 2008 in connection with a rights offering.

(3)
Includes commitments to portfolio companies for which funding had yet to occur.

(4)
Weighted average yield of debt and other income producing securities at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt and income producing securities, divided by (b) total debt and income producing securities at fair value. Weighted average yield of debt and other income producing securities at amortized cost is computed as (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt and income producing securities, divided by (b) total debt and income producing securities at amortized cost.

(5)
Total return based on market value for the year ended December 31, 2012 equalled the increase of the ending market value at December 31, 2012 of $17.50 per share from the ending market value at December 31, 2011 of $15.45 per share plus the

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(6)
Total return based on net asset value for the year ended December 31, 2012 equalled the change in net asset value during the period (adjusted for share issuances) plus the declared dividends of $1.60 per share for the year ended December 31, 2012, divided by the beginning net asset value. Total return based on net asset value for the year ended December 31, 2011 equalled the change in net asset value during the period (adjusted for share issuances) plus the declared dividends of $1.41 per share for the year ended December 31, 2011, divided by the beginning net asset value. Total return based on net asset value for the year ended December 31, 2010 equalled the change in net asset value during the period (adjusted for share issuances) plus the declared dividends of $1.40 per share for the year ended December 31, 2010, divided by the beginning net asset value. Total return based on net asset value for the year ended December 31, 2009 equalled the change in net asset value during the period (adjusted for share issuances) plus the declared dividends of $1.47 per share for the year ended December 31, 2009, divided by the beginning net asset value. Total return based on net asset value for the year ended December 31, 2008 equalled the change in net asset value during the period (adjusted for share issuances) plus the declared dividends of $1.68 per share for the year ended December 31, 2008, divided by the beginning net asset value. Total return based on net asset value is not annualized. Our performance changes over time and currently may be different than that shown. Past performance is no guarantee of future results.

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SELECTED QUARTERLY DATA (Unaudited)
(dollar amounts in thousands, except per share data)

 
  2012  
 
  Q4   Q3   Q2   Q1  

Total investment income

  $ 212,160   $ 190,572   $ 177,555   $ 167,738  

Net investment income before net realized and unrealized gains and incentive compensation

  $ 138,249   $ 123,599   $ 110,634   $ 103,424  

Incentive compensation

  $ 43,787   $ 34,139   $ 22,733   $ 26,386  

Net investment income before net realized and unrealized gains

  $ 94,462   $ 89,460   $ 87,901   $ 77,038  

Net realized and unrealized gains

  $ 80,682   $ 47,095   $ 3,031   $ 28,509  

Net increase in stockholders' equity resulting from operations

  $ 175,144   $ 136,555   $ 90,932   $ 105,547  

Basic and diluted earnings per common share

  $ 0.71   $ 0.59   $ 0.41   $ 0.49  

Net asset value per share as of the end of the quarter

  $ 16.04   $ 15.74   $ 15.51   $ 15.47  

 

 
  2011  
 
  Q4   Q3   Q2   Q1  

Total investment income

  $ 187,123   $ 167,365   $ 144,307   $ 135,691  

Net investment income before net realized and unrealized gains (losses) and incentive compensation

  $ 121,990   $ 108,517   $ 85,509   $ 78,764  

Incentive compensation

  $ 29,531   $ 10,159   $ 41,746   $ 30,941  

Net investment income before net realized and unrealized gains (losses)

  $ 92,459   $ 98,358   $ 43,763   $ 47,823  

Net realized and unrealized gains (losses)

  $ 25,666   $ (57,719 ) $ (6,840 ) $ 75,943  

Net increase in stockholders' equity resulting from operations

  $ 118,125   $ 40,639   $ 36,923   $ 123,766  

Basic and diluted earnings per common share

  $ 0.58   $ 0.20   $ 0.18   $ 0.61  

Net asset value per share as of the end of the quarter

  $ 15.34   $ 15.13   $ 15.28   $ 15.45  

 

 
  2010  
 
  Q4   Q3   Q2   Q1  

Total investment income

  $ 157,170   $ 138,126   $ 121,590   $ 66,510  

Net investment income before net realized and unrealized gains and incentive compensation

  $ 99,323   $ 89,025   $ 64,514   $ 39,849  

Incentive compensation

  $ 35,973   $ 17,805   $ 14,973   $ 8,144  

Net investment income before net realized and unrealized gains

  $ 63,350   $ 71,220   $ 49,541   $ 31,705  

Net realized and unrealized gains

  $ 93,538   $ 57,157   $ 280,613 (1) $ 44,710  

Net increase in stockholders' equity resulting from operations

  $ 156,888   $ 128,377   $ 330,154   $ 76,415  

Basic and diluted earnings per common share

  $ 0.79   $ 0.67   $ 1.73   $ 0.61  

Net asset value per share as of the end of the quarter

  $ 14.92   $ 14.43   $ 14.11   $ 11.78  

(1)
Includes gain on the Allied Acquisition of $195,876.

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RISK FACTORS

              You should carefully consider the risk factors described below, together with all of the other information included in this prospectus and the accompanying prospectus supplement, including our consolidated financial statements and the related notes thereto, before you decide whether to make an investment in our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, the net asset value of our common stock and the trading price of our securities could decline, and you may lose all or part of your investment.

RISKS RELATING TO OUR BUSINESS

Capital markets have been in a period of disruption and instability for an extended period of time. These market conditions materially and adversely affected debt and equity capital markets in the United States, which had, and may in the future have, a negative impact on our business and operations.

              The global capital markets have been in an extended period of instability as evidenced by periodic disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. While recent market conditions have improved, there have been continuing periods of volatility and there can be no assurance that adverse market conditions will not repeat themselves or worsen in the future. If these adverse and volatile market conditions worsen, we and other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital in order to grow. Equity capital may be difficult to raise because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors. At our 2012 annual stockholders meeting, subject to certain determinations required to be made by our board of directors, our stockholders approved our ability to sell or otherwise issue shares of our common stock, in an amount not exceeding 25% of our then outstanding common stock, at a price below the then current net asset value per share during a period that began on June 4, 2012 and expires on the earlier of June 4, 2013 and the date of our 2013 annual stockholders meeting. On April 19, 2013, we filed the 2013 Proxy Statement for our 2013 annual stockholders meeting. The 2013 Proxy Statement sets forth certain proposals to be voted upon at our 2013 annual stockholders meeting (currently expected to take place on June 4, 2013), including a proposal that, if approved by stockholders, would have the effect of extending this approval to the earlier of the one-year anniversary of the date of our 2013 annual stockholders meeting and the date of our 2014 annual stockholders meeting. In addition, our ability to incur indebtedness (including by issuing preferred stock) is limited by applicable regulations such that our asset coverage, as calculated pursuant to the Investment Company Act, must equal at least 200% immediately after each time we incur indebtedness. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we currently experience. Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.

              Moreover, the re-appearance of market conditions similar to those experienced from 2007 through 2009 for any substantial length of time could make it difficult to extend the maturity of or

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refinance our existing indebtedness under similar terms and any failure to do so could have a material adverse effect on our business.

              Given the extreme volatility and dislocation in the capital markets over the past several years, many BDCs have faced, and may in the future face, a challenging environment in which to raise or access capital. At times during the recent significant changes in the capital markets, our ability to raise capital was affected and consequently the pace of our investment activity had slowed. In addition, significant changes in the capital markets, including the extreme volatility and disruption over the past several years, has had, and may in the future have, a negative effect on the valuations of our investments and on the potential for liquidity events involving our investments. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). As a result, volatility in the capital markets can adversely affect our investment valuations. Further, the illiquidity of our investments may make it difficult for us to sell such investments to access capital if required. As a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes. An inability to raise or access capital could have a material adverse impact on our business, financial condition or results of operations.

A failure on our part to maintain our status as a BDC would significantly reduce our operating flexibility.

              If we fail to maintain our status as a BDC, we might be regulated as a closed-end investment company that is required to register under the Investment Company Act, which would subject us to additional regulatory restrictions and significantly decrease our operating flexibility. In addition, any such failure could cause an event of default under our outstanding indebtedness, which could have a material adverse effect on our business, financial condition or results of operations.

We are dependent upon certain key personnel of Ares for our future success and upon their access to other Ares investment professionals.

              We depend on the diligence, skill and network of business contacts of certain key personnel of the Ares Management Private Debt Group. We also depend, to a significant extent, on access to the investment professionals of other groups within Ares and the information and deal flow generated by Ares' investment professionals in the course of their investment and portfolio management activities. Our future success depends on the continued service of the key personnel of the Ares Management Private Debt Group. The departure of any of these individuals, or of a significant number of the investment professionals or partners of Ares, could have a material adverse effect on our business, financial condition or results of operations. In addition, we cannot assure you that Ares Capital Management will remain our investment adviser or that we will continue to have access to Ares' investment professionals or its information and deal flow. Further, there can be no assurance that Ares Capital will replicate Ares' historical success, and we caution you that our investment returns could be substantially lower than the returns achieved by other Ares managed funds.

Our financial condition and results of operations depend on our ability to manage future growth effectively.

              Our ability to achieve our investment objective depends on our ability to acquire suitable investments and monitor and administer those investments, which depends, in turn, on our investment adviser's ability to identify, invest in and monitor companies that meet our investment criteria.

              Accomplishing this result on a cost-effective basis is largely a function of the structuring of our investment process and the ability of our investment adviser to provide competent, attentive and efficient services to us. Our executive officers and the members of our investment adviser's investment

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committee have substantial responsibilities in connection with their roles at Ares and with the other Ares funds, as well as responsibilities under the investment advisory and management agreement. They may also be called upon to provide significant managerial assistance to certain of our portfolio companies. These demands on their time, which will increase as the number of investments grow, may distract them or slow the rate of investment. In order to grow, Ares will need to hire, train, supervise, manage and retain new employees. However, we cannot assure you that we will be able to do so effectively. Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations.

              In addition, as we grow, we may open up new offices in new geographic regions that may increase our direct operating expenses without corresponding revenue growth.

Our ability to grow depends on our ability to raise capital.

              We will need to periodically access the capital markets to raise cash to fund new investments in excess of our repayments. We have elected to be treated as a RIC and operate in a manner so as to qualify for the U.S. federal income tax treatment applicable to RICs. Among other things, in order to maintain our RIC status, we must distribute to our stockholders on a timely basis generally an amount equal to at least 90% of our investment company taxable income, and, as a result, such distributions will not be available to fund investment originations. We must continue to borrow from financial institutions and issue additional securities to fund our growth. Unfavorable economic or capital market conditions may increase our funding costs, limit our access to the capital markets or could result in a decision by lenders not to extend credit to us. An inability to successfully access the capital markets could limit our ability to grow our business and fully execute our business strategy and could decrease our earnings, if any.

              In addition, with certain limited exceptions, we are only allowed to borrow amounts or issue debt securities or preferred stock, which we refer to collectively as "senior securities," such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 200% immediately after such borrowing, which, in certain circumstances, may restrict our ability to borrow or issue debt securities or preferred stock. The amount of leverage that we employ will depend on our investment adviser's and our board of directors' assessments of market and other factors at the time of any proposed borrowing or issuance of senior securities. We cannot assure you that we will be able to maintain our current Facilities, obtain other lines of credit or issue senior securities at all or on terms acceptable to us.

Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital.

              We may issue senior securities or borrow money from banks or other financial institutions, up to the maximum amount permitted by the Investment Company Act. Under the provisions of the Investment Company Act, we are permitted, as a BDC, to incur indebtedness or issue senior securities only in amounts such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 200% after each such incurrence or issuance. If the value of our assets declines, we may be unable to satisfy this test, which may prohibit us from paying dividends and could prevent us from maintaining our status as a RIC or may prohibit us from repurchasing shares of our common stock. In addition, our inability to satisfy this test could cause an event of default under our existing indebtedness. If we cannot satisfy this test, we may be required to sell a portion of our investments at a time when such sales may be disadvantageous and, depending on the nature of our leverage, repay a portion of our indebtedness. Accordingly, any failure to satisfy this test could have a material adverse effect on our business, financial condition or results of operations. As of December 31, 2012, our asset coverage calculated in accordance with the Investment Company Act was 282%. Also, to generate cash for funding new investments, we may in the future seek to issue additional debt or to securitize certain

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of our loans. The Investment Company Act may impose restrictions on the structure of any such securitization.

              We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the current net asset value per share of our common stock if our board of directors determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale. Any such sale would be dilutive to the net asset value per share of our common stock. In any such case, the price at which our securities are to be issued and sold may not be less than a price which, in the determination of our board of directors, closely approximates the market value of such securities (less any commission or discount). If our common stock trades at a discount to net asset value, this restriction could adversely affect our ability to raise capital.

              At our 2012 annual stockholders meeting, subject to certain determinations required to be made by our board of directors, our stockholders approved our ability to sell or otherwise issue shares of our common stock, in an amount not exceeding 25% of our then outstanding common stock, at a price below the then current net asset value per share during a period that began on June 4, 2012 and expires on the earlier of June 4, 2013 and the date of our 2013 annual stockholders meeting. On April 19, 2013, we filed the 2013 Proxy Statement for our 2013 annual stockholders meeting. The 2013 Proxy Statement sets forth certain proposals to be voted upon at our 2013 annual stockholders meeting (currently expected to take place on June 4, 2013), including a proposal that, if approved by stockholders, would have the effect of extending this approval to the earlier of the one-year anniversary of the date of our 2013 annual stockholders meeting and the date of our 2014 annual stockholders meeting.

We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with us.

              Borrowings, also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in our securities. We currently borrow under the Facilities and have issued or assumed other senior securities, and in the future may borrow from, or issue additional senior securities to, banks, insurance companies, funds, institutional investors and other lenders and investors. Lenders and holders of such senior securities have fixed dollar claims on our consolidated assets that are superior to the claims of our common stockholders or any preferred stockholders. If the value of our consolidated assets increases, then leveraging would cause the net asset value per share of our common stock to increase more sharply than it would have had we not incurred leverage.

              Conversely, if the value of our consolidated assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not incurred leverage. Similarly, any increase in our consolidated income in excess of consolidated interest payable on the borrowed funds would cause our net income to increase more than it would had we not incurred leverage, while any decrease in our consolidated income would cause net income to decline more sharply than it would have had we not incurred leverage. Such a decline could negatively affect our ability to make common stock dividend payments. There can be no assurance that a leveraging strategy will be successful.

              As of December 31, 2012, we had $300.0 million of outstanding borrowings under the Facilities, $756.3 million in aggregate principal amount outstanding of the Unsecured Notes and $1,237.5 million in aggregate principal amount outstanding of the Convertible Unsecured Notes. In order for us to cover our annual interest payments on our outstanding indebtedness at December 31, 2012, we must achieve annual returns on our December 31, 2012 total assets of at least 2.0%. The weighted average stated interest rate charged on our outstanding indebtedness as of December 31, 2012 was 5.5%. We intend to continue borrowing under the Facilities in the future and we may increase the size of the

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Facilities or issue additional debt securities or other evidences of indebtedness (although there can be no assurance that we will be successful in doing so). For more information on the Company's indebtedness, see "Liquidity." Our ability to service our debt depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. The amount of leverage that we employ at any particular time will depend on our investment adviser's and our board of directors' assessments of market and other factors at the time of any proposed borrowing.

              The Facilities, the Unsecured Notes and the Convertible Unsecured Notes impose financial and operating covenants that restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC. A failure to renew the Facilities or to add new or replacement debt facilities or issue additional debt securities or other evidences of indebtedness could have a material adverse effect on our business, financial condition or results of operations.

              The following table illustrates the effect on return to a holder of our common stock of the leverage created by our use of borrowing at the weighted average stated interest rate of 5.5% as of December 31, 2012, together with (a) our total value of net assets as of December 31, 2012; (b) $2,293.8 million in aggregate principal amount of indebtedness outstanding as of December 31, 2012 and (c) hypothetical annual returns on our portfolio of minus 15% to plus 15%.

Assumed Return on Portfolio (Net of Expenses)(1)

    (15 )%   (10 )%   (5 )%   0 %   5 %   10 %   15 %

Corresponding Return to Common Stockholders(2)

    (27 )%   (19 )%   (11 )%   (3 )%   5 %   13 %   21 %

(1)
The assumed portfolio return is required by SEC regulations and is not a prediction of, and does not represent, our projected or actual performance. Actual returns may be greater or less than those appearing in the table. Pursuant to SEC regulations, this table is calculated as of December 31, 2012. As a result, it has not been updated to take into account any changes in assets or leverage since December 31, 2012.

(2)
In order to compute the "Corresponding Return to Common Stockholders," the "Assumed Return on Portfolio" is multiplied by the total value of our assets at December 31, 2012 to obtain an assumed return to us. From this amount, the interest expense (calculated by multiplying the weighted average stated interest rate of 5.5% by the $2,293.8 million of principal debt) is subtracted to determine the return available to stockholders. The return available to stockholders is then divided by the total value of our net assets as of December 31, 2012 to determine the "Corresponding Return to Common Stockholders."

In addition to regulatory requirements that restrict our ability to raise capital, the Facilities, the Unsecured Notes and the Convertible Unsecured Notes contain various covenants that, if not complied with, could accelerate repayment under the Facilities, the Unsecured Notes and the Convertible Unsecured Notes, thereby materially and adversely affecting our liquidity, financial condition and results of operations.

              The agreements governing the Facilities, the Unsecured Notes and the Convertible Unsecured Notes require us to comply with certain financial and operational covenants. These covenants may include, among other things:

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              As of the date of this prospectus, we are in compliance in all material respects with the covenants of the Facilities, the Unsecured Notes and the Convertible Unsecured Notes. However, our continued compliance with these covenants depends on many factors, some of which are beyond our control. For example, depending on the condition of the public debt and equity markets and pricing levels, unrealized depreciation in our portfolio may increase in the future. Any such increase could result in our inability to comply with our obligation to restrict the level of indebtedness that we are able to incur in relation to the value of our assets or to maintain a minimum level of stockholders' equity.

              Accordingly, although we believe we will continue to be in compliance, there are no assurances that we will continue to comply with the covenants in the Facilities, the Unsecured Notes and the Convertible Unsecured Notes. Failure to comply with these covenants could result in a default under the Facilities, the Unsecured Notes or the Convertible Unsecured Notes that, if we were unable to obtain a waiver from the lenders or holders of such indebtedness, as applicable, such lenders or holders could accelerate repayment under such indebtedness and thereby have a material adverse impact on our business, financial condition and results of operations.

We operate in a highly competitive market for investment opportunities.

              A number of entities compete with us to make the types of investments that we make in middle-market companies. We compete with other BDCs, public and private funds, commercial and investment banks, commercial financing companies, insurance companies, hedge funds, and, to the extent they provide an alternative form of financing, private equity funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. Some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the Investment Company Act imposes on us as a BDC and that the Code (as defined below) imposes on us as a RIC. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to pursue attractive investment opportunities from time to time.

              We do not seek to compete primarily based on the interest rates we offer and we believe that some of our competitors may make loans with interest rates that are comparable to or lower than the rates we offer. Rather, we compete with our competitors based on our existing investment platform, seasoned investment professionals, experience and focus on middle-market companies, disciplined investment philosophy, extensive industry focus and flexible transaction structuring. For a more detailed discussion of these competitive advantages, see "Business—Competitive Advantages."

              We may lose investment opportunities if we do not match our competitors' pricing, terms and structure. If we match our competitors' pricing, terms and structure, we may experience decreased net interest income and increased risk of credit loss. As a result of operating in such a competitive environment, we may make investments that are on less favorable terms than what we may have originally anticipated, which may impact our return on these investments.

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We may be subject to additional U.S. federal corporate-level taxes if we fail to maintain our status as a RIC.

              We have elected to be treated as a RIC under the Code and operate in a manner so as to qualify for the U.S. federal income tax treatment applicable to RICs. As a RIC, we generally will not pay U.S. federal corporate-level income taxes on our income and net capital gains that we distribute to our stockholders as dividends on a timely basis. We will be subject to U.S. federal corporate-level income tax on any undistributed income and/or gains. To maintain our status as a RIC, we must meet certain source of income, asset diversification and annual distribution requirements. We may also be subject to certain U.S. federal excise taxes, as well as state, local and foreign taxes.

              To satisfy the Annual Distribution Requirement (as defined below) for a RIC we must distribute to our stockholders on a timely basis generally an amount equal to at least 90% of our investment company taxable income for each year. We have the ability to pay a large portion of our dividends in shares of our stock, and as long as a portion of such dividend is paid in cash and other requirements are met, such stock dividends will be taxable as a dividend for U.S. federal income tax purposes. This may result in our U.S. stockholders having to pay tax on such dividends, even if no cash is received, and may result in our non-U.S. stockholders being subject to withholding tax in respect of amounts distributed in our stock. Because we use debt financing, we are subject to certain asset coverage ratio requirements under the Investment Company Act and financial covenants under our indebtedness that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to maintain our status as a RIC and, thus, may be subject to corporate-level income tax on all of our income and/or gains.

              To maintain our status as a RIC, in addition to the Annual Distribution Requirement, we must also meet certain annual source of income requirements at the end of each taxable year and asset diversification requirements at the end of each calendar quarter. Failure to meet these requirements may result in our having to (a) dispose of certain investments quickly or (b) raise additional capital to prevent the loss of RIC status. Because most of our investments are in private companies and are generally illiquid, any such dispositions may be at disadvantageous prices and may result in losses. Also, the rules applicable to our qualification as a RIC are complex with many areas of uncertainty. Accordingly, no assurance can be given that we have qualified or will continue to qualify as a RIC. If we fail to maintain our status as a RIC for any reason and become subject to regular "C" corporation income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and on any investment in us. The "Regulated Investment Company Modernization Act of 2010," which is effective for 2011 and later tax years, provides some relief from RIC disqualification due to failures of the source of income and asset diversification requirements, although there may be additional taxes due in such cases. We cannot assure you that we would qualify for any such relief should we fail the source of income or asset diversification requirements.

We may have difficulty paying our required distributions under applicable tax rules if we recognize income before or without receiving cash representing such income.

              For U.S. federal income tax purposes, we are required to include in income certain amounts that we have not yet received in cash, such as original issue discount, which may arise, for example, if we receive warrants in connection with the making of a loan, or payment-in-kind ("PIK") interest representing contractual interest added to the loan principal balance and due at the end of the loan term. Such original issue discount or PIK interest is included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash, including, for example, amounts attributable to hedging and foreign

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currency transactions or cancellation of indebtedness income resulting from a restructuring of an investment in debt securities.

              Since, in certain cases, we may recognize income before or without receiving cash in respect of such income, we may have difficulty meeting the U.S. federal income tax requirement to distribute generally an amount equal to at least 90% of our investment company taxable income to maintain our status as a RIC. Accordingly, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are not able to obtain cash from other sources, we may fail to qualify as a RIC and thus be subject to additional corporate-level income taxes. Such a failure would have a material adverse effect on us and on any investment in us. See "Certain Material U.S. Federal Income Tax Considerations—Taxation as a RIC."

We are exposed to risks associated with changes in interest rates.

              General interest rate fluctuations may have a substantial negative impact on our investments and investment opportunities and, accordingly, may have a material adverse effect on our investment objective and rate of return on invested capital. Because we borrow money and may issue debt securities or preferred stock to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest these funds. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

              Trading prices for debt that pays a fixed rate of return tend to fall as interest rates rise. Trading prices tend to fluctuate more for fixed-rate securities that have longer maturities. In the past, we have entered into certain hedging transactions, such as interest rate swap agreements, to mitigate our exposure to adverse fluctuations in interest rates, and we may do so again in the future. In addition, we may increase our floating rate investments to position the portfolio for rate increases. However, we cannot assure you that such transactions will be successful in mitigating our exposure to interest rate risk. Hedging transactions may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio investments.

              Although we have no policy governing the maturities of our investments, under current market conditions we expect that we will invest in a portfolio of debt generally having maturities of up to 10 years. This means that we are subject to greater risk (other things being equal) than a fund invested solely in shorter-term securities. A decline in the prices of the debt we own could adversely affect the trading price of our common stock. Also, an increase in interest rates available to investors could make an investment in our common stock less attractive if we are not able to increase our dividend rate, which could reduce the value of our common stock.

Most of our portfolio investments are not publicly traded and, as a result, the fair value of these investments may not be readily determinable.

              A large percentage of our portfolio investments are not publicly traded. The fair value of investments that are not publicly traded may not be readily determinable. We value these investments quarterly at fair value as determined in good faith by our board of directors based on, among other things, the input of our management and audit committee and independent valuation firms that have been engaged at the direction of our board of directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing 12-month period (with certain de minimis exceptions). The valuation process is conducted at the end of each fiscal quarter, with a minimum of 50% (based on value) of our valuations of portfolio companies without readily available market quotations subject to review by an independent valuation firm each quarter.

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However, we may use these independent valuation firms to review the value of our investments more frequently, including in connection with the occurrence of significant events or changes in value affecting a particular investment. In addition, our independent registered public accounting firm reviews our valuation process as part of their overall integrated audit.

              The types of factors that may be considered in valuing our investments include the enterprise value of the portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company's ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, a comparison of the portfolio company's securities to similar publicly traded securities, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate our valuation. Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these investments existed and may differ materially from the values that we may ultimately realize. Our net asset value per share could be adversely affected if our determinations regarding the fair value of these investments are materially higher than the values that we realize upon disposition of such investments.

The lack of liquidity in our investments may adversely affect our business.

              As we generally make investments in private companies, substantially all of these investments are subject to legal and other restrictions on resale or are otherwise less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we could realize significantly less than the value at which we have recorded our investments. In addition, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we or an affiliated manager of Ares has material non-public information regarding such portfolio company.

We may experience fluctuations in our quarterly results.

              We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rates payable on the debt investments we make, the default rates on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

There are significant potential conflicts of interest that could impact our investment returns.

              Certain of our executive officers and directors, and members of the investment committee of our investment adviser, serve or may serve as officers, directors or principals of other entities and affiliates of our investment adviser and investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in our or our stockholders' best interests or that may require them to devote time to services for other entities, which could interfere with the time available to provide services to us. Certain members of our investment adviser's investment committee have significant responsibilities for other Ares funds. For example, Mr. Rosenthal is required to devote a substantial majority of his business time to the affairs of the

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Ares Management Private Equity Group. Similarly, although the professional staff of our investment adviser will devote as much time to the management of the Company as appropriate to enable our investment adviser to perform its duties in accordance with the investment advisory and management agreement, the investment professionals of our investment adviser may have conflicts in allocating their time and services among the Company, on the one hand, and investment vehicles managed by Ares or one or more of its affiliates, on the other hand. These activities could be viewed as creating a conflict of interest insofar as the time and effort of the professional staff of our investment adviser and its officers and employees will not be devoted exclusively to the business of the Company but will instead be allocated between the business of the Company and the management of these other investment vehicles. However, Ares believes that the efforts of such individuals are synergistic with and beneficial to the affairs of Ares Capital and these other investment vehicles managed by Ares or its affiliates.

              In addition, certain Ares funds may have investment objectives that compete or overlap with, and may from time to time invest in asset classes similar to those targeted by, Ares Capital. Consequently, we, on the one hand, and these other entities, may from time to time pursue the same or similar capital and investment opportunities. Ares and our investment adviser endeavor to allocate investment opportunities in a fair and equitable manner, and in any event consistent with any fiduciary duties owed to Ares Capital. Nevertheless, it is possible that we may not be given the opportunity to participate in certain investments made by investment funds managed by investment managers affiliated with Ares. In addition, there may be conflicts in the allocation of investment opportunities among us and the funds managed by us or one or more of our controlled affiliates or among the funds they manage. We may or may not participate in investments made by funds managed by us or one or more of our controlled affiliates.

              We have from time to time sold assets to certain of the vehicles managed by IHAM and, as part of our investment strategy, we may offer to sell additional assets to vehicles managed by us and/or one or more of our controlled affiliates (including IHAM) or we may purchase assets from vehicles managed by us and/or one or more of our controlled affiliates. In addition, vehicles managed by us or one or more of our controlled affiliates (including IHAM) may offer assets to or may purchase assets from one another. While assets may be sold or purchased at prices that are consistent with those that could be obtained from third parties in the marketplace, and although these types of transactions generally require approval of one or more independent parties, there may be an inherent conflict of interest in such transactions between us and funds managed by us or one of our controlled affiliates.

              We pay management and incentive fees to our investment adviser, and reimburse our investment adviser for certain expenses it incurs. In addition, investors in our common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in, among other things, a lower rate of return than one might achieve if distributions were made on a gross basis.

              Our investment adviser's base management fee is based on a percentage of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) and, consequently, our investment adviser may have conflicts of interest in connection with decisions that could affect our total assets, such as decisions as to whether to incur indebtedness or to make future investments.

              The part of the incentive fee payable by us to our investment adviser that relates to our pre-incentive fee net investment income is computed and paid on income that may include interest that is accrued but not yet received in cash. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible.

              Our investment advisory and management agreement renews for successive annual periods if approved by our board of directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are

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not "interested persons" of the Company as defined in Section 2(a)(19) of the Investment Company Act. However, both we and our investment adviser have the right to terminate the agreement without penalty upon 60 days' written notice to the other party. Moreover, conflicts of interest may arise if our investment adviser seeks to change the terms of our investment advisory and management agreement, including, for example, the terms for compensation. While any material change to the investment advisory and management agreement must be submitted to stockholders for approval under the Investment Company Act, we may from time to time decide it is appropriate to seek stockholder approval to change the terms of the agreement.

              We are party to an administration agreement with our administrator, Ares Operations, a wholly owned subsidiary of Ares Management, pursuant to which our administrator furnishes us with certain administrative and other services and we pay our administrator at cost our allocable portion of overhead and other expenses (including travel expenses) incurred by our administrator in performing its obligations under our administration agreement, including our allocable portion of the cost of certain of our officers (including our chief compliance officer, chief financial officer, general counsel, secretary and treasurer) and their respective staffs, but not investment professionals.

              Our portfolio company, IHAM, is party to an administration agreement, referred to herein as the "IHAM administration agreement," with Ares Operations. Pursuant to the IHAM administration agreement, our administrator provides IHAM with administrative services and IHAM reimburses our administrator for all of the actual costs associated with such services, including its allocable portion of our administrator's overhead and the cost of our administrator's officers and respective staff in performing its obligations under the IHAM administration agreement. Prior to entering into the IHAM administration agreement, IHAM was party to a services agreement with our investment adviser, pursuant to which our investment adviser provided similar services.

              We are party to a New York office lease that will expire in February 2026 pursuant to which we are leasing office facilities from a third party. We are also party to an office sublease with Ares Commercial Real Estate Management LLC ("ACREM"), a wholly owned subsidiary of Ares Management and the manager of Ares Commercial Real Estate Corporation, pursuant to which we are subleasing approximately 12% of ACREM's Chicago office space for a fixed rent equal to 12% of the basic annual rent payable by ACREM under its Chicago office lease, plus certain additional costs and expenses. We also entered into separate subleases with Ares Management and IHAM, pursuant to which Ares Management and IHAM sublease approximately 15% and 20%, respectively, of our New York office space, for a fixed rent equal to 15% and 20%, respectively, of the basic annual rent payable by us under our office lease, plus certain additional costs and expenses.

              As a result of the arrangements described above, there may be times when the management team of Ares (including those members of management focused primarily on managing Ares Capital) has interests that differ from those of yours, giving rise to a conflict.

              Our stockholders may have conflicting investment, tax and other objectives with respect to their investments in us. The conflicting interests of individual stockholders may relate to or arise from, among other things, the nature of our investments, the structure or the acquisition of our investments, and the timing of dispositions of our investments. As a consequence, conflicts of interest may arise in connection with decisions made by our investment adviser, including with respect to the nature or structuring of our investments, that may be more beneficial for one stockholder than for another stockholder, especially with respect to stockholders' individual tax situations. In selecting and structuring investments appropriate for us, our investment adviser will consider the investment and tax objectives of the Company and our stockholders, as a whole, not the investment, tax or other objectives of any stockholder individually.

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Changes in laws or regulations governing our operations or the operations of our portfolio companies, changes in the interpretation thereof or newly enacted laws or regulations, such as the Dodd-Frank Act, and any failure by us or our portfolio companies to comply with these laws or regulations, could require changes to certain business practices of us or our portfolio companies, negatively impact the operations, cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.

              We and our portfolio companies are subject to regulation by laws and regulations at the local, state, federal and, in some cases, foreign levels. These laws and regulations, as well as their interpretation, may be changed from time to time, and new laws and regulations may be enacted. Accordingly, any change in these laws or regulations, changes in their interpretation, or newly enacted laws or regulations and any failure by us or our portfolio companies to comply with these laws or regulations, could require changes to certain business practices of us or our portfolio companies, negatively impact the operations, cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.

              On July 21, 2010, President Obama signed into law the Dodd-Frank Act. Many of the provisions of the Dodd-Frank Act have had extended implementation periods and delayed effective dates and have required extensive rulemaking by regulatory authorities. While many of the rules required to be written have been promulgated, some have not yet been implemented. Many of these rules will be implemented in 2013. Although the full impact of the Dodd-Frank Act on us and our portfolio companies may not be known for an extended period of time, the Dodd-Frank Act, including the rules implementing its provisions and the interpretation of those rules, along with other legislative and regulatory proposals directed at the financial services industry or affecting taxation that are proposed or pending in the U.S. Congress, may negatively impact the operations, cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies, intensify the regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.

Our investment adviser's liability is limited under the investment advisory and management agreement, and we are required to indemnify our investment adviser against certain liabilities, which may lead our investment adviser to act in a riskier manner on our behalf than it would when acting for its own account.

              Our investment adviser has not assumed any responsibility to us other than to render the services described in the investment advisory and management agreement, and it will not be responsible for any action of our board of directors in declining to follow our investment adviser's advice or recommendations. Pursuant to the investment advisory and management agreement, our investment adviser and its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other person or entity affiliated with it will not be liable to us for their acts under the investment advisory and management agreement, absent willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties. We have agreed to indemnify, defend and protect our investment adviser and its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other person or entity affiliated with it with respect to all damages, liabilities, costs and expenses resulting from acts of our investment adviser not arising out of willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties under the investment advisory and management agreement. These protections may lead our investment adviser to act in a riskier manner when acting on our behalf than it would when acting for its own account. See "Risk Factors—Risks Relating to Our Investments—Our

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investment adviser's incentive fee may induce it to make certain investments, including speculative investments."

We may be obligated to pay our investment adviser incentive compensation even if we incur a loss.

              Our investment adviser is entitled to incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our pre-incentive fee net investment income for that quarter (before deducting incentive compensation and certain other items) above a threshold return for that quarter. Our pre-incentive fee net investment income for incentive compensation purposes excludes realized and unrealized capital losses or depreciation and income taxes related to realized gains that we may incur in the fiscal quarter, even if such capital losses or depreciation and income taxes related to realized gains result in a net loss on our statement of operations for that quarter. Thus, we may be required to pay our investment adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.

              Under the investment advisory and management agreement, we will defer cash payment of any incentive fee otherwise earned by our investment adviser if, during the most recent four full calendar quarter periods ending on or prior to the date such payment is to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) is less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period. These calculations will be adjusted for any share issuances or repurchases. Any deferred incentive fees will be carried over for payment in subsequent calculation periods to the extent such payment can then be made under the investment advisory and management agreement.

              If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible. Our investment adviser is not under any obligation to reimburse us for any part of the incentive fee it received that was based on accrued income that we never receive as a result of a default on the obligation that resulted in the accrual of such income.

RISKS RELATING TO OUR INVESTMENTS

Declines in market prices and liquidity in the corporate debt markets can result in significant net unrealized depreciation of our portfolio, which in turn would reduce our net asset value.

              As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or under the direction of our board of directors. We may take into account the following types of factors, if relevant, in determining the fair value of our investments: the enterprise value of a portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company's ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company's securities to similar publicly traded securities, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). As a result, volatility in the capital markets can also adversely affect our investment valuations. Decreases in the market values or fair values of our investments are recorded as unrealized depreciation. The effect

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of all of these factors on our portfolio can reduce our net asset value by increasing net unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized losses and may suffer unrealized losses, which could have a material adverse impact on our business, financial condition and results of operations.

Economic recessions or downturns could impair our portfolio companies and harm our operating results.

              Many of our portfolio companies may be susceptible to economic downturns or recessions (including the economic downturn that began in 2007) and may be unable to repay our loans during these periods. Therefore, during these periods our non-performing assets may increase and the value of our portfolio may decrease if we are required to write down the values of our investments. Adverse economic conditions may also decrease the value of collateral securing some of our loans and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing investments and harm our operating results. We experienced to some extent such effects during the economic downturn that began in 2007 and may experience such effects again in any future downturn or recession.

              A portfolio company's failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, acceleration of the time when the loans are due and foreclosure on its assets representing collateral for its obligations, which could trigger cross defaults under other agreements and jeopardize our portfolio company's ability to meet its obligations under the debt that we hold and the value of any equity securities we own. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company.

Investments in privately held middle-market companies involve significant risks.

              We primarily invest in privately held U.S. middle-market companies. Investments in privately held middle-market companies involve a number of significant risks, including the following:

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Our debt investments may be risky and we could lose all or part of our investment.

              The debt that we invest in is typically not initially rated by any rating agency, but we believe that if such investments were rated, they would be below investment grade (rated lower than "Baa3" by Moody's Investors Service, lower than "BBB-" by Fitch Ratings or lower than "BBB-" by Standard & Poor's Ratings Services), which under the guidelines established by these entities, is an indication of having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. Bonds that are rated below investment grade are sometimes referred to as "high yield bonds" or "junk bonds." Therefore, our investments may result in an above average amount of risk and volatility or loss of principal.

              Our investment portfolio includes our investment in the SSLP, which as of December 31, 2012 represented approximately 21% of our portfolio at fair value. While the SSLP's portfolio is comprised of 36 separate first lien senior secured loans, any material degradation of the performance of these loans in the aggregate could have a material adverse effect on our business, financial condition and results of operations. We also may invest in assets other than first and second lien and mezzanine debt investments, including high-yield securities, U.S. government securities, credit derivatives and other structured securities and certain direct equity investments. These investments entail additional risks that could adversely affect our investment returns.

Investments in equity securities, many of which are illiquid with no readily available market, involve a substantial degree of risk.

              We may purchase common and other equity securities. Although common stock has historically generated higher average total returns than fixed income securities over the long-term, common stock also has experienced significantly more volatility in those returns and in recent years has significantly under performed relative to fixed income securities. The equity securities we acquire may fail to appreciate and may decline in value or become worthless and our ability to recover our investment will depend on our portfolio company's success. Investments in equity securities involve a number of significant risks, including:

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              There are special risks associated with investing in preferred securities, including:

              Additionally, when we invest in first lien senior secured loans (including unitranche loans), second lien senior secured loans or mezzanine debt, we may acquire warrants or other equity securities as well. Our goal is ultimately to dispose of such equity interests and realize gains upon our disposition of such interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

              We may invest, to the extent permitted by law, in the equity securities of investment funds that are operating pursuant to certain exceptions to the Investment Company Act and in advisers to similar investment funds and, to the extent we so invest, will bear our ratable share of any such company's expenses, including management and performance fees. We will also remain obligated to pay management and incentive fees to Ares Capital Management with respect to the assets invested in the securities and instruments of such companies. With respect to each of these investments, each of our common stockholders will bear his or her share of the management and incentive fee of Ares Capital Management as well as indirectly bearing the management and performance fees and other expenses of any such investment funds or advisers.

There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.

              If one of our portfolio companies were to go bankrupt, even though we may have structured our interest as senior debt, depending on the facts and circumstances, a bankruptcy court might recharacterize our debt holding as an equity investment and subordinate all or a portion of our claim to that of other creditors. In addition, lenders can be subject to lender liability claims for actions taken by them where they become too involved in the borrower's business or exercise control over the borrower. For example, we could become subject to a lender's liability claim, if, among other things, we actually render significant managerial assistance.

Our portfolio companies may incur debt or issue equity securities that rank equally with, or senior to, our investments in such companies.

              Our portfolio companies may have, or may be permitted to incur, other debt, or issue other equity securities, that rank equally with, or senior to, our investments. By their terms, such instruments may provide that the holders are entitled to receive payment of dividends, interest or principal on or

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before the dates on which we are entitled to receive payments in respect of our investments. These debt instruments would usually prohibit the portfolio companies from paying interest on or repaying our investments in the event and during the continuance of a default under such debt. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of securities ranking senior to our investment in that portfolio company typically are entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying such holders, the portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of securities ranking equally with our investments, we would have to share on an equal basis any distributions with other security holders in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

              The rights we may have with respect to the collateral securing any junior priority loans we make to our portfolio companies may also be limited pursuant to the terms of one or more intercreditor agreements (including agreements governing "first out" and "last out" structures) that we enter into with the holders of senior debt. Under such an intercreditor agreement, at any time that senior obligations are outstanding, we may forfeit certain rights with respect to the collateral to the holders of the senior obligations. These rights may include the right to commence enforcement proceedings against the collateral, the right to control the conduct of such enforcement proceedings, the right to approve amendments to collateral documents, the right to release liens on the collateral and the right to waive past defaults under collateral documents. We may not have the ability to control or direct such actions, even if as a result our rights as junior lenders are adversely affected.

When we are a debt or minority equity investor in a portfolio company, we are often not in a position to exert influence on the entity, and other equity holders and management of the company may make decisions that could decrease the value of our portfolio holdings.

              When we make debt or minority equity investments, we are subject to the risk that a portfolio company may make business decisions with which we disagree and the other equity holders and management of such company may take risks or otherwise act in ways that do not serve our interests. As a result, a portfolio company may make decisions that could decrease the value of our investment.

Our portfolio companies may be highly leveraged.

              Some of our portfolio companies may be highly leveraged, which may have adverse consequences to these companies and to us as an investor. These companies may be subject to restrictive financial and operating covenants and the leverage may impair these companies' ability to finance their future operations and capital needs. As a result, these companies' flexibility to respond to changing business and economic conditions and to take advantage of business opportunities may be limited. Further, a leveraged company's income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.

Our investment adviser's incentive fee may induce it to make certain investments, including speculative investments.

              The incentive fee payable by us to Ares Capital Management may create an incentive for Ares Capital Management to make investments on our behalf that are risky or more speculative than would be the case in the absence of such compensation arrangement. The way in which the incentive fee payable to our investment adviser is determined, which is calculated as a percentage of the return on invested capital, may encourage our investment adviser to use leverage to increase the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would disfavor the holders of our common stock and the holders of securities convertible into our common stock. In addition, our investment adviser will receive the incentive fee based, in part, upon net capital gains realized on our investments. Unlike the portion of the incentive fee based on

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income, there is no hurdle rate applicable to the portion of the incentive fee based on net capital gains. As a result, our investment adviser may have a tendency to invest more in investments that are likely to result in capital gains as compared to income producing securities. Such a practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.

              The part of the incentive fee payable by us that relates to our pre-incentive fee net investment income will be computed and paid on income that may include interest that is accrued but not yet received in cash. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible. Our investment adviser is not under any obligation to reimburse us for any part of the incentive fee it received that was based on such accrued interest that we never actually receive.

              Because of the structure of the incentive fee, it is possible that we may have to pay an incentive fee in a quarter where we incur a loss. For example, if we receive pre-incentive fee net investment income in excess of the hurdle rate for a quarter, we will pay the applicable incentive fee even if we have incurred a loss in that quarter due to realized and/or unrealized capital losses. In addition, if market interest rates rise, we may be able to invest our funds in debt instruments that provide for a higher return, which would increase our pre-incentive fee net investment income and make it easier for our investment adviser to surpass the fixed hurdle rate and receive an incentive fee based on such net investment income.

Our investments in foreign companies may involve significant risks in addition to the risks inherent in U.S. investments.

              Our investment strategy contemplates potential investments in foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes (potentially at confiscatory levels), less liquid markets, less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

              Although most of our investments will be U.S. dollar denominated, our investments that are denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and political developments. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us.

We may expose ourselves to risks if we engage in hedging transactions.

              We have and may in the future enter into hedging transactions, which may expose us to risks associated with such transactions. We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Use of these hedging instruments may include counter-party credit risk.

              Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging

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transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. Moreover, it may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.

              The success of our hedging transactions will depend on our ability to correctly predict movements in currencies and interest rates. Therefore, while we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for a variety of reasons, we may not seek to (or be able to) establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not related to currency fluctuations. See also "Risk Factors—Risk Relating to Our Business—We are exposed to risks associated with changes in interest rates."

We may initially invest a portion of the net proceeds of offerings pursuant to this prospectus primarily in high-quality short-term investments, which will generate lower rates of return than those expected from the interest generated on first and second lien senior secured loans and mezzanine debt.

              We may initially invest a portion of the net proceeds of offerings pursuant to this prospectus primarily in cash, cash equivalents, U.S. government securities and other high-quality short-term investments. These securities generally earn yields substantially lower than the income that we anticipate receiving once we are fully invested in accordance with our investment objective. As a result, we may not, for a time, be able to achieve our investment objective and/or we may need to, for a time, decrease the amount of any dividend that we may pay to our stockholders to a level that is substantially lower than the level that we expect to pay when the net proceeds of offerings are fully invested in accordance with our investment objective. If we do not realize yields in excess of our expenses, we may incur operating losses and the market price of our shares may decline.

RISKS RELATING TO OFFERINGS PURSUANT TO THIS PROSPECTUS

Our shares of common stock have traded at a discount from net asset value and may do so again in the future, which could limit our ability to raise additional equity capital.

              Shares of closed-end investment companies frequently trade at a market price that is less than the net asset value that is attributable to those shares. This characteristic of closed-end investment companies is separate and distinct from the risk that our net asset value per share may decline. It is not possible to predict whether any shares of our common stock will trade at, above, or below net asset value. In the recent past, including during much of 2009, the stocks of BDCs as an industry, including at times shares of our common stock, traded below net asset value and at near historic lows as a result of concerns over liquidity, leverage restrictions and distribution requirements. When our common stock is trading below its net asset value per share, we will generally not be able to issue additional shares of our common stock at its market price without first obtaining approval for such issuance from our stockholders and our independent directors. At our 2012 annual stockholders meeting, subject to certain determinations required to be made by our board of directors, our stockholders approved our ability to sell or otherwise issue shares of our common stock, in an amount not exceeding 25% of our then outstanding common stock, at a price below the then current net asset value per share during a period that began on June 4, 2012 and expires on the earlier of June 4, 2013 and the date of our 2013

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annual stockholders meeting. On April 19, 2013, we filed the 2013 Proxy Statement for our 2013 annual stockholders meeting. The 2013 Proxy Statement sets forth certain proposals to be voted upon at our 2013 annual stockholders meeting (currently expected to take place on June 4, 2013), including a proposal that, if approved by stockholders, would have the effect of extending this approval to the earlier of the one-year anniversary of the date of our 2013 annual stockholders meeting and the date of our 2014 annual stockholders meeting.

There is a risk that investors in our common stock may not receive dividends or that our dividends may not grow over time and that investors in our debt securities may not receive all of the interest income to which they are entitled.

              We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. If we declare a dividend and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash dividend payments.

              In addition, due to the asset coverage test applicable to us as a BDC, we may be limited in our ability to make distributions. Further, if we invest a greater amount of assets in equity securities that do not pay current dividends, it could reduce the amount available for distribution. See "Price Range of Common Stock and Distributions."

              The above-referenced restrictions on distributions may also inhibit our ability to make required interest payments to holders of our debt, which may cause a default under the terms of our debt agreements. Such a default could materially increase our cost of raising capital, as well as cause us to incur penalties under the terms of our debt agreements.

Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.

              The Maryland General Corporation Law, our charter and our bylaws contain provisions that may discourage, delay or make more difficult a change in control of Ares Capital or the removal of our directors. We are subject to the Maryland Business Combination Act (the "Business Combination Act"), subject to any applicable requirements of the Investment Company Act. Our board of directors has adopted a resolution exempting from the Business Combination Act any business combination between us and any other person, subject to prior approval of such business combination by our board, including approval by a majority of our disinterested directors. If the resolution exempting business combinations is repealed or our board or disinterested directors do not approve a business combination, the Business Combination Act may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer. Our bylaws exempt from the Maryland Control Share Acquisition Act (the "Control Share Acquisition Act") acquisitions of our stock by any person. If we amend our bylaws to repeal the exemption from the Control Share Acquisition Act, the Control Share Acquisition Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such an offer.

              We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our charter classifying our board of directors into three classes serving staggered three-year terms, and provisions of our charter authorizing our board of directors to classify or reclassify shares of our stock into one or more classes or series, to cause the issuance of additional shares of our stock, and to amend our charter from time to time, without stockholder approval, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. These provisions, as well as other provisions of our charter and bylaws, may discourage, delay, defer, make more difficult or prevent a transaction or a change in control that might otherwise be in your best interest.

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Investing in our common stock may involve an above average degree of risk.

              The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and volatility or loss of principal. Our investments in portfolio companies may be highly speculative and aggressive and, therefore, an investment in our securities may not be suitable for someone with lower risk tolerance.

The market price of our common stock may fluctuate significantly.

              The capital and credit markets have experienced periods of extreme volatility and disruption over the past several years. The market price and liquidity of the market for shares of our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

              In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been brought against that company. If our stock price fluctuates significantly, we may be the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources from our business.

We may in the future determine to issue preferred stock, which could adversely affect the market value of our common stock.

              The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect

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the market price for our common stock by making an investment in the common stock less attractive. In addition, the dividends on any preferred stock we issue must be cumulative. Payment of dividends and repayment of the liquidation preference of preferred stock must take preference over any dividends or other payments to our common stockholders, and holders of preferred stock are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference (other than convertible preferred stock that converts into common stock). In addition, under the Investment Company Act, preferred stock constitutes a "senior security" for purposes of the 200% asset coverage test.

The net asset value per share of our common stock may be diluted if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or securities to subscribe for or convertible into shares of our common stock.

              At our 2012 annual stockholders meeting, subject to certain determinations required to be made by our board of directors, our stockholders approved our ability to sell or otherwise issue shares of our common stock, in an amount not exceeding 25% of our then outstanding common stock, at a price below the then current net asset value per share during a period that began on June 4, 2012 and expires on the earlier of June 4, 2013 and the date of our 2013 annual stockholders meeting. On April 19, 2013, we filed the 2013 Proxy Statement for our 2013 annual stockholders meeting. The 2013 Proxy Statement sets forth certain proposals to be voted upon at our 2013 annual stockholders meeting (currently expected to take place on June 4, 2013), including a proposal that, if approved by stockholders, would have the effect of extending this approval to the earlier of the one-year anniversary of the date of our 2013 annual stockholders meeting and the date of our 2014 annual stockholders meeting.

              In addition, at our 2009 annual stockholders meeting, our stockholders approved a proposal authorizing us to sell or otherwise issue warrants or securities to subscribe for or convertible into shares of our common stock subject to certain limitations (including, without limitation, that the number of shares issuable does not exceed 25% of our then outstanding common stock and that the exercise or conversion price thereof is not, at the date of issuance, less than the greater of the market value per share and the net asset value per share of our common stock). The authorization granted to sell or issue warrants or securities to subscribe for or convertible into shares of our common stock has no expiration.

              Any decision to sell shares of our common stock below its then current net asset value per share or securities to subscribe for or convertible into shares of our common stock would be subject to the determination by our board of directors that such issuance is in our and our stockholders' best interests.

              If we were to sell shares of our common stock below its then current net asset value per share, such sales would result in an immediate dilution to the net asset value per share of our common stock. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and a proportionately greater decrease in the stockholders' interest in our earnings and assets and their voting interest in us than the increase in our assets resulting from such issuance. Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted.

              In addition, if we issue warrants or securities to subscribe for or convertible into shares of our common stock, subject to certain limitations, the exercise or conversion price per share could be less than net asset value per share at the time of exercise or conversion (including through the operation of anti-dilution protections). Because we would incur expenses in connection with any issuance of such securities, such issuance could result in a dilution of the net asset value per share at the time of exercise or conversion. This dilution would include reduction in net asset value per share as a result of

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the proportionately greater decrease in the stockholders' interest in our earnings and assets and their voting interest than the increase in our assets resulting from such issuance.

              Further, if current stockholders of the Company do not purchase any shares to maintain their percentage interest, regardless of whether such offering is above or below the then current net asset value per share, their voting power will be diluted. For additional information and hypothetical examples of these risks, see "Sales of Common Stock Below Net Asset Value" and the prospectus supplement pursuant to which such sale is made.

Your interest in us may be diluted if you do not fully exercise your subscription rights in any rights offering. In addition, if the subscription price is less than our net asset value per share, then you will experience an immediate dilution of the aggregate net asset value of your shares.

              In the event we issue subscription rights, stockholders who do not fully exercise their subscription rights should expect that they will, at the completion of a rights offering pursuant to this prospectus, own a smaller proportional interest in us than would otherwise be the case if they fully exercised their rights. We cannot state precisely the amount of any such dilution in share ownership because we do not know at this time what proportion of the shares will be purchased as a result of such rights offering.

              In addition, if the subscription price is less than the net asset value per share of our common stock, then our stockholders would experience an immediate dilution of the aggregate net asset value of their shares as a result of the offering. The amount of any decrease in net asset value is not predictable because it is not known at this time what the subscription price and net asset value per share will be on the expiration date of a rights offering or what proportion of the shares will be purchased as a result of such rights offering. Such dilution could be substantial. See "Risk Factors—Risks Relating to Offerings Pursuant to this Prospectus—The net asset value per share of our common stock may be diluted if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or securities to subscribe for or convertible into shares of our common stock" and "Sales of Common Stock Below Net Asset Value."

Investors in offerings of our common stock will likely incur immediate dilution upon the closing of such offering.

              We generally expect the public offering price of any offering of shares of our common stock to be higher than the book value per share of our outstanding common stock (unless we offer shares pursuant to a rights offering or after obtaining prior approval for such issuance from our stockholders and our independent directors). Accordingly, investors purchasing shares of our common stock in offerings pursuant to this prospectus may pay a price per share that exceeds the tangible book value per share after such offering.

Our stockholders will experience dilution in their ownership percentage if they opt out of our dividend reinvestment plan.

              All dividends declared in cash payable to stockholders that are participants in our dividend reinvestment plan are automatically reinvested in shares of our common stock. As a result, our stockholders that opt out of our dividend reinvestment plan will experience dilution in their ownership percentage of our common stock over time.

Our stockholders may experience dilution upon the conversion of the Convertible Unsecured Notes.

              The February 2016 Convertible Notes are convertible into shares of our common stock beginning August 15, 2015 or, under certain circumstances, earlier. The June 2016 Convertible Notes are convertible into shares of our common stock beginning on December 15, 2015 or, under certain

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circumstances, earlier. The 2017 Convertible Notes are convertible into shares of our common stock beginning on September 15, 2016 or, under certain circumstances, earlier. The 2018 Convertible Notes are convertible into shares of our common stock beginning on July 15, 2017 or, under certain circumstances, earlier. Upon conversion of the Convertible Unsecured Notes, we have the choice to pay or deliver, as the case may be, at our election, cash, shares of our common stock or a combination of cash and shares of our common stock. The current conversion price of the February 2016 Convertible Notes is approximately $18.89 per share of common stock, the current conversion price of the June 2016 Convertible Notes is approximately $18.80 per share, the current conversion price of the 2017 Convertible Notes is approximately $19.21 per share and the current conversion price of the 2018 Convertible Notes is approximately $19.81 per share, in each case subject to adjustment in certain circumstances. If we elect to deliver shares of common stock upon a conversion at the time our tangible book value per share exceeds the conversion price in effect at such time, our stockholders may incur dilution. In addition, our stockholders will experience dilution in their ownership percentage of common stock upon our issuance of common stock in connection with the conversion of the Convertible Unsecured Notes and any dividends paid on our common stock will also be paid on shares issued in connection with such conversion after such issuance.

Our stockholders may receive shares of our common stock as dividends, which could result in adverse tax consequences to them.

              In order to satisfy the Annual Distribution Requirement applicable to RICs, we have the ability to declare a large portion of a dividend in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion can be as low as 20%) and certain requirements are met, the entire distribution would be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder would be taxed on 100% of the fair market value of the dividend on the date a stockholder received it in the same manner as a cash dividend, even though most of the dividend was paid in shares of our common stock.

Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.

              Sales of substantial amounts of our common stock, or the availability of such common stock for sale (including as a result of the conversion of our Convertible Unsecured Notes into common stock), could adversely affect the prevailing market prices for our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities should we desire to do so.

The trading market or market value of our publicly issued debt securities may fluctuate.

              Our publicly issued debt securities may or may not have an established trading market. We cannot assure you that a trading market for our publicly issued debt securities will ever develop or be maintained if developed. In addition to our creditworthiness, many factors may materially adversely affect the trading market for, and market value of, our publicly issued debt securities. These factors include, but are not limited to, the following:

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              You should also be aware that there may be a limited number of buyers when you decide to sell your debt securities. This too may materially adversely affect the market value of the debt securities or the trading market for the debt securities.

Terms relating to redemption may materially adversely affect your return on any debt securities that we may issue.

              If your debt securities are redeemable at our option, we may choose to redeem your debt securities at times when prevailing interest rates are lower than the interest rate paid on your debt securities. In addition, if your debt securities are subject to mandatory redemption, we may be required to redeem your debt securities also at times when prevailing interest rates are lower than the interest rate paid on your debt securities. In this circumstance, you may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as your debt securities being redeemed.

Our credit ratings may not reflect all risks of an investment in our debt securities.

              Our credit ratings are an assessment by third parties of our ability to pay our obligations. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of our debt securities. Our credit ratings, however, may not reflect the potential impact of risks related to market conditions generally or other factors discussed above on the market value of or trading market for the publicly issued debt securities.

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FORWARD-LOOKING STATEMENTS

              Some of the statements in this prospectus constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this prospectus involve a number of risks and uncertainties, including statements concerning:

              We use words such as "anticipates," "believes," "expects," "intends," "will," "should," "may" and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. Our actual results and condition could differ materially from those expressed in the forward-looking statements for any reason, including the factors set forth in "Risk Factors" and the other information included in this prospectus.

              We have based the forward-looking statements included in this prospectus on information available to us on the date of this prospectus, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any

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forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

              The forward-looking statements in this prospectus are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

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USE OF PROCEEDS

              Unless otherwise specified in a prospectus supplement, we intend to use the net proceeds from the sale of our securities for general corporate purposes, which includes investing in portfolio companies in accordance with our investment objective. We also expect to use the net proceeds of an offering to repay or repurchase outstanding indebtedness, which may include indebtedness ($2.3 billion aggregate principal amount outstanding as of March 28, 2013) under (a) the Revolving Credit Facility (no amounts outstanding as of March 28, 2013), (b) the Revolving Funding Facility ($280.0 million aggregate principal amount outstanding as of March 28, 2013), (c) the SMBC Funding Facility (no amounts outstanding as of March 28, 2013), (d) the February 2016 Convertible Notes ($575.0 million aggregate principal amount outstanding as of March 28, 2013), (e) the June 2016 Convertible Notes ($230.0 million aggregate principal amount outstanding as of March 28, 2013), (f) the 2017 Convertible Notes ($162.5 million aggregate principal amount outstanding as of March 28, 2013), (g) the 2018 Convertible Notes ($270.0 million aggregate principal amount outstanding as of March 28, 2013), (h) the February 2022 Notes ($143.8 million aggregate principal amount outstanding as of March 28, 2013), (i) the October 2022 Notes ($182.5 million aggregate principal amount outstanding as of March 28, 2013), (j) the 2040 Notes ($200.0 million aggregate principal amount outstanding as of March 28, 2013) and (k) the 2047 Notes ($230.0 million aggregate principal amount outstanding as of March 28, 2013).

              Subject to certain exceptions, the interest charged on the indebtedness incurred under the Revolving Credit Facility is based on LIBOR (one, two, three or six month) plus an applicable spread of 2.25% or a "base rate" (as defined in the agreements governing the Revolving Credit Facility) plus an applicable spread of 1.25%. As of March 28, 2013, one, two, three and six month LIBOR were 0.20%, 0.24%, 0.28% and 0.44%, respectively. The Revolving Credit Facility matures on May 4, 2016. Subject to certain exceptions, the interest charged on the indebtedness incurred under the Revolving Funding Facility is based on LIBOR plus applicable spreads ranging from 2.25% to 2.50% and ranging from 1.25% to 1.50% over "base rate" (as defined in the agreements governing the Revolving Funding Facility), in each case, determined monthly based on the composition of the borrowing base relative to outstanding borrowings under the facility. The Revolving Funding Facility is scheduled to expire on April 18, 2017 (subject to extension exercisable upon mutual consent). Subject to certain exceptions, the interest charged on the indebtedness incurred under the SMBC Funding Facility is based on one month LIBOR plus an applicable spread of 2.125% or a "base rate" (as defined in the agreements governing the SMBC Funding Facility) plus an applicable spread of 1.125%. The SMBC Funding Facility is scheduled to expire on September 14, 2020 (subject to two one-year extension options exercisable upon mutual consent). The interest charged on the Convertible Unsecured Notes and the Unsecured Notes is as follows: (a) 5.75% in the case of the February 2016 Convertible Notes, (b) 5.125% in the case of the June 2016 Convertible Notes, (c) 4.875% in the case of the 2017 Convertible Notes, (d) 4.75% in the case of the 2018 Convertible Notes, (e) 7.00% in the case of the February 2022 Notes, (f) 5.875% in the case of the October 2022 Notes, (g) 7.75% in the case of the 2040 Notes and (h) 6.875% in the case of the 2047 Notes. The February 2016 Convertible Notes, the June 2016 Convertible Notes, the 2017 Convertible Notes and the 2018 Convertible Notes mature on February 1, 2016, June 1, 2016, March 15, 2017 and January 15, 2018, respectively. The February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes mature on February 15, 2022, October 1, 2022, October 15, 2040 and April 15, 2047, respectively. The supplement to this prospectus relating to an offering may more fully identify the use of the proceeds from such offering.

              We anticipate that substantially all of the net proceeds of an offering of securities pursuant to this prospectus and its related prospectus supplement will be used for the above purposes within three months of any such offering, depending on the availability of appropriate investment opportunities consistent with our investment objective, but no longer than within six months of any such offerings.

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              Our primary focus is to generate current income and capital appreciation through investments in first and second lien senior secured loans and mezzanine debt and, to a lesser extent, equity securities of eligible portfolio companies. In addition to such investments, we may invest up to 30% of our portfolio in non-qualifying assets, as permitted by the Investment Company Act. See "Regulation." Specifically, as part of this 30% basket, we may invest in entities that are not considered "eligible portfolio companies" (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act. Pending such investments, we will invest a portion of the net proceeds primarily in cash, cash equivalents, U.S. government securities and other high-quality short-term investments. These securities generally earn yields substantially lower than the income that we anticipate receiving once we are fully invested in accordance with our investment objective. As a result, we may not, for a time, be able to achieve our investment objective and/or we may need to, for a time, decrease the amount of any dividend that we may pay to our stockholders to a level that is substantially lower than the level that we expect to pay when the net proceeds of offerings are fully invested in accordance with our investment objective. If we do not realize yields in excess of our expenses, we may incur operating losses and the market price of our common stock and debt securities may decline. See "Regulation—Temporary Investments" for additional information about temporary investments we may make while waiting to make longer-term investments in pursuit of our investment objective.

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PRICE RANGE OF COMMON STOCK AND DISTRIBUTIONS

              Our common stock is traded on The NASDAQ Global Select Market under the symbol "ARCC." Our common stock has historically traded at prices both above and below our net asset value per share. It is not possible to predict whether our common stock will trade at, above or below net asset value. See "Risk Factors—Risks Relating to Offerings Pursuant to this Prospectus—Our shares of common stock have traded at a discount from net asset value and may do so again in the future, which could limit our ability to raise additional equity capital."

              The following table sets forth, for each fiscal quarter for the fiscal years ended December 31, 2011, 2012 and 2013, the net asset value per share of our common stock, the range of high and low closing sales prices of our common stock, the closing sales price as a premium (discount) to net asset value and the dividends or distributions declared by us. On April 25, 2013, the last reported closing sales price of our common stock on The NASDAQ Global Select Market was $17.76 per share, which represented a premium of approximately 10.7% to the net asset value per share reported by us as of December 31, 2012.

 
   
   
   
  High
Sales Price
Premium
(Discount)
to Net
Asset
Value(2)
  Low
Sales Price
Premium
(Discount)
to Net Asset
Value(2)
   
 
 
   
  Price Range   Cash
Dividend
Per
Share(3)
 
 
  Net
Asset
Value(1)
 
 
  High   Low  

Year ended December 31, 2011

                                     

First Quarter

  $ 15.45   $ 17.83   $ 16.08     15.4 %   4.1 % $ 0.35  

Second Quarter

  $ 15.28   $ 17.71   $ 15.70     15.9 %   2.7 % $ 0.35  

Third Quarter

  $ 15.13   $ 16.30   $ 13.07     7.7 %   (13.6 )% $ 0.35  

Fourth Quarter

  $ 15.34   $ 15.95   $ 13.26     4.0 %   (13.6 )% $ 0.36  

Year ended December 31, 2012

                                     

First Quarter

  $ 15.47   $ 16.70   $ 15.51     8.0 %   0.3 % $ 0.37  

Second Quarter

  $ 15.51   $ 16.55   $ 14.67     6.7 %   (5.4 )% $ 0.37  

Third Quarter

  $ 15.74   $ 17.68   $ 16.04     12.3 %   1.9 % $ 0.43 (4)

Fourth Quarter

  $ 16.04   $ 17.74   $ 16.08     10.6 %   0.2 % $ 0.43 (4)

Year ended December 31, 2013

                                     

First Quarter

    *   $ 18.54   $ 17.66     *     *   $ 0.38  

Second Quarter (through April 25, 2013)

    *   $ 18.02   $ 16.87     *     *     **  

(1)
Net asset value per share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low closing sales prices. The net asset values shown are based on outstanding shares at the end of the relevant quarter.

(2)
Calculated as the respective high or low closing sales price less net asset value, divided by net asset value (in each case, as of the applicable quarter).

(3)
Represents the dividend or distribution declared in the relevant quarter.

(4)
Consists of a quarterly dividend of $0.38 per share and an additional dividend of $0.05 per share.

*
Net asset value has not yet been calculated for this period.

**
Dividend has not yet been declared for this period.

              We currently intend to distribute dividends or make distributions to our stockholders on a quarterly basis out of assets legally available for distribution. We may also distribute additional

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dividends or make additional distributions to our stockholders from time to time. Our quarterly and additional dividends or distributions, if any, will be determined by our board of directors.

              The following table summarizes our dividends declared for the fiscal years ended December 31, 2011, 2012 and 2013:

Date Declared
  Record Date   Payment Date   Amount  

March 1, 2011

  March 15, 2011   March 31, 2011   $ 0.35  

May 3, 2011

  June 15, 2011   June 30, 2011   $ 0.35  

August 4, 2011

  September 15, 2011   September 30, 2011   $ 0.35  

November 8, 2011

  December 15, 2011   December 31, 2011   $ 0.36  
               

Total declared for 2011

          $ 1.41  
               

February 28, 2012

  March 15, 2012   March 30, 2012   $ 0.37  

May 8, 2012

  June 15, 2012   June 29, 2012   $ 0.37  

August 7, 2012

  September 14, 2012   September 28, 2012   $ 0.38  

August 7, 2012

  September 14, 2012   September 28, 2012   $ 0.05 (1)

November 5, 2012

  December 14, 2012   December 28, 2012   $ 0.38  

November 5, 2012

  December 14, 2012   December 28, 2012   $ 0.05 (1)
               

Total declared for 2012

          $ 1.60  
               

February 27, 2013

  March 15, 2013   March 29, 2013   $ 0.38  
               

Total declared for 2013

          $ 0.38  
               

(1)
Represents an additional dividend.

              Of the $1.60 per share in dividends declared during the year ended December 31, 2012, $1.56 per share was comprised of ordinary income and $0.04 per share was comprised of long-term capital gains.

              To maintain our status as a regulated investment company, or a RIC, under the Internal Revenue Code of 1986, as amended (the "Code"), we must timely distribute an amount equal to at least 90% of our investment company taxable income (as defined by the Code, which generally includes net ordinary income and net short term capital gains) to our stockholders. In addition, we generally will be required to pay an excise tax equal to 4% on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (i) 98% of our ordinary income recognized during a calendar year, (ii) 98.2% of our capital gain net income, as defined by the Code, recognized for the one year period ending October 31st in that calendar year and (iii) any income recognized, but not distributed, in preceding years. The taxable income on which we pay excise tax is generally distributed to our stockholders in the next tax year. Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income for distribution in the following year, and pay any applicable excise tax. For the years ended December 31, 2012 and 2011, we recorded an excise tax expense of $7.9 million and $6.6 million, respectively. We cannot assure you that we will achieve results that will permit the payment of any cash distributions. We maintain an "opt out" dividend reinvestment plan for our common stockholders. As a result, if we declare a cash dividend, stockholders' cash dividends will be automatically reinvested in additional shares of our common stock, unless they specifically "opt out" of the dividend reinvestment plan so as to receive cash dividends. See "Dividend Reinvestment Plan."

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RATIOS OF EARNINGS TO FIXED CHARGES

              For the years ended December 31, 2012, 2011, 2010, 2009 and 2008, the ratios of earnings to fixed charges of the Company, computed as set forth below, were as follows:

 
  For the
Year Ended
December 31,
2012
  For the
Year Ended
December 31,
2011
  For the
Year Ended
December 31,
2010
  For the
Year Ended
December 31,
2009
  For the
Year Ended
December 31,
2008
 

Earnings to Fixed Charges(1)

    4.6 (2)   3.7 (3)   9.8 (4)   9.4 (5)   (2.8 )

              For purposes of computing the ratios of earnings to fixed charges, earnings represent net increase in stockholders' equity resulting from operations plus (or minus) income tax expense (benefit) including excise tax expense plus fixed charges. Fixed charges include interest and credit facility fees expense and amortization of debt issuance costs.

(1)
Earnings include net realized and unrealized gains or losses and the capital gains incentive fee expense accrued in accordance with GAAP. Net realized and unrealized gains or losses and the capital gains incentive fee expense accrued in accordance with GAAP can vary substantially from period to period.

Excluding the net realized and unrealized gains or losses and the capital gains incentive fee expense accrued in accordance with GAAP, the earnings to fixed charges ratio would be 3.7 for the year ended December 31, 2012, 3.6 for the year ended December 31, 2011, 4.0 for the year ended December 31, 2010, 6.5 for the year ended December 31, 2009, and 4.5 for the year ended December 31, 2008.

(2)
Earnings for the year ended December 31, 2012 included a net realized loss on the extinguishment of debt of $2.7 million.

(3)
Earnings for the year ended December 31, 2011 included a net realized loss on the extinguishment of debt of $19.3 million.

(4)
Earnings for year ended December 31, 2010, included a one-time gain on the Allied Acquisition of $195.9 million, a net realized loss on the extinguishment of debt of $2.0 million and net realized gain on sale of other assets of $5.9 million.

(5)
Earnings for the year ended December 31, 2009, included a net realized gain on the extinguishment of debt of $26.5 million.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

              The information contained in this section should be read in conjunction with the "Selected Condensed Consolidated Financial Data of Ares Capital" and our financial statements and notes thereto appearing elsewhere in this prospectus or the accompanying prospectus supplement.

OVERVIEW

              We are a specialty finance company that is a closed-end, non-diversified management investment company incorporated in Maryland. We have elected to be regulated as a BDC under the Investment Company Act.

              We are externally managed by Ares Capital Management, a wholly owned subsidiary of Ares Management, a global alternative asset manager and an SEC-registered investment adviser, pursuant to our investment advisory and management agreement. Ares Operations, a wholly owned subsidiary of Ares Management, provides certain administrative and other services necessary for us to operate.

              Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first lien senior secured loans (including unitranche loans), second lien senior secured loans and mezzanine debt, which in some cases includes an equity component like warrants.

              To a lesser extent, we also make preferred and/or common equity investments, which have generally been non-control equity investments, of less than $20 million (usually in conjunction with a concurrent debt investment). However, we may increase the size or change the nature of these investments.

              As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in "qualifying assets," including securities and indebtedness of private U.S. companies and certain public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. We also may invest up to 30% of our portfolio in non-qualifying assets, as permitted by the Investment Company Act. Specifically, as part of this 30% basket, we may invest in entities that are not considered "eligible portfolio companies" (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act.

              We have elected to be treated as a RIC under the Code, and operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and timely distribute to our stockholders generally at least 90% of our investment company taxable income, as defined by the Code, for each year. Pursuant to this election, we generally will not have to pay corporate level taxes on any income that we distribute to our stockholders provided that we satisfy those requirements.

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PORTFOLIO AND INVESTMENT ACTIVITY

              The Company's investment activity for the years ended December 31, 2012, 2011 and 2010 is presented below (information presented herein is at amortized cost unless otherwise indicated).

 
  Year Ended December 31,  
(dollar amounts in millions)
  2012   2011   2010  

New investment commitments(1):

                   

New portfolio companies

  $ 1,794.7   $ 1,778.0   $ 774.3  

Existing portfolio companies(2)

    1,402.3     1,896.4     933.8  
               

Total new investment commitments

    3,197.0     3,674.4     1,708.1  

Less:

                   

Investment commitments exited

    2,614.5     2,603.1     1,644.5  
               

Net investment commitments

  $ 582.5   $ 1,071.3   $ 63.6  

Principal amount of investments funded:

                   

Senior term debt

  $ 2,686.4   $ 2,484.2   $ 1,376.4  

Subordinated Certificates of the SSLP(3)

    270.0     496.8     391.6  

Senior subordinated debt

    101.3     51.8     1,055.3  

Collateralized loan obligations

            166.1  

Preferred equity securities

        164.1     91.7  

Other equity securities

    103.9     41.2     295.4  

Commercial real estate

        0.9     41.2  
               

Total

  $ 3,161.6   $ 3,239.0   $ 3,417.7  

Principal amount of investments sold or repaid:

                   

Senior term debt

  $ 1,786.9   $ 1,607.5   $ 987.4  

Subordinated Certificates of the SSLP

    66.3         15.4  

Senior subordinated debt

    409.0     463.2     461.9  

Collateralized loan obligations

    55.5     166.3     6.8  

Preferred equity securities

    26.2     43.5     21.5  

Other equity securities

    126.0     166.1     61.9  

Commercial real estate

    13.0     21.6     1.0  
               

Total

  $ 2,482.9   $ 2,468.2   $ 1,555.9  

Number of new investment commitments(4)

    82     72     63  

Average new investment commitment amount

  $ 39.0   $ 51.0   $ 27.1  

Weighted average term for new investment commitments (in months)

    66     63     61  

Percentage of new investment commitments at floating rates

    88 %   94 %   71 %

Percentage of new investment commitments at fixed rates

    8 %   5 %   23 %

Weighted average yield of debt and other income producing securities(5):

                   

Funded during the period at fair value(6)

    9.9 %   10.9 %   13.1 %

Funded during the period at amortized cost

    9.9 %   10.9 %   13.2 %

Exited or repaid during the period at fair value(6)

    9.6 %   10.1 %   12.9 %

Exited or repaid during the period at amortized cost

    9.7 %   10.2 %   12.9 %

(1)
New investment commitments include new agreements to fund revolving credit facilities or delayed draw loans.

(2)
Includes investment commitments to the SSLP to make co-investments with GE in first lien senior secured loans of middle market companies of $270.0 million, $496.8 million and $391.6 million for the years ended December 31, 2012, 2011 and 2010, respectively.

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(3)
See "Senior Secured Loan Program" below and Note 4 to our consolidated financial statements for the year ended December 31, 2012 for more detail on the SSLP.

(4)
Number of new investment commitments represents each commitment to a particular portfolio company.

(5)
"Weighted average yield of debt and other income producing securities at fair value" is computed as the (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt and other income producing securities, divided by (b) total debt and other income producing securities at fair value. "Weighted average yield of debt and other income producing securities at amortized cost" is computed as the (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount earned on accruing debt and other income producing securities, divided by (b) total debt and other income producing securities at amortized cost.

(6)
Represents fair value for investments in the portfolio as of the most recent prior quarter end, if applicable.

              As of December 31, 2012 and 2011, our investments consisted of the following:

 
  As of December 31,  
 
  2012   2011  
(in millions)
  Amortized
Cost
  Fair
Value
  Amortized
Cost
  Fair
Value
 

Senior term debt

  $ 3,587.8   $ 3,555.1   $ 2,691.0   $ 2,671.1  

Subordinated Certificates of the SSLP(1)

    1,237.9     1,263.6     1,034.3     1,059.2  

Senior subordinated debt

    321.3     259.8     592.6     515.0  

Collateralized loan obligations

            55.5     54.0  

Preferred equity securities

    238.8     250.1     251.2     251.1  

Other equity securities

    430.4     584.1     463.9     527.0  

Commercial real estate

    7.3     11.9     20.2     17.1  
                   

Total

  $ 5,823.5   $ 5,924.6   $ 5,108.7   $ 5,094.5  
                   

(1)
The proceeds from these certificates were applied to co-investments with GE to fund first lien senior secured loans to 36 and 32 different borrowers as of December 31, 2012 and 2011, respectively.

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              The weighted average yields at fair value and amortized cost of the following portions of our portfolio as of December 31, 2012 and 2011 were as follows:

 
  As of December 31,  
 
  2012   2011  
 
  Amortized
Cost
  Fair
Value
  Amortized
Cost
  Fair
Value
 

Debt and other income producing securities

    11.4 %   11.3 %   12.1 %   12.0 %

Total portfolio

    10.1 %   10.0 %   10.4 %   10.4 %

Senior term debt

    9.5 %   9.6 %   10.5 %   10.5 %

First lien senior term debt

    9.0 %   9.0 %   9.6 %   9.7 %

Second lien senior term debt

    10.5 %   10.7 %   12.4 %   12.4 %

Subordinated Certificates of the SSLP(1)

    15.8 %   15.4 %   16.0 %   15.7 %

Senior subordinated debt

    11.7 %   14.5 %   10.3 %   11.9 %

Collateralized loan obligations

    %   %   8.8 %   9.1 %

Income producing equity securities (excluding collateralized loan obligations)

    9.9 %   8.8 %   10.4 %   10.0 %

(1)
The proceeds from these certificates were applied to co-investments with GE to fund first lien senior secured loans.

              Ares Capital Management, our investment adviser, employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our investment adviser grades the credit risk of all investments on a scale of 1 to 4 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors. Under this system, investments with a grade of 4 involve the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit. Investments graded 3 involve a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing as expected and the risk factors to our ability to ultimately recoup the cost of our investment are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a grade of 3. Investments graded 2 indicate that the risk to our ability to recoup the initial cost basis of such investment has increased materially since origination or acquisition, including as a result of factors such as declining performance and non-compliance with debt covenants; however, payments are generally not more than 120 days past due. An investment grade of 1 indicates that the risk to our ability to recoup the initial cost basis of such investment has substantially increased since origination or acquisition, and the portfolio company likely has materially declining performance. For debt investments with an investment grade of 1, most or all of the debt covenants are out of compliance and payments are substantially delinquent. For investments graded 1, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit. For investments graded 1 or 2, our investment adviser enhances its level of scrutiny over the monitoring of such portfolio company. Our investment adviser grades the investments in our portfolio at least each quarter and it is possible that the grade of a portfolio investment may be reduced or increased over time.

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              Set forth below is the grade distribution of our portfolio companies as of December 31, 2012 and 2011:

 
  As of December 31,  
 
  2012   2011  
(dollar amounts in millions)
  Fair
Value
  %   Number of
Companies
  %   Fair
Value
  %   Number of
Companies
  %  

Grade 1

  $ 75.1     1.3 %   9     5.9 % $ 77.1     1.5 %   9     6.4 %

Grade 2

    136.7     2.3 %   9     5.9 %   184.4     3.7 %   11     7.8 %

Grade 3

    5,108.8     86.2 %   121     79.7 %   4,265.5     83.7 %   110     78.0 %

Grade 4

    604.0     10.2 %   13     8.5 %   567.5     11.1 %   11     7.8 %
                                   

Total

  $ 5,924.6     100.0 %   152     100.0 % $ 5,094.5     100.0 %   141     100.0 %
                                   

              As of December 31, 2012 and 2011, the weighted average grade of the investments in our portfolio at fair value was 3.1 and 3.0, respectively.

              As of December 31, 2012, loans on non-accrual status represented 2.3% and 0.6% of the total investments at amortized cost and at fair value, respectively. As of December 31, 2011, loans on non-accrual status represented 3.3% and 0.9% of the total investments at amortized cost and at fair value, respectively.

Senior Secured Loan Program

              The Company co-invests in first lien senior secured loans of middle market companies with GE through an unconsolidated Delaware limited liability company, the Senior Secured Loan Fund LLC (d/b/a "The Senior Secured Loan Program") or the SSLP. The SSLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SSLP must be approved by an investment committee of the SSLP consisting of representatives of the Company and GE (with approval from a representative of each required). The Company provides capital to the SSLP in the form of subordinated certificates (the "SSLP Certificates").

              As of December 31, 2012 and 2011, the SSLP had available capital of $9.0 billion and $7.7 billion, respectively, of which approximately $6.3 billion and $5.0 billion in aggregate principal amount was funded at December 31, 2012 and 2011, respectively. As of December 31, 2012 and 2011, the Company had agreed to make available to the SSLP approximately $1.8 billion and $1.5 billion, respectively, of which approximately $1.2 billion and $1.0 billion was funded, respectively. Investment of any unfunded amount must still be approved by the investment committee of the SSLP as described above.

              As of December 31, 2012 and 2011, the SSLP had total assets of $6.3 billion and $5.1 billion, respectively. As of December 31, 2012 and 2011, GE's investment in the SSLP consisted of senior notes of $4.8 billion and $3.8 billion, respectively, and SSLP Certificates of $178 million and $149 million, respectively. The SSLP Certificates are junior in right of payment to the senior notes held by GE. As of December 31, 2012 and 2011, the Company and GE owned 87.5% and 12.5%, respectively, of the outstanding SSLP Certificates.

              As of December 31, 2012 and 2011, the SSLP's portfolio was comprised of all first lien senior secured loans to U.S. middle-market companies and none of these loans was on non-accrual status. The portfolio companies in the SSLP are in industries similar to the companies in the Company's portfolio.

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              Below is a summary of the SSLP's portfolio, followed by a listing of the individual first lien senior secured loans in the SSLP's portfolio as of December 31, 2012 and 2011:

 
  As of December 31,  
(dollar amounts in millions)
  2012   2011  

Total first lien senior secured loans(1)

  $ 5,998.1   $ 5,017.9  

Weighted average yield on first lien senior secured loans(2)

    8.0 %   8.2 %

Number of borrowers in the SSLP

    36     32  

Largest loan to a single borrower(1)

  $ 330.0   $ 300.0  

Total of five largest loans to borrowers(1)

  $ 1,441.4   $ 1,362.9  

(1)
At principal amount.

(2)
Computed as the (a) annual stated interest rate on accruing first lien senior secured loans, divided by (b) total first lien senior secured loans at principal amount.

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SSLP Loan Portfolio as of December 31, 2012

(dollar amounts in millions)
Portfolio Company
  Business Description   Maturity
Date
  Stated
Interest
Rate(1)
  Principal
Amount
  Fair
Value(2)
 

Access CIG, LLC(3)

  Records and information management services provider     10/2017     7.0 % $ 152.8   $ 152.8  

ADG, LLC

  Dental services     10/2016     8.8 %   199.4     199.4  

AMZ Products Merger Corporation

  Specialty chemicals manufacturer     12/2018     6.8 %   240.0     240.0  

BECO Holding Company, Inc.(5)

  Wholesale distributor of first response fire protection equipment and related parts     12/2017     8.3 %   160.0     160.0  

Cambridge International, Inc. 

  Manufacturer of custom designed and engineered metal products     4/2018     8.0 %   88.3     83.9  

CCS Group Holdings, LLC(5)

  Correctional facility healthcare operator     4/2016     8.0 %   142.8     142.8  

Chariot Acquisition, LLC

  Distributor and designer of aftermarket golf cart parts and accessories     1/2018     8.8 %   146.8     146.8  

CIBT Holdings, Inc.(5)

  Expedited travel document processing services     12/2017     8.5 %   146.4     146.4  

CT Technologies Intermediate Holdings, Inc. and CT Technologies Holdings LLC(3)(5)

  Healthcare analysis services     3/2017     7.8 %   284.9     273.5  

CWD, LLC

  Supplier of automotive aftermarket brake parts     3/2014     8.8 %   119.8     110.2  

Drayer Physical Therapy Institute, LLC

  Outpatient physical therapy provider     7/2018     7.5 %   138.1     138.1  

Driven Holdings, LLC(5)

  Automotive aftermarket car care franchisor     3/2017     7.0 %   160.4     160.4  

Excelligence Learning Corporation(5)

  Developer, manufacturer and retailer of educational products     8/2016     8.0 %   115.8     115.8  

Fleischmann's Vinegar Company, Inc. 

  Manufacturer and marketer of industrial vinegar     5/2016     8.9 %   59.6     59.6  

Fox Hill Holdings, LLC

  Operating company that develops middle market manufacturing and industrial distribution companies     12/2017     8.0 %   292.5     292.5  

III US Holdings, LLC

  Provider of library automation software and systems     3/2018     7.6 %   202.9     202.9  

Implus Footcare, LLC(5)

  Provider of footwear and other accessories     10/2016     9.5 %   178.0     178.0  

Instituto de Banca y Comercio, Inc. & Leeds IV Advisors, Inc.(5)

  Private school operator     6/2015     10.5 %   165.6     165.6  

Intermedix Corporation(4)

  Revenue cycle management provider to the emergency healthcare industry     12/2018     6.3 %   330.0     330.0  

LJSS Acquisition, Inc. 

  Fluid power distribution company in the industrial and mobile equipment markets     9/2017     6.8 %   163.9     163.9  

MWI Holdings, Inc.(3)

  Highly engineered springs, fasteners, and other precision components     6/2017     8.0 %   251.2     251.2  

Nordco, Inc. 

  Designer and manufacturer of railroad maintenance-of-way machinery     6/2016     7.0 %   113.2     113.2  

Oak Parent, Inc.(3)

  Manufacturer of athletic apparel     4/2018     8.0 %   282.8     282.8  

Opinionology, LLC and Survey Sampling International LLC

  Provider of outsourced data collection to the market research industry     7/2017     8.5 %   152.3     152.3  

Penn Detroit Diesel Allison, LLC

  Distributor of new equipment and aftermarket parts to the heavy-duty truck industry     12/2016     9.0 %   65.3     65.3  

PetroChoice Holdings, LLC

  Provider of lubrication solutions     1/2017     10.0 %   162.4     162.4  

Power Buyer, LLC

  Provider of emergency maintenance services for power transmission, distribution, and substation infrastructure     12/2018     8.8 %   208.0     208.0  

Powersport Auctioneer Holdings, LLC(5)

  Powersport vehicle auction operator     12/2016     8.5 %   40.7     40.7  

Pregis Corporation, Pregis Intellipack Corp. and Pregis Innovative Packaging Inc.(3)

  Provider of highly-customized and tailored protective packaging solutions     3/2017     7.8 %   125.9     125.9  

PSSI Holdings, LLC

  Provider of mission-critical outsourced cleaning and sanitation services to the food processing industry     6/2017     6.8 %   161.7     161.7  

Selig Sealing Products, Inc. 

  Manufacturer of container sealing products for rigid packaging applications     7/2018     7.8 %   169.6     169.6  

Singer Sewing Company

  Manufacturer of consumer sewing machines     6/2017     7.3 %   199.0     199.0  

Strategic Partners, Inc. 

  Designer, manufacturer and distributor of medical uniforms     8/2018     7.8 %   234.4     234.4  

Talent Partners G.P. and Print Payroll Services, G.P. 

  Provider of technology-enabled payroll to the advertising industry     10/2017     8.0 %   65.5     65.5  

The Teaching Company, LLC and The Teaching Company Holdings, Inc.(3)(5)

  Education publications provider     3/2017     9.0 %   113.9     113.9  

WB Merger Sub, Inc. 

  Importer, distributor and developer of premium wine and spirits     12/2016     9.0 %   164.2     164.2  
                           

                  $ 5,998.1   $ 5,972.7  
                           

(1)
Represents the weighted average annual stated interest rate as of December 31, 2012. All interest rates are payable in cash.

(2)
Represents the fair value in accordance with ASC 820-10. The determination of such fair value is not included in the Company's board of directors valuation process described elsewhere herein.

(3)
The Company also holds a portion of the first lien senior secured loan in this portfolio company.

(4)
The Company also holds a second lien senior secured loan in the portfolio company.

(5)
The Company holds an equity investment in this portfolio company.

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SSLP Loan Portfolio as of December 31, 2011

(dollar amounts in millions)
Portfolio Company
  Business Description   Maturity
Date
  Stated
Interest
Rate(1)
  Principal
Amount
  Fair
Value(2)
 

ADG, LLC

  Dental services     10/2016     8.8 % $ 176.4   $ 176.4  

AMZ Products Merger Corporation

  Specialty chemicals manufacturer     6/2014     7.8 %   156.6     156.6  

Anthony, Inc. and Anthony Holdings, Inc. 

  Manufacturer of refrigeration glass doors and related products     6/2017     7.1 %   243.8     243.8  

Augusta Sportswear, Inc.(3)

  Manufacturer of athletic apparel     7/2015     8.5 %   239.9     239.9  

BECO Holding Company, Inc.(5)

  Wholesale distributor of first response fire protection equipment and related parts     7/2015     9.0 %   116.0     116.0  

Cambridge International, Inc. 

  Manufacturer of custom designed and engineered metal products     12/2015     8.8 %   73.7     73.7  

CCS Group Holdings, LLC(5)

  Correctional facility healthcare operator     4/2016     8.0 %   109.9     109.9  

CIBT Holdings, Inc.(5)

  Expedited travel document processing services     12/2017     9.3 %   133.0     133.0  

CWD, LLC

  Supplier of automotive aftermarket brake parts     3/2014     8.8 %   123.8     123.8  

CT Technologies Intermediate Holdings, Inc. and CT Technologies Holdings LLC (3)(5)

  Healthcare analysis services     3/2017     7.8 %   288.5     274.1  

Driven Holdings, LLC(5)

  Automotive aftermarket car care franchisor     12/2016     8.5 %   170.0     170.0  

Excelligence Learning Corporation(5)

  Developer, manufacturer and retailer of educational products     8/2016     8.0 %   121.0     121.0  

Fleischmann's Vinegar Company, Inc. 

  Manufacturer and marketer of industrial vinegar     5/2016     8.8 %   62.3     62.3  

Fox Hill Holdings, LLC

  Operating company that develops middle market manufacturing and industrial distribution companies     12/2017     8.8 %   300.0     300.0  

Huddle House, Inc.(4)(5)

  Restaurant owner and operator     6/2013     11.0 %(6)   58.2     58.2  

Implus Footcare, LLC(5)

  Provider of footwear and other accessories     10/2016     9.5 %   179.8     179.8  

Industrial Air Tool, L.P. 

  Industrial products     6/2014     7.5 %   34.1     34.1  

Instituto de Banca y Comercio, Inc. & Leeds IV Advisors, Inc.(5)

  Private school operator     6/2015     10.5 %   173.8     173.8  

Intermedix Corporation

  Revenue cycle management provider to the emergency healthcare industry     8/2016     6.0 %   225.9     225.9  

LJSS Acquisition, Inc. 

  Fluid power distribution company in the industrial and mobile equipment markets     10/2017     8.8 %   167.0     167.0  

MWI Holdings, Inc.(3)

  Highly engineered springs, fasteners, and other precision components     6/2017     8.0 %   253.7     253.7  

Nivel Parts and Manufacturing Co., LLC

  Provider of golf car aftermarket parts and accessories     2/2016     8.0 %   88.0     88.0  

Nordco, Inc. 

  Designer and manufacturer of railroad maintenance-of-way machinery     6/2016     7.0 %   119.4     119.4  

Opinionology, LLC and Survey Sampling International LLC

  Provider of outsourced data collection to the market research industry     7/2017     9.0 %   158.5     158.5  

Penn Detroit Diesel Allison, LLC

  Distributor of new equipment and aftermarket parts to the heavy-duty truck industry     12/2016     9.0 %   66.0     66.0  

PG Mergersub, Inc. and PGA Holdings, Inc.(3)(4)(5)

  Provider of patient surveys, management reports and national databases for the integrated healthcare delivery system     11/2015     6.8 %   267.3     267.3  

Powersport Auctioneer Holdings, LLC

  Powersport vehicle auction operator     12/2016     8.8 %   74.5     74.5  

PSSI Holdings, LLC

  Provider of mission-critical outsourced cleaning and sanitation services to the food processing industry     6/2017     6.8 %   158.8     158.8  

The Teaching Company, LLC and The Teaching Company Holdings, Inc.(5)

  Education publications provider     3/2017     9.0 %   116.2     116.2  

United Central Industrial Supply Company, LLC

  Provider of mining supplies and services to the U.S. underground coal mining industry     10/2015     6.3 %   152.5     152.5  

WB Merger Sub, Inc. 

  Importer, distributor and developer of premium wine and spirits     12/2016     9.0 %   155.9     155.9  

WP CPP Holdings, LLC(3)

  Precision engineered castings manufacturer     10/2017     8.5 %   253.4     248.3  
                           

                  $ 5,017.9   $ 4,998.4  
                           

(1)
Represents the weighted average annual stated interest rate as of December 31, 2011. Unless otherwise stated, all interest rates are payable in cash.

(2)
Represents the fair value in accordance with ASC 820-10. The determination of such fair value is not included in the Company's board of directors valuation process described elsewhere herein.

(3)
The Company also holds a portion of the first lien senior secured loan in this portfolio company.

(4)
The Company holds a senior subordinated loan in this portfolio company.

(5)
The Company holds an equity investment in this portfolio company.

(6)
Consists of 9.0% interest payable in cash and 2.0% of payment-in-kind interest.

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              The amortized cost and fair value of the SSLP Certificates held by the Company was $1.2 billion and $1.3 billion, respectively, as of December 31, 2012, and $1.0 billion and $1.1 billion, respectively, as of December 31, 2011. The SSLP Certificates pay a weighted average contractual coupon of three month LIBOR plus approximately 8.0% and also entitle the holders thereof to receive a portion of the excess cash flow from the underlying loan portfolio, which may result in a return to the holders of the SSLP Certificates that is greater than both the contractual coupon on the SSLP Certificates as well as the weighted average yield on the SSLP's portfolio of 8.0% and 8.2% at December 31, 2012 and 2011, respectively. The Company's yield on its investment in the SSLP at fair value was 15.4% and 15.7% as of December 31, 2012 and 2011, respectively. For the years ended December 31, 2012, 2011 and 2010, the Company earned interest income of $185 million, $118 million and $50 million, respectively, from its investment in the SSLP Certificates.

              The Company is also entitled to certain fees in connection with the SSLP. For the years ended December 31, 2012, 2011 and 2010, in connection with the SSLP, the Company earned capital structuring service fees and sourcing, management and other fees totaling $58 million, $55 million and $36 million, respectively.

              Effective March 30, 2012, Ares Capital Management assumed from the Company the role of co-manager of the SSLP. However, this change did not impact the Company's economics in respect of its participation in the SSLP and Ares Capital Management does not receive any remuneration in respect of its co-manager role.

              Below is certain summarized financial information for the SSLP as of and for the years ended December 31, 2012 and 2011:

 
  For the Years Ended December 31,  
(in millions)
  2012   2011  

Selected Balance Sheet Information:

             

Investments in loans receivable, net of discount for loan origination fees

  $ 5,952.3   $ 4,981.3  

Cash and other assets

  $ 369.2   $ 126.4  

Total assets

  $ 6,321.5   $ 5,107.7  

Senior notes

  $ 4,840.4   $ 3,846.2  

Other liabilities

  $ 46.9   $ 66.7  

Total liabilities

  $ 4,887.3   $ 3,912.9  

Subordinated certificates and members' equity

  $ 1,434.2   $ 1,194.8  

Total liabilities and members' capital

  $ 6,321.5   $ 5,107.7  

Selected Statement of Operations Information:

             

Total revenues

  $ 479.4   $ 284.8  

Total expenses

  $ 258.7   $ 155.7  

Net income

  $ 220.7   $ 129.1  

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RESULTS OF OPERATIONS

For the years ended December 31, 2012, 2011 and 2010

              Operating results for the years ended December 31, 2012, 2011 and 2010 are as follows:

 
  For the Years Ended
December 31,
 
(in millions)
  2012   2011   2010  

Total investment income

  $ 748.0   $ 634.5   $ 483.4  

Total expenses

    387.9     344.6     262.2  
               

Net investment income before income taxes

    360.1     289.9     221.2  

Income tax expense, including excise tax

    11.2     7.5     5.4  
               

Net investment income

    348.9     282.4     215.8  

Net realized gains on investments

    46.7     96.6     45.5  

Net unrealized gains (losses) on investments

    115.3     (40.2 )   230.7  

Gain from the acquisition of Allied Capital

            195.9  

Realized losses on extinguishment of debt

    (2.7 )   (19.3 )   (2.0 )

Realized gain on sale of other assets

            5.9  
               

Net increase in stockholders' equity resulting from operations

  $ 508.2   $ 319.5   $ 691.8  
               

Investment Income

 
  For the Years Ended
December 31,
 
(in millions)
  2012   2011   2010  

Interest income from investments

  $ 571.5   $ 473.2   $ 393.6  

Capital structuring service fees

    102.1     97.4     54.7  

Dividend income

    39.7     38.4     14.4  

Management and other fees

    18.9     16.7     14.4  

Other income

    15.8     8.8     6.3  
               

Total investment income

  $ 748.0   $ 634.5   $ 483.4  
               

              The increase in interest income from investments for the year ended December 31, 2012 from the comparable period in 2011 was primarily due to the increase in the size of the portfolio, which increased from an average of $4.6 billion at amortized cost for the year ended December 31, 2011 to an average of $5.5 billion at amortized cost for the comparable period in 2012. Even though new investment commitments decreased from $3.7 billion for the year ended December 31, 2011 to $3.2 billion for the comparable period in 2012, capital structuring service fees increased for the year ended December 31, 2012 from the comparable period in 2011 primarily due to the increase in the average capital structuring service fees received on new investments, which increased from 2.7% in 2011 to 3.2% in 2012. For the year ended December 31, 2012, dividend income included $19.9 million from the Company's investment in IHAM as well as $2.2 million of dividend income that was non-recurring in nature from non-income producing equity securities. The increase in other income for the year ended December 31, 2012 from the comparable period in 2011 was primarily attributable to higher amendment, letter of credit and agency fees.

              The increase in interest income from investments for the year ended December 31, 2011 from the comparable period in 2010 was primarily due to the increase in the size of the portfolio, which increased from an average of $3.7 billion at amortized cost for the year ended December 31, 2010 to

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an average of $4.6 billion at amortized cost from the comparable period in 2011. The increase in capital structuring service fees for the year ended December 31, 2011 from the comparable period in 2010 was primarily due to the increase in new investment commitments, which increased from $1.7 billion for the year ended December 31, 2010 to $3.7 billion for the comparable period in 2011. The increase in dividend income for the year ended December 31, 2011 from the comparable period in 2010 is primarily attributable to the increase in dividend income from IHAM, which was $7.3 million for the year ended December 31, 2010 and $19.0 million for the comparable period in 2011, which resulted from the growth of and increased earnings of IHAM. In addition, there was an increase in dividends from certain portfolio companies in which we have an equity investment. Total dividend income for the year ended December 31, 2011 included $10.3 million of dividend income that was non-recurring in nature from non-income producing equity securities.

Operating Expenses

 
  For the Years Ended
December 31,
 
(in millions)
  2012   2011   2010  

Interest and credit facility fees

  $ 143.0   $ 122.5   $ 79.3  

Incentive fees related to pre-incentive fee net investment income

    95.2     79.0     61.3  

Incentive fees related to capital gains per GAAP

    31.9     33.3     15.6  

Base management fees

    86.2     71.6     52.0  

Professional fees

    12.0     16.7     29.9  

Administrative fees

    9.3     9.5     10.9  

Other general and administrative

    10.3     12.0     13.2  
               

Total operating expenses

  $ 387.9   $ 344.6   $ 262.2  
               

              Interest and credit facility fees for the years ended December 31, 2012, 2011 and 2010, were comprised of the following:

 
  For the Years Ended
December 31,
 
(in millions)
  2012   2011   2010  

Stated interest expense

  $ 113.1   $ 92.2   $ 57.7  

Facility fees

    5.6     6.1     4.6  

Amortization of debt issuance costs

    13.0     13.2     8.8  

Accretion of discount on notes payable

    11.3     11.0     8.2  
               

Total interest and credit facility fees expense

  $ 143.0   $ 122.5   $ 79.3  
               

              Stated interest expense for the year ended December 31, 2012 increased from the comparable period in 2011 due to the increase in the average principal amount of debt outstanding and an increase in our weighted average stated interest rate of our debt. For the year ended December 31, 2012, our average principal debt outstanding was $2.2 billion as compared to $1.8 billion for the comparable period in 2011, and the weighted average stated interest rate on our debt was 5.2% for the year ended December 31, 2012 as compared to 5.1% for the comparable period in 2011.

              Stated interest expense for the year ended December 31, 2011 increased from the comparable period in 2010 due to the increase in our average principal debt outstanding and an increase in our weighted average stated interest rate of our debt. For the year ended December 31, 2011, our average principal debt outstanding was $1.8 billion as compared to $1.5 billion for the comparable period in 2010, and the weighted average stated interest rate on our debt was 5.1% as compared to 3.9% for the

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comparable period in 2010. Our weighted average stated interest rate of our debt for the year ended December 31, 2011 increased from 2010 due to having higher amounts of unsecured indebtedness, with longer durations to maturity and higher stated interest rates, outstanding during the comparable period in 2011. Amortization of debt issuance costs for the year ended December 31, 2011 increased from the comparable period in 2010 primarily due to the debt issuance costs associated with convertible notes that we issued in early 2011.

              The increase in base management fees and incentive fees related to pre-incentive fee net investment income for the year ended December 31, 2012 from the comparable period in 2011 and for the year ended December 31, 2011 from the comparable period in 2010 were both primarily due to the increase in the size of the portfolio and in the case of incentive fees, the related increase in pre-incentive fee net investment income.

              For the year ended December 31, 2012, 2011 and 2010 the capital gains incentive fee accrual calculated in accordance with GAAP was $31.9 million, $33.3 million and $15.6 million, respectively. As a result of an amendment to the capital gains portion of the incentive fee under our investment advisory and management agreement that was approved on June 6, 2011 (the "Capital Gains Amendment"), we accrued $26.0 million of capital gains incentive fees in accordance with GAAP for the year ended December 31, 2011 as a result of the application of the Capital Gains Amendment with respect to the assets purchased in the Allied Acquisition. The capital gains incentive fees accrued under GAAP includes an accrual related to unrealized capital appreciation, whereas the Capital Gains Fee actually payable under our investment advisory and management agreement does not. There can be no assurance that such unrealized capital appreciation will be realized in the future. The accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. As of December 31, 2012, the total capital gains incentive fee accrual calculated in accordance with GAAP was $80.8 million (included in management and incentive fees payable in the consolidated balance sheet). However, the Capital Gains Fee actually payable under our investment advisory and management agreement for the year ended December 31, 2012 was $11.5 million. For the years ended December 31, 2011 and 2010, there was no Capital Gains Fee payable under our investment advisory and management agreement.

              See Note 3 to the Company's consolidated financial statements for the year ended December 31, 2012 for more information on the incentive and base management fees.

              Professional fees include legal, accounting, valuation and other professional fees incurred related to the management of the Company. The decrease in professional fees for the year ended December 31, 2012 from the comparable period in 2011 as well as the decrease from the year ended December 31, 2011 from the comparable period in 2010 primarily resulted from declines in professional fees related to the Allied Acquisition following its completion in 2010 and having substantially completed the integration of Allied Capital by early 2011. Administrative fees represent fees paid to Ares Operations for our allocable portion of overhead and other expenses incurred by Ares Operations in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our executive officers and their respective staffs. Other general and administrative expenses include rent, insurance, depreciation, director's fees and other costs.

Income Tax Expense, Including Excise Tax

              The Company has elected to be treated as a RIC under the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must, among other things, timely distribute to its stockholders generally at least 90% of its investment company taxable income, as defined by the Code, for each year. In order to maintain its RIC status, the

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Company, among other things, has made and intends to continue to make the requisite distributions to its stockholders which will generally relieve the Company from U.S. federal income taxes.

              Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year dividend distributions from such current year taxable income into the next tax year and pay a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, the Company accrues excise tax on estimated excess taxable income as such taxable income is earned. For the years ended December 31, 2012, 2011 and 2010, a net expense of $7.9 million, $6.6 million and $2.2 million was recorded for U.S. federal excise tax, respectively.

              Certain of our consolidated subsidiaries are subject to U.S. federal and state income taxes. For the years ended December 31, 2012, 2011 and 2010, we recorded a tax expense of approximately $3.2 million, $0.9 million and $3.2 million, respectively, for these subsidiaries.

Net Realized Gains/Losses

              During the year ended December 31, 2012, the Company had $2.5 billion of sales, repayments or exits of investments resulting in $46.7 million of net realized gains. These sales, repayments or exits included $256.9 million of investments sold to IHAM and certain vehicles managed by IHAM. A net realized gain of $2.3 million was recorded on these transactions. See Note 14 to the Company's consolidated financial statements for the year ended December 31, 2012 for more detail on IHAM and its managed vehicles. Net realized gains of $46.7 million on investments were comprised of $172.0 million of gross realized gains and $125.3 million of gross realized losses. Additionally, during the year ended December 31, 2012, in connection with the repayment in full of the $60 million aggregate principal amount of the Company's asset-backed notes (the "CLO Notes") issued under its 2006 debt securitization (the "Debt Securitization") ahead of their scheduled maturities, $2.7 million of unamortized debt issuance costs were expensed and recorded as a realized loss on the extinguishment of debt.

              The realized gains and losses on investments during the year ended December 31, 2012 consisted of the following:

(in millions)
Portfolio Company
  Net Realized
Gains (Losses)
 

Reed Group, Ltd. 

  $ 41.5  

Stag-Parkway, Inc. 

    30.0  

R3 Education, Inc. and EIC Acquisitions Corp. 

    18.3  

Savers, Inc. and SAI Acquisition Corporation

    15.2  

BenefitMall Holdings Inc. 

    12.5  

Things Remembered Inc. and TRM Holdings Corporation

    9.6  

Sunquest Information Systems, Inc. 

    9.1  

Norwesco

    5.7  

OTG Management, Inc. 

    4.0  

Crescent Hotels & Resorts, LLC and affiliates

    (5.5 )

LVCG Holdings LLC

    (6.6 )

Direct Buy Holdings, Inc. and Direct Buy Investors, LP

    (8.3 )

Aquila Binks Forest Development, LLC

    (9.5 )

Making Memories Wholesale, Inc. 

    (12.3 )

Firstlight Financial Corporation

    (26.0 )

Prommis Solutions, LLC

    (46.8 )

Other, net

    15.8  
       

Total (net)

  $ 46.7  
       

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              During the year ended December 31, 2011, the Company had $2.5 billion of sales, repayments or exits of investments resulting in $96.6 million of net realized gains. These sales, repayments or exits included $261.3 million of investments sold to IHAM or certain vehicles managed by IHAM. A net realized gain of $0.1 million was recorded on these transactions. Net realized gains of $96.6 million on investments were comprised of $249.1 million of gross realized gains and $152.5 million of gross realized losses. Additionally, during the year ended December 31, 2011, in connection with the redemptions of all of the Company's outstanding 6.000% notes due on April 1, 2012 (the "2012 Notes") and all the Company's outstanding 6.625% notes due on July 15, 2011 (the "2011 Notes"), the Company recognized a realized loss on the extinguishment of debt of $19.3 million.

              The realized gains and losses on investments during the year ended December 31, 2011 consisted of the following:

(in millions)
Portfolio Company
  Net Realized
Gains (Losses)
 

Reflexite Corporation

  $ 40.9  

DSI Renal, Inc. 

    27.5  

Callidus Debt Partners CLO Fund VI, Ltd. 

    23.9  

Industrial Container Services, LLC

    19.9  

Dryden XVIII Leveraged Loan 2007 Limited

    19.3  

Penn Detroit Diesel Allison, LLC

    18.4  

Callidus MAPS CLO Fund I LLC

    15.0  

Callidus Debt Partners CLO Fund VII, Ltd. 

    10.8  

Callidus MAPS CLO Fund II, Ltd. 

    8.2  

Callidus Debt Partners CLO Fund IV, Ltd. 

    8.0  

Callidus Debt Partners CLO Fund V, Ltd. 

    5.7  

Border Foods, Inc. 

    5.2  

Driven Brands, Inc. 

    4.5  

Callidus Debt Partners CLO Fund III, Ltd. 

    4.4  

Sigma International Group, Inc. 

    (4.3 )

AWTP, LLC

    (7.6 )

Universal Trailer Corporation

    (7.9 )

HB&G Building Products, Inc. 

    (9.1 )

Summit Business Media, LLC

    (10.1 )

Wastequip, Inc. 

    (10.2 )

Coverall North America, Inc. 

    (12.3 )

Primis Marketing Group, Inc. 

    (14.1 )

Cook Inlet Alternative Risk, LLC

    (15.7 )

Direct Buy Holdings, Inc. 

    (17.7 )

MPBP Holdings, Inc. 

    (27.7 )

Other, net

    21.6  
       

Total (net)

  $ 96.6  
       

              During the year ended December 31, 2010, the Company had $1.6 billion of sales, repayments or exits of investments resulting in $45.5 million of net realized gains. These sales, repayments or exits included $113.1 million of investments sold to IHAM or certain vehicles managed by IHAM. A net realized loss of $1.3 million was recorded on these transactions. Net realized gains of $45.5 million on investments were comprised of $64.6 million of gross realized gains and $19.1 million of gross realized losses. Additionally, during the year ended December 31, 2010, the Company purchased $19.4 million aggregate principal amount of the 2011 Notes and $34.4 million aggregate principal amount of the 2012 Notes. As a result of these transactions, the Company recognized a realized loss on the extinguishment of debt of $2.0 million.

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              The realized gains and losses on investments during the year ended December 31, 2010 consisted of the following:

(in millions)
Portfolio Company
  Net Realized
Gains (Losses)
 

Air Medical Group Holdings, LLC

  $ 14.9  

Bumble Bee Foods, LLC

    6.1  

Growing Family, Inc. 

    (7.7 )

Other, net

    32.2  
       

Total (net)

  $ 45.5  
       

Net Unrealized Gains/Losses

              We value our portfolio investments quarterly and the changes in value are recorded as unrealized gains or losses. Net unrealized gains and losses for the Company's portfolio for the years ended December 31, 2012, 2011 and 2010, were comprised of the following:

 
  For the Years Ended
December 31,
 
(in millions)
  2012   2011   2010  

Unrealized appreciation

  $ 151.0   $ 144.1   $ 317.5  

Unrealized depreciation

    (126.7 )   (205.1 )   (85.3 )

Net unrealized (appreciation) depreciation reversed related to net realized gains or losses(1)

    91.0     20.8     (1.5 )
               

Total net unrealized gains (losses) from investments

  $ 115.3   $ (40.2 ) $ 230.7  
               

(1)
The net unrealized (appreciation) depreciation reversed related to net realized gains or losses represents the unrealized appreciation or depreciation recorded on the related asset at the end of the prior period.

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              The changes in unrealized appreciation and depreciation during the year ended December 31, 2012 consisted of the following:

(in millions)
Portfolio Company
  Net Unrealized
Appreciation
(Depreciation)
 

Ivy Hill Asset Management, L.P. 

  $ 41.6  

ADF Restaurant Group, LLC

    12.2  

R3 Education, Inc. 

    6.9  

Performant Financial Corporation

    6.5  

Tradesmen International, Inc. 

    6.5  

AWTP, LLC

    6.2  

Financial Pacific Company

    6.0  

ELC Acquisition Corp. 

    5.1  

The Dwyer Group

    5.0  

Campus Management Corp. 

    (4.5 )

Community Education Centers, Inc. 

    (4.6 )

Matrixx Initiatives, Inc. 

    (4.8 )

HCP Acquisition Holdings, LLC

    (6.2 )

UL Holding Co., LLC

    (7.0 )

RE Community Holdings II, Inc. 

    (7.3 )

American Broadband Communications, LLC

    (8.5 )

Orion Foods, LLC

    (10.4 )

eInstruction Corporation

    (16.7 )

MVL Group, Inc

    (27.9 )

Other, net

    26.2  
       

Total (net)

  $ 24.3  
       

              The changes in unrealized appreciation and depreciation during the year ended December 31, 2011 consisted of the following:

(in millions)
Portfolio Company
  Net Unrealized
Appreciation
(Depreciation)
 

Ivy Hill Asset Management, L.P. 

  $ 48.9  

Firstlight Financial Corporation

    15.4  

BenefitMall Holdings, Inc. 

    9.5  

Things Remembered Inc. 

    5.5  

American Broadband Holding Company

    5.3  

Insight Pharmaceuticals Corporation

    4.9  

Savers, Inc. 

    4.9  

The Step2 Company, LLC

    (4.5 )

Direct Buy Holdings, Inc. 

    (5.6 )

VSS-Tranzact Holdings, LLC

    (6.3 )

Orion Foods, LLC

    (6.8 )

Making Memories Wholesale, Inc. 

    (7.0 )

Reed Group, Ltd. 

    (8.3 )

CitiPostal Inc. 

    (11.0 )

Pillar Processing, LLC

    (12.6 )

Ciena Capital LLC

    (27.0 )

eInstruction Corporation

    (27.9 )

Prommis Solutions, LLC

    (43.2 )

Other, net

    4.8  
       

Total (net)

  $ (61.0 )
       

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              The changes in unrealized appreciation and depreciation during the year ended December 31, 2010 consisted of the following:

(in millions)
Portfolio Company
  Net Unrealized
Appreciation
(Depreciation)
 

DSI Renal Inc. 

  $ 24.7  

Senior Secured Loan Fund LLC

    24.3  

Ivy Hill Asset Management, L.P. 

    21.6  

R3 Education, Inc. 

    16.3  

Stag-Parkway, Inc. 

    15.5  

Callidus Debt Partners CDO Fund VI, Ltd. 

    12.7  

Hot Stuff Foods, LLC

    11.3  

Things Remembered, Inc. 

    11.1  

Dryden XVIII Leveraged Loan 2007 Limited

    8.2  

Vantage Oncology, Inc. 

    7.8  

Tradesmen International, Inc. 

    7.7  

Industrial Container Services, LLC

    7.0  

Callidus Debt Partners CDO Fund VII, Ltd. 

    7.0  

S.B. Restaurant Company

    6.8  

Callidus MAPS CLO Fund I, Ltd. 

    6.2  

Reflexite Corporation

    5.9  

Callidus MAPS CLO Fund II, Ltd. 

    5.7  

Component Hardware Group, Inc. 

    5.5  

Woodstream Corporation

    5.2  

American Broadband Holding Company

    4.8  

Callidus Debt Partners CDO Fund IV, Ltd. 

    4.7  

Direct Buy Holdings, Inc. 

    4.2  

The Step2Company, LLC

    4.0  

MPBP Holdings, Inc. 

    (4.7 )

Reed Group, Ltd. 

    (5.6 )

Ciena Capital LLC

    (6.1 )

Aquila Binks Forest Development, LLC

    (6.5 )

ADF Restaurant Group, LLC

    (6.7 )

Coverall North America, Inc. 

    (7.6 )

Other, net

    41.2  
       

Total (net)

  $ 232.2  
       

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

              The Company's liquidity and capital resources are generated primarily from the net proceeds of public offerings of equity and debt securities, advances from the Facilities, net proceeds from the issuance of other securities, including convertible notes, as well as cash flows from operations.

              As of December 31, 2012, the Company had $269.0 million in cash and cash equivalents and $2.2 billion in total debt outstanding at carrying value ($2.3 billion at principal amount). Subject to leverage and borrowing base restrictions, the Company had approximately $1.6 billion available for additional borrowings under the Facilities as of December 31, 2012.

              We may from time to time seek to retire or repurchase our common stock through cash purchases, as well as retire, cancel or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. Such repurchases

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or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. The amounts involved may be material. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including unsecured debt and/or debt securities convertible into common stock. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. In accordance with the Investment Company Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the Investment Company Act, is at least 200% after such borrowing.

Equity Issuances

              The following table summarizes the total shares issued and proceeds we received in underwritten public offerings of our common stock net of underwriting discounts and offering costs for the years ended December 31, 2012 and 2010. There were no sales of our equity securities during the year ended December 31, 2011.

(in millions, except per share data)
  Shares
issued
  Offering
price per
share
  Proceeds net of
underwriting
discounts
and offering costs
 

2012

                   

August 2012 public offering

    25.9   $ 16.55 (1) $ 427.6  

January 2012 public offering

    16.4   $ 15.41 (2) $ 252.4  
                 

Total for the year ended December 31, 2012

    42.3         $ 680.0  

2010

                   

November 2010 public offering

    11.5   $ 16.50   $ 180.6  

February 2010 public offering

    23.0   $ 12.75   $ 277.2  
                 

Total for the year ended December 31, 2010

    34.5         $ 457.8  

(1)
The shares were sold to the underwriters for a price of $16.55 per share, which the underwriters were then permitted to sell at variable prices to the public.

(2)
The shares were sold to the underwriters for a price of $15.41 per share, which the underwriters were then permitted to sell at variable prices to the public.

              The Company used the net proceeds from these public equity offerings in 2012 and 2010 to repay outstanding debt and for general corporate purposes, which included funding investments in accordance with our investment objective.

              As of December 31, 2012, total equity market capitalization for the Company was $4.4 billion compared to $3.2 billion as of December 31, 2011.

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Debt Capital Activities

              Our debt obligations consisted of the following as of December 31, 2012 and 2011:

 
  As of December 31,  
 
  2012   2011  
(in millions)
  Total
Aggregate
Principal
Amount
Committed/
Outstanding(1)
  Principal
Amount
Outstanding
  Carrying
Value
  Total
Aggregate
Principal
Amount
Committed/
Outstanding(1)
  Principal
Amount
Outstanding
  Carrying
Value
 

Revolving Credit Facility

  $ 900.0 (2) $   $   $ 810.0   $ 395.0   $ 395.0  

Revolving Funding Facility

    620.0 (3)   300.0     300.0     500.0     463.0     463.0  

SMBC Funding Facility

    400.0                      

Debt Securitization

                77.5     77.5     77.5  

February 2016 Convertible Notes

    575.0     575.0     548.5 (4)   575.0     575.0     541.2 (4)

June 2016 Convertible Notes

    230.0     230.0     218.8 (4)   230.0     230.0     215.9 (4)

2017 Convertible Notes

    162.5     162.5     158.3 (4)            

2018 Convertible Notes

    270.0     270.0     262.8 (4)            

February 2022 Notes

    143.8     143.8     143.8              

October 2022 Notes

    182.5     182.5     182.5              

2040 Notes

    200.0     200.0     200.0     200.0     200.0     200.0  

2047 Notes

    230.0     230.0     181.2 (5)   230.0     230.0     181.0 (5)
                           

  $ 3,913.8   $ 2,293.8   $ 2,195.9   $ 2,622.5   $ 2,170.5   $ 2,073.6  
                           

(1)
Subject to borrowing base and leverage restrictions. Represents the total aggregate amount committed or outstanding, as applicable, under such instrument.

(2)
Provides for a feature that allows the Company, under certain circumstances, to increase the size of the Revolving Credit Facility to a maximum of $1,350.0 million as of December 31, 2012.

(3)
Provides for a feature that allows the Company and Ares Capital CP, under certain circumstances, to increase the size of the Revolving Funding Facility to a maximum of $865.0 million as of December 31, 2012.

(4)
Represents the aggregate principal amount outstanding of the Convertible Unsecured Notes less the unaccreted discount initially recorded upon issuance of the Convertible Unsecured Notes. The total unaccreted discount for the February 2016 Convertible Notes, the June 2016 Convertible Notes, the 2017 Convertible Notes and the 2018 Convertible Notes was $26.5 million, $11.2 million, $4.2 million and $7.2 million, respectively, as of December 31, 2012. The total unaccreted discount for the February 2016 Convertible Notes and the June 2016 Convertible Notes was $33.8 million and $14.1 million, respectively, as of December 31, 2011.

(5)
Represents the aggregate principal amount outstanding less the unaccreted purchased discount. The total unaccreted purchased discount on the 2047 Notes was $48.8 million and $49.0 million as of December 31, 2012 and December 31, 2011, respectively.

              The weighted average stated interest rate and weighted average maturity, both on aggregate principal amount, of all our debt outstanding as of December 31, 2012 were 5.5% and 9.8 years, respectively, and as of December 31, 2011 were 4.8% and 9.3 years, respectively.

              The ratio of total principal amount of debt outstanding to stockholders' equity as of December 31, 2012 was 0.58:1.00 compared to 0.69:1.00 as of December 31, 2011. The ratio of total

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carrying value of debt outstanding to stockholders' equity as of December 31, 2012 was 0.55:1.00 compared to 0.66:1.00 as of December 31, 2011.

              In accordance with the Investment Company Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, as calculated pursuant to the Investment Company Act, is at least 200% after such borrowing. As of December 31, 2012, our asset coverage was 282%.

Revolving Credit Facility

              In December 2005, we entered into the Revolving Credit Facility, which as of December 31, 2012, allowed us to borrow up to $900 million at any one time outstanding. In May 2012, we amended and restated the Revolving Credit Facility to, among other things, increase the size of the facility from $810 million to $900 million, extend the expiration of the revolving period from January 22, 2013 to May 4, 2015 and extend the stated maturity date from January 22, 2013 to May 4, 2016. The Revolving Credit Facility also provides for a feature that allows us, under certain circumstances, to increase the size of the facility to a maximum of $1.35 billion. As of December 31, 2012, the interest rate charged on the indebtedness incurred under the Revolving Credit Facility is based on LIBOR plus an applicable spread of 2.25% or a "base rate" (as defined in the agreements governing the Revolving Credit Facility) plus an applicable spread of 1.25%. Additionally, we are required to pay a commitment fee of 0.375% per annum on any unused portion of the Revolving Credit Facility. As of December 31, 2012, there were no amounts outstanding under the Revolving Credit Facility and we were in compliance in all material respects with the terms of the Revolving Credit Facility.

Revolving Funding Facility

              In October 2004, we established through our consolidated subsidiary, Ares Capital CP, the Revolving Funding Facility, which as of December 31, 2012, allowed Ares Capital CP to borrow up to $620 million at any one time outstanding. The Revolving Funding Facility is secured by all of the assets held by, and its membership interest in, Ares Capital CP. In June 2012, we and Ares Capital CP amended the Revolving Funding Facility to, among other things, (i) increase the size of the Revolving Funding Facility from $500 million to $580 million, (ii) add a feature that allows, under certain circumstances, for an increase in the size of the facility to a maximum of $865 million, (iii) extend the reinvestment period from January 18, 2015 to April 18, 2015, and (iv) extend the stated maturity date from January 18, 2017 to April 18, 2017. In July 2012, the Company and Ares Capital CP received an increase in the commitments under the Revolving Funding Facility of $40 million, bringing the total commitments to $620 million. As of December 31, 2012, the interest rate charged on the indebtedness incurred under the Revolving Funding Facility was one month LIBOR plus an applicable spread of 2.50% or a "base rate" (as defined in the agreements governing the Revolving Funding Facility) plus an applicable spread of 1.50%. See "Recent Developments" as well as Note 19 to our consolidated financial statements for the year ended December 31, 2012 for more information on a recent amendment to the Revolving Funding Facility. Additionally, we are required to pay a commitment fee of between 0.50% and 1.75% depending on the size of the unused portion of the Revolving Funding Facility. As of December 31, 2012, the principal amount outstanding under the Revolving Funding Facility was $300.0 million and we and Ares Capital CP were in compliance in all material respects with the terms of the Revolving Funding Facility.

SMBC Funding Facility

              In January 2012, we established through our consolidated subsidiary, ACJB, the SMBC Funding Facility, which as of December 31, 2012, allowed ACJB to borrow up to $400 million at any one time outstanding. The SMBC Funding Facility is secured by all of the assets held by ACJB. In September 2012, the Company and ACJB amended the SMBC Funding Facility to, among other things,

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(i) increase the size of the SMBC Funding Facility from $200 million to $400 million, (ii) extend the reinvestment period from January 20, 2015 to September 14, 2015 and (iii) extend the stated maturity date from January 20, 2020 to September 14, 2020. The reinvestment period and the stated maturity date are both subject to two one-year extensions by mutual agreement. As of December 31, 2012, the interest rate charged on the indebtedness incurred under the SMBC Funding Facility is based on one month LIBOR plus an applicable spread of 2.125% or a "base rate" (as defined in the agreements governing the SMBC Funding Facility) plus an applicable spread of 1.125%. As a result of the September 2012 amendment to the SMBC Funding Facility described above, ACJB is not required to pay a commitment fee until September 15, 2013, at which time ACJB is required to pay a commitment fee of 0.50% depending on the size of the unused portion of the SMBC Funding Facility. As of December 31, 2012, there was no amounts outstanding under the SMBC Funding Facility and we and ACJB were in compliance in all material respects with the terms of the SMBC Funding Facility.

Debt Securitization

              In July 2006, through ARCC Commercial Loan Trust 2006, a vehicle serviced by our consolidated subsidiary, ARCC CLO 2006 LLC, we completed the $400 million Debt Securitization and issued approximately $314 million aggregate principal amount of the CLO Notes to third parties that were secured by a pool of middle market loans that were purchased or originated by us. We initially retained approximately $86 million of aggregate principal amount of certain "BBB" and non-rated securities in the Debt Securitization and subsequently repurchased $35 million of the CLO Notes. In June 2012, we repaid in full the $60 million aggregate principal amount outstanding of the CLO Notes and terminated or discharged the agreements governing the Debt Securitization.

Convertible Unsecured Notes

              In January 2011, we issued $575 million aggregate principal amount of unsecured convertible senior notes that mature on February 1, 2016, unless previously converted or repurchased in accordance with their terms. In March 2011, we issued $230 million aggregate principal amount of unsecured convertible senior notes that mature on June 1, 2016, unless previously converted or repurchased in accordance with their terms. In March 2012, we issued $162.5 million aggregate principal amount of unsecured convertible senior notes that mature on March 15, 2017, unless previously converted or repurchased in accordance with their terms. In the fourth quarter of 2012, we issued $270.0 million aggregate principal amount of unsecured convertible senior notes that mature on January 15, 2018, unless previously converted or repurchased in accordance with their terms. We do not have the right to redeem the Convertible Unsecured Notes prior to maturity. The February 2016 Convertible Notes, the June 2016 Convertible Notes, the 2017 Convertible Notes and the 2018 Convertible Notes bear interest at a rate of 5.750%, 5.125%, 4.875% and 4.750%, respectively, per year, payable semi-annually.

              In certain circumstances, the Convertible Unsecured Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, at their respective conversion rates (listed below as of December 31, 2012) subject to customary anti-dilution adjustments and the requirements of their respective indenture (the "Convertible Unsecured Notes Indentures"). Prior to the close of business on the business day immediately preceding their respective conversion date (listed below), holders may convert their Convertible Unsecured Notes only under certain circumstances set forth in the respective Convertible Unsecured Notes Indenture. On or after their respective conversion dates until the close of business on the scheduled trading day immediately preceding their respective maturity date, holders may convert their Convertible Unsecured Notes at any time. In addition, if we engage in certain corporate events as described in their respective Convertible Unsecured Notes Indenture, holders of the Convertible Unsecured Notes may require us to repurchase for cash all or part of the Convertible Unsecured Notes at a repurchase price equal to

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100% of the principal amount of the Convertible Unsecured Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the required repurchase date.

              Certain key terms related to the convertible features for each of the Convertible Unsecured Notes are listed below.

 
  February 2016
Convertible Notes
  June 2016
Convertible Notes
  2017
Convertible Notes
  2018
Convertible Notes

Conversion premium

  17.5%   17.5%   17.5%   17.5%

Closing stock price at issuance

  $16.28   $16.20   $16.46   $16.91

Closing stock price date

  January 19, 2011   March 22, 2011   March 8, 2012   October 3, 2012

Conversion price as of December 31, 2012

  $18.89   $18.80   $19.21   $19.81

Conversion rate as of December 31, 2012 (shares per one thousand dollar principal amount)

  52.9289   53.1903   52.0606   50.4731

Conversion dates

  August 15, 2015   December 15, 2015   September 15, 2016   July 15, 2017

              As of December 31, 2012, we were in compliance in all material respects with the terms of the Convertible Unsecured Notes Indentures.

Unsecured Notes

              In February 2012, we issued $143.8 million in aggregate principal amount of senior unsecured notes, which bear interest at a rate of 7.00% per year and mature on February 15, 2022. The February 2022 Notes require payment of interest quarterly, and all principal is due upon maturity. These notes are redeemable in whole or in part at any time or from time to time at our option on or after February 15, 2015, at a par redemption price of $25.00 per security plus accrued and unpaid interest.

              In September 2012 and October 2012, we issued $182.5 million in aggregate principal amount of senior unsecured notes, which bear interest at a rate of 5.875% per year and mature on October 1, 2022. The October 2022 Notes require payment of interest quarterly commencing on January 1, 2013, and all principal is due upon maturity. These notes are redeemable in whole or in part at any time or from time to time at our option on or after October 1, 2015, at a par redemption price of $25.00 per security plus accrued interest and unpaid interest.

              In October 2010, we issued $200 million in aggregate principal amount of senior unsecured notes which bear interest at a rate of 7.75% and mature on October 15, 2040. The 2040 Notes require payment of interest quarterly, and all principal is due upon maturity. These notes are redeemable in whole or in part at any time or from time to time at our option on or after October 15, 2015, at a par redemption price of $25.00 per security plus accrued and unpaid interest.

              As part of the Allied Acquisition, we assumed $230 million aggregate principal amount outstanding of senior unsecured notes which bear interest at a rate of 6.875% and mature on April 15, 2047. The 2047 Notes require payment of interest quarterly, and all principal is due upon maturity. These notes are redeemable in whole or in part at any time or from time to time at our option, at a

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par redemption price of $25.00 per security plus accrued and unpaid interest and upon the occurrence of certain tax events as described in the indenture governing the 2047 Notes.

              As of December 31, 2012 we were in compliance in all material respects with the terms of the indentures governing the Unsecured Notes.

              The Convertible Unsecured Notes and the Unsecured Notes are our senior unsecured obligations and rank senior in right of payment to our existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Unsecured Notes and the Unsecured Notes; equal in right of payment to our existing and future unsecured indebtedness that is not expressly subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.

              See Note 5 to our consolidated financial statements for the year ended December 31, 2012 for more detail on the Company's debt obligations.

CONTRACTUAL OBLIGATIONS

              A summary of the maturities of our principal amounts of debt and other contractual payment obligations as of December 31, 2012 are as follows:

 
  Payments Due by Period  
(in millions)
  Total   Less than
1 year
  1 - 3 years   3 - 5 years   After
5 years
 

Revolving Credit Facility

  $   $   $   $   $  

Revolving Funding Facility

    300.0             300.0      

SMBC Funding Facility

                     

February 2016 Convertible Notes

    575.0             575.0      

June 2016 Convertible Notes

    230.0             230.0      

2017 Convertible Notes

    162.5             162.5      

2018 Convertible Notes

    270.0                 270.0  

February 2022 Notes

    143.8                 143.8  

October 2022 Notes

    182.5                 182.5  

2040 Notes

    200.0                 200.0  

2047 Notes

    230.0                 230.0  

Operating lease obligations

    73.0     7.1     11.8     10.9     43.2  
                       

  $ 2,366.8   $ 7.1   $ 11.8   $ 1,278.4   $ 1,069.5  
                       

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OFF BALANCE SHEET ARRANGEMENTS

              The Company has various commitments to fund investments in its portfolio, as described below.

              As of December 31, 2012 and 2011, the Company had the following commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to fund which are at (or substantially at) the Company's discretion:

 
  As of December 31,  
(in millions)
  2012   2011  

Total revolving and delayed draw commitments

  $ 466.6   $ 565.6  

Less: funded commitments

    (107.1 )   (125.0 )
           

Total unfunded commitments

    359.5     440.6  

Less: commitments substantially at discretion of the Company

    (6.0 )   (64.8 )

Less: unavailable commitments due to borrowing base or other covenant restrictions

    (0.6 )   (5.5 )
           

Total net adjusted unfunded revolving and delayed draw commitments

  $ 352.9   $ 370.3  
           

              Included within the total revolving and delayed draw commitments as of December 31, 2012 were commitments to issue up to $62.3 million in standby letters of credit through a financial intermediary on behalf of certain portfolio companies. Under these arrangements, if the standby letters of credit were to be issued, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations. As of December 31, 2012, the Company had $41.4 million in standby letters of credit issued and outstanding under these commitments on behalf of the portfolio companies, of which no amounts were recorded as a liability on our balance sheet as such letters of credit are considered in the valuation of the investments in the portfolio company. Of these letters of credit $41.3 million expire in 2013 and $0.1 million expire in 2014.

              As of December 31, 2012 and 2011, the Company was party to subscription agreements to fund equity investments in private equity investment partnerships as follows:

 
  As of
December 31,
 
(in millions)
  2012   2011  

Total private equity commitments

  $ 131.0   $ 132.0  

Less: funded private equity commitments

    (66.5 )   (67.4 )
           

Total unfunded private equity commitments

    64.5     64.6  

Less: private equity commitments substantially at discretion of the Company

    (53.1 )   (53.5 )
           

Total net adjusted unfunded private equity commitments

  $ 11.4   $ 11.1  
           

              In addition, as of December 31, 2012 and 2011, the Company had outstanding guarantees or similar obligations on behalf of certain portfolio companies totaling $0.8 million.

              In the ordinary course of business, we may sell certain of our investments to third party purchasers. In particular, in connection with the sale of certain controlled portfolio company equity investments (as well as certain other sales), we have, and may continue to do so in the future, agreed to indemnify such purchasers for future liabilities arising from the investments and the related sale transaction. Such indemnification provisions may give rise to future liabilities.

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              As of December 31, 2012, one of the Company's portfolio companies, Ciena Capital LLC ("Ciena"), had one non-recourse securitization Small Business Administration ("SBA") loan warehouse facility, which has reached its maturity date but remains outstanding. Ciena is working with the providers of the SBA loan warehouse facility with regard to the repayment of that facility. Allied Capital had previously issued a performance guaranty (which Ares Capital succeeded to as a result of the Allied Acquisition) whereby Ares Capital must indemnify the warehouse providers for any damages, losses, liabilities and related costs and expenses that they may incur as a result of Ciena's failure to perform any of its obligations as loan originator, loan seller or loan servicer under the warehouse facility. As of December 31, 2012, there were no known issues or claims with respect to this performance guaranty.

RECENT DEVELOPMENTS

              On January 25, 2013, we and Ares Capital CP entered into an amendment to the Revolving Funding Facility. The amendment, among other things, modified the interest charged on the indebtedness incurred under the Revolving Funding Facility from the previous applicable spreads of 2.50% over LIBOR and 1.50% over "base rate" (as defined in the agreements governing the Revolving Funding Facility) to applicable spreads ranging from 2.25% to 2.50% over LIBOR and ranging from 1.25% to 1.50% over "base rate," in each case, determined monthly based on the composition of the borrowing base relative to outstanding borrowings under the facility. After giving effect to the amendment and the relevant borrowing base and amounts outstanding thereunder, the interest charged on the indebtedness incurred under the Revolving Funding Facility as of January 25, 2013 was based on a spread over one-month LIBOR of 2.25% or a spread over "base rate" of 1.25%. As of such date, one-month LIBOR was 0.2037% and the "base rate" was 3.25%.

              In April 2013, we completed the April 2013 Offering pursuant to which we sold 19,147,500 shares of common stock at a price of $17.43 per share to the participating underwriters. Total proceeds from the April 2013 Offering, net of estimated offering expenses payable by us, were approximately $333.2 million.

CRITICAL ACCOUNTING POLICIES

Basis of Presentation

              The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with GAAP, and include the accounts of the Company and its consolidated subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition as of and for the periods presented. All significant intercompany balances and transactions have been eliminated.

Cash and Cash Equivalents

              Cash and cash equivalents include funds from time to time deposited with financial institutions and short-term, liquid investments in a money market fund. Cash and cash equivalents are carried at cost which approximates fair value.

Concentration of Credit Risk

              The Company places its cash and cash equivalents with financial institutions and, at times, cash held in money market accounts may exceed the Federal Deposit Insurance Corporation insured limit.

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Investments

              Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. Unrealized gains or losses primarily reflect the change in investment values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized.

              Investments for which market quotations are readily available are typically valued at such market quotations. In order to validate market quotations, we look at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available (i.e., substantially all of our investments) are valued at fair value as determined in good faith by our board of directors, based on, among other things, the input of our investment adviser, audit committee and independent third-party valuation firms that have been engaged at the direction of our board of directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing 12 month period (with certain de minimis exceptions) and under a valuation policy and a consistently applied valuation process. The valuation process is conducted at the end of each fiscal quarter, and a minimum of 50% of our portfolio at fair value is subject to review by an independent valuation firm each quarter. In addition, our independent registered public accounting firm reviews our valuation process as part of their overall integrated audit.

              As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments: the enterprise value of a portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company's ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company's securities to any similar publicly traded securities, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate our valuation.

              Because there is not a readily available market value for most of the investments in our portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our board of directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.

              In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

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              Our board of directors undertakes a multi-step valuation process each quarter, as described below:

Interest and Dividend Income Recognition

              Interest income is recorded on an accrual basis and includes the accretion of discounts and amortization of premiums. Discounts from and premiums to par value on securities purchased are accreted/amortized into interest income over the life of the respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortization of premiums, if any.

              Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management's judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current. The Company may make exceptions to this if the loan has sufficient collateral value and is in the process of collection.

              Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Payment-in-Kind Interest

              The Company has loans in its portfolio that contain PIK provisions. The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan and recorded as interest income. To maintain the Company's status as a RIC, this non-cash source of income must be paid out to stockholders in the form of dividends even though the Company has not yet collected the cash.

Capital Structuring Service Fees and Other Income

              The Company's investment adviser seeks to provide assistance to our portfolio companies in connection with the Company's investments and in return the Company may receive fees for capital structuring services. These fees are generally only available to the Company as a result of the

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Company's underlying investments, are normally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when earned upon closing of the investment. The services that the Company's investment adviser provides vary by investment, but generally include reviewing existing credit facilities, arranging bank financing, arranging equity financing, structuring financing from multiple lenders, structuring financing from multiple equity investors, restructuring existing loans, raising equity and debt capital, and providing general financial advice, which concludes upon closing of the investment. Any services of the above nature subsequent to the closing would generally generate a separate fee payable to the Company. In certain instances where the Company is invited to participate as a co-lender in a transaction and does not provide significant services in connection with the investment, a portion of loan fees paid to the Company in such situations will be deferred and amortized over the estimated life of the loan. The Company's investment adviser may also take a seat on the board of directors of a portfolio company, or observe the meetings of the board of directors without taking a formal seat.

              Other income includes fees for asset management, management and consulting services, loan guarantees, commitments, amendments and other services rendered by the Company to portfolio companies. Such fees are recognized as income when earned or the services are rendered.

Foreign Currency Translation

              The Company's books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

              Results of operations based on changes in foreign exchange rates are separately disclosed in the statement of operations. Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities.

Equity Offering Expenses

              The Company's offering costs, excluding underwriters' fees, are charged against the proceeds from equity offerings when received.

Debt Issuance Costs

              Debt issuance costs are amortized over the life of the related debt instrument using the straight line method, which closely approximates the effective yield method.

U.S. Federal Income Taxes

              The Company has elected to be treated as a RIC under the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must, among other things, timely distribute to its stockholders at least 90% of its investment company taxable income, as defined by the Code, for each year. The Company, among other things, has made and intends to continue to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal income taxes.

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              Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year dividend distributions from such income into the next tax year and pay a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as such taxable income is earned.

              Certain of our consolidated subsidiaries are subject to U.S. federal and state income taxes.

Dividends to Common Stockholders

              Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by our board of directors each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are generally distributed, although we may decide to retain such capital gains for investment.

              We have adopted a dividend reinvestment plan that provides for reinvestment of any distributions we declare in cash on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not "opted out" of our dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of our common stock, rather than receiving the cash dividend. We intend to use primarily newly issued shares to implement the dividend reinvestment plan (so long as we are trading at a premium to net asset value). If our shares are trading at a significant enough discount to net asset value and we are otherwise permitted under applicable law to purchase such shares, we intend to purchase shares in the open market in connection with our obligations under our dividend reinvestment plan. However, we reserve the right to issue new shares of our common stock in connection with our obligations under the dividend reinvestment plan even if our shares are trading below net asset value.

Use of Estimates in the Preparation of Financial Statements

              The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of actual and contingent assets and liabilities at the date of the financial statements and the reported amounts of income or loss and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the valuation of investments.

Quantitative and Qualitative Disclosures About Market Risk

              We are subject to financial market risks, including changes in interest rates and the valuations of our investment portfolio.

Interest Rate Risk

              Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. See "Risk Factors—We are exposed to risks associated with changes in interest rates."

              As of December 31, 2012, approximately 13% of the investments at fair value in our portfolio bore interest at fixed rates, approximately 75% bore interest at variable rates, 11% were non-interest earning and 1% were on non-accrual status. Additionally, for the variable rate investments, 70% of

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these investments contained interest rate floors (representing 53% of total investments at fair value). The Facilities all bear interest at variable rates with no interest rate floors, while the Unsecured Notes and the Convertible Unsecured Notes bear interest at fixed rates.

              We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.

              While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio investments. In addition, there can be no assurance that we will be able to effectively hedge our interest rate risk.

              Based on our December 31, 2012 balance sheet, the following table shows the annual impact on net income of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure:

(in millions)
Basis Point Change
  Interest Income   Interest Expense   Net Income  

Up 300 basis points

  $ 62.8   $ 9.0   $ 53.8  

Up 200 basis points

  $ 22.1   $ 6.0   $ 16.1  

Up 100 basis points

  $ (14.8 ) $ 3.0   $ (17.8 )

Down 100 basis points

  $ 5.8   $ (0.6 ) $ 6.4  

Down 200 basis points

  $ 5.8   $ (0.6 ) $ 6.4  

Down 300 basis points

  $ 5.6   $ (0.6 ) $ 6.2  

              Based on our December 31, 2011 balance sheet, the following table shows the annual impact on net income of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure:

(in millions)
Basis Point Change
  Interest Income   Interest Expense   Net Income  

Up 300 basis points

  $ 65.7   $ 28.1   $ 37.6  

Up 200 basis points

  $ 32.5   $ 18.7   $ 13.8  

Up 100 basis points

  $ 0.5   $ 9.4   $ (8.9 )

Down 100 basis points

  $ 3.8   $ (3.1 ) $ 6.9  

Down 200 basis points

  $ 3.6   $ (3.1 ) $ 6.7  

Down 300 basis points

  $ 3.4   $ (3.1 ) $ 6.5  

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SENIOR SECURITIES
(dollar amounts in thousands, except per share data)

              Information about our senior securities (including preferred stock, debt securities and other indebtedness) is shown in the following tables as of the end of each fiscal year ended December 31 since we commenced operations. The report of our independent registered public accounting firm, KPMG LLP, on the senior securities table as of December 31, 2012, is attached as an exhibit to the registration statement of which this prospectus is a part. The "—" indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.

Class and Year
  Total Amount
Outstanding
Exclusive of
Treasury
Securities(1)
  Asset
Coverage
Per Unit(2)
  Involuntary
Liquidating
Preference
Per Unit(3)
  Average
Market Value
Per Unit(4)
 

Revolving Credit Facility

                         

Fiscal 2012

  $   $   $     N/A  

Fiscal 2011

  $ 395,000   $ 2,518   $     N/A  

Fiscal 2010

  $ 146,000   $ 3,213   $     N/A  

Fiscal 2009

  $ 474,144   $ 2,298   $     N/A  

Fiscal 2008

  $ 480,486   $ 2,205   $     N/A  

Fiscal 2007

  $ 282,528   $ 2,650   $     N/A  

Fiscal 2006

  $ 193,000   $ 2,638   $     N/A  

Fiscal 2005

  $   $   $     N/A  

Revolving Funding Facility

                         

Fiscal 2012

  $ 300,000   $ 2,816   $     N/A  

Fiscal 2011

  $ 463,000   $ 2,518   $     N/A  

Fiscal 2010

  $ 242,050   $ 3,213   $     N/A  

Fiscal 2009

  $ 221,569   $ 2,298   $     N/A  

Fiscal 2008

  $ 114,300   $ 2,205   $     N/A  

Fiscal 2007

  $ 85,000   $ 2,650   $     N/A  

Fiscal 2006

  $ 15,000   $ 2,638   $     N/A  

Fiscal 2005

  $ 18,000   $ 32,645   $     N/A  

Fiscal 2004

  $ 55,500   $ 3,878   $     N/A  

Revolving Funding II Facility

                         

Fiscal 2009

  $   $   $     N/A  

SMBC Revolving Funding Facility

                         

Fiscal 2012

  $   $   $     N/A  

Debt Securitization

                         

Fiscal 2011

  $ 77,531   $ 2,518   $     N/A  

Fiscal 2010

  $ 155,297   $ 3,213   $     N/A  

Fiscal 2009

  $ 273,752   $ 2,298   $     N/A  

Fiscal 2008

  $ 314,000   $ 2,205   $     N/A  

Fiscal 2007

  $ 314,000   $ 2,650   $     N/A  

Fiscal 2006

  $ 274,000   $ 2,638   $     N/A  

February 2016 Convertible Notes

                         

Fiscal 2012

  $ 548,521   $ 2,816   $     N/A  

Fiscal 2011

  $ 541,153   $ 2,518   $     N/A  

June 2016 Convertible Notes

                         

Fiscal 2012

  $ 218,761   $ 2,816   $     N/A  

Fiscal 2011

  $ 215,931   $ 2,518   $     N/A  

2017 Convertible Notes

                         

Fiscal 2012

  $ 158,312   $ 2,816   $     N/A
 

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Class and Year
  Total Amount
Outstanding
Exclusive of
Treasury
Securities(1)
  Asset
Coverage
Per Unit(2)
  Involuntary
Liquidating
Preference
Per Unit(3)
  Average
Market Value
Per Unit(4)
 

2018 Convertible Notes

                         

Fiscal 2012

  $ 262,829   $ 2,816   $     N/A  

2011 Notes

                         

Fiscal 2010

  $ 296,258   $ 3,213   $   $ 1,018  

2012 Notes

                         

Fiscal 2010

  $ 158,108   $ 3,213   $   $ 1,018  

February 2022 Notes

                         

Fiscal 2012

  $ 143,750   $ 2,816   $   $ 1,035  

October 2022 Notes

                         

Fiscal 2012

  $ 182,500   $ 2,816         $ 986  

2040 Notes

                         

Fiscal 2012

  $ 200,000   $ 2,816   $   $ 1,041  

Fiscal 2011

  $ 200,000   $ 2,518   $   $ 984  

Fiscal 2010

  $ 200,000   $ 3,213   $   $ 952  

2047 Notes

                         

Fiscal 2012

  $ 181,199   $ 2,816   $   $ 978  

Fiscal 2011

  $ 180,988   $ 2,518   $   $ 917  

Fiscal 2010

  $ 180,795   $ 3,213   $   $ 847  

(1)
Total amount of each class of senior securities outstanding at carrying value at the end of the period presented.

(2)
The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the "Asset Coverage Per Unit" (including for the February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes, which were issued in $25 increments).

(3)
The amount to which such class of senior security would be entitled upon our involuntary liquidation in preference to any security junior to it.

(4)
Not applicable, except for with respect to the 2011 Notes, the 2012 Notes, the February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes, as other senior securities are not registered for public trading. The average market value per unit for each of the 2011 Notes, the 2012 Notes, the February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes is based on the average daily prices of such notes and is expressed per $1,000 of indebtedness (including for the February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes, which were issued in $25 increments).

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BUSINESS

GENERAL

              Ares Capital, a Maryland corporation, is a specialty finance company that is a closed-end, non-diversified management investment company. We have elected to be regulated as a BDC under the Investment Company Act. We were founded on April 16, 2004, were initially funded on June 23, 2004 and completed our initial public offering on October 8, 2004. We are one of the largest BDCs with approximately $6.4 billion of total assets as of December 31, 2012.

              We are externally managed by our investment adviser, Ares Capital Management, a wholly owned subsidiary of Ares Management, a global alternative asset manager and an SEC registered investment adviser with approximately $59 billion of total committed capital under management as of December 31, 2012. Our administrator, Ares Operations, a wholly owned subsidiary of Ares Management, provides certain administrative and other services necessary for us to operate.

              Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in U.S. middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive. However, we may from time to time invest in larger or smaller (in particular, for investments in early-stage and/or venture capital-backed) companies. We generally use the term "middle-market" to refer to companies with annual EBITDA between $10 million and $250 million. As used herein, EBITDA represents net income before net interest expense, income tax expense, depreciation and amortization.

              We invest primarily in first lien senior secured loans (including unitranche loans), second lien senior secured loans and mezzanine debt, which in some cases includes an equity component. First and second lien senior secured loans generally are senior debt instruments that rank ahead of subordinated debt of a given portfolio company. Mezzanine debt is subordinated to senior loans and is generally unsecured. Our investments in corporate borrowers generally range between $30 million and $400 million each, investments in project finance/power generation projects generally range between $10 million and $200 million each and investments in early-stage and/or venture capital-backed companies generally range between $1 million and $25 million each. However, the investment sizes may be more or less than these ranges and may vary based on, among other things, our capital availability, the composition of our portfolio and general micro- and macro-economic factors.

              To a lesser extent, we also make preferred and/or common equity investments, which have generally been non-control equity investments of less than $20 million (usually in conjunction with a concurrent debt investment). However, we may increase the size or change the nature of these investments.

              The proportion of these types of investments will change over time given our views on, among other things, the economic and credit environment in which we are operating. In connection with our investing activities, we may make commitments with respect to indebtedness or securities of a potential portfolio company substantially in excess of our final investment. In such situations, while we may initially agree to fund up to a certain dollar amount of an investment, we may subsequently syndicate a portion of such amount (including, without limitation, to vehicles managed by our portfolio company, IHAM), such that we are left with a smaller investment than what was reflected in our original commitment. In addition to originating investments, we may also acquire investments in the secondary market.

              The first and second lien senior secured loans in which we invest generally have stated terms of three to 10 years and the mezzanine debt investments in which we invest generally have stated terms of up to 10 years, but the expected average life of such first and second lien loans and mezzanine debt is generally between three and seven years. However, we may invest in loans and securities with any maturity or duration. The instruments in which we invest typically are not rated by any rating agency,

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but we believe that if such instruments were rated, they would be below investment grade (rated lower than "Baa3" by Moody's Investors Service, lower than "BBB-" by Fitch Ratings or lower than "BBB-" by Standard & Poor's Ratings Services), which, under the guidelines established by these entities, is an indication of having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. Bonds that are rated below investment grade are sometimes referred to as "high yield bonds" or "junk bonds." We may invest without limit in debt or other securities of any rating, as well as debt or other securities that have not been rated by any nationally recognized statistical rating organization.

              We believe that our investment adviser, Ares Capital Management, is able to leverage the current investment platform, resources and existing relationships of Ares with financial sponsors, financial institutions, hedge funds and other investment firms to provide us with attractive investment opportunities. In addition to deal flow, the Ares investment platform assists our investment adviser in analyzing, structuring and monitoring investments. Ares has been in existence for more than 15 years and its senior partners have an average of over 23 years experience in leveraged finance, private equity, distressed debt, commercial real estate finance, investment banking and capital markets. The Company has access to Ares' investment professionals and administrative professionals, who provide assistance in accounting, finance, legal, compliance, operations, information technology and investor relations. As of December 31, 2012, Ares had approximately 240 investment professionals and approximately 320 administrative professionals.

              Since our initial public offering on October 8, 2004 through December 31, 2012, our realized gains have exceeded our realized losses by approximately $194 million (excluding the one-time gain on the Allied Acquisition) and gains/losses from the extinguishment of debt and other assets). For this same time period, our exited investments have resulted in an aggregate cash flow realized internal rate of return to us of approximately 13% (based on original cash invested, net of syndications, of approximately $6.8 billion and total proceeds from such exited investments of approximately $8.3 billion). Approximately 72% of these exited investments resulted in an aggregate cash flow realized internal rate of return to us of 10% or greater. Internal rate of return is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. Internal rate of return is gross of expenses related to investments as these expenses are not allocable to specific investments. Investments are considered to be exited when the original investment objective has been achieved through the receipt of cash and/or non-cash consideration upon the repayment of a debt investment or sale of an investment or through the determination that no further consideration was collectible and, thus, a loss may have been realized. These internal rates of return results are historical results relating to our past performance and are not necessarily indicative of future results, the achievement of which cannot be assured.

              We and GE also co-invest through an unconsolidated vehicle, the SSLP. The SSLP was initially formed in December 2007 by Allied Capital and GE to co-invest in first lien senior secured loans of middle-market companies. In October 2009, we acquired from Allied Capital subordinated certificates issued by the SSLP and management rights in respect thereto. As of December 31, 2012, the SSLP had available capital of $9.0 billion of which approximately $6.3 billion in aggregate principal amount was funded at December 31, 2012. As of December 31, 2012, we had agreed to make available to the SSLP approximately $1.8 billion, of which approximately $1.2 billion was funded. The SSLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SSLP must be approved by an investment committee of the SSLP consisting of representatives of the Company and GE (with approval from a representative of each required). As of December 31, 2012, our investment in the SSLP was approximately $1.3 billion at fair value (including unrealized appreciation of $25.8 million), which represented approximately 21% of our total portfolio at fair value.

              While our primary focus is to generate current income and capital appreciation through investments in first and second lien senior secured loans and mezzanine debt and, to a lesser extent,

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equity securities of eligible portfolio companies, we also may invest up to 30% of our portfolio in non-qualifying assets, as permitted by the Investment Company Act. See "Regulation." Specifically, as part of this 30% basket, we may invest in entities that are not considered "eligible portfolio companies" (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act.

              In the first quarter of 2011, the staff of the SEC informally communicated to certain BDCs the Staff's belief that certain entities, which would be classified as an "investment company" under the Investment Company Act but for the exception from the definition of "investment company" set forth in Rule 3a-7 promulgated under the Investment Company Act, could not be treated as "eligible portfolio companies" (as defined in Section 2(a)(46) under the Investment Company Act) (i.e., in a BDC's 70% basket of "qualifying assets"). Subsequently, in August 2011 the SEC issued the Concept Release which stated that "[a]s a general matter, the Commission presently does not believe that Rule 3a-7 issuers are the type of small, developing and financially troubled businesses in which the U.S. Congress intended BDCs primarily to invest" and requested comment on whether or not a 3a-7 issuer should be considered an "eligible portfolio company." We provided a comment letter in respect of the Concept Release and continue to believe that the language of Section 2(a)(46) of the Investment Company Act permits a BDC to treat as "eligible portfolio companies" entities that rely on the 3a-7 exception. However, given the current uncertainty in this area (including the language in the Concept Release), we have, solely for purposes of calculating the composition of our portfolio pursuant to Section 55(a) of the Investment Company Act, identified such entities, which include the SSLP, as "non-qualifying assets" should the Staff ultimately take an official view that 3a-7 issuers are not "eligible portfolio companies."

              As of December 31, 2012, our portfolio company, IHAM, which became an SEC registered investment adviser effective March 30, 2012, managed 13 credit vehicles and served as the sub-manager/sub-servicer for three other credit vehicles, which are described in more detail under "Investments—Ivy Hill Asset Management, L.P." As of December 31, 2012, IHAM had total committed capital under management of approximately $3.3 billion, which included approximately $0.2 billion invested by Ares Capital in IHAM. In connection with IHAM's registration as a registered investment adviser, on March 30, 2012, we received exemptive relief from the SEC allowing us to, subject to certain conditions, own directly or indirectly up to 100% of IHAM's outstanding equity interests and make additional investments in IHAM.

About Ares

              Founded in 1997, Ares is a global alternative asset manager and an SEC registered investment adviser with approximately $59 billion of total committed capital under management and approximately 560 employees as of December 31, 2012.

              Ares specializes in originating and managing assets in the leveraged finance, commercial real estate and private equity markets. Ares' leveraged finance activities include the origination, acquisition and management of senior loans, high yield bonds, mezzanine debt and special situation investments. Ares' commercial real estate activities generally focus on lending to U.S. middle-market real estate projects. Ares' private equity activities generally focus on control-oriented equity investments in under-capitalized companies with capital structure issues. Ares has the ability to invest across a capital structure, from senior debt to common equity. This flexibility, combined with Ares' "buy and hold" philosophy, enables Ares to structure an investment to meet the specific needs of a company rather than the less flexible demands of the public markets.

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              The following chart shows the structure and various investment strategies of Ares as of December 31, 2012:

CHART

              Ares is organized around four primary investment platforms: Private Equity, Capital Markets, Private Debt and Commercial Real Estate. Ares' senior partners have been working together as a group for many years and have an average of over 23 years of experience in leveraged finance, private equity, distressed debt, commercial real estate, investment banking and capital markets. They are backed by a team of approximately 240 highly disciplined investment professionals which as of December 31, 2012 covered investments in more than 1,100 companies across over 30 industries. Ares' rigorous investment approach is based upon an intensive, independent financial analysis, with a focus on preservation of capital, diversification and active portfolio management. These fundamentals underlie Ares' investment strategy and have resulted in large pension funds, banks, insurance companies, endowments and high net worth individuals investing in Ares' funds.

Ares Capital Management

              Ares Capital Management, our investment adviser, is served by an origination, investment and portfolio management team of approximately 80 U.S.-based investment professionals as of December 31, 2012 and led by the senior partners of the Ares Management Private Debt Group: Michael Arougheti, Eric Beckman, Kipp deVeer, Mitchell Goldstein and Michael Smith. Ares Capital Management leverages off of Ares' investment platform and benefits from the significant capital markets, trading and research expertise of Ares' investment professionals. Ares Capital Management's investment committee has eight members, including the senior partners of the Ares Management Private Debt Group, senior partners in the Ares Management Private Equity Group and a senior adviser to the Ares Management Capital Markets Group.

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MARKET OPPORTUNITY

              We believe that current market conditions present attractive opportunities for us to invest in middle-market companies; specifically:

COMPETITIVE ADVANTAGES

              We believe that we have the following competitive advantages over other capital providers to middle-market companies:

The Ares Platform

              As of December 31, 2012, Ares had approximately $59 billion of total committed capital under management in the related asset classes of non-syndicated first and second lien corporate and commercial real estate loans, syndicated corporate and commercial real estate loans, high yield bonds, corporate and commercial real estate mezzanine debt and private equity. We believe Ares' current investment platform provides a competitive advantage in terms of access to origination and marketing activities and diligence for us. In particular, we believe that the Ares platform provides us with an advantage through its deal flow generation and investment evaluation process. Ares' asset management platform also provides additional market information, company knowledge and industry insight that benefit our investment and due diligence process. Ares' professionals maintain extensive financial sponsor and intermediary relationships, which provide valuable insight and access to transactions and information.

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Seasoned Management Team

              The investment professionals in the Ares Management Private Debt Group and members of our investment adviser's investment committee also have significant experience investing across market cycles. This experience also provides us with a competitive advantage in identifying, originating, investing in and managing a portfolio of investments in middle-market companies.

Broad Origination Strategy

              We focus on self-originating most of our investments by pursuing a broad array of investment opportunities in middle-market companies across multiple channels. We also leverage off of the extensive relationships of the broader Ares platform, including relationships with the portfolio companies in the IHAM Vehicles, to identify investment opportunities. We believe that this allows for asset selectivity and that there is a significant relationship between proprietary deal origination and credit performance. We believe that our focus on generating proprietary deal flow and lead investing also gives us greater control over capital structure, deal terms, pricing and documentation and enables us to actively manage our portfolio investments. Moreover, by leading the investment process, we are often able to secure controlling positions in credit tranches, thereby providing additional control in investment outcomes. We also have originated substantial proprietary deal flow from middle-market intermediaries, which often allows us to act as the sole or principal source of institutional capital to the borrower.

Scale and Flexible Transaction Structuring

              We believe that being one of the largest BDCs makes us a more desirable and flexible capital provider, especially in competitive markets. We are flexible and have significant experience in structuring investments, including the types of investments and the terms associated with such investments. We believe this approach and experience enables our investment adviser to identify attractive investment opportunities throughout economic cycles and across a company's capital structure so we can make investments consistent with our stated investment objective and preserve principal while seeking appropriate risk adjusted returns. In addition, we have the ability to provide "one stop" financing with the ability to invest capital across the balance sheet and syndicate and hold larger investments than many of our competitors. We believe that the ability to underwrite, syndicate and hold larger investments benefits our stockholders by (a) potentially increasing net income and earnings through syndication, (b) increasing originated deal flow flexibility, (c) broadening market relationships and deal flow, (d) allowing us to optimize our portfolio composition and (e) allowing us to provide capital to a broader spectrum of middle-market companies, which we believe currently have limited access to capital from traditional lending sources. In addition, we believe that the ability to provide capital at every level of the balance sheet provides a strong value proposition to middle-market borrowers and our senior debt capabilities provide superior deal origination and relative value analysis capabilities compared to traditional "mezzanine only" lenders.

Experience with and Focus on Middle-Market Companies

              Ares has historically focused on investments in middle-market companies and we benefit from this experience. In sourcing and analyzing deals, our investment adviser benefits from Ares' extensive network of relationships focused on middle-market companies, including management teams, members of the investment banking community, private equity groups and other investment firms with whom Ares has had long-term relationships. We believe this network enables us to identify well-positioned prospective portfolio company investments. The Ares Management Private Debt Group works closely with Ares' other investment professionals. As of December 31, 2012, Ares oversaw a portfolio of investments in over 1,100 companies across over 30 industries, which provides access to an extensive network of relationships and insights into industry trends and the state of the capital markets.

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Disciplined Investment Philosophy

              In making its investment decisions, our investment adviser has adopted Ares' long-standing, consistent, credit-based investment approach that was developed over 23 years ago by its founders. Specifically, our investment adviser's investment philosophy, portfolio construction and portfolio management involve an assessment of the overall macroeconomic environment and financial markets and company-specific research and analysis. Its investment approach emphasizes capital preservation, low volatility and minimization of downside risk. In addition to engaging in extensive due diligence from the perspective of a long-term investor, our investment adviser's approach seeks to reduce risk in investments by focusing on:

Extensive Industry Focus

              We seek to concentrate our investing activities in industries with a history of predictable and dependable cash flows and in which the Ares investment professionals have had extensive investment experience. Ares investment professionals have developed long-term relationships with management teams and management consultants in over 30 industries, and have accumulated substantial information and identified potential trends within these industries. In turn, we benefit from these relationships, information and identification of potential trends in making investments.

OPERATING AND REGULATORY STRUCTURE

              Our investment activities are managed by Ares Capital Management, which is wholly owned by Ares, and supervised by our board of directors, a majority of whom are independent of Ares and its affiliates. Ares Capital Management is registered under the Advisers Act. Under our investment advisory and management agreement, we have agreed to pay Ares Capital Management an annual base management fee based on our total assets, as defined under the Investment Company Act (other than cash and cash equivalents, but including assets purchased with borrowed funds), and an incentive fee based on our performance. See "Management—Investment Advisory and Management Agreement." Ares Operations provides us with certain administrative and other services necessary for us to operate pursuant to our administration agreement. See "Management—Administration Agreement."

              As a BDC, we are required to comply with certain regulatory requirements. For example, we are not generally permitted to invest in any portfolio company in which a fund managed by Ares or any of its downstream affiliates (other than us and our downstream affiliates) currently has an investment. However, we may co-invest on a concurrent basis with funds managed by Ares or any of its downstream affiliates, subject to compliance with existing regulatory guidance, applicable regulations and our allocation procedures. Certain types of co-investment transactions would only be permitted pursuant to an exemptive order from the SEC, for which we have applied. Any such order will be subject to certain terms and conditions. Further, there is no assurance that this application for exemptive relief will be granted by the SEC.

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              Also, while we may borrow funds to make investments, our ability to use debt is limited in certain significant aspects. In particular, BDCs must have at least 200% asset coverage calculated pursuant to the Investment Company Act in order to incur debt or issue preferred stock (which we refer to collectively as "senior securities"), which requires us to finance our investments with at least as much equity as senior securities in the aggregate. Certain of our credit facilities also require that we maintain asset coverage of at least 200%.

              In addition, as a consequence of our being a RIC for U.S. federal income tax purposes, as well as our status as a BDC, our asset growth is dependent on our ability to raise equity capital through the issuance of common stock. RICs generally must distribute substantially all of their earnings to stockholders as dividends in order to preserve their status as a RIC and avoid corporate-level U.S. federal income tax. This requirement, in turn, generally prevents us from using earnings to support our operations including making new investments.

MARKET CONDITIONS

              Beginning in 2007, the global financial markets experienced stress, volatility, instability, illiquidity and disruption. While this volatility and disruption peaked in 2008 to 2009 and appears to have abated somewhat, the availability of capital and access to capital markets has been limited over the last several years. As the global liquidity situation and market conditions evolve, we will continue to monitor and adjust our approach to funding accordingly. Given the instability in the global markets over the past several years and the uncertainty around the strength of the U. S. economic recovery, there can be no assurances that these activities will be successful since such market conditions could worsen again in the future. If they do, we could face materially higher financing costs. Consequently, our operating strategy could be materially and adversely affected. See "Risk Factors—Risks Relating to Our Business—Capital markets have been in a period of disruption and instability for an extended period of time. These market conditions materially and adversely affected debt and equity capital markets in the United States, which had, and may in the future have, a negative impact on our business and operations."

              In connection with the prior depressed market conditions of the general economy, the stocks of BDCs as an industry have in the past traded at near historic lows as a result of concerns over liquidity, credit quality, leverage restrictions and distribution requirements. In some cases, certain BDCs became "forced sellers" of assets, defaulted on their indebtedness, decreased their distributions to stockholders or announced share repurchase programs. Although we believe that we currently have sufficient capital to fund our investments and operations, we cannot assure you that the market pressures we may face in the future will not have a material adverse effect on our business, financial condition and results of operations.

INVESTMENTS

Ares Capital Corporation Portfolio

              We have built an investment portfolio of primarily first and second lien loans, mezzanine debt and, to a lesser extent, equity investments in private middle-market companies. Our portfolio is well diversified by industry sector and its concentration to any single issuer is limited. Our largest investment as of December 31, 2012 was in the subordinated certificates of the SSLP. The SSLP consists of a diverse portfolio of first lien senior secured loans to 36 different borrowers as of December 31, 2012 and the portfolio companies in the SSLP are in industries similar to the companies in Ares Capital's portfolio. Our investment in the SSLP represented approximately 21% of our portfolio fair value as of December 31, 2012.

              Our debt investments in corporate borrowers generally range between $30 million and $400 million each, investments in project finance/power generation projects generally range between

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$10 million and $200 million each and investments in early-stage and/or venture capital-backed companies generally range between $1 million and $25 million each. However, the sizes of our investments may be more or less than these ranges and may vary based on, among other things, our capital availability, the composition of our portfolio and general micro- and macro-economic factors.

              Our preferred and/or common equity investments have generally been non-control equity investments of less than $20 million (usually in conjunction with a concurrent debt investment). However, we may increase the size or change the nature of these investments.

              In addition, the proportion of these types of investments will change over time given our views on, among other things, the economic and credit environment in which we are operating. In connection with our investing activities, we may make commitments with respect to indebtedness or securities of a potential portfolio company substantially in excess of our expected final hold size. In such situations, while we may initially agree to fund up to a certain dollar amount of an investment, we may subsequently syndicate a portion of such amount such that we are left with a smaller investment than what was reflected in our original commitment. We may also syndicate a "first out" tranche of a loan to an investor and retain a "last out" tranche of such loan, in which case the "first out" tranche of such loan will generally receive priority with respect to payments of principal, interest and any other amounts due thereunder. In addition to originating investments, we may also acquire investments in the secondary market.

              We make senior secured loans primarily in the form of first lien loans (including unitranche loans) and second lien secured loans. Our senior secured loans generally have terms of three to 10 years. In connection with our senior secured loans we generally receive a security interest in certain of the assets of the borrower and consequently such assets serve as collateral in support of the repayment of such senior secured loans. Senior secured loans are generally exposed to the least amount of credit risk because they typically hold a senior position with respect to scheduled interest and principal payments and security interests in assets of the borrower. However, unlike mezzanine debt, senior secured loans typically do not receive any stock, warrants to purchase stock or other yield enhancements. Senior secured loans may include both revolving lines of credit and term loans.

              Structurally, mezzanine debt usually ranks subordinate in priority of payment to senior secured loans and is often unsecured. However, mezzanine debt ranks senior to common and preferred equity in a borrowers' capital structure. Mezzanine debt investments offer lenders fixed returns in the form of interest payments and will often provide lenders an opportunity to participate in the capital appreciation of a borrower, if any, through an equity interest. This equity interest typically takes the form of an equity co-investment and/or warrants. Due to its higher risk profile and often less restrictive covenants as compared to senior secured loans, mezzanine debt generally bears a higher stated interest rate than senior secured loans. The equity co-investment and warrants (if any) associated with a mezzanine debt investment typically allow lenders to receive repayment of their principal on an agreed amortization schedule while retaining their equity interest in the borrower. Equity issued in connection with mezzanine debt also may include a "put" feature, which permits the holder to sell its equity interest back to the borrower at a price determined through an agreed formula.

              In making an equity investment, in addition to considering the factors discussed below under "—Investment Selection," we also consider the anticipated timing of a liquidity event, such as a public offering, sale of the company or redemption of our equity securities.

              We generally seek to invest in companies in the industries in which Ares' investment professionals have direct expertise. The following is a representative list of the industries in which we have invested:

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              However, we may invest in other industries if we are presented with attractive opportunities.

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              The industrial and geographic compositions of the Company's portfolio at fair value at December 31, 2012 and 2011 were as follows:

 
  As of December 31,  
Industry
  2012   2011  

Investment Funds and Vehicles(1)

    21.7 %   23.6 %

Healthcare Services

    12.9     13.4  

Education

    7.8     11.2  

Financial Services

    7.3     6.4  

Restaurants and Food Services

    7.1     6.8  

Other Services

    6.7     2.5  

Consumer Products

    6.6     5.4  

Business Services

    6.4     6.6  

Containers and Packaging

    5.1     4.5  

Energy

    3.7     1.3  

Automotive Services

    3.4     1.1  

Manufacturing

    2.4     2.8  

Aerospace and Defense

    2.0     3.6  

Telecommunications

    1.6     2.0  

Oil and Gas

    1.0     0.7  

Other

    4.3     8.1  
           

Total

    100.0 %   100.0 %
           

(1)
Includes our investment in the SSLP, which had made first lien senior secured loans to 36 and 32 different borrowers as of December 31, 2012 and 2011, respectively. The portfolio companies in the SSLP are in industries similar to the companies in the Company's portfolio.

 
  As of December 31,  
Geographic Region
  2012   2011  

West

    49.1 %   48.4 %

Midwest

    19.2     14.5  

Southeast

    14.7     21.2  

Mid Atlantic

    12.8     12.8  

Northeast

    2.3     1.7  

International

    1.9     1.4  
           

Total

    100.0 %   100.0 %
           

Ivy Hill Asset Management, L.P.

              We have made investments in our portfolio company, IHAM, an SEC registered investment adviser, as well as in certain IHAM Vehicles. As of December 31, 2012, IHAM managed 13 credit vehicles and served as the sub-manager/sub-servicer for three other vehicles. As of December 31, 2012, IHAM had total committed capital under management of approximately $3.3 billion, which included approximately $0.2 billion invested by Ares Capital in IHAM.

              From time to time, IHAM or certain IHAM Vehicles may purchase investments from us or sell investments to us, in each case for a price equal to the fair market value of such investments determined at the time of such transactions.

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              IHAM is party to the IHAM administration agreement with our administrator, Ares Operations. Pursuant to the IHAM administration agreement, Ares Operations provides IHAM with, among other things, office facilities, equipment, clerical, bookkeeping and record keeping services, services relating to the marketing and sale of interests in vehicles managed by IHAM, services of, and oversight of, custodians, depositories, accountants, attorneys, underwriters and such other persons in any other capacity deemed to be necessary. Under the IHAM administration agreement, IHAM reimburses Ares Operations for all of the actual costs associated with such services, including Ares Operations' allocable portion of overhead and the cost of its officers, employees and respective staff in performing its obligations under the IHAM administration agreement.

INVESTMENT SELECTION

              Ares' investment philosophy was developed over the past 23 years and has remained consistent and relevant throughout a number of economic cycles. We are managed using a similar investment philosophy used by the investment professionals of Ares in Ares' private investment funds.

              This investment philosophy involves, among other things:

              The foundation of Ares' investment philosophy is intensive credit investment analysis, a portfolio management discipline based on both market technicals and fundamental value-oriented research, and diversification strategy. We follow a rigorous investment process based on:

              We seek to identify those companies exhibiting superior fundamental risk-reward profiles and strong defensible business franchises while focusing on the relative value of the investment across the industry as well as for the specific company.

Intensive Due Diligence

              The process through which an investment decision is made involves extensive research into the target company, its industry, its growth prospects and its ability to withstand adverse conditions. If the senior investment professional responsible for the transaction determines that an investment opportunity should be pursued, we will engage in an intensive due diligence process. Approximately 30-40% of the investments initially reviewed by us proceed to this phase. Though each transaction will involve a somewhat different approach, the regular due diligence steps generally undertaken include:

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Selective Investment Process

              After an investment has been identified and preliminary diligence has been completed, a credit research and analysis report is prepared. This report is reviewed by the senior investment professional in charge of the potential investment. If such senior and other investment professionals are in favor of the potential investment, then it is first presented to an underwriting committee, which is comprised of the senior partners of the Ares Management Private Debt Group.

              After the investment is approved by the underwriting committee, a more extensive due diligence process is employed by the transaction team. Additional due diligence with respect to any investment may be conducted on our behalf by attorneys, independent accountants, and other third party consultants and research firms prior to the closing of the investment, as appropriate on a case-by-case basis. Approximately 7-10% of all investments initially reviewed by us will be presented to the investment committee. Approval of an investment for funding requires the approval of the majority of the investment committee of Ares Capital Management, although unanimous consent is sought.

Issuance of Formal Commitment

              Once we have determined that a prospective portfolio company is suitable for investment, we work with the management and/or sponsor of that company and its other capital providers, including senior, junior and equity capital providers, if any, to finalize the structure of the investment. Approximately 5-7% of the investments initially reviewed by us eventually result in the issuance of formal commitments and the closing of such transactions.

Debt Investments

              We invest in portfolio companies primarily in the form of first lien senior secured loans (including unitranche loans), second lien senior secured loans and mezzanine debt. The first and second lien senior secured loans generally have terms of three to 10 years. In connection with our first and second lien senior secured loans we generally receive security interests in the assets of our portfolio companies that will serve as collateral in support of the repayment of such loans. First and second lien senior secured loans generally have floating interest rates, which may have LIBOR floors, and also may provide for some amortization of principal and excess cash flow payments, with the remaining principal balance due at maturity.

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              We structure our mezzanine investments primarily as unsecured subordinated loans that provide for relatively high fixed interest rates that provide us with significant current interest income. The mezzanine debt investments generally have terms of up to 10 years. These loans typically have interest-only payments, with amortization of principal, if any, deferred to the later years of the mezzanine investment. In some cases, we may enter into loans that, by their terms, convert into equity or additional debt or defer payments of interest (or at least cash interest) for the first few years after our investment. Also, in some cases our mezzanine debt will be secured by a subordinated lien on some or all of the assets of the borrower.

              In some cases, our debt investments may provide for a portion of the interest payable to be PIK interest. To the extent interest is PIK, it will be payable through the increase of the principal amount of the loan by the amount of interest due on the then-outstanding aggregate principal amount of such loan.

              In the case of our first and second lien senior secured loans and mezzanine debt, we tailor the terms of the investment to the facts and circumstances of the transaction and the prospective portfolio company, negotiating a structure that aims to protect our rights and manage our risk while creating incentives for the portfolio company to achieve its business plan and improve its profitability. For example, in addition to seeking a senior position in the capital structure of our portfolio companies, we will seek, where appropriate, to limit the downside potential of our investments by:

              We generally require financial covenants and terms that require an issuer to reduce leverage, thereby enhancing credit quality. These methods include: (a) maintenance leverage covenants requiring a decreasing ratio of indebtedness to cash flow over time, (b) maintenance cash flow covenants requiring an increasing ratio of cash flow to the sum of interest expense and capital expenditures and (c) indebtedness incurrence prohibitions, limiting a company's ability to take on additional indebtedness. In addition, by including limitations on asset sales and capital expenditures we may be able to prevent a company from changing the nature of its business or capitalization without our consent.

              Our debt investments may include equity features, such as warrants or options to buy a minority interest in the portfolio company. Warrants we receive with our debt investments may require only a nominal cost to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We may structure the warrants to provide provisions protecting our rights as a minority-interest holder, as well as puts, or rights to sell such securities back to the portfolio company, upon the occurrence of specified events. In many cases, we also obtain registration rights in connection with these equity interests, which may include demand and "piggyback" registration rights.

Equity Investments

              To a lesser extent, we also make preferred and/or common equity investments, which have generally been non-control equity investments of less than $20 million (usually in conjunction with a

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concurrent debt investment). However, we may increase the size or change the nature of these investments.

ON-GOING RELATIONSHIPS WITH AND MONITORING OF PORTFOLIO COMPANIES

              We closely monitor each investment we make, maintain a regular dialogue with both the management team and other stakeholders and seek specifically tailored financial reporting. In addition, senior investment professionals may take board seats or obtain board observation rights for our portfolio companies. As of December 31, 2012, of our 152 portfolio companies, we were entitled to board seats or board observation rights on 50% of these companies.

              We seek to exert significant influence post-investment, in addition to covenants and other contractual rights and through board participation, when appropriate, by actively working with management on strategic initiatives. We often introduce managers of companies in which we have invested to other portfolio companies to capitalize on complementary business activities and best practices.

              Our investment adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our investment adviser grades the credit risk of all investments on a scale of 1 to 4 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors. Under this system, investments with a grade of 4 involve the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit. Investments graded 3 involve a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing as expected and the risk factors to our ability to ultimately recoup the cost of our investment are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a grade of 3. Investments graded 2 indicate that the risk to our ability to recoup the initial cost basis of such investment has increased materially since origination or acquisition, including as a result of factors such as declining performance and non-compliance with debt covenants; however, payments are generally not more than 120 days past due. An investment grade of 1 indicates that the risk to our ability to recoup the initial cost basis of such investment has substantially increased since origination or acquisition, and the portfolio company likely has materially declining performance. For debt investments with an investment grade of 1, most or all of the debt covenants are out of compliance and payments are substantially delinquent. For investments graded 1, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit. For investments graded 1 or 2, our investment adviser enhances its level of scrutiny over the monitoring of such portfolio company. Our investment adviser grades the investments in our portfolio at least each quarter and it is possible that the grade of a portfolio investment may be reduced or increased over time.

              As of December 31, 2012, the weighted average grade of our portfolio was 3.1. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Portfolio and Investment Activity."

MANAGERIAL ASSISTANCE

              As a BDC, we must offer, and must provide upon request, significant managerial assistance to certain of our portfolio companies. This assistance could involve, among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting

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with and advising officers of portfolio companies and providing other organizational and financial guidance. Ares Operations may provide all or a portion of this assistance pursuant to our administration agreement, the costs of which will be reimbursed by us. We may receive fees for these services.

COMPETITION

              Our primary competitors include public and private funds, commercial and investment banks, commercial finance companies, other BDCs and private equity funds, each of which we compete with for financing opportunities. Many of our competitors are substantially larger and have considerably greater financial and marketing resources than we do. For example, some competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than we do. Furthermore, many of our competitors are not subject to the regulatory restrictions that the Investment Company Act imposes on us as a BDC. For additional information concerning the competitive risks we face, see "Risk Factors—Risks Relating to Our Business—We operate in a highly competitive market for investment opportunities."

              We believe that the relationships of the members of our investment adviser's investment committee and of the senior partners of Ares enable us to learn about, and compete effectively for, financing opportunities with attractive middle-market companies in the industries in which we seek to invest. We believe that Ares' professionals' deep and long-standing direct sponsor relationships and the resulting proprietary transaction opportunities that these relationships often present, provide valuable insight and access to transactions and information. We use the industry information of Ares' investment professionals to which we have access to assess investment risks and determine appropriate pricing for our investments in portfolio companies.

STAFFING

              We do not currently have any employees and do not expect to have any employees. Services necessary for our business are provided by individuals who are employees or affiliates of our investment adviser, Ares Capital Management, and our administrator, Ares Operations, each of which is a wholly owned subsidiary of Ares Management, pursuant to the terms of our investment advisory and management agreement and our administration agreement, respectively, each as described below. Each of our executive officers is an employee or affiliate of our investment adviser or our administrator. Our day-to-day investment activities are managed by our investment adviser. Most of the services necessary for the origination of our investment portfolio are provided by investment professionals employed by Ares Capital Management. Ares Capital Management has approximately 80 U.S.-based investment professionals who focus on origination, transaction development, investment and the ongoing monitoring of our investments. See "Management—Investment Advisory and Management Agreement" below. We reimburse both our investment adviser and our administrator for a certain portion of expenses incurred in connection with such staffing, as described in more detail below. Because we have no employees, Ares Capital does not have a formal employee relations policy.

PROPERTIES

              We do not own any real estate or other physical properties materially important to our operation. Our headquarters are currently located at 245 Park Avenue, 44th Floor, New York, New York 10167. We rent our New York office space directly from a third party pursuant to a lease that expires in February 2026. We entered into separate subleases with Ares Management and IHAM, pursuant to which Ares Management and IHAM sublease approximately 15% and 20%, respectively, of our New York office space, for a fixed rent equal to 15% and 20%, respectively, of the basic annual rent payable by us under our office lease, plus certain additional costs and expenses. We have also

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entered into a sublease with ACREM, a wholly owned subsidiary of Ares Management, pursuant to which we are subleasing approximately 12% of ACREM's Chicago office space for a fixed rent equal to 12% of the basic annual rent payable by ACREM under its Chicago office lease, plus certain additional costs and expenses.

LEGAL PROCEEDINGS

              We are party to certain lawsuits in the normal course of business. In addition, Allied Capital was involved in various legal proceedings that we assumed in connection with the Allied Acquisition. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any such legal proceedings cannot at this time be predicted with certainty, we do not expect that these legal proceedings will materially affect our business, financial condition or results of operations.

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PORTFOLIO COMPANIES

              The following table describes each of the businesses included in our portfolio and reflects data as of December 31, 2012. Percentages shown for class of investment securities held by us represent percentage of the class owned and do not necessarily represent voting ownership. Percentages shown for equity securities, other than warrants or options, represent the actual percentage of the class of security held before dilution. Percentages shown for warrants and options held represent the percentage of class of security we may own assuming we exercise our warrants or options before dilution.

              We have indicated by footnote portfolio companies (a) where we directly or indirectly own more than 25% of the outstanding voting securities of such portfolio company and, therefore, are presumed to be "controlled" by us under the Investment Company Act and (b) where we directly or indirectly own 5% to 25% of the outstanding voting securities of such portfolio company or where we hold one or more seats on the portfolio company's board of directors and, therefore, are deemed to be an "affiliated person" under the Investment Company Act. We directly or indirectly own less than 5% of the outstanding voting securities of all other portfolio companies (or have no other affiliations with such portfolio companies) listed on the table. We offer to make significant managerial assistance to certain of our portfolio companies. Where we do not hold a seat on the portfolio company's board of directors, we may also receive rights to observe such board meetings.

              Where we have indicated by footnote the amount of unfunded commitments to portfolio companies to fund various revolving and delayed draw senior secured and subordinated loans, such unfunded commitments are presented net of (i) standby letters of credit treated as funded commitments because they are issued and outstanding, (ii) commitments substantially at the Company's discretion and (iii) commitments that are unavailable due to borrowing base or other covenant restrictions.

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ARES CAPITAL AND SUBSIDIARIES
PORTFOLIO COMPANIES
As of December 31, 2012
(dollar amounts in thousands)

Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
10th Street, LLC(3)   Real estate holding company   Senior subordinated loan   8.93% Cash, 4.07% PIK   11/2/2014         $ 25,208  
5 North 11th Street       Member interest             10.00 % $  
Brooklyn, NY 11211       Option             40.10 % $ 501  
                             
Access CIG, LLC   Records and information   Senior secured loan   7.00% (Libor + 5.75%/Q)   10/5/2017         $ 1,000  
205 Main Street, Suite E   management services                          
Pleasanton, CA 94566   provider                          
                             
ADF Capital, Inc. & ADF Restaurant   Restaurant owner and   Senior secured revolving loan   6.50% (Libor + 3.50%/Q)   11/27/2013         $ 1,468 (5)
Group, LLC   operator   Senior secured revolving loan   6.50% (Base Rate + 2.50%/Q)   11/27/2013         $ 200 (5)
165 Passaic Avenue       Senior secured loan   12.50% (Libor + 9.50%/Q)   11/27/2014         $ 20,234  
Fairfield, NJ 07004       Promissory note   12.00% PIK   11/27/2016         $ 18,719  
        Warrants             87.72 % $ 5,496 (2)
                             
AGILE Fund I, LLC(4)   Investment partnership   Member interest             0.50 % $ 29  
4445 Willard Avenue, 11th Floor                              
Chevy Chase, MD 20815                              
                             
AllBridge Financial, LLC(4)   Asset management services   Equity interests             100.00 % $ 7,814  
13760 Noel Road, Suite 1100                              
Dallas, TX 75240                              
                             
American Academy Holdings, LLC   Provider of education,   Senior secured revolving loan     3/18/2016         $ (6)
2480 South 3850 West, Suite B   training, certification,   Senior secured loan   9.50% (Libor + 8.50%/Q)   3/18/2016         $ 541  
Salt Lake City, UT 84120   networking, and consulting   Senior secured loan   9.50% (Libor + 8.50%/Q)   3/18/2016         $ 76,043  
    services to medical coders and other healthcare professionals                          
                             
American Broadband   Broadband communication   Senior secured loan   7.50% (Libor + 5.50%/Q)   9/1/2013         $ 7,666  
Communications, LLC, American   services   Senior secured loan   12.00% (Libor + 11.50% /Q)   12/31/2013         $ 16,476  
Broadband Holding Company, Cameron       Senior subordinated loan   12.00% Cash, 2.00% PIK   11/7/2014         $ 43,052  
Holdings of NC, Inc., and Dialog       Senior subordinated loan   10.00% Cash, 4.00% PIK   11/7/2014         $ 22,574  
Telecom LLC       Warrants             17.00 % $ 1,340 (2)
401 N. Tryon Street, 10th Floor       Warrants             20.00 % $ 2,533 (2)
Charlotte, NC 28202                              
                             
American Commercial Coatings, Inc.   Real estate property   Commercial mortgage loan       12/1/2025         $ 2,061  
2008 Cypress Street                              
Paris, KY 40362                              
                             
Apple & Eve, LLC and US Juice Partners, LLC(3)   Juice manufacturer   Senior units             9.71 % $ 1,398  
2 Seaview Blvd                              
Port Washington, NY 11050                              
                             
Athletic Club Holdings, Inc.   Premier health club   Senior secured loan   4.71% (Libor + 4.50%/M)   10/11/2013         $ 11,500  
5201 East Tudor Road   operator                          
Anchorage, AL 99507                              
                             
AWTP, LLC(4)   Water treatment services   Junior secured loan   10.00%   6/23/2015         $ 4,212  
2080 Lunt Avenue       Junior secured loan   15.00% PIK   6/23/2015         $ 6,121  
Elk Grove Village, IL 60007       Membership interest             90.00 % $ 4,580  
                             
Batanga, Inc.   Independent digital media   Senior secured revolving loan     10/31/2013         $ (7)
2121 Ponce de Leon Blvd., Suite 800   company   Senior secured loan   9.60%   10/31/2016         $ 5,594  
Coral Gables, FL 33134       Senior secured loan     10/31/2016         $ (8)
                             
BECO Holding Company, Inc.   Wholesale distributor of   Common stock             2.39 % $ 2,457  
10926 David Taylor Drive, Suite 300   first response fire protection                          
Charlotte, NC 28262   equipment and related parts                          
                             
Benihana, Inc.   Restaurant owner and   Senior secured revolving loan   9.25% (Libor + 8.00%/M)   8/21/2017         $ 431 (9)
8685 Northwest 53rd Terrace   operator   Senior secured loan   9.25% (Libor + 8.00%/Q)   2/21/2018         $ 31,769  
Miami, FL 33166                              
                             
Bushnell Inc.   Sports optics manufacturer   Junior secured loan   9.00% (Libor + 7.50%/Q)   2/24/2016         $ 48,338  
9200 Cody       Junior secured loan   9.50% (Libor + 8.00%/Q)   2/24/2016         $ 43,675  
Overland Park, KS 66214                              
                             

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Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
California Forensic Medical Group, Inc.   Correctional facility   Senior secured revolving loan   10.25% (Base Rate + 7.00%/Q)   11/16/2018         $ 2,000 (10)
300 Foam Street, Suite B   healthcare operator   Senior secured loan     11/16/2018         $ (11)
Monterey, CA 93940       Senior secured loan   9.25% (Libor + 8.00%/Q)   11/16/2018         $ 54,182  
                             
Callidus Capital Corporation(4)   Asset management services   Common stock             100.00 % $ 1,718  
2000 Avenue of the Stars, 12th Floor                              
Los Angeles, CA 90067                              
                             
Cambrios Technologies Corporation   Nanotechnology-based   Senior secured loan   12.00%   8/1/2015         $ 4,848  
930 East Arques Ave.   solutions manufacturer for   Warrants             4.88 % $ 8 (2)
Sunnyvale, CA 94085   electronic devices and                          
    computers                          
                             
Campus Management Corp. and Campus   Education software   Preferred stock             16.75 % $ 6,589  
Management Acquisition Corp.(3)   developer                          
350 Park Avenue, 23rd Floor                              
New York, NY 10022                              
                             
Capital Investments and Ventures Corp.   SCUBA diver training and   Senior secured revolving loan     8/9/2018         $ (12)
30151 Tomas Street,   certification provider   Senior secured loan   8.50% (Libor + 7.25%/Q)   8/9/2018         $ 74,812  
Rancho Santa Margarita, CA 92688                              
                             
Cast & Crew Payroll, LLC and   Payroll and accounting   Senior secured revolving loan     12/24/2017         $ (13)
Centerstage Co-Investors, L.L.C.(3)   services provider to the   Senior secured loan   7.50% (Libor + 6.50%/Q)   12/24/2017         $ 100,000  
2300 Empire Avenue, 5th Floor   entertainment industry   Class A membership units             10.13 % $ 2,500  
Burbank, CA 91504       Class B membership units             10.13 % $ 2,500  
                             
CCS Group Holdings, LLC   Correctional facility   Class A units             1.41 % $ 1,205  
3343 Perimeter Hill Drive, Suite 300   healthcare operator                          
Nashville, TN 37211                              
                             
Centinela Funding, LLC   Solar power generation   Senior secured loan   10.00% (Libor + 8.75%/Q)   11/14/2020         $ 45,000  
Two Tower Center, 11th Floor   facility developer and   Senior secured loan     11/14/2020         $ (14)
East Brunswick, NJ 08816   operator                          
                             
CFW Co-Invest, L.P. and NCP   Health club franchisor   Limited partnership interest             12.24 % $ 4,152  
Curves, L.P.       Limited partnership interest             12.24 % $ 1,848  
100 Ritchie Road                              
Waco, TX 76712                              
                             
Charter Baking Company, Inc.   Baked goods manufacturer   Senior subordinated loan   16.00% PIK   2/6/2013         $ 8,885  
3300 Walnut Street, Unit C       Preferred stock             2.79 % $ 1,617  
Boulder, CO 80301                              
                             
CIBT Investment Holdings, LLC   Expedited travel document   Class A shares             1.97 % $ 3,543  
111 Huntington Ave., 30th Floor   processing services                          
Boston, MA 02199                              
                             
CIC Flex, LP   Investment partnership   Limited partnership units             14.28 % $ 3,570  
60 South Sixth Street, Suite 3720                              
Minneapolis, MN 55402                              
                             
Ciena Capital LLC(4)   Real estate and small   Senior secured revolving loan   6.00%   12/31/2013         $ 14,000 (15)
1633 Broadway, 39th Floor   business loan servicer   Senior secured loan   12.00%   12/31/2016         $ 32,000  
New York, NY 10019       Equity interests             100.00 % $ 18,616  
                             
CitiPostal Inc.(4)   Document storage and   Senior secured revolving loan   6.75% (Base Rate + 3.25%/Q)   12/21/2013         $ 1,000 (16)
5 North 11th Street   management services   Senior secured loan   8.50% Cash, 5.50% PIK   12/21/2013         $ 54084  
Brooklyn, NY 11211       Senior subordinated loan       12/21/2015         $ 1,556  
        Common stock             63.10 % $  
                             
Cleveland East Equity, LLC   Hotel operator   Real estate equity interests             50.00 % $ 3,639  
26300 Harvard Road                              
Warrensville Heights, OH 44122                              
                             
Command Alkon, Inc.   Software solutions provider   Senior secured loan     3/28/2018         $ (17)
1800 International Park Dr., Suite 400   to the ready-mix concrete   Junior secured loan   9.75% (Libor + 8.50%/Q)   3/28/2018         $ 39,130  
Birmingham, AL 35243   industry                          
                             
Commercial Credit Group, Inc.   Commercial equipment   Senior subordinated loan   12.75%   5/10/2018         $ 28,000  
121 West Trade Street, Suite 2100   finance and leasing company                          
Charlotte, NC 28202                              
                             
Commons R-3, LLC   Real estate developer   Real estate equity interests             20.00 % $  
5555 Glenridge Connector, Suite 700                              
Atlanta, GA 30342                              
                             

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Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
Community Education Centers, Inc.   Offender re-entry and   Senior secured loan   6.25% (Libor + 5.25%/Q)   12/13/2014         $ 15,000  
35 Fairfield Place   in-prison treatment services   Senior secured loan   7.50% (Base Rate + 4.25%/Q)   12/13/2014         $ 714  
West Caldwell, NJ 07006   provider   Junior secured loan   15.33% (Libor + 8.50% Cash, 6.50% PIK/Q)   12/13/2015         $ 29,837  
        Junior secured loan   15.31% (Libor + 8.50% Cash,
6.50% PIK/Q)
  12/13/2015         $ 8,980  
        Warrants             3.84 % $ (2)
        Warrants             3.32 % $ (2)
                             
Competitor Group, Inc. and   Endurance sports media and   Senior secured revolving loan   10.00% (Base Rate + 6.75%/Q)   11/30/2018         $ 2,850 (19)
Calera XVI, LLC   event operator   Senior secured revolving loan   9.00% (Libor + 7.75%/Q)   11/30/2018         $ 900 (19)
9401 Waples Street, Suite 150       Senior secured loan     11/30/2018         $ (18)
San Diego, CA 92121       Senior secured loan   9.00% (Libor + 7.75%/Q)   11/30/2018         $ 54,500  
        Membership units             7.81 % $ 2,500  
                             
Component Hardware Group, Inc.   Commercial equipment   Junior secured loan   7.00% Cash, 3.00% PIK   12/31/2014         $ 3,202  
1890 Swarthmore Avenue   manufacturer   Senior subordinated loan   7.50% Cash, 5.00% PIK   12/31/2014         $ 11,142  
Lakewood, NJ 08701       Warrants             20.00 % $ 7,322 (2)
                             
Cook Inlet Alternative Risk, LLC   Risk management services   Senior subordinated loan   9.00%   9/30/2015         $ 2,750  
10 British American Blvd.                              
Latham, NY 12110                              
                             
Cornerstone Records Management, LLC   Physical records storage and   Senior secured revolving loan     8/12/2016         $ (20)
10440 Little Patuxent Parkway, Suite 900   management service   Senior secured loan     8/12/2016           (21)
Columbia, MD 21044   provider   Senior secured loan   10.50% (Libor + 9.00%/Q)   8/12/2016         $ 17,722  
                             
Covestia Capital Partners, LP   Investment partnership   Limited partnership interest             46.67 % $ 1,135  
11111 Santa Monica Blvd, Suite 1620                              
Los Angeles, CA 90025                              
                             
Crescent Hotels & Resorts, LLC and   Hotel operator   Senior subordinated loan       9/8/2011         $  
affiliates(4)       Senior subordinated loan       6/1/2017         $  
2000 Avenue of the Stars, 12th Floor       Common equity interest             90.00 % $  
Los Angeles, CA 90067       Limited liability company             100.00 % $  
        membership interest                      
                             
CT Technologies Intermediate   Healthcare analysis services   Senior secured loan   7.75% (Libor + 6.50%/Q)   3/15/2017         $ 14,148  
Holdings, Inc. and CT Technologies       Class A common stock             4.49 % $ 4,772  
Holdings LLC(3)       Class C common stock             20.00 % $ 1,316  
8901 Farrow Rd                              
Columbia, SC 29203                              
                             
Distant Lands Trading Co.   Coffee manufacturer   Class A common stock             3.32 % $  
801 Houser Way North       Class A-1 common stock             7.33 % $  
Renton, WA 98055                              
                             
Driven Holdings, LLC   Automotive aftermarket car   Preferred stock             1.96 % $ 2,688  
128 S. Tryon St., Ste 900   care franchisor   Common stock             1.96 % $ 137  
Charlotte, NC 28202                              
                             
Dynamic India Fund IV, LLC   Investment company   Member interest             5.44 % $ 3,104  
IFS Court, Twenty Eight                              
Cybercity, Ebene, Mauritius                              
                             
Earthcolor Group, LLC   Printing management   Limited liability company             9.30 % $  
249 Pomeroy Road   services   interests                      
Parsippany, NJ 07054                              
                             
Eckler Industries, Inc.   Restoration parts and   Senior secured revolving loan   8.25% (Base Rate + 5.00%/M)   7/12/2017         $ 1,300 (22)
5200 S. Washington Ave.   accessories provider for   Senior secured loan   7.25% (Libor + 6.00%/M)   7/12/2017         $ 52,071  
Titusville, FL 32780   classic automobiles   Series A preferred stock             5.41 % $ 1,871  
        Common stock             5.41 % $ 200  
                             
EcoMotors, Inc.   Engine developer   Senior secured loan   10.13%   7/1/2016         $ 5,000  
17000 Federal Drive, Suite 200       Senior secured loan     10/1/2016         $ (23)
Allen Park, MI 48101       Senior secured loan     4/1/2017         $ (24)
        Warrants             0.76 % $ 84 (2)
                             
eInstruction Corporation   Developer, manufacturer   Junior secured loan       7/2/2014         $  
308 N. Carroll Blvd.   and retailer of educational   Senior subordinated loan       1/2/2015         $  
Denton, TX 76201   products   Common stock             2.40 % $  
                             
ELC Acquisition Corp., ELC Holdings   Developer, manufacturer   Preferred stock   12.00% PIK         10.57 % $ 11,766  
Corporation, and Excelligence Learning   and retailer of educational   Common stock             8.47 % $ 2,789  
Corporation(3)   products                          
2 Lower Ragsdale Drive                              
Monterey, CA 93940                              
                             

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Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
EquiPower Resources Holdings, LLC   Gas-fired power generation   Junior secured loan   10.00% (Libor + 8.50%/Q)   6/21/2019         $ 22,500  
100 Constitution Plaza, 10th Floor   facilities operator                          
Hartford, CT 06103                              
                             
Financial Pacific Company   Commercial finance leasing   Preferred stock   8.00% PIK         14.84 % $ 13,687  
3455 South 344th Way, Suite 300       Common stock             14.84 % $  
Federal Way, WA 98001                              
                             
Fulton Holdings Corp.   Airport restaurant operator   Senior secured loan   12.50%   5/28/2016         $ 40,000  
5950 Fulton Industrial Blvd       Common stock             2.16 % $ 1,873  
Atlanta, GA 30336                              
                             
Geotrace Technologies, Inc.   Reservoir processing and   Warrants             62.97 % $ (2)
1011 Highway 6 South, Suite 220   development   Warrants             50.76 % $ 1,757 (2)
Houston, TX 77077                              
                             
Gilchrist & Soames, Inc.   Personal care manufacturer   Senior secured revolving loan   6.25% (Libor + 5.00%/M)   10/5/2013         $ 9,200 (25)
1535 E. Naomi Street       Senior secured loan   13.44% Cash, 2.00% PIK   10/5/2013         $ 20,847  
PO Box 33806                              
Indianapolis, IN 46203                              
                             
Gordian Acquisition Corporation   Financial services firm   Common stock             5.00 % $  
950 Third Avenue, 17th Floor                              
New York, NY 10022                              
                             
HCI Equity, LLC(4)   Investment company   Member interest             100.00 % $ 447  
2000 Avenue of the Stars, 12th Floor                              
Los Angeles, CA 90067                              
                             
HCP Acquisition Holdings, LLC(4)   Healthcare compliance   Class A units             26.80 % $  
600 Fifth Avenue, 17th Floor   advisory services                          
New York, NY 10020                              
                             
Hojeij Branded Foods, Inc.   Airport restaurant operator   Senior secured revolving loan   9.00% (Libor + 8.00%/Q)   2/15/2017         $ 1,900 (26)
12700 Spine Rd SW       Senior secured loan   9.00% (Libor + 8.00%/Q)   2/15/2017         $ 22,600  
Atlanta, GA 30320       Senior secured loan     2/15/2017         $ (27)
        Warrants             7.50 % $ 1,899 (2)
        Warrants             7.50 % $ 132 (2)
                             
Hot Light Brands, Inc.(4)   Real estate holding company   Senior secured loan       2/1/2011         $ 1,128  
11780 Manchester Road, Suite 207       Common stock             100.00 % $  
St. Louis, MO 63131                              
                             
ICSH, Inc.   Industrial container   Senior secured revolving loan     8/31/2016         $ (28)
1540 Greenwood Avenue   manufacturer, reconditioner   Senior secured loan     8/31/2016         $ (29)
Montebello, CA 90640   and servicer   Senior secured loan   8.00% (Libor + 7.00%/Q)   8/31/2016         $ 22,569  
        Senior secured loan   8.00% (Libor + 7.00%/Q)   8/31/2016         $ 353  
        Senior secured loan   8.00% (Libor + 7.00%/Q)   8/31/2016         $ 77  
        Senior secured loan   8.04% (Libor + 7.00%/Q)   8/31/2016         $ 14,795  
        Senior secured loan   8.04% (Libor + 7.00%/Q)   8/31/2016         $ 92,178  
        Senior secured loan   9.25% (Base Rate + 6.00%/Q)   8/31/2016         $ 3,750  
                             
IfByPhone Inc.   Voice-based marketing   Senior secured revolving loan     10/15/2013         $ (30)
300 W. Adams Street, Suite 900   automation software   Senior secured loan   11.00%   11/1/2015         $ 2,000  
Chicago, IL 60606   provider   Senior secured loan   11.00%   1/1/2016         $ 1,000  
        Warrants             0.50 % $ 88 (2)
                             
ILC Industries, LLC   Designer and manufacturer   Senior secured loan   7.50% (Libor + 6.00%/Q)   7/13/2018         $ 24,875  
105 Wilbur Place   of protective cases and                          
Bohemia, NY 11716   technically advanced lighting                          
    systems                          
                             
Impact Innovations Group, LLC   IT consulting and   Member interest             50.00 % $ 200  
2500 Northwinds Parkway, Suite 200   outsourcing services                          
Alpharetta, GA 30004                              
                             
Imperial Capital Group LLC   Investment services   Class A common units             5.00 % $ 18,954  
2000 Avenue of the Stars, 9th Floor S       2006 Class B common units             5.00 % $ 4  
Los Angeles, CA 90067       2007 Class B common units             5.00 % $ 1  
                             
Imperial Capital Private   Investment partnership   Limited partnership interest             80.00 % $ 8,341  
Opportunities, LP                              
2000 Avenue of the Stars, 9th Floor S                              
Los Angeles, CA 90067                              
                             
Implus Footcare, LLC   Provider of footwear and   Preferred stock   6.00% PIK         2.58 % $ 4,873  
2001 TW Alexander Drive   other accessories   Common stock             2.39 % $ 196  
P.O. Box 13925                              
Durham, NC 27709                              
                             

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Table of Contents

Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
INC Research, Inc.   Pharmaceutical and   Common stock             18.18 % $ 929  
3201 Beechleaf Court, Suite 600   biotechnology consulting                          
Raleigh, NC 27604   services                          
                             
Infilaw Holding, LLC   Operator of three for-profit   Senior secured revolving loan     8/25/2016         $ (31)
1100 5th Avenue South, Suite 301   law schools   Senior secured loan   9.50% (Libor + 8.50%/Q)   8/25/2016         $ 19,158  
Naples, FL 34102       Series A preferred units   9.50% (Libor + 8.50%/Q)         95.99 % $ 124,890  
        Series B preferred stock             6.67 % $ 9,524  
                             
Insight Pharmaceuticals Corporation(3)   OTC drug products   Junior secured loan   13.25% (Libor + 11.75%/Q)   8/26/2017         $ 19,310  
1170 Wheeler Way, Suite 150   manufactuer   Class A common stock             12.60 % $ 8,277  
Langhorne, PA 19047       Class B common stock             12.60 % $ 8,277  
                             
Instituto de Banca y Comercio, Inc. &   Private school operator   Series B preferred stock             19.59 % $ 7,143  
Leeds IV Advisors, Inc.       Series C preferred stock             0.80 % $ 159  
Calle Santa Ana 1660       Common stock             0.83 % $  
Santurce, Puerto Rico 00909-2309                              
                             
Intermedix Corporation   Revenue cycle management   Junior secured loan   10.25% (Libor + 9.00%/Q)   6/27/2019         $ 112,000  
6451 N. Federal Highway, Suite 1000   provider to the emergency                          
Fort Lauderdale, FL 33308   healthcare industry                          
                             
Investor Group Services, LLC(3)   Business consulting for   Limited liability company                 $ 711  
2020 Front Street, Suite 100   private equity and corporate   membership interest                      
Boston, MA 02116   clients                          
                             
Itel Laboratories, Inc.   Data services provider for   Senior secured revolving loan     6/29/2018         $ (32)
6745 Phillips Industrial Boulevard   building materials to   Senior secured loan   6.25% (Libor + 5.00%/Q)   6/29/2018         $ 12,263  
Jacksonville, Florida 32256   property insurance industry   Preferred units             1.80 % $ 1,093  
                             
Ivy Hill Asset Management, L.P.(4)   Asset management services   Member interest             100.00 % $ 294,258  
2000 Avenue of the Stars, 12th Floor                              
Los Angeles, CA 90067                              
                             
La Paloma Generating Company, LLC   Natural gas fired, combined   Junior secured loan   10.25% (Libor + 8.75%/Q)   8/27/2018         $ 56,640  
24 Waterway Avenue, Suite 800   cycle plant operator                          
Houston, TX 77380                              
                             
Lakeland Tours, LLC   Educational travel provider   Senior secured revolving loan     12/31/2016         $ (33)
218 West Water Street, Suite 400       Senior secured loan   9.25% (Libor + 8.25%/Q)   12/31/2016         $ 99,188  
Charlottesville, VA 22902       Senior secured loan   5.25% (Libor + 4.25%/Q)   12/31/2016         $ 1,793  
        Senior secured loan   5.25% (Libor + 4.25%/Q)   12/31/2016         $ 8,967  
        Common stock             3.53 % $ 4,555  
                             
Lighting Science Group Corporation   Designer, developer and   Letter of credit facility     2/20/2014         $ (34)
1227 South Patrick Drive, Building 2A   manufacturer of advanced                          
Satellite Beach, FL 32937   lighting products                          
                             
Magnacare Holdings, Inc., Magnacare   Healthcare professional   Senior secured revolving loan     3/16/2018         $ (35)
Administrative Services, LLC, and   provider   Senior secured loan   9.75% (Libor + 8.75%/Q)   3/16/2018         $ 63,013  
Magnacare, LLC       Senior secured loan   9.75% (Libor + 8.75%/Q)   3/16/2018         $ 70,886  
825 East Gate Blvd.                              
Garden City, NY 11530                              
                             
Massage Envy, LLC   Franchiser in the massage   Senior secured revolving loan     9/26/2018         $ (36)
14350 N. 87th Street   industry   Senior secured loan   8.50% (Libor + 7.25%/Q)   9/26/2018         $ 80,494  
Suites 200, 205 and 230       Common stock             1.66 % $ 3,000  
Scottsdale, AZ 85260                              
                             
Matrixx Initiatives, Inc. and Wonder   Developer and marketer of   Senior secured revolving loan   13.00% (Libor + 12.00%/M)   6/30/2016         $ 8,550 (37)
Holdings Acquisition Corp.   over-the-counter healthcare   Senior secured loan   13.00% (Libor + 12.00%/Q)   6/30/2016         $ 34,903  
8515 E. Anderson Dr.   products   Warrants             4.56 % $ (2)
Scottsdale, AZ 85255       Warrants             5.00 % $ (2)
                             
McKenzie Sports Products, LLC   Designer, manufacturer and   Senior secured revolving loan     3/30/2017         $ (38)
1910 Saint Luke's Church Road   distributor of taxidermy   Senior secured loan   7.00% (Libor + 5.50%/M)   3/30/2017         $ 11,833  
Salisbury, NC 28146   forms and supplies   Senior secured loan   7.00% (Libor + 5.50%/M)   3/30/2017           9,902  
        Senior secured loan   7.75% (Base Rate + 4.50%/M)   3/30/2017         $ 51  
                             
Microstar Logistics LLC, Microstar   Keg management solutions   Junior secured loan   8.50% (Libor + 7.50%/Q)   12/14/2018         $ 165,000  
Global Asset Management LLC and   provider   Common stock             3.47 % $ 5,000  
MStar Holding Corporation                              
5299 DTC Blvd., Suite 510                              
Greenwood Village, CO 80111                              
                             
Multi-Ad Services, Inc.(3)   Marketing services and   Preferred units             13.95 % $ 2,037  
1720 W. Detweiller Drive   software provider   Common units             7.48 % $  
Peoria, IL 61615                              
                             

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Table of Contents

Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
MVL Group, Inc.(4)   Marketing research provider   Senior secured revolving loan   4.94% (Libor + 4.50%/Q)   6/30/2012         $ 806 (41)
1061 E. Indiantown Road, Suite 300       Senior subordinated loan       7/8/2012         $ 5,330  
Jupiter, FL 33477       Junior subordinated loan       7/8/2012         $  
        Common stock             56.10 % $  
                             
MW Dental Holding Corp.   Dental services   Senior secured revolving loan   8.50% (Libor + 7.00%/M)   4/12/2017         $ 3,000 (39)
680 Hehli Way       Senior secured loan   8.50% (Libor + 7.00%/M)   4/12/2017         $ 114,187  
PO Box 69       Senior secured loan     4/12/2017         $ (40)
Mondovi, WI 54755                              
                             
MWI Holdings, Inc.   Provider and manufacturer   Senior secured loan   10.00% (Libor + 8.00%/Q)   6/15/2017         $ 48,274  
101 Godfrey Street   of engineered springs,                          
P.O. Box 7008   fasteners, and other                          
Logansport, IN 46947   precision components                          
                             
Napa Management Services Corporation   Anesthesia management   Senior secured revolving loan   7.50% (Libor + 6.00%/M)   4/15/2016         $ 5,250 (42)
68 South Service Road, Suite 350   services provider   Senior secured loan   7.50% (Libor + 6.00%/Q)   4/15/2016         $ 37,187  
Melville, NY 11747       Common units             8.90 % $ 6,169  
                             
National Print Group, Inc.   Printing management   Senior secured revolving loan   9.00% (Libor + 6.00%/Q)   10/31/2013         $ 895 (43)
2464 Amicola Highway   services   Senior secured revolving loan   9.00% (Base Rate + 5.00%/M)   10/31/2013         $ 1,017 (43)
Chattanooga, TN 37406       Senior secured loan   10.00% (Base Rate + 9.00% Cash, 1.00% PIK /Q)   10/31/2013         $ 327  
        Senior secured loan   10.00% (Libor + 9.00% Cash, 1.00% PIK /Q)   10/31/2013         $ 6,834  
        Preferred stock             5.17 % $  
                             
NetShape Technologies, Inc.   Metal precision engineered   Senior secured revolving loan   3.96% (Libor + 3.75%/M)   2/2/2013         $ 373 (44)
8751 Old State Road   components manufacturer                          
60 Sellersburg, IN 47172                              
                             
Netsmart Technologies, Inc. and NS   Healthcare technology   Senior secured loan   7.25% (Libor + 6.00%/Q)   12/18/2017         $ 40,095  
Holdings, Inc.   provider   Senior secured loan     12/18/2017         $ (45)
4950 College Boulevard       Common stock             1.70 % $ 2,611  
Overland Park, KS 66211                              
                             
NPH, Inc.   Hotel property   Real estate equity interests             100.00 % $ 6,123  
13175 Gregg Street                              
Poway, CA 92064                              
                             
Oak Parent, Inc.   Manufacturer of athletic   Senior secured loan   8.00% (Libor + 7.00%/Q)   4/2/2018         $ 50,727  
425 Park 20 W   apparel                          
Grovetown, GA 30813                              
                             
OnCURE Medical Corp.   Radiation oncology care   Common stock             3.29 % $  
188 Inverness Drive West, Suite 650   provider                          
Englewood, CO 80112                              
                             
Orion Foods, LLC (fka Hot Stuff   Convenience food service   Senior secured revolving loan   10.75% (Base Rate + 7.50%/M)   9/30/2014         $ 7,800 (46)
Foods, LLC)(4)   retailer   Senior secured loan   10.00% (Libor + 8.50%/Q)   9/30/2014         $ 33,477  
2930 W. Maple Street       Junior secured loan       9/30/2014         $ 17,807  
Sioux Falls, SD 57118       Class A common units             100.00 % $  
        Class B common units             25.00 % $  
        Preferred units             93.53 % $  
                             
OTG Management, LLC   Airport restaurant operator   Senior secured revolving loan     12/11/2017         $ (47)
352 Park Avenue South       Senior secured loan   8.75% (Libor + 7.25%/Q)   12/11/2017         $ 25,000  
New York, NY 10010       Senior secured loan     12/11/2017         $ (48)
        Common units             4.44 % $ 2,042  
        Warrants             7.73 % $ 4,334 (2)
                             
Panda Sherman Power, LLC   Developer and operator of a   Senior secured loan   9.00% (Libor + 7.50%/Q)   9/14/2018         $ 32,500  
4100 Spring Valley Road, Suite 1001   gas turbine power plant                          
Dallas, Texas 75244                              
                             
Panda Temple Power, LLC   Developer and operator of a   Senior secured loan   11.50% (Libor + 10.00%/Q)   7/17/2018         $ 60,000  
4100 Spring Valley Road, Suite 1001   gas turbine power plant                          
Dallas, Texas 75244                              
                             
Partnership Capital Growth Fund I, L.P.   Investment partnership   Limited partnership interest             25.00 % $ 4,197  
One Embarcadero, Suite 3810                              
San Francisco, CA 94111                              
                             
Partnership Capital Growth   Investment partnership   Limited partnership interest             2.50 % $ 1,819  
Fund III, L.P.                              
One Embarcadero, Suite 3810                              
San Francisco, CA 94111                              
                             

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Table of Contents

Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
Passport Health Communications, Inc.,   Healthcare technology   Series A preferred stock             4.31 % $ 11,448  
Passport Holding Corp. and   provider   Common stock             4.31 % $  
Prism Holding Corp.                              
720 Cool Springs Blvd., Suite 450                              
Franklin, TN 37067                              
                             
Pelican Products, Inc.   Flashlights manufacturer   Senior secured loan   7.00% (Libor + 5.50%/Q)   7/11/2018         $ 7,960  
23215 Early Avenue       Junior secured loan   11.50% (Libor + 10.00%/Q)   6/15/2019         $ 32,000  
Torrance, CA 90505                              
                             
Performance Food Group, Inc. and   Food service distributor   Junior secured loan   11.00%   5/23/2015         $ 50,000  
Wellspring Distribution Corp.       Junior secured loan   11.00%   5/23/2015         $ 50,000  
12650 East Arapahoe Road       Junior secured loan   11.00%   5/23/2015         $ 50,250  
Centennial, CO 80112       Class A non-voting common stock             33.33 % $ 6,732  
                             
Performant Financial Corporation   Collections services   Common stock             2.16 % $ 9,899  
333 North Canyons Pkwy.                              
Livermore, CA 94551                              
                             
PG Mergersub, Inc. and PGA   Provider of patient surveys,   Junior secured loan   8.25% (Libor + 7.00%/Q)   10/20/2018         $ 45,000  
Holdings, Inc.   management reports and   Common stock             0.13 % $ 697  
245 Park Avenue, 41st Floor   national databases for the   Preferred stock             0.13 % $ 14  
New York, NY 10167   integrated healthcare                          
    delivery system                          
                             
PG-ACP Co-Invest, LLC   Supplier of medical   Class A membership units             99.99 % $ 1,293  
9800 De Soto Avenue   uniforms, specialized                          
Chatsworth, CA 91311   medical footwear and                          
    accessories                          
                             
Pillar Processing LLC and PHL   Mortgage services   Senior secured loan       11/20/2018         $ 7,033  
Holding Co.(3)       Senior secured loan       5/20/2019         $ 522  
220 Northpointe       Class A common stock             100.00 % $  
Parkway, Suite G                              
Buffalo, NY 14228                              
                             
Piper Jaffray Merchant Banking Fund I, L.P.   Investment partnership   Limited partnership interest             2.00 % $ 259  
800 Nicollet Mall, Suite 800                              
Minneapolis, MN 55402                              
                             
PODS Funding Corp.   Storage and warehousing   Junior subordinated loan   12.75% Cash, 2.75% PIK   5/29/2017         $ 40,228  
5585 Rio Vista Drive                              
Clearwater, FL 33760                              
                             
Powersport Auctioneer Holdings, LLC   Powersport vehicle auction   Common units             2.38 % $ 736  
13175 Gregg Street   operator                          
Poway, CA 92064                              
                             
Pregis Corporation, Pregis Intellipack   Provider of highly-   Senior secured loan   8.50% (Base Rate + 5.25%/Q)   3/23/2017         $ 3  
Corp. and Pregis Innovative   customized, tailored   Senior secured loan   7.75% (Libor + 6.25%/Q)   3/23/2017         $ 992  
Packaging Inc.   protective packaging                          
1650 Lake Cook Rd., Suite 400   solutions                          
Deerfield, IL 60015                              
                             
Prommis Holdings, LLC   Bankruptcy and foreclosure   Class B common units             17.27 % $  
1544 Old Alabama Road   processing services                          
Roswell, GA 30076                              
                             
Promo Works, LLC   Marketing services   Senior secured loan       12/23/2013         $ 2,042  
300 Martingale Road                              
Schaumburg, IL 60173                              
                             
Protective Industries, Inc. dba Caplugs   Plastic protection products   Senior secured revolving loan   5.75% (Libor + 4.25%/M)   5/23/2016         $ 1,633 (49)
2150 Elmwood Avenue   manufacturer   Senior secured loan   5.75% (Libor + 4.25%/M)   5/23/2017         $ 1,500  
Buffalo, NY 14207       Senior secured loan     5/23/2017         $ (50)
        Senior subordinated loan   8.00% Cash, 7.25% PIK   5/23/2018         $ 695  
        Preferred stock             2.50 % $ 4,644  
                             
PRV Aerospace, LLC   Aerospace precision   Senior secured loan   6.50% (Libor + 5.25%/Q)   5/9/2018         $ 9,596  
2600 94th Street SW, Suite 150   components manufacturer   Junior secured loan   10.50% (Libor + 9.25%/Q)   5/9/2019         $ 80,000  
Everett, WA 98204                              
                             
R2 Acquisition Corp.   Marketing services   Common stock             0.33 % $ 137  
207 NW Park Ave                              
Portland, OR 97209                              
                             

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Table of Contents

Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
R3 Education, Inc. and EIC   Medical school operator   Preferred stock             15.66 % $ 1,936  
Acquisitions Corp.       Common membership             22.19 % $ 29,829  
1750 W. Broadway St. #222       interest                      
Oviedo, FL 32765       Warrants             10.00 % $ (2)
                             
RCHP, Inc.   Operator of general acute   Junior secured loan   11.50% (Libor + 10.00%/S)   5/4/2019         $ 65,000  
103 Continental Place, Suite 200   care hospitals                          
Brentwood, TN 37027                              
                             
RE Community Holdings II, Inc.and Pegasus Community Energy, LLC.   Operator of municipal recycling facilities   Preferred stock             21.43 % $ 1,487  
809 West Hill Street                              
Charlotte, NC 28208                              
                             
Reed Group, Ltd.   Medical disability   Equity interests             4.00 % $ 435  
10155 Westmoor Drive, Suite 210   management services                          
Westminster, CO 80021   provider                          
                             
Respicardia, Inc.   Developer of implantable   Senior secured loan   11.00%   7/1/2015         $ 6,000  
12400 Whitewater Drive, Suite 150   therapies to improve   Warrants             0.19 % $ 29 (2)
Minnetonka, MN 55343   cardiovascular health                          
                             
Restaurant Holding Company, LLC   Fast food restaurant   Senior secured loan   9.00% (Libor + 7.50%/M)   2/17/2017         $ 70,769  
Carretera 165 Km 6.2   operator                          
Zona Industrial Cataño                              
Cataño, Puerto Rico 00962                              
                             
S.B. Restaurant Company   Restaurant owner and   Preferred stock             2.15 % $  
14241 Firestone Blvd, Suite 315   operator   Warrants             2.50 % $ (2)
La Mirada, CA 90638                              
                             
Sage Products Holdings III, LLC   Patient infection control and   Junior secured loan   9.25% (Libor + 8.00%/Q)   6/13/2020         $ 75,000  
3909 Three Oaks Road   preventive care solutions                          
Cary, IL 60013   provider                          
                             
Saw Mill PCG Partners LLC   Metal precision engineered   Common units             66.67 % $  
8751 Old State Road 60   components manufacturer                          
Sellersburg, IN 47172                              
                             
Senior Secured Loan Fund LLC(4)   Co-investment vehicle   Subordinated certificates   8.31% (Libor + 8.00%/Q)             $ 1,263,644  
2000 Avenue of the Stars, 12th Floor                              
Los Angeles, CA 90067                              
                             
Service King Paint & Body, LLC   Collision repair site   Senior secured revolving loan     8/20/2017         $ (51)
808 S. Central Expressway   operators   Senior secured loan   8.50% (Libor + 7.25%/Q)   8/20/2017         $ 122,850  
Richardson, TX 75080       Senior secured loan   5.50% (Libor + 4.25%/Q)   8/20/2017         $ 9,925  
        Membership interest             100.00 % $ 6,684  
                             
Sigma International Group, Inc.   Water treatment parts   Junior secured loan   10.00% (Libor + 5.00% Cash,   4/10/2014         $ 4,195  
700 Goldman Drive   manufacturer       5.00% PIK /Q)                  
Cream Ridge, NJ 08514                              
                             
Soteria Imaging Services, LLC(3)   Outpatient medical imaging   Junior secured loan       11/10/2010         $ 843  
9200 Leesgate Road, Suite 800   provider   Preferred member units             89.23 % $  
Fairfax, VA 22030                              
                             
SSH Environmental Industries, Inc. and   Magnetic sensors and   Senior secured loan   9.00% (Libor + 7.50%/Q)   12/16/2016         $ 11,625  
SSH Non-Destructive Testing, Inc.   supporting sensor products   Senior secured loan     12/16/2016         $ (52)
875 N. Michigan Ave., Suite 4020   manufacturer                          
Chicago, IL 60611                              
                             
Startec Equity, LLC(4)   Communication services   Member interest             100.00 % $  
2000 Avenue of the Stars, 12th Floor                              
Los Angeles, CA 90067                              
                             
Strident Holding, Inc.   Recovery audit services   Senior secured loan   6.50% (Libor + 5.25%/Q)   7/15/2018         $ 17,910  
950 East Paces Ferry Rd., Suite 2850   provider to commercial and                          
Atlanta, GA 30326   governmental healthcare payors                          
                             
Summit Business Media Parent Holding Company LLC   Business media consulting services   Limited liability company membership interest             22.29 % $ 873  
375 Park Avenue                              
New York, NY 10152-0002                              
                             
SurgiQuest, Inc.   Medical device   Senior secured revolving loan     9/28/2014         $ (53)
333 Quarry Road   manufacturer   Senior secured loan   10.00%   10/1/2016         $ 7,000  
Milford, CT 06460       Senior secured loan     10/1/2016         $ (54)
        Warrants             5.21 % $ (2)
                             

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Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
The Dwyer Group(3)   Operator of multiple   Senior subordinated loan   12.00% Cash, 1.50% PIK   6/29/2018         $ 25,400  
7 Times Square, Suite 4307   franchise concepts primarily   Series A preferred units   8.00% PIK         18.26 % $ 13,962  
New York, NY 10036   related to home maintenance or repairs                          
                             
The Step2 Company, LLC   Toy manufacturer   Junior secured loan   10.00%   4/13/2015         $ 27,000  
10010 Aurora-Hudson Road       Junior secured loan   10.00% Cash, 6.00% PIK   4/13/2015         $ 28,876  
Streetsboro, OH 44241       Common units             1.77 % $ 94  
        Warrants             5.00 % $ 269 (2)
                             
The Teaching Company, LLC and   Education publications   Senior secured loan   9.00% (Libor + 7.50%/Q)   3/16/2017         $ 31,221  
The Teaching Company Holdings, Inc.   provider   Preferred stock             1.77 % $ 3,225  
4151 Lafayette Center Drive, No. 100       Common stock             3.64 % $ 8  
Chantilly, VA 20151                              
                             
The Thymes, LLC(4)   Cosmetic products   Preferred units   8.00% PIK         67.50 % $ 5,244  
629 9th Street SE   manufacturer   Common units             67.50 % $ 3,138  
Minneapolis, MN 55414                              
                             
Things Remembered Inc. and   Personalized gifts retailer   Senior secured revolving loan     5/24/2017         $ (55)
TRM Holdings Corporation       Senior secured loan   8.00% (Libor + 6.50%/Q)   5/24/2018         $ 14,962  
5500 Avion Park Drive                              
Highland Heights, OH 44143                              
                             
TOA Technologies, Inc.   Cloud based, mobile   Senior secured revolving loan     10/31/2014         $ (56)
3333 Richmond Road, Suite 420   workforce management   Senior secured loan   10.25%   10/31/2016         $ 12,480  
Beachwood, OH 44122   applications provider   Senior secured loan     10/31/2016         $ (57)
        Warrants             3.91 % $ 617 (2)
                             
Tradesmen International, Inc.   Construction labor support   Warrants             10.00 % $ 10,150 (2)
9760 Shepard Road                              
Macedonia, OH 44056                              
                             
Tripwire, Inc.   IT security software   Senior secured revolving loan     5/23/2018         $ (58)
101 SW Main St., Suite 1500   provider   Senior secured loan   6.00% (Libor + 4.75%/Q)   5/23/2018         $ 60,000  
Portland, OR 97204       Class A common stock             2.95 % $ 6,941  
        Class B common stock             2.95 % $ 70  
                             
U.S. Anesthesia Partners, Inc.   Anesthesiology service   Senior secured loan   6.50% (Libor + 5.50%/Q)   12/27/2018         $ 15,000  
2411 Fountain View Dr., Suite 200   provider                          
Houston, TX 77057                              
                             
UL Holding Co., LLC and
Universal Lubricants, LLC(3)
  Petroleum product
manufacturer
  Junior secured loan   9.19% (Libor + 7.19% Cash, 2.00% PIK /Q)   12/31/2014         $ 30,348  
2824 N Ohio       Junior secured loan   12.00% Cash, 2.00% PIK   12/31/2014         $ 4,920  
Wichita, KS 67201       Junior secured loan   12.00% Cash, 2.00% PIK   12/31/2014         $ 18,614  
        Junior secured loan   12.00% Cash, 3.00% PIK   12/31/2014         $ 5,078  
        Class A common units             2.68 % $ 57  
        Class B-4 common units             100.00 % $ 19  
        Class B-5 common units             59.92 % $ 226  
        Class C common units             8.60 % $ 287  
                             
United Road Towing, Inc.   Towing company   Warrants             3.00 % $ (2)
9550 Bornet Drive, Suite 301                              
Mokena, IL 60448                              
                             
Vantage Oncology, Inc.   Radiation oncology care   Common stock             5.67 % $ 2,616  
1500 Rosecrans Ave, Suite 400   provider                          
Manhattan Beach, CA 90266                              
                             
Venturehouse-Cibernet Investors, LLC   Financial settlement services   Equity interest             3.31 % $  
509 Seventh Street, N.W.   for intercarrier wireless                          
Washington, DC 20004   roaming                          
                             
VSC Investors LLC   Investment company   Membership interest             1.95 % $ 854  
401 Vance Street                              
Los Angeles, CA 90272                              
                             
VSS-Tranzact Holdings, LLC(3)   Management consulting   Common membership             5.98 % $ 3,652  
350 Park Avenue   services   interest                      
New York, NY 10022                              
                             
Wash Multifamily Laundry Systems, LLC   Laundry service and   Senior secured loan   7.00% (Base Rate + 3.75%/Q)   8/28/2014         $ 27,172  
(fka Web Services Company, LLC)   equipment provider   Junior secured loan   10.88% (Libor + 9.38%/Q)   8/28/2015         $ 90,000  
3690 Redondo Beach Ave.                              
Redondo Beach, CA 90278                              
                             
Waste Pro USA, Inc   Waste management services   Preferred Class A common             2.47 % $ 24,219  
2101 West State Road 434, Suite 315       equity                      
Longwood, FL 32779                              
                             

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Company
  Business Description   Investment   Interest(1)   Maturity Date   % of
Class
Held at
12-31-12
  Fair Value  
Woodstream Corporation   Pet products manufacturer   Senior secured loan   6.50% (Libor + 5.00%/Q)   8/31/2014         $ 18,000  
69 N. Locust Street       Senior subordinated loan   12.00%   2/27/2015         $ 45,000  
Lititz, PA 17543-1714       Common stock             2.17 % $ 2,999  
                             
Wyle Laboratories, Inc. and Wyle   Provider of specialized   Senior preferred stock   8.00% PIK         0.77 % $ 103  
Holdings, Inc.   engineering, scientific and   Common stock             0.66 % $ 2,346  
1960 E. Grand Ave., Suite 900   technical services                          
El Segundo, CA 90245-5023                              

(1)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate loans to our portfolio companies bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), at the borrower's option, which resets daily (D), monthly (M), bimonthly (B), quarterly (Q) or semiannually (S). For each such loan, we have provided the current interest rate in effect as of September 30, 2012.

(2)
Percentages shown for warrants or convertible preferred stock held represents the percentages of common stock we may own on a fully diluted basis, assuming we exercise our warrants or convert our preferred stock to common stock.

(3)
As defined in the Investment Company Act, we are an "Affiliate" of this portfolio company because we own 5% or more of the portfolio company's outstanding voting securities.

(4)
As defined in the Investment Company Act, we are an "Affiliate" of this portfolio company because we own 5% or more of the portfolio company's outstanding voting securities or we have the power to exercise control over the management or policies of such portfolio company (including through a management agreement). In addition, as defined in the Investment Company Act, we "Control" this portfolio company because we own more than 25% of the portfolio company's outstanding voting securities or we have the power to exercise control over the management or policies of such portfolio company (including through a management agreement).

(5)
$3,332 of total commitment of $5,000 remains unfunded as of December 31, 2012.

(6)
Total commitment of $4,400 remains unfunded as of December 31, 2012.

(7)
Total commitment of $4,000 remains unfunded as of December 31, 2012.

(8)
Total commitment of $4,500 remains unfunded as of December 31, 2012.

(9)
$2,800 of total commitment of $3,231 remains unfunded as of December 31, 2012.

(10)
$1,058 of total commitment of $5,000 remains unfunded as of December 31, 2012.

(11)
Total commitment of $10,000 remains unfunded as of December 31, 2012.

(12)
Total commitment of $10,000 remains unfunded as of December 31, 2012.

(13)
Total commitment of $20,000 remains unfunded as of December 31, 2012.

(14)
Total commitment of $11,000 remains unfunded as of December 31, 2012.

(15)
$0 of total commitment of $20,000 remains unfunded as of December 31, 2012.

(16)
$2,700 of total commitment of $3,700 remains unfunded as of December 31, 2012.

(17)
Total commitment of $7,500 remains unfunded as of December 31, 2012.

(18)
Total commitment of $12,500 remains unfunded as of December 31, 2012.

(19)
$0 of total commitment of $3,750 remains unfunded as of December 31, 2012.

(20)
Total commitment of $2,333 remains unfunded as of December 31, 2012.

(21)
Total commitment of $3,867 remains unfunded as of December 31, 2012.

(22)
$6,200 of total commitment of $7,500 remains unfunded as of December 31, 2012.

(23)
Total commitment of $5,000 remains unfunded as of December 31, 2012.

(24)
Total commitment of $5,000 remains unfunded as of December 31, 2012.

(25)
$800 of total commitment of $10,000 remains unfunded as of December 31, 2012.

(26)
$459 of total commitment of $2,500 remains unfunded as of December 31, 2012.

(27)
Total commitment of $24,900 remains unfunded as of December 31, 2012.

(28)
$8,061 of total commitment of $10,000 remains unfunded as of December 31, 2012.

(29)
Total commitment of $23,750 remains unfunded as of December 31, 2012.

(30)
Total commitment of $1,000 remains unfunded as of December 31, 2012.

(31)
$14,132 of total commitment of $25,000 remains unfunded as of December 31, 2012.

(32)
Total commitment of $2,500 remains unfunded as of December 31, 2012.

(33)
$21,162 of total commitment of $22,500 remains unfunded as of December 31, 2012.

(34)
$0 of total commitment of $25,000 remains unfunded as of December 31, 2012.

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Table of Contents

(35)
Total commitment of $10,000 remains unfunded as of December 31, 2012.

(36)
Total commitment of $5,000 remains unfunded as of December 31, 2012.

(37)
$5,500 of total commitment of $15,000 remains unfunded as of December 31, 2012.

(38)
Total commitment of $3,000 remains unfunded as of December 31, 2012.

(39)
$7,000 of total commitment of $10,000 remains unfunded as of December 31, 2012.

(40)
Total commitment of $10,300 remains unfunded as of December 31, 2012.

(41)
$9,194 of total commitment of $10,000 remains unfunded as of December 31, 2012.

(42)
$3,750 of total commitment of $9,000 remains unfunded as of December 31, 2012.

(43)
$1,464 of total commitment of $4,109 remains unfunded as of December 31, 2012.

(44)
$557 of total commitment of $972 remains unfunded as of December 31, 2012.

(45)
Total commitment of $2,905 remains unfunded as of December 31, 2012.

(46)
$2,200 of total commitment of $10,000 remains unfunded as of December 31, 2012.

(47)
Total commitment of $2,500 remains unfunded as of December 31, 2012.

(48)
Total commitment of $22,500 remains unfunded as of December 31, 2012.

(49)
$2,994 of total commitment of $4,667 remains unfunded as of December 31, 2012.

(50)
Total commitment of $4,666 remains unfunded as of December 31, 2012.

(51)
Total commitment of $10,000 remains unfunded as of December 31, 2012.

(52)
Total commitment of $10,455 remains unfunded as of December 31, 2012.

(53)
Total commitment of $2,000 remains unfunded as of December 31, 2012.

(54)
Total commitment of $2,000 remains unfunded as of December 31, 2012.

(55)
Total commitment of $5,000 remains unfunded as of December 31, 2012.

(56)
Total commitment of $4,000 remains unfunded as of December 31, 2012.

(57)
Total commitment of $3,000 remains unfunded as of December 31, 2012.

(58)
Total commitment of $10,000 remains unfunded as of December 31, 2012.

              Set forth below is a brief description of each portfolio company in which we have made an investment that represents greater than 5% of our total assets as of December 31, 2012.

Senior Secured Loan Fund LLC

              The Senior Secured Loan Fund LLC, or SSLP, was formed in December 2007. We and GE co-invest through the SSLP in first lien senior secured loans of middle-market companies and, as of December 31, 2012, the SSLP had available capital of $9.0 billion of which approximately $6.3 billion in aggregate principal amount was funded. As of December 31, 2012, we had agreed to make available to the SSLP approximately $1.8 billion, of which approximately $1.2 billion was funded. The SSLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SSLP must be approved by an investment committee of the SSLP consisting of representatives of the Company and GE (with approval from a representative of each required). The SSLP consists of a diverse portfolio of first lien senior secured loans to 36 different borrowers as of December 31, 2012 and the portfolio companies in the SSLP are in industries similar to the companies in Ares Capital's portfolio.

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MANAGEMENT

              Our business and affairs are managed under the direction of our board of directors. The responsibilities of the board of directors include, among other things, the quarterly valuation of our investments. The size of our board of directors is set at nine members and currently consists of four directors who are "interested persons" of Ares Capital as defined in Section 2(a)(19) of the Investment Company Act and five directors who are not such "interested persons." We refer to the directors who are non-interested persons as our "independent directors." We refer to our directors who are "interested persons" as our "interested directors." Our board of directors elects our officers, who serve at the discretion of the board of directors. The board of directors maintains an audit committee and nominating and governance committee, and may establish additional committees from time to time as necessary.

EXECUTIVE OFFICERS AND BOARD OF DIRECTORS

              Under our charter and bylaws, our directors are divided into three classes. Directors are elected for staggered terms of three years each, with the term of office of only one of these three classes of directors expiring each year. Each director will hold office for the term to which he or she is elected and until his or her successor is duly elected and qualifies.

Directors

              Information regarding the board of directors is as follows:

Name
  Age   Position   Director
Since
  Expiration
of Term
 

Independent Directors

                       

Steve Bartlett

    65   Director     2012     2015  

Ann Torre Bates

    55   Director     2010     2014  

Steven B. McKeever

    52   Director     2012     2014  

Frank E. O'Bryan

    79   Director     2005     2013  

Eric B. Siegel

    55   Director     2004     2013  

Interested Directors

                       

Michael J. Arougheti

    40   President and Director     2009     2014  

Antony P. Ressler

    52   Director     2010     2013  

Robert L. Rosen

    66   Director     2004     2015  

Bennett Rosenthal

    49   Chairman and Director     2004     2015  

              The address for Mr. Arougheti and Mr. Rosen is c/o Ares Capital Corporation, 245 Park Avenue, 44th Floor, New York, New York 10167. The address for each other director is c/o Ares Capital Corporation, 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067.

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Executive Officers and Certain Other Officers Who Are Not Directors

              Information regarding our executive officers and certain other officers who are not directors is as follows:

Name
  Age   Position

Joshua M. Bloomstein

    39   Vice President, General Counsel and Secretary

Miriam Krieger

    36   Chief Compliance Officer

Scott C. Lem

    35   Assistant Treasurer

Daniel F. Nguyen

    41   Vice President and Treasurer

Penni F. Roll

    47   Chief Financial Officer

Michael D. Weiner

    60   Vice President

              The address for Mr. Bloomstein and Ms. Roll is c/o Ares Capital Corporation, 245 Park Avenue, 44th Floor, New York, New York 10167. The address for Ms. Krieger is c/o Ares Capital Corporation, 2200 Pennsylvania Avenue, Suite 600-W, Washington, DC 20037. The address for each other executive officer and listed officer is c/o Ares Capital Corporation, 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067.

Biographical Information and Discussion of Experience and Qualifications, etc.

Directors

              As described below under "Committees of the Board of Directors—Nominating and Governance Committee," the board of directors has identified certain desired attributes for director nominees. Each of our directors has demonstrated high character and integrity, superior credentials and recognition in his or her respective field and the relevant expertise and experience upon which to be able to offer advice and guidance to our management. Each of our directors also has sufficient time available to devote to the affairs of the Company, is able to work with the other members of the board of directors and contribute to the success of the Company and can represent the long-term interests of the Company's stockholders as a whole. Our directors have been selected such that the board of directors represents a range of backgrounds and experience. Set forth below is biographical information of each director and in the paragraph immediately following such director's biographical information, a paragraph discussing such director's particular experience, qualifications, attributes or skills that lead us and our board of directors to conclude, as of the date of this prospectus, that such individual should serve as a director, in light of the Company's business and structure.

Independent Directors

              Steve Bartlett, 65, has served as a director of the Company since 2012. Mr. Bartlett has been a consultant since 2012, providing strategic independent consulting services to several U.S. corporations. From 1999 to 2012, Mr. Bartlett served as President and Chief Executive Officer of the Financial Services Roundtable. For the past several years, Mr. Bartlett has sat on the board of directors of BIPAC and Easter Seals of Greater Washington, DC. In 2001, Mr. Bartlett served on the President's Commission on Excellence in Special Education. Mr. Bartlett previously served as the Mayor of Dallas, Texas from 1991 to 1995, a member of the United States Congress from 1983 to 1991, and a member of the Dallas City Council from 1977 to 1981. Mr. Bartlett also founded Meridian Products Corporation, a manufacturer of injection molded plastics in 1976. Mr. Bartlett previously served on the Board of Governors of the National YMCA and on the board of directors for the following companies: Centene Corporation (NYSE), IMCO Recycling, Inc. (NYSE), KB Home Corporation (NYSE), Sun Coast Industries (NYSE), Dallas Can! and Grace Presbyterian Village. Mr. Bartlett also served as co-chair of Character Counts of Dallas and chair of the Trinity Trails. Mr. Bartlett also served on the

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Dallas-Fort Worth International Airport Board. Mr. Bartlett graduated from the University of Texas at Austin in 1971, later serving as a guest lecturer at the Lyndon B. Johnson School of Public Affairs.

              The Company believes that Mr. Bartlett's experience serving as President and Chief Executive Officer of the Financial Services Roundtable, his experience in politics (including serving as the Mayor of Dallas, Texas, a member of the United States Congress, and a member of the Dallas City Council) and his service as a director of public and private companies provides the board of directors with key experience and insight to the Company, especially with respect to issues specific to boards of directors of public companies and companies in the financial services industry.

              Ann Torre Bates, 55, has served as a director of the Company since 2010 and is currently the chairperson of the audit committee. Ms. Bates currently dedicates her time serving on the boards of directors of several companies in the financial sector. From 1997 to 2012, Ms. Bates was a strategic and financial consultant, principally with respect to corporate finance matters. From 1995 to 1997, Ms. Bates served as Executive Vice President, Chief Financial Officer and Treasurer of NHP, Inc., a national real estate services firm. From 1991 to 1995, Ms. Bates was Vice President and Treasurer of US Airways, and held various finance positions from 1988 to 1991. Ms. Bates holds a BBA in Accountancy from the University of Notre Dame and an MBA in Finance and Economics from Cornell University. She currently serves on the board of directors of the Franklin Mutual Series and Recovery Funds, the Franklin Templeton Funds, the Franklin Alternative Strategic Funds and SLM Corporation (Sallie Mae). She served as a director of Allied Capital Corporation from 2003 to 2010.

              We believe that Ms. Bates' experience serving as a director of other public companies in the financial sector, as well as her past experience as a chief financial officer, provides the board of directors and, specifically, the audit committee of the board of directors with valuable knowledge and insight in the financial services sector as well as experience in financial and accounting matters.

              Steven B. McKeever, 52, has served as a director of the Company since 2012 and currently serves on the nominating and governance committee. Mr. McKeever is the CEO of Hidden Beach Recordings, an independent record label based in Los Angeles, California, which Mr. McKeever founded in 1997. From 1991 to 1995, Mr. McKeever was with Motown Records, where he served as Executive Vice President of Talent and Creative Affairs from 1993 to 1995 and Senior Vice President of Artists and Repertoire from 1991 to 1993. In 1992, Mr. McKeever created MoJAZZ Records, a subsidiary of Motown Records and served as its President. In 1993, he was instrumental in the sale of Motown Records to PolyGram Records. Mr. McKeever eventually left Motown Records in 1995 to work on his own entrepreneurial projects. Mr. McKeever began his career at the law firm of Irell & Manella LLP in Los Angeles as an entertainment lawyer. In 2011, Mr. McKeever served as the Executive Producer of Entertainment for the dedication of the Martin Luther King, Jr. Memorial in Washington, D.C. Mr. McKeever currently serves as a director of several organizations, including College Bound, African Ancestry.com and The Pacific Institute Spirit Board. He served as a Governor of the Los Angeles Chapter of The National Academy of Recording Arts and Sciences (a/k/a The GRAMMYs) from 2001 to 2003 and 2008 to 2010 and gives generous time to various charitable organizations such as The City of Hope. Mr. McKeever received his B.S. from the University of Illinois at Urbana Champaign and received his J.D. from Harvard Law School.

              We believe that Mr. McKeever's diversity of experiences, in particular his small business and entrepreneurial experience, provides the board of directors with unique insight and expertise into the management of small and middle market companies.

              Frank E. O'Bryan, 79, has served as a director of the Company since 2005 and currently serves on the audit committee and the nominating and governance committee. Mr. O'Bryan served as Chairman of the Board of WMC Mortgage Company from 1997 to 2003 and as a Vice Chairman until 2004, when the company was sold to General Electric Corporation. Mr. O'Bryan served as Vice Chairman of Shearson/American Express Mortgage Corp. (formerly Western Pacific Financial) and as a

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Director of Shearson American Express from 1981 to 1985 and prior to that served as a Director and senior executive of Shearson Hayden Stone from 1979 to 1981. Mr. O'Bryan holds a BS in Business from the University of Arizona. Mr. O'Bryan is a past member of the boards of directors of Damon Corporation, Grubb & Ellis, Standard Pacific Corporation, Farmers & Merchants Bank and The First American Financial Corporation.

              We believe that Mr. O'Bryan's long and varied business career, including his service as a director of numerous public and private companies, allows him to provide key experience and insight, especially with respect to issues specific to boards of directors of public companies and companies in the financial services industry, and that Mr. O'Bryan also provides valuable knowledge and expertise in financial and accounting matters to the board of directors and the audit committee from his service on the audit committees of The First American Financial Corporation and Standard Pacific Corporation.

              Eric B. Siegel, 55, has served as a director of the Company since 2004 and has been the lead independent director of the board of directors since 2010. Mr. Siegel currently serves on the audit committee and is the chairperson of the nominating and governance committee. Since 1995, Mr. Siegel has been an independent business consultant providing advice through a limited liability company owned by Mr. Siegel, principally with respect to acquisition strategy and structuring, and the subsequent management of acquired entities. Mr. Siegel is currently a member of the Advisory Board of and Special Advisor to the Chairman of the Milwaukee Brewers Baseball Club and a Director and Chairman of the Executive Committee of El Paso Electric Company, a NYSE publicly traded utility company. Mr. Siegel is also a past member of the boards of directors of a number of public and private companies, including Kerzner International Ltd. until it went private in 2006. Mr. Siegel rejoined the board of Kerzner International Ltd., currently a private company, in 2008. Mr. Siegel is a retired limited partner of Apollo Advisors, L.P. and Lion Advisors, L.P., private investment management firms. Mr. Siegel is a past member of the Board of Trustees of the Marlborough School, a member of the board of directors of the Friends of the Los Angeles Saban Free Clinic and a board member of Reprise Theatre Company, a non-profit theatre organization. Mr. Siegel holds his BA summa cum laude and Phi Beta Kappa and JD Order of the Coif from the University of California at Los Angeles.

              We believe that Mr. Siegel's experience practicing as a corporate lawyer provides valuable insight to the board of directors on regulatory and risk management issues and that his experience as a partner in investment firms and over 20 years of experience serving as a director for both public and private companies provide industry-specific knowledge and expertise to the board of directors.

Interested Directors

              Michael J. Arougheti, 40, has served as President of the Company since May 2004 and as a director of the Company since 2009. Mr. Arougheti joined Ares Management in May 2004 and is a Senior Partner in the Ares Management Private Debt Group. He is a member of the Executive Committee of Ares Partners Management Company LLC, which indirectly controls Ares Management, the managing member of our investment adviser. Mr. Arougheti also is a member of the Investment Committees of our investment adviser, the Ares Management Private Debt Group, Ares Management Europe Limited (through which Ares Management conducts its European private debt and capital markets businesses) and Ares Commercial Real Estate Management LLC, the manager of Ares Commercial Real Estate Corporation. Mr. Arougheti may from time to time serve as an officer, director or principal of entities affiliated with Ares Management or of investment funds managed by Ares Management and its affiliates. From 2001 to 2004, Mr. Arougheti was employed by Royal Bank of Canada, where he was a Managing Partner of the Principal Finance Group of RBC Capital Partners and a member of the firm's Mezzanine Investment Committee. At RBC Capital Partners, Mr. Arougheti oversaw an investment team that originated, managed and monitored a diverse portfolio of middle market leveraged loans, senior and junior subordinated debt, preferred equity and common stock and warrants on behalf of RBC and other third party institutional investors. Mr. Arougheti joined

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Royal Bank of Canada in October 2001 from Indosuez Capital, where he was a Principal, responsible for originating, structuring and executing leveraged transactions across a broad range of products and asset classes. Mr. Arougheti also sat on the firm's Investment Committee. Prior to joining Indosuez in 1994, Mr. Arougheti worked at Kidder, Peabody & Co., where he was a member of the firm's Mergers and Acquisitions Group. In addition to serving as Chairman of the board of directors of Ares Commercial Real Estate Corporation, Mr. Arougheti also serves on the boards of directors of Investor Group Services, Riverspace Arts and Operation Hope. Mr. Arougheti received a BA in Ethics, Politics and Economics, cum laude, from Yale University.

              We believe that Mr. Arougheti's depth of experience in investment management, leveraged finance and financial services, as well as his intimate knowledge of the Company's business and operations, gives the board of directors valuable industry-specific knowledge and expertise on these and other matters. Mr. Arougheti is an interested director because he is the President of the Company, is on the Investment Committee of our investment adviser, and is a member of, and serves on the Executive Committee of, Ares Partners Management Company LLC.

              Antony P. Ressler, 52, has served as a director of the Company since April 2010. Mr. Ressler co-founded Ares Management in 1997 and is a Senior Partner in the Ares Management Private Equity Group and is a member of the Executive Committee of Ares Partners Management Company LLC, which indirectly controls Ares Management, the managing member of our investment adviser. Mr. Ressler is a Senior Advisor to the Ares Management Capital Markets Group and is a member of the Investment Committees of funds managed by the Ares Management Private Equity Group and certain funds managed by the Ares Management Capital Markets Group. Mr. Ressler may from time to time serve as an officer, director or principal of entities affiliated with Ares Management or of investment funds managed by Ares Management and its affiliates. Prior to Ares, Mr. Ressler was a co-founder of Apollo Management, L.P. in 1990 and was a member of the original six-member management team. Mr. Ressler oversaw and led the capital markets activities of Apollo Management, L.P. and Lion Advisors, L.P. from 1990 until 1997, particularly focusing on high yield bonds, leveraged loans and other fixed income assets. Prior to 1990, Mr. Ressler served as a Senior Vice President in the High Yield Bond Department of Drexel Burnham Lambert Inc., with responsibility for the New Issue/Syndicate Desk. Mr. Ressler currently serves on the board of directors of Air Lease Corporation. Mr. Ressler is also a member of the Executive Committee of the Board of Trustees of the Cedars Sinai Medical Center, is Finance Chair and a member of the Executive Committee of the Los Angeles County Museum of Art (LACMA), and is Founder and Co-Chairman of the Alliance for College Ready Public Schools, a high performing group of eighteen charter high schools and middle schools based in Los Angeles. Mr. Ressler is also one of the founding members of the board and Finance Chair of the Painted Turtle Camp, a southern California based organization (affiliated with Paul Newman's Hole in the Wall Association), which was created to serve children dealing with chronic and life threatening illnesses by creating memorable, old-fashioned camping experiences. Mr. Ressler is also a former member of the board of directors of WCA Waste Corporation. Mr. Ressler received his BSFS from Georgetown University's School of Foreign Service and received his MBA from Columbia University's Graduate School of Business.

              We believe that Mr. Ressler's intimate knowledge of the business and operations of Ares Management and the Company, his extensive experience in the financial industry and as a partner in investment firms and his service as a director of other public companies provides industry-specific knowledge and expertise to the board of directors. Mr. Ressler is an interested director because he is a member of, and serves on the Executive Committee of, Ares Partners Management Company LLC.

              Robert L. Rosen, 66, has served as a director of the Company since 2004. Mr. Rosen is an Operating Advisor to the Ares Management Private Equity Group. Mr. Rosen is the managing partner of RLR Capital Partners, which invests principally in the securities of publicly traded North American companies. From 2005 to 2008, Mr. Rosen was a Managing Partner of RLR Focus Fund LP, an "active

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value" hedge fund. From 1995 to 2001, Mr. Rosen served as an exclusive consultant to Apollo Management, L.P. In 1998, Mr. Rosen founded National Financial Partners (NYSE: "NFP"), an independent provider of financial services to high net worth individuals and small to medium sized corporations. He served as NFP's CEO from 1998 to 2000 and as its Chairman until January 2002. From 1987 to 1993, Mr. Rosen was a Managing Partner of Ballantrae Partners, L.P., an investment partnership. From 1989 to 1993, Mr. Rosen was Chairman and CEO of Damon Corporation, a leading healthcare and laboratory testing company that was ultimately sold to Quest Diagnostics. From 1983 to 1987, Mr. Rosen was Vice Chairman of Maxxam Group. Prior to that, Mr. Rosen spent twelve years at Shearson American Express in positions in research, investment banking and senior management, and for two years was Assistant to Sanford Weill, the then Chairman and CEO of Shearson. In 2012, Mr. Rosen joined the board of directors of Ares Commercial Real Estate Corporation and Sapient Corporation. Mr. Rosen is a member of the NYU Stern School of Business Board of Overseers and a member of the Council on Foreign Relations. Mr. Rosen received an undergraduate degree from City University of New York and an M.B.A. in finance from NYU's Stern School.

              We believe that Mr. Rosen's over 31 years of experience as a senior executive of financial services, healthcare services and private equity funds brings broad financial industry and specific investment management insight and experience to the board of directors and that his expertise in finance provides valuable knowledge to the board of directors. Mr. Rosen is an interested director because of his role as an Operating Adviser to the Ares Management Private Equity Group.

              Bennett Rosenthal, 49, has served as Chairman of our board of directors since 2004. Mr. Rosenthal joined Ares Management in 1998 and is a Senior Partner in and the Co-Head of the Ares Management Private Equity Group. He is a member of the Executive Committee of Ares Partners Management Company LLC, which indirectly controls Ares Management, the managing member of our investment adviser. Mr. Rosenthal also is a member of the Investment Committees of our investment adviser, the funds managed by the Ares Management Private Equity Group and the Private Debt Group. Mr. Rosenthal may from time to time serve as an officer, director or principal of entities affiliated with Ares Management or of investment funds managed by Ares Management and its affiliates. Prior to joining Ares, Mr. Rosenthal was Managing Director in the Global Leveraged Finance Group of Merrill Lynch and was responsible for originating, structuring and negotiating leveraged loan and high yield financings. Mr. Rosenthal is a member of the following boards of directors: AmeriQual Management, Inc., Aspen Dental Management, Inc., City Ventures, LLC, Dawn Holdings, Inc., Jacuzzi Brands Inc. and Nortek, Inc. Mr. Rosenthal is also a former member of the board of directors of Hanger Orthopedic Group, Inc. and Maidenform Brands, Inc. Mr. Rosenthal graduated summa cum laude with a BS in Economics from the University of Pennsylvania's Wharton School of Business where he also received his MBA with distinction.

              We believe that Mr. Rosenthal's intimate knowledge of the business and operations of Ares Management, extensive experience in the financial industry as well as the management of private equity and debt investments in particular and experience as a director of other public and private companies not only give the board of directors valuable insight but also position him well to continue to serve as the chairman of our board of directors. Mr. Rosenthal is an interested director because he is on the Investment Committee of our investment adviser and is a member of, and serves on the Executive Committee of, Ares Partners Management Company LLC.

Executive Officers and Certain Other Officers Who Are Not Directors

              Joshua M. Bloomstein, 39, serves as the General Counsel, Vice President and Secretary of the Company. He joined Ares Management in November 2006 and currently serves as the Deputy General Counsel of Ares Management, and may from time to time serve as an officer, director or principal of entities affiliated with Ares Management or of investment funds managed by Ares Management and its affiliates. Prior to joining Ares, Mr. Bloomstein was an attorney with Latham & Watkins LLP

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specializing in leveraged buyouts and private equity investments as well as general partnership and corporate matters. Mr. Bloomstein graduated magna cum laude with a BA in Political Science from the State University of New York at Albany and received a JD degree, magna cum laude, from the University of Miami School of Law where he was appointed to the Order of the Coif.

              Miriam Krieger, 36, serves as Chief Compliance Officer of the Company. She joined Ares Management in April 2010 and currently serves as Ares Management's Deputy Chief Compliance Officer—Private Debt, and may from time to time, serve as an officer, director or principal of entities affiliated with Ares Management or of investment funds managed by Ares Management and its affiliates. From March 2008 until joining Ares, Ms. Krieger was Chief Compliance Officer and Corporate Secretary of Allied Capital Corporation, where she also served as Executive Vice President from August 2008 until April 2010 and as Senior Vice President from March 2008 to August 2008. Ms. Krieger also served as Senior Vice President and Chief Compliance Officer at MCG Capital Corporation, a publicly traded business development company, from 2006 to 2008 and Vice President and Assistant General Counsel from 2004 to 2006. From 2001 to 2004, Ms. Krieger was an associate in the Financial Services Group of the law firm of Sutherland Asbill & Brennan LLP. Ms. Krieger graduated with a BA in Economics and Political Science from Wellesley College and received a JD and an MA in Economics from Duke University.

              Scott C. Lem, 35, serves as Assistant Treasurer of the Company. He joined Ares Management in July 2003 and currently serves as Chief Accounting Officer of Ares Capital Management, and may from time to time serve as an officer, director or principal of entities affiliated with Ares Management or of investment funds managed by Ares Management and its affiliates. From July 2003 to December 2008, Mr. Lem served as Controller of Ares Management. Previously, Mr. Lem was with Ernst & Young LLP and Arthur Andersen LLP, most recently as a Senior Associate conducting audits for clients across several industries including entertainment, hospitality and real estate. Mr. Lem graduated summa cum laude with a BS in Accounting from the University of Southern California's Leventhal School of Accounting and summa cum laude with a BS in Business Administration from the University of Southern California's Marshall School of Business. Mr. Lem has also received an MBA in Finance from UCLA's Anderson School of Management. Mr. Lem is a Certified Public Accountant (Inactive).

              Daniel F. Nguyen, 41, serves as a Vice President and Treasurer of the Company. He joined Ares Management in August 2000 and currently serves as Vice President, Chief Financial Officer and Treasurer of Ares Management, and may from time to time serve as an officer, director or principal of entities affiliated with Ares Management or of investment funds managed by Ares Management and its affiliates. Mr. Nguyen has also served as Treasurer of Ares Commercial Real Estate Corporation and Chief Financial Officer of Ares Dynamic Credit Allocation Fund, Inc. since 2011. From March 2007 to December 2010, Mr. Nguyen served as Treasurer of the Company and from August 2004 to March 2007, as Chief Financial Officer of the Company. From 1996 to 2000, Mr. Nguyen was with Arthur Andersen LLP, where he was in charge of conducting business audits on numerous financial clients, performing due diligence investigation of potential mergers and acquisitions and analyzing changes in accounting guidelines for derivatives. At Arthur Andersen LLP, Mr. Nguyen also focused on treasury risk management and on mortgage backed securities and other types of structured financing. Mr. Nguyen graduated with a BS in Accounting from the University of Southern California's Leventhal School of Accounting and received an MBA in Global Business from Pepperdine University's Graziadio School of Business and Management. Mr. Nguyen also studied European Business at Oxford University as part of the MBA curriculum. Mr. Nguyen is a Chartered Financial Analyst and a Certified Public Accountant.

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              Penni F. Roll, 47, serves as the Chief Financial Officer of the Company. She joined Ares Management in April 2010 as Executive Vice President—Finance of Ares Capital Management and may from time to time serve as an officer, director or principal of entities affiliated with Ares Management or of investment funds managed by Ares Management and its affiliates. Ms. Roll served as Chief Financial Officer of Allied Capital Corporation from 1998 until April 2010. Ms. Roll joined Allied Capital Corporation in 1995 as its Controller after serving as a Manager in KPMG LLP's financial services practice. Ms. Roll graduated magna cum laude with a BSBA in Accounting from West Virginia University. Ms. Roll is a Certified Public Accountant (Inactive).

              Michael D. Weiner, 60, serves as a Vice President of the Company. Mr. Weiner is also Vice President, General Counsel and Secretary of Ares Management, and may from time to time serve as an officer, director or principal of entities affiliated with Ares Management or of investment funds managed by Ares Management and its affiliates. Mr. Weiner has also served as Vice President and General Counsel of Ares Commercial Real Estate Corporation since 2012. From September 2006 to January 2010, Mr. Weiner served as General Counsel of the Company. Mr. Weiner joined Ares Management in September 2006. Previously, Mr. Weiner served as General Counsel to Apollo Management L.P. and had been an officer of the corporate general partners of Apollo since 1992. Prior to joining Apollo, Mr. Weiner was a partner in the law firm of Morgan, Lewis & Bockius specializing in corporate and alternative financing transactions, securities law as well as general partnership, corporate and regulatory matters. Mr. Weiner has served on the boards of directors of several corporations. Mr. Weiner also serves on the Board of Governors of the Cedars Sinai Medical Center in Los Angeles. Mr. Weiner graduated with a BS in Business and Finance from the University of California at Berkeley and a JD from the University of Santa Clara.

INVESTMENT COMMITTEE

              Information regarding the members of Ares Capital Management's investment committee is as follows:

Name
  Age   Position

Michael J. Arougheti

    40   President and Director of the Company, Member of Investment Committee, Portfolio Manager

Eric B. Beckman

    47   Member of Investment Committee, Portfolio Manager

R. Kipp deVeer

    40   Member of Investment Committee, Portfolio Manager

Mitchell Goldstein

    46   Member of Investment Committee, Portfolio Manager

John Kissick

    71   Member of Investment Committee, Portfolio Manager

Bennett Rosenthal

    49   Chairman and Director of the Company, Member of Investment Committee, Portfolio Manager

David Sachs

    53   Member of Investment Committee, Portfolio Manager

Michael L. Smith

    42   Member of Investment Committee, Portfolio Manager

              The principal business address for Messrs. Arougheti, deVeer, Goldstein and Smith is c/o Ares Management LLC, 245 Park Avenue, 44th Floor, New York, New York 10167. The principal business

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address for Messrs. Beckman, Kissick, Rosenthal and Sachs is c/o Ares Management LLC, 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067.

Members of Ares Capital Management's Investment Committee Who Are Not Directors or Officers of the Company

              Eric B. Beckman—Mr. Beckman joined Ares Management in 1998 and serves as a Senior Partner in the Ares Management Private Debt Group. He is a member of the Investment Committees of our investment adviser and the Ares Management Private Debt Group. Before joining the Ares Management Private Debt Group, he served as a Partner in the Ares Management Private Equity Group and a Principal in Ares' mezzanine and special situations effort. While at Ares, he has been responsible for originating, structuring and managing investments in senior loans, mezzanine debt, private equity and distressed securities across a number of industries. Mr. Beckman joined Ares from Goldman, Sachs & Co. where he specialized in leveraged loan and high yield bond financings. While at Goldman Sachs, he was also involved in raising and managing the West Street Bridge Loan Fund, and in certain restructuring advisory and distressed lending activities. Earlier in his career he worked in the Office of the Mayor and for the City Council of New York. Mr. Beckman is the chair of the Los Angeles Advisory Committee and a member of the national board of directors of the Posse Foundation, a college access program for inner city youth. He graduated summa cum laude with a BA in Political Theory and Economics from Cornell University, and received his JD from the Yale Law School where he was a senior editor of the Yale Law Journal.

              R. Kipp deVeer—Mr. deVeer joined Ares Management in May 2004 and serves as a Senior Partner in the Ares Management Private Debt Group. He is a member of the Investment Committees of our investment adviser, the Ares Management Private Debt Group and Ares Management Europe Limited (through which Ares Management conducts its European private debt and capital markets businesses). Mr. deVeer is also a director of Ares Management Europe Limited. Prior to joining Ares, Mr. deVeer was a partner at RBC Capital Partners, a division of Royal Bank of Canada, which led the firm's middle-market financing and principal investment business. Mr. deVeer joined RBC in October 2001 from Indosuez Capital, where he was Vice President in the Merchant Banking Group. Mr. deVeer has also worked at J.P. Morgan and Co., both in the Special Investment Group of J.P. Morgan Investment Management, Inc. and the Investment Banking Division of J.P. Morgan Securities Inc. Mr. deVeer received a BA from Yale University and an MBA from Stanford University's Graduate School of Business.

              Mitchell Goldstein—Mr. Goldstein joined Ares Management in May 2005 and serves as a Senior Partner in the Ares Management Private Debt Group. He is a member of the Investment Committees of our investment adviser and the Ares Management Private Debt Group. Prior to joining Ares, Mr. Goldstein worked at Credit Suisse First Boston, where he was a Managing Director in the Financial Sponsors Group. At CSFB, Mr. Goldstein was responsible for providing investment banking services to private equity funds and hedge funds with a focus on M&A and restructurings as well as capital raisings, including high yield, bank debt, mezzanine debt, and IPOs. Mr. Goldstein joined CSFB in 2000 at the completion of the merger with Donaldson, Lufkin & Jenrette. From 1998 to 2000, Mr. Goldstein was at Indosuez Capital, where he was a member of the Investment Committee and a Principal, responsible for originating, structuring and executing leveraged transactions across a broad range of products and asset classes. From 1993 to 1998, Mr. Goldstein worked at Bankers Trust. Mr. Goldstein graduated summa cum laude from the State University of New York at Binghamton with a BS in Accounting, received an MBA from Columbia University's Graduate School of Business and is a Certified Public Accountant.

              John Kissick—Mr. Kissick is a Senior Partner in the Ares Management Private Equity Group. Mr. Kissick is also a Senior Advisor to the Ares Management Capital Markets Group and is a member

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of the Investment Committees of our investment adviser, the Ares Management Private Debt Group and the funds managed by the Ares Management Capital Markets Group and the Ares Management Private Equity Group. Prior to Ares, Mr. Kissick was a co-founder of Apollo Management, L.P. in 1990 and a member of the original six-member management team. Together with Mr. Ressler, Mr. Kissick oversaw and led the capital markets activities of Apollo Management, L.P. and Lion Advisors, L.P. from 1990 until 1997, particularly focusing on high yield bonds, leveraged loans and other fixed income assets. Prior to 1990, Mr. Kissick served as a Senior Executive Vice President of Drexel Burnham Lambert Inc., where he began in 1975, eventually heading its Corporate Finance Department. Mr. Kissick serves on the boards of the Cedars-Sinai Medical Center in Los Angeles, the Stanford University Athletic Department and its Initiative for Improving K-12 Education, and MLA Partner Schools, which helps economically disadvantaged children graduate from high school through a variety of mentoring and other programs. Mr. Kissick graduated from Yale University with a BA in Economics and with highest honors from the Stanford Business School with an MBA in Finance.

              David Sachs—Mr. Sachs is a Senior Advisor in the Ares Management Capital Markets Group, is a Senior Partner of Ares and serves on the Management Committee of Ares. Mr. Sachs serves as an Investment Committee member on all Ares funds. From 1994 to 1997, Mr. Sachs was a principal of Onyx Partners, Inc. specializing in merchant banking and related capital raising activities in the private equity and mezzanine debt markets. Mr. Sachs also serves as Chairman of the board of directors of Ares Dynamic Credit Allocation Fund, Inc., a publicly traded closed-end fund managed by an affiliate of Ares Management. From 1990 to 1994, Mr. Sachs was employed by Taylor & Co., an investment manager providing investment advisory and consulting services to members of the Bass Family of Fort Worth, Texas. From 1984 to 1990, Mr. Sachs was with Columbia Savings and Loan Association, most recently as Executive Vice President, responsible for all asset-liability management as well as running the Investment Management Department. Mr. Sachs serves on the Board of Directors of Terex Corporation. Mr. Sachs serves on the McCormick Advisory Council at Northwestern University. Mr. Sachs graduated from Northwestern University with a BS in Industrial Engineering and Management Science.

              Michael L. Smith—Mr. Smith joined Ares Management in May 2004 and serves as a Senior Partner in the Ares Management Private Debt Group. He is a member of the Investment Committees of our investment adviser, the Ares Management Private Debt Group and Ares Commercial Real Estate Management LLC, the manager of Ares Commercial Real Estate Corporation. Prior to joining Ares, Mr. Smith was a Partner at RBC Capital Partners, a division of Royal Bank of Canada, which led the firm's middle-market financing and principal investment business. Mr. Smith joined RBC in October 2001 from Indosuez Capital, where he was a Vice President in the Merchant Banking Group. Previously, Mr. Smith worked at Kenter, Glastris & Company, and at Salomon Brothers Inc., in their Debt Capital Markets Group and Financial Institutions Group. Mr. Smith received a BS in Business Administration, cum laude, from the University of Notre Dame and a Masters in Management from Northwestern University's Kellogg Graduate School of Management.

BOARD LEADERSHIP STRUCTURE

              Our board of directors monitors and performs an oversight role with respect to the business and affairs of the Company, including with respect to investment practices and performance, compliance with regulatory requirements and the services, expenses and performance of service providers to the Company. Among other things, our board of directors approves the appointment of our investment adviser, administrator and officers, reviews and monitors the services and activities performed by our investment adviser, administrator and officers and approves the engagement, and reviews the performance of, our independent registered public accounting firm.

              Under the Company's bylaws, our board of directors may designate a chairman to preside over the meetings of the board of directors and meetings of the stockholders and to perform such other

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duties as may be assigned to him by the board of directors. We do not have a fixed policy as to whether the chairman of the board of directors should be an independent director and believe that our flexibility to select our chairman and reorganize our leadership structure from time to time is in the best interests of the Company and its stockholders.

              Presently, Mr. Rosenthal serves as the chairman of our board of directors. Mr. Rosenthal is an interested director because he is on the Investment Committee of our investment adviser and is a member of, and serves on the Executive Committee of, Ares Partners Management Company LLC ("APMC"), which indirectly controls Ares Management, the managing member of our investment adviser. We believe that Mr. Rosenthal's history with the Company, familiarity with the Ares investment platform and extensive experience in the management of private equity and debt investments qualifies him to serve as the chairman of our board of directors. Moreover, we believe that we are best served through our existing leadership structure with Mr. Rosenthal as chairman of our board of directors, as Mr. Rosenthal's relationship with our investment adviser provides an effective bridge between our board of directors and our investment adviser, thus ensuring an open dialogue between our board of directors and our investment adviser and that both groups act with a common purpose.

              The independent directors have designated a lead independent director whose duties include, among other things, chairing executive sessions of the independent directors, acting as a liaison between the independent directors and the chairman of the board of directors and between the independent directors and management of the Company and our investment adviser, facilitating communication among the independent directors and the Company's counsel, reviewing and commenting on board and committee meeting agendas and calling additional meetings of the independent directors as appropriate. In August 2010, the board of directors designated and appointed Mr. Siegel as the lead independent director and Mr. Siegel has served as lead independent director since that time.

              We believe that board leadership structures must be evaluated on a case by case basis and that our existing board leadership structure is appropriate. However, we continually re-examine our corporate governance policies on an ongoing basis to ensure that they continue to meet the Company's needs.

BOARD'S ROLE IN RISK OVERSIGHT

              Our board of directors performs its risk oversight function and fulfills its risk oversight responsibilities primarily (a) through its two standing committees, which report to the entire board of directors and are comprised solely of independent directors and (b) by working with our Chief Compliance Officer to monitor risk in accordance with our compliance policies and procedures.

              As described below in more detail under "Committees of the Board of Directors," the audit committee and the nominating and governance committee assist the board of directors in performing its risk oversight function and fulfilling its risk oversight responsibilities. The audit committee's risk oversight responsibilities include overseeing the Company's accounting and financial reporting processes, assisting the board of directors in fulfilling its oversight responsibilities relating to the Company's systems of internal controls regarding finance and accounting and audits of the Company's financial statements and disclosure controls and procedures, and discussing with management the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company's risk assessment and risk management policies. The nominating and governance committee's risk oversight responsibilities include selecting, researching and nominating directors for election by our stockholders, developing and recommending to our board of directors a set of corporate governance principles and overseeing the evaluation of our board of directors and its committees.

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              Our board of directors also performs its risk oversight function and fulfills its risk oversight responsibilities by working with our Chief Compliance Officer to monitor risk in accordance with the Company's policies and procedures. Our Chief Compliance Officer prepares a written report annually discussing the adequacy and effectiveness of the compliance policies and procedures of the Company and certain of its service providers. Our Chief Compliance Officer's report, which is reviewed by our board of directors, addresses at a minimum (a) the operation of the compliance policies and procedures of the Company and certain of its service providers since the last report; (b) any material changes to such policies and procedures since the last report; (c) any recommendations for material changes to such policies and procedures as a result of our Chief Compliance Officer's annual review; and (d) any compliance matter that has occurred since the date of the last report about which our board of directors would reasonably need to know to oversee the Company's compliance activities and risks. In addition, our Chief Compliance Officer reports to our board of directors on a quarterly basis with respect to material compliance matters and meets separately in executive session with the independent directors periodically, but in no event less than once each year.

              We believe that our board of directors' role in risk oversight is effective and appropriate given the extensive regulation to which we are already subject as a BDC. Specifically, as a BDC we must comply with certain regulatory requirements and restrictions that control the levels of risk in our business and operations. For example, our ability to incur indebtedness is limited such that our asset coverage must equal at least 200% immediately after each time we incur indebtedness, we generally have to invest at least 70% of our total assets in "qualifying assets" and, subject to certain exceptions, we are subject to restrictions on our ability to engage in transactions with Ares and its affiliates. See "Regulation." In addition, we have elected to be treated as a RIC under the Code. As a RIC we must, among other things, meet certain source of income and asset diversification requirements. See "Certain Material U.S. Federal Income Tax Considerations."

              We believe that the extent of our board of directors' (and its committees') role in risk oversight complements our board of directors' leadership structure because it allows our independent directors, through the two fully independent board committees, a lead independent director, executive sessions with each of our Chief Compliance Officer, our independent registered public accounting firm and independent valuation providers and otherwise, to exercise oversight of risk without any conflict that might discourage critical review.

              We believe that our board of directors' role in risk oversight must be evaluated on a case by case basis and that our board of directors' existing role in risk oversight is appropriate. However, our board of directors re-examines the manner in which it administers its oversight function on an ongoing basis to ensure that it continues to meet the Company's needs.

COMMITTEES OF THE BOARD OF DIRECTORS

              Our board of directors has established an audit committee and a nominating and governance committee. We do not have a compensation committee because our executive officers do not receive any direct compensation from us. During 2012, the board of directors held 11 formal meetings, the audit committee held eight formal meetings and the nominating and governance committee held seven formal meetings. We encourage, but do not require, the directors to attend our annual meeting of stockholders in person.

Audit Committee

              The members of the audit committee are Ms. Bates and Messrs. O'Bryan and Siegel, each of whom is independent for purposes of the Investment Company Act and The NASDAQ Global Select Market's corporate governance regulations. Ms. Bates currently serves as chairperson of the audit committee. The board of directors has adopted a charter for the audit committee, which is available on

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our website at www.arescapitalcorp.com. The contents of our website are not intended to be incorporated by reference into this prospectus or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.

              The function of the audit committee is to assist our board of directors in fulfilling its responsibilities by: (i) overseeing the Company's accounting and financial reporting processes and the audits of the Company's financial statements and (ii) reviewing the financial reports and other types of financial information provided by the Company to the public. The audit committee is also responsible for approving our independent registered public accounting firm and recommending them to our board of directors (including a majority of the independent directors) for approval and submission to our stockholders for ratification, reviewing with our independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by our independent registered public accounting firm, reviewing the independence of our independent registered public accounting firm and reviewing the adequacy of our internal controls and procedures.

              The audit committee also assists our board of directors in determining the fair value of debt and equity securities that are not publicly traded or for which current market values are not readily available. The audit committee also currently receives input from independent valuation firms that have been engaged at the direction of the board of directors to value certain portfolio investments. In addition, the audit committee is responsible for discussing with the Company's officers and management of our investment adviser the Company's major financial risk exposures and the steps that the Company has taken to monitor and control such exposures, including the Company's risk assessment and risk management policies.

              This description of the audit committee's role and responsibilities is summary in nature, is not exhaustive and is qualified in its entirety by reference to the charter of the audit committee, which can be accessed via the Company's website at www.arescapitalcorp.com. The information on the Company's website is not incorporated by reference into this prospectus or any accompanying prospectus supplement.

              Our board of directors has determined that Ms. Bates and Mr. O'Bryan are each an "audit committee financial expert" within the meaning of the rules of the SEC.

Nominating and Governance Committee

              The members of the nominating and governance committee are Messrs. McKeever, O'Bryan and Siegel, each of whom is independent for purposes of the Investment Company Act and The NASDAQ Global Select Market's corporate governance regulations. Mr. Siegel currently serves as chairman of the nominating and governance committee. Our board of directors has adopted a charter for the nominating and governance committee, which is available on our website at www.arescapitalcorp.com. The nominating and governance committee is responsible for developing and reviewing changes in policies regarding the nomination of directors, selecting, researching and nominating directors for election by our stockholders, selecting nominees to fill vacancies on the board or a committee of the board, developing and recommending to the board a set of corporate governance principles and overseeing the evaluation of the board and its committees.

              In considering possible candidates for election as a director, the nominating and governance committee takes into account, in addition to such other factors as it deems relevant, the desirability of selecting directors who:

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              The nominating and governance committee may consider recommendations for nomination of directors from our stockholders. Nominations made by stockholders must be delivered to or mailed (setting forth the information required by our bylaws) and received at our principal executive offices not earlier than 150 days nor fewer than 120 days in advance of the first anniversary of the date on which we first mailed our proxy materials for the previous year's annual meeting of stockholders; provided, however, that if the date of the annual meeting has changed by more than 30 days from the prior year, the nomination must be received not earlier than the 150th day prior to the date of such annual meeting nor later than the later of (1) the 120th day prior to the date of such annual meeting or (2) the 10th day following the day on which public announcement of such meeting date is first made.

              This description of the nominating and governance committee's role and responsibilities is summary in nature, is not exhaustive and is qualified in its entirety by reference to the charter of the nominating and governance committee, which can be accessed via the Company's website at www.arescapitalcorp.com. The information on the Company's website is not incorporated by reference into this prospectus or any accompanying prospectus supplement.

Compensation Committee

              We do not have a compensation committee because our executive officers do not receive any direct compensation from us. However, the compensation payable to our investment adviser pursuant to the investment advisory and management agreement is separately approved by a majority of our independent directors in accordance with NASDAQ Marketplace Rule 5605(d).

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BENEFICIAL OWNERSHIP OF OUR DIRECTORS

              The following table sets forth the dollar range of our equity securities based on the closing price of our common stock on April 1, 2013 and the number of shares beneficially owned by each of our directors as of December 31, 2012. We are not part of a "family of investment companies," as that term is defined in the Investment Company Act.

Name of Director
  Aggregate Dollar Range
of Equity Securities
in Ares Capital(1)(2)

Independent Directors(3)

   

Steve Bartlett(4)

  $10,001-$50,000

Ann Torre Bates

  $50,001-$100,000

Steven B. McKeever

  None

Frank E. O'Bryan

  Over $100,000

Eric B. Siegel

  Over $100,000

Interested Directors

   

Michael J. Arougheti(5)

  Over $100,000

Antony P. Ressler(5)

  Over $100,000

Robert L. Rosen

  Over $100,000

Bennett Rosenthal(5)

  Over $100,000

(1)
The dollar ranges are as follows: none, $1-$10,000, $10,001-$50,000, $50,001-$100,000 or over $100,000. The dollar range of our equity securities beneficially owned is calculated based on the closing sales price of our common stock as reported on The NASDAQ Global Select Market as of April 1, 2013.

(2)
Beneficial ownership determined in accordance with Rule 16a-1(a)(2) under the Exchange Act.

(3)
As of December 31, 2012, to the best of our knowledge, except as listed above, none of the independent directors, nor any of their immediate family members, had any interest in us, our investment adviser or any person or entity directly or indirectly controlling, controlled by or under common control with us or our investment adviser.

(4)
The shares of our common stock held by Mr. Bartlett have been pledged as security in connection with a line of credit with a third party financial institution unaffiliated with the Company.

(5)
Does not include 2,859,882 shares of the Company's common stock held by Ares Investments Holdings LLC ("Ares Investments"), whose indirect parent is APMC, which indirectly controls Ares Management, the managing member of our investment adviser. Messrs. Arougheti, Ressler and Rosenthal are members of, and serve on the Executive Committee of, APMC. Each of Messrs. Arougheti, Ressler and Rosenthal expressly disclaims beneficial ownership of all shares of our common stock owned by Ares Investments.

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COMPENSATION TABLE

              The following table shows information regarding the compensation earned or actually received by our directors, none of whom is our employee, for services as a director for the fiscal year ended December 31, 2012. No compensation is paid by us to interested directors. No information has been provided with respect to our executive officers who are not directors, since our executive officers do not receive any direct compensation from us.

Name
  Fees Earned or
Paid in Cash(1)
  Total  

Independent Directors

             

Steve Bartlett(2)

  $ 23,333   $ 23,333  

Ann Torre Bates

  $ 155,000   $ 155,000  

Kenneth R. Heitz(3)

  $ 57,500   $ 57,500  

Steven B. McKeever(4)

  $ 46,902   $ 46,902  

Frank E. O'Bryan

  $ 146,500   $ 146,500  

Gregory W. Penske(5)

  $ 136,917   $ 136,917  

Eric B. Siegel

  $ 168,000   $ 168,000  

Interested Directors

             

Michael J. Arougheti

    None     None  

Antony P. Ressler

    None     None  

Robert L. Rosen(6)

    None     None  

Bennett Rosenthal

    None     None  

(1)
For a discussion of the independent directors' compensation, see below.

(2)
Mr. Bartlett became a director in October 2012.

(3)
Mr. Heitz became a director in June 2011 and served on our board of directors until he passed away on July 9, 2012.

(4)
Mr. McKeever became a director in September 2012.

(5)
Mr. Penske resigned from his position as a director in December 2012.

(6)
While Mr. Rosen did not receive any compensation from us for the fiscal year ended December 31, 2012, he did receive $138,000 from Ares Management in connection with his service as our director for such period.

              The independent directors receive an annual fee of $125,000. They also receive $2,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting and receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each committee meeting. In addition, the chairperson of the audit committee receives an additional annual fee of $5,000, the lead independent director receives an additional annual fee of $10,000, and each chairperson of any other committee receives an additional annual fee of $2,000 for his or her additional services in these capacities. In addition, we purchase directors' and officers' liability insurance on behalf of our directors and officers.

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PORTFOLIO MANAGERS

              The following individuals function as portfolio managers primarily responsible for the day-to-day management of our portfolio. The portfolio managers are comprised of (a) the underwriting committee, whose primary responsibility is to recommend investments for approval to the Investment Committee of Ares Capital Management and (b) members of the Investment Committee of Ares Capital Management who are not otherwise on the underwriting committee.

Name
  Position   Length of
Service with
Ares (years)
  Principal Occupation(s) During Past 5 Years

Michael J. Arougheti

  President and Director of the Company     8   Mr. Arougheti joined Ares in May 2004 and has served as President of the Company since May 2004 and a director of the Company since February 2009. He is a founding member of Ares, where he serves as a member of the Executive Committee of APMC, and a Senior Partner in the Ares Management Private Debt Group. Mr. Arougheti also is a member of the Investment Committees of Ares Capital Management, the Ares Management Private Debt Group, Ares Management Europe Limited and Ares Commercial Real Estate Management LLC.

Eric B. Beckman

 

Senior Partner in Ares Management Private Debt Group

   
15
 

Mr. Beckman joined Ares in 1998 and serves as a Senior Partner in the Ares Management Private Debt Group. He is a member of the Investment Committees of Ares Capital Management and the Ares Management Private Debt Group. Before joining the Ares Management Private Debt Group, Mr. Beckman served as a Senior Partner in the Ares Management Private Equity Group and Principal in Ares' mezzanine and special situations efforts.

R. Kipp deVeer

 

Senior Partner in Ares Management Private Debt Group

   
8
 

Mr. deVeer joined Ares in May 2004 and serves as a Senior Partner in the Ares Management Private Debt Group. He is a member of the Investment Committees of Ares Capital Management, the Ares Management Private Debt Group and Ares Management Europe Limited. Mr. deVeer is also a director of Ares Management Europe Limited.

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Name
  Position   Length of
Service with
Ares (years)
  Principal Occupation(s) During Past 5 Years

Mitchell Goldstein

 

Senior Partner in Ares Management Private Debt Group

    7  

Mr. Goldstein joined Ares in May 2005 and serves as a Senior Partner in the Ares Management Private Debt Group. He is a member of the Investment Committees of Ares Capital Management and the Ares Management Private Debt Group.

John Kissick

 

Senior Partner in Ares Management Private Equity Group

   
15
 

Mr. Kissick serves as a Senior Partner in the Ares Management Private Equity Group. Mr. Kissick is also a Senior Advisor to the Ares Management Capital Markets Group and is a member of the Investment Committees of Ares Capital Management, the Ares Management Private Debt Group and all funds managed by the Ares Management Capital Markets Group and the Ares Management Private Equity Group.

Bennett Rosenthal

 

Chairman of the board of directors of the Company; Senior Partner in and Co-Head of the Ares Management Private Equity Group

   
15
 

Mr. Rosenthal has served as Chairman of the Company's board of directors since 2004. He joined Ares in 1998 and is a founding member of Ares, where he serves on the Executive Committee of APMC, and is a Senior Partner in and the Co-Head of the Ares Management Private Equity Group. Mr. Rosenthal also is a member of the Investment Committees of Ares Capital Management and the Ares Management Private Debt Group.

David Sachs

 

Senior Advisor to Ares Management Capital Markets Group

   
15
 

Mr. Sachs serves as a Senior Advisor to the Ares Management Capital Markets Group. Mr. Sachs is a member of the Investment Committees of Ares Capital Management, the Ares Management Private Debt Group, Ares Commercial Real Estate Management LLC and all other Ares funds.

Michael L. Smith

 

Senior Partner in Ares Management Private Debt Group

   
8
 

Mr. Smith joined Ares in May 2004 and serves as a Senior Partner in the Ares Management Private Debt Group. He is a member of the Investment Committees of Ares Capital Management, the Ares Management Private Debt Group and Ares Commercial Real Estate Management LLC.

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              None of the individuals listed above is primarily responsible for the day-to-day management of the portfolio of any other account, except that:

See "Risk Factors—Risks Relating to Our Business—There are significant potential conflicts of interest that could impact our investment returns."

              Each of Messrs. Arougheti, Beckman, deVeer, Goldstein and Smith is equally responsible for deal origination, execution and portfolio management. Mr. Arougheti, as our President, however, spends a greater amount of his time on corporate and administrative activities in his role as an officer of the Company. Each of Messrs. Arougheti, Beckman, deVeer, Goldstein and Smith is a senior partner in the Ares Management Private Debt Group and receives a compensation package that includes some combination of fixed draw and variable incentive compensation based primarily on our performance for services provided. None of the portfolio managers receives any direct compensation from us.

              The following table sets forth the dollar range of our equity securities based on the closing price of our common stock on April 1, 2013 and the number of shares beneficially owned by each of the portfolio managers described above as of December 31, 2012 unless otherwise indicated below.

Name
  Aggregate Dollar Range
of Equity Securities
in Ares Capital(1)

Michael J. Arougheti

  Over $1,000,000(2)

Eric B. Beckman

  Over $1,000,000

R. Kipp deVeer

  Over $1,000,000

Mitchell Goldstein

  Over $1,000,000

John Kissick

  None

Bennett Rosenthal

  Over $1,000,000(2)

David Sachs

  Over $1,000,000

Michael L. Smith

  Over $1,000,000

(1)
Dollar ranges are as follows: none, $1-$10,000, $10,001-$50,000, $50,001-$100,000, $100,001-$500,000, $500,001-$1,000,000 or over $1,000,000.

(2)
Does not include 2,859,882 shares of the Company's common stock held by Ares Investments, whose indirect parent is APMC, which indirectly controls Ares Management, the managing member of our investment adviser. Messrs. Arougheti, Ressler and Rosenthal are members of, and serve on the Executive Committee of, APMC. Each of Messrs. Arougheti, Ressler and Rosenthal expressly disclaims beneficial ownership of all shares of our common stock owned by Ares Investments.

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INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT

Management Services

              Ares Capital Management serves as our investment adviser and is registered as an investment adviser under the Advisers Act. Subject to the overall supervision of our board of directors, our investment adviser manages the day-to-day operations of, and provides investment advisory and management services to, Ares Capital. Under the terms of the investment advisory and management agreement, Ares Capital Management:

              Ares Capital Management's services to us under the investment advisory and management agreement are not exclusive, and it is free to furnish similar services to other entities. Similarly, affiliates of our investment adviser may directly or indirectly manage funds or other investment vehicles with investment objectives similar to ours. Accordingly, we may compete with these Ares funds or other investment vehicles managed by our investment adviser and its affiliates for capital and investment opportunities. Ares Capital Management endeavors to allocate investment opportunities in a fair and equitable manner, and in any event consistent with any fiduciary duties owed to Ares Capital. Nevertheless, it is possible that we may not be given the opportunity to participate in certain investments made by investment funds or other investment vehicles managed by Ares Capital Management or its affiliates.

              The sole member of Ares Capital Management is Ares Management, a global alternative asset manager and an SEC registered investment adviser. As of December 31, 2012, Ares had approximately $59 billion of total committed capital under management.

Management Fee

              Pursuant to the investment advisory and management agreement and subject to the overall supervision of our board of directors, our investment adviser provides investment advisory and management services to us. For providing these services, our investment adviser receives a fee from us consisting of two components—a base management fee and an incentive fee.

              The base management fee is calculated at an annual rate of 1.5% based on the average value of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of the two most recently completed calendar quarters. The base management fee is payable quarterly in arrears.

Incentive Fee

              The incentive fee has two parts. The first part is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the quarter. Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar

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quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the administration agreement, and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities, accrued income that we have not yet received in cash. Our investment adviser is not under any obligation to reimburse us for any part of the incentive fee it received that was based on accrued interest that we never actually receive. See "Risk Factors—Risks Relating to Our Business—There are significant potential conflicts of interest that could impact our investment returns" and "Risk Factors—Risks Relating to Our Business—We may be obligated to pay our investment adviser incentive compensation even if we incur a loss."

              Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses, unrealized capital appreciation, unrealized capital depreciation or income tax expense related to realized gains. Because of the structure of the incentive fee, it is possible that we may pay an incentive fee in a quarter where we incur a loss. For example, if we receive pre-incentive fee net investment income in excess of the hurdle rate (as defined below) for a quarter, we will pay the applicable incentive fee even if we have incurred a loss in that quarter due to realized and/or unrealized capital losses.

              Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed "hurdle rate" of 1.75% per quarter. If market credit spreads rise, we may be able to invest our funds in debt instruments that provide for a higher return, which may increase our pre-incentive fee net investment income and make it easier for our investment adviser to surpass the fixed hurdle rate and receive an incentive fee based on such net investment income. To the extent we have retained pre-incentive fee net investment income that has been used to calculate this part of the incentive fee, it is also included in the amount of our total assets (other than cash and cash equivalents but including assets purchased with borrowed funds) used to calculate the 1.5% base management fee.

              We pay our investment adviser an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:

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              The following is a graphical representation of the calculation of the income-related portion of the incentive fee:


Quarterly Incentive Fee Based on Net Investment Income


Pre-incentive fee net investment income return
(expressed as a percentage of the value of net assets)

GRAPHIC

Percentage of pre-incentive fee net investment income
allocated to income-related portion of incentive fee

              These calculations will be appropriately pro rated for any period of less than three months and adjusted for any share issuances or repurchases during the calendar quarter.

              The second part of the incentive fee, the Capital Gains Fee, is determined and payable in arrears as of the end of each calendar year (or, upon termination of our investment advisory and management agreement, as of the termination date) and is calculated at the end of each applicable year by subtracting (a) the sum of our cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (b) our cumulative aggregate realized capital gains, in each case calculated from October 8, 2004. Realized capital gains and losses include gains and losses on investments and foreign currencies, as well as gains and losses on extinguishment of debt and other assets. If such amount is positive at the end of such year, then the Capital Gains Fee for such year is equal to 20% of such amount, less the aggregate amount of Capital Gains Fees paid in all prior years. If such amount is negative, then there is no Capital Gains Fee for such year.

              The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in our portfolio when sold and (b) the accreted or amortized cost basis of such investment.

              The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the net sales price of each investment in our portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.

              The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in our portfolio as of the applicable Capital Gains Fee calculation date and (b) the accreted or amortized cost basis of such investment.

              Notwithstanding the foregoing, as a result of the Capital Gains Amendment, if we are required by GAAP to record an investment at its fair value as of the time of acquisition instead of at the actual amount paid for such investment by us (including, for example, as a result of the application of the acquisition method of accounting), then solely for the purposes of calculating the Capital Gains Fee, the "accreted or amortized cost basis" of an investment shall be an amount (the "Contractual Cost Basis") equal to (1)(x) the actual amount paid by us for such investment plus (y) any amounts recorded in our financial statements as required by GAAP that are attributable to the accretion of such investment plus (z) any other adjustments made to the cost basis included in our financial statements, including PIK interest or additional amounts funded (net of repayments) minus (2) any amounts recorded in our financial statements as required by GAAP that are attributable to the amortization of such investment, whether such calculated Contractual Cost Basis is higher or lower than the fair value of such investment (as determined in accordance with GAAP) at the time of acquisition.

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              We defer cash payment of any incentive fee otherwise earned by our investment adviser if during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made the sum of (a) the aggregate distributions to our stockholders and (b) the change in net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) is less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period. Any deferred incentive fees are carried over for payment in subsequent calculation periods to the extent such payment is payable under our investment advisory and management agreement.

Examples of Quarterly Incentive Fee Calculation

Example 1—Income Related Portion of Incentive Fee(1):

Assumptions

    •    Hurdle rate(2) = 1.75%    
    •    Management fee(3) = 0.375%    
    •    Other expenses (legal, accounting, custodian, transfer agent, etc.)(4) = 0.20%    

Alternative 1

Additional Assumptions

    •    Investment income (including interest, dividends, fees, etc.) = 1.25%    
    •    Pre-incentive fee net investment income
            (investment income - (management fee + other expenses)) = 0.675%
   
    Pre-incentive fee net investment income does not exceed the hurdle rate,
        therefore there is no incentive fee.
   

(1)
The hypothetical amount of pre-incentive fee net investment income shown is based on a percentage of total net assets. In addition, the example assumes that during the most recent four full calendar quarter period ending on or prior to the date the payment set forth in the example is to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) is at least 7% of our net assets (defined as total assets less indebtedness) at the beginning of such period (as adjusted for any share issuances or repurchases).

(2)
Represents a quarter of the 7.0% annualized hurdle rate.

(3)
Represents a quarter of the 1.5% annualized management fee.

(4)
Excludes offering expenses.

Alternative 2

Additional Assumptions

    •    Investment income (including interest, dividends, fees, etc.) = 2.70%    
    •    Pre-incentive fee net investment income
            (investment income - (management fee + other expenses)) = 2.125%
   
    Pre-incentive fee net investment income exceeds hurdle rate, therefore there is an incentive fee.    
    Incentive Fee   =   100% × "Catch-Up" + the greater of 0% AND (20% × (pre-incentive fee net investment income - 2.1875%)    
        =   (100% × (2.125% - 1.75%)) + 0%    
        =   100% × 0.375%    
        =   0.375%    

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Alternative 3

Additional Assumptions

    •    Investment income (including interest, dividends, fees, etc.) = 3.50%    
    •    Pre-incentive fee net investment income
            (investment income - (management fee + other expenses)) = 2.925%
   
    Pre-incentive fee net investment income exceeds hurdle rate, therefore there is an incentive fee.    
    Incentive Fee   =   100% × "Catch-Up" + the greater of 0% AND (20% × (pre-incentive fee net investment income - 2.1875%)    
        =   (100% × (2.1875% - 1.75%)) + (20% × (2.925% - 2.1875%))    
        =   0.4375% + (20% × 0.7375%)    
        =   0.4375% + 0.1475%    
        =   0.585%    

Example 2—Capital Gains Portion of Incentive Fee:

Alternative 1:

Assumptions

The capital gains portion of the incentive fee, if any, would be:

Alternative 2

Assumptions

The capital gains portion of the incentive fee, if any, would be:

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              For the year ended December 31, 2012, we incurred $86.2 million in base management fees and $95.2 million in incentive fees related to pre-incentive fee net investment income. The incentive fees related to the capital gains incentive fee as calculated under the investment advisory and management agreement for the year ended December 31, 2012 was $11.5 million. However, in accordance with GAAP, the Company accrued a capital gains incentive fee of $31.9 million for the year ended December 31, 2012, bringing the total cumulative GAAP accrual related to the capital gains incentive fee to $80.8 million as of December 31, 2012. GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the investment advisory and management agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the Capital Gains Fee plus the aggregate cumulative unrealized capital appreciation. If such amount is positive at the end of a period, then GAAP requires us to record a capital gains incentive fee equal to 20% of such cumulative amount, less the aggregate amount of actual Capital Gains Fees paid or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future.

              For the year ended December 31, 2011, we incurred $71.6 million in base management fees and $79.0 million in incentive fees related to pre-incentive fee net investment income. The incentive fees related to the capital gains incentive fee as calculated under the investment advisory and management agreement for the year ended December 31, 2011 was $0. However, in accordance with GAAP, the Company accrued a capital gains incentive fee of $33.3 million for the year ended December 31, 2011, including $26.0 million recognized in the second quarter of 2011 as a result of the application of the Capital Gains Amendment described above with respect to the assets purchased in the Allied Acquisition, bringing the total GAAP accrual related to the capital gains incentive fee to $49.0 million as of December 31, 2011.

              For the year ended December 31, 2010, we incurred $52.0 million in base management fees, $61.3 million in incentive fees related to pre-incentive fee net investment income and no incentive fees related to realized capital gains under the investment advisory and management agreement. In accordance with GAAP, the Company accrued a capital gains incentive fee of $15.6 million for the year ended December 31, 2010.

Payment of Our Expenses

              The services of all investment professionals and staff of our investment adviser, when and to the extent engaged in providing investment advisory and management services to us and routine overhead expenses of such personnel allocable to such services, are provided and paid for by our investment adviser. We bear all other costs and expenses of our operations and transactions, including, but not limited to, those relating to: rent; organization; calculation of our net asset value (including, but not limited to, the cost and expenses of any independent valuation firm); expenses incurred by our investment adviser payable to third parties, including agents, consultants or other advisers, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies; interest payable on indebtedness, if any, incurred to

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finance our investments; offerings of our common stock and other securities; investment advisory and management fees; administration fees; fees payable to third parties, including agents, consultants or other advisers, relating to, or associated with, evaluating and making investments; transfer agent and custodial fees; registration fees; listing fees; taxes; independent directors' fees and expenses; costs of preparing and filing reports or other documents with the SEC; the costs of any reports, proxy statements or other notices to stockholders, including printing costs; to the extent we are covered by any joint insurance policies, our allocable portion of the insurance premiums for such policies; direct costs and expenses of administration, including auditor and legal costs; and all other expenses incurred by us or our administrator in connection with administering our business as described in more detail under "Administration Agreement" below.

Duration, Termination and Amendment

              At an in-person meeting of our board of directors on March 16, 2011, the form of our current investment advisory and management agreement, including two proposed amendments to our then existing investment advisory and management agreement, was approved by our board of directors with the recommendation that stockholders of the Company vote to approve the proposed amendments. On June 6, 2011, our stockholders approved the proposed amendments, and we entered into a restated investment advisory and management agreement reflecting such amendments on June 6, 2011. At an in-person meeting of our board of directors on May 3, 2012, our board of directors, including a majority of the directors who are not "interested persons" of the Company as defined in the Investment Company Act, voted to approve the continuation of the investment advisory and management agreement to June 6, 2013. A discussion regarding the basis for our board of directors' approval of the continuation of the investment advisory and management agreement is available in our annual report on Form 10-K for the fiscal year ended December 31, 2012.

              Unless terminated earlier, the investment advisory and management agreement will automatically renew for successive annual periods if approved annually by our board of directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not "interested persons" of the Company as defined in the Investment Company Act. The investment advisory and management agreement will automatically terminate in the event of its assignment. The investment advisory and management agreement may be terminated by either party without penalty upon 60 days' written notice to the other party.

              Conflicts of interest may arise if our investment adviser seeks to change the terms of our investment advisory and management agreement, including, for example, the amount of the management fee, the incentive fee or other compensation terms. Material amendments to our investment advisory and management agreement must be approved by the affirmative vote of the holders of a majority of our outstanding voting securities and by a majority of our independent directors, and we may from time to time decide it is appropriate to seek the requisite approval to change the terms of the agreement.

Indemnification

              The investment advisory and management agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, our investment adviser, its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other person or entity affiliated with it are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of our investment adviser's services under the investment advisory and management agreement or otherwise as our investment adviser.

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Organization of our Investment Adviser

              Our investment adviser is a Delaware limited liability company that is registered as an investment adviser under the Advisers Act. The principal executive offices of Ares Capital Management are located at 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067.

ADMINISTRATION AGREEMENT

              We are also party to a separate administration agreement with Ares Operations, an affiliate of our investment adviser and a wholly owned subsidiary of Ares Management. Our board of directors approved the continuation of our administration agreement on May 3, 2012, which extended the term of the agreement to June 1, 2013. Pursuant to the administration agreement, Ares Operations furnishes us with office equipment and clerical, bookkeeping and record keeping services at our office facilities. Under the administration agreement, Ares Operations also performs, or oversees the performance of, our required administrative services, which include, among other things, providing assistance in accounting, legal, compliance, operations, technology, and investor relations, being responsible for the financial records that we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, Ares Operations assists us in determining and publishing our net asset value, assists us in providing managerial assistance to our portfolio companies, oversees the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others. Payments under the administration agreement are equal to an amount based upon our allocable portion of Ares Operations' overhead and other expenses (including travel expenses) incurred by Ares Operations in performing its obligations under the administration agreement, including our allocable portion of the compensation of certain of our officers (including our chief compliance officer, chief financial officer, general counsel, treasurer and assistant treasurer) and their respective staffs. The administration agreement may be terminated by either party without penalty upon 60 days' written notice to the other party.

              For the year ended December 31, 2012, we incurred $9.3 million in administrative fees. As of December 31, 2012, $2.5 million was unpaid and included in "accounts payable and other liabilities" in our December 31, 2012 consolidated balance sheet. For the years ended December 31, 2011 and 2010, we incurred $9.6 million and $11.0 million, respectively, in administrative fees.

Indemnification

              The administration agreement provides that, absent willful misfeasance, bad faith or negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Ares Operations, its members and their respective officers, managers, partners, agents, employees, controlling persons and members and any other person or entity affiliated with it are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of Ares Operations' services under the administration agreement or otherwise as our administrator.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

              We are party to an investment advisory and management agreement with Ares Capital Management, whose sole member is Ares Management, an entity in which certain of our directors, officers and members of the investment committee of our investment adviser may have indirect ownership and pecuniary interests. Certain of our directors, officers and members of the investment committee of our investment adviser also serve as officers or principals of other investment managers affiliated with Ares Management that currently, and may in the future, manage investment funds with investment objectives similar to our investment objective. In addition, certain of our officers and directors and the members of the investment committee of our investment adviser serve or may serve as officers, directors or principals of entities that operate in the same or related line of business as we do or of investment funds managed by our affiliates. Accordingly, we may not be made aware of and/or given the opportunity to participate in certain investments made by investment funds managed by advisers affiliated with Ares Management. However, our investment adviser intends to allocate investment opportunities in a fair and equitable manner that meets our investment objective so that we are not disadvantaged in relation to any other client. See "Risk Factors—Risks Relating to Our Business—There are significant potential conflicts of interest that could impact our investment returns."

              Pursuant to the terms of the administration agreement between Ares Operations and us, Ares Operations, whose sole member is Ares Management, currently provides us with certain administrative and other services necessary to conduct our day-to-day operations, and we reimburse Ares Operations, at cost, our allocable portion of overhead and other expenses (including travel expenses) incurred by Ares Operations in performing its obligations under our administration agreement, including our allocable portion of the compensation of certain of our officers (including our chief compliance officer, chief financial officer, general counsel, treasurer and assistant treasurer) and their respective staffs.

              Our portfolio company, IHAM, is party to the IHAM administration agreement with Ares Operations, pursuant to which Ares Operations provides IHAM with, among other things, office facilities, equipment, clerical, bookkeeping and record keeping services, services relating to the marketing and sale of interests in vehicles managed by IHAM, services of, and oversight of, custodians, depositories, accountants, attorneys, underwriters and such other persons in any other capacity deemed to be necessary. Under the IHAM administration agreement, IHAM reimburses Ares Operations for all of the actual costs associated with such services, including Ares Operations' allocable portion of overhead and the cost of its officers and respective staff in performing its obligations under the IHAM administration agreement.

              We rent our New York office space directly from a third party pursuant to a lease that expires in February 2026. We have also entered into a sublease with ACREM, a wholly owned subsidiary of Ares Management, pursuant to which we are subleasing approximately 12% of ACREM's Chicago office space for a fixed rent equal to 12% of the basic annual rent payable by ACREM under its Chicago office lease, plus certain additional costs and expenses. We also entered into separate subleases with Ares Management and IHAM, pursuant to which Ares Management and IHAM sublease approximately 15% and 20%, respectively, of our New York office space for a fixed rent equal to 15% and 20%, respectively, of the base annual rent payable by us under our lease for this space, plus certain additional costs and expenses.

              We have also entered into a license agreement with Ares Management pursuant to which Ares Management has agreed to grant us a non-exclusive, royalty-free license to use the name "Ares." Under this agreement, we will have a right to use the Ares name for so long as Ares Capital Management remains our investment adviser. Other than with respect to this limited license, we have no legal right to the "Ares" name. This license agreement will remain in effect for so long as the investment advisory and management agreement with Ares Capital Management is in effect and Ares Capital Management remains our investment adviser. Like the investment advisory and management agreement, the license

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agreement may also be terminated by either party without penalty upon 60 days' written notice to the other.

              As of December 31, 2012, Ares Investments, an affiliate of Ares Management (the sole member of our investment adviser), owned approximately 2.9 million shares of our common stock representing approximately 1.2% of the total shares outstanding as of December 31, 2012.

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CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS

              To our knowledge, as of April 26, 2013, there were no persons that owned 25% or more of our outstanding voting securities and no person would be deemed to control us, as such term is defined in the Investment Company Act.

              The following table sets forth, as of April 26, 2013 (unless otherwise noted), the number of shares of our common stock beneficially owned by each of our current directors and named executive officers, all directors, executive officers and certain other officers as a group and certain beneficial owners, according to information furnished to us by such persons or publicly available filings.

              Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Ownership information for those persons who beneficially own 5% or more of our outstanding shares of common stock is based upon Schedule 13D, Schedule 13G, Form 13F or other filings by such persons with the SEC and other information obtained from such persons. To our knowledge, as of April 26, 2013, there were no persons that owned 5% or more of our outstanding shares of common stock. Except as otherwise noted below, each person named in the following table has sole voting and investment power with respect to all shares of our common stock that he or she beneficially owns.

              The address for Mr. Arougheti, Mr. Rosen and Ms. Roll is c/o Ares Capital Corporation, 245 Park Avenue, 44th Floor, New York, New York 10167. The address for each of the other directors, executive officers and certain other officers is c/o Ares Capital Corporation, 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067.

Name of Beneficial Owner
  Amount and
Nature of
Beneficial
Ownership
  Percent of
Class(1)
 

Directors and Named Executive Officers:

             

Interested Directors

             

Michael J. Arougheti

    353,679 (2)   *  

Antony P. Ressler

    1,483,957 (2)(3)   *  

Robert L. Rosen

    15,000     *  

Bennett Rosenthal

    75,000 (2)(4)      

Independent Directors

             

Steve Bartlett

    2,200 (5)   *  

Ann Torre Bates

    5,149 (6)   *  

Steven B. McKeever

    None        

Frank E. O'Bryan

    12,400 (7)   *  

Eric B. Siegel

    26,280 (8)   *  

Named Executive Officers Who Are Not Directors

             

Penni F. Roll

    49,452 (9)   *  

All Directors, Executive Officers and Certain Other Officers as a Group (15 persons)

    2,048,102 (2)(10)   *  

*
Represents less than 1%.

(1)
Based on 268,043,157 shares of common stock outstanding as of April 26, 2013.

(2)
Does not include 2,859,882 shares of the Company's common stock held by Ares Investments, whose indirect parent is APMC. Messrs. Arougheti, Ressler and Rosenthal are members of, and serve on the executive committee of, APMC, which indirectly controls Ares Management, the managing member of our investment adviser. Each of Messrs. Arougheti, Ressler and Rosenthal expressly disclaims beneficial ownership of all shares of our common stock owned by Ares Investments.

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(3)
Consists of (i) 983,250 shares of common stock indirectly beneficially owned by Mr. Ressler through Greek Associates of which Mr. Ressler is the general partner and (ii) 500,707 shares of common stock indirectly beneficially owned by Mr. Ressler through a family foundation of which Mr. Ressler is the trustee.

(4)
Consists of 75,000 shares of common stock indirectly beneficially owned by Mr. Rosenthal through BAR Holdings, LLC of which Mr. Rosenthal is the manager.

(5)
The shares of our common stock held by Mr. Bartlett have been pledged as security in connection with a line of credit with a third party financial institution unaffiliated with the Company.

(6)
Consists of (i) 2,874 shares of common stock owned directly and (ii) 2,275 shares of common stock indirectly beneficially owned by Ms. Bates through her spouse.

(7)
Consists of (i) 400 shares of common stock owned directly and (ii) 12,000 shares of common stock indirectly beneficially owned by Mr. O'Bryan through a family trust of which Mr. O'Bryan is the trustee and beneficiary.

(8)
Consists of (i) 15,953 shares of common stock owned directly; (ii) 8,166 shares of common stock indirectly beneficially owned by Mr. Siegel through his spouse and (iii) 2,161 shares of common stock indirectly beneficially owned by Mr. Siegel as a custodian for the accounts of his children. Mr. Siegel has shared voting and investment authority with respect to shares held by his spouse.

(9)
Consists of (i) 8,147 shares of common stock owned directly; and (ii) 41,305 shares of common stock indirectly beneficially owned by Ms. Roll through a trust for the benefit of Ms. Roll, her spouse and her children.

(10)
Includes shares owned by certain officers of the Company that are not "Named Executive Officers," as defined in Item 402 of Regulation S-K, as promulgated under the Securities Act.

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DETERMINATION OF NET ASSET VALUE

              The net asset value per share of our outstanding shares of common stock is determined quarterly by dividing the value of total assets minus liabilities by the total number of shares outstanding.

              Investments for which market quotations are readily available are typically valued at such market quotations. In order to validate market quotations, we look at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. Debt and equity securities that are not publicly traded or whose market price is not readily available (i.e., substantially all of our investments) are valued at fair value as determined in good faith by our board of directors, based on, among other things, the input of our management and audit committee and independent valuation firms that have been engaged at the direction of the board to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing 12-month period (with certain de minimis exceptions). Effective January 1, 2008, the Company adopted ASC 820-10, which expands the application of fair value accounting for investments (see Note 8 to the consolidated financial statements for the period ended December 31, 2012). ASC 820-10 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date.

              The valuation process is conducted at the end of each fiscal quarter, with a minimum of 50% (based on value) of our valuations of portfolio companies without readily available market quotations subject to review by an independent valuation firm each quarter. In addition, our independent accountants review our valuation process as part of their overall integrated audit.

              As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments: the enterprise value of a portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company's ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company's securities to publicly traded securities, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation.

              Because there is not a readily available market value for most of the investments in our portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our board of directors, based on, among other things, the input of our management and audit committee and independent valuation firms under a valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize significantly less than the value at which we have previously recorded it.

              In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned. For example, over the past several years, the global financial markets have experienced periods of volatility,

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instability and disruption. See "Risk Factors—Risks Relating to Our Investments—Declines in market prices and liquidity in the corporate debt markets can result in significant net unrealized depreciation of our portfolio, which in turn would reduce our net asset value."

              With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described below:

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DIVIDEND REINVESTMENT PLAN

              We have adopted a dividend reinvestment plan that provides for reinvestment of any distributions we declare in cash on behalf of our stockholders, unless a stockholder elects to receive cash as provided below. As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not "opted out" of our dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of our common stock, rather than receiving the cash dividends.

              No action is required on the part of a registered stockholder to have their cash dividend reinvested in shares of our common stock. A registered stockholder may elect to receive an entire cash dividend in cash by notifying Computershare Shareowner Services LLC ("Computershare"), the plan administrator and our transfer agent and registrar, in writing so that such notice is received by the plan administrator no later than the record date fixed by the board of directors for dividends to stockholders. The plan administrator will set up an account for shares acquired through the dividend reinvestment plan for each stockholder who has not elected to receive dividends in cash and hold such shares in non-certificated form. Upon request by a stockholder participating in the dividend reinvestment plan, received in writing no later than 10 days prior to the record date, the plan administrator will, instead of crediting fractional shares to the participant's account, issue a check for any fractional share.

              Those stockholders whose shares are held by a broker or other financial intermediary may receive dividends in cash by notifying their broker or other financial intermediary of their election.

              We intend to use primarily newly issued shares to implement the dividend reinvestment plan so long as our shares are trading at or at a premium to net asset value. If our shares are trading at a discount to net asset value and we are otherwise permitted under applicable law to purchase such shares, we intend to purchase shares in the open market in connection with our obligations under our dividend reinvestment plan. However, we reserve the right to issue new shares of our common stock in connection with our obligations under the dividend reinvestment plan even if our shares are trading below net asset value. If newly issued shares are used to implement the dividend reinvestment plan, the number of shares to be issued to a stockholder shall be determined by dividing the total dollar amount of the dividend payable to such stockholder by the market price per share of our common stock at the close of regular trading on The NASDAQ Global Select Market on the dividend payment date. Market price per share on that date shall be the closing price for such shares on The NASDAQ Global Select Market or, if no sale is reported for such day, at the average of their reported bid and asked prices. If shares are purchased in the open market to implement the dividend reinvestment plan, the number of shares to be issued to a stockholder shall be determined by dividing the dollar amount of the cash dividend payable to such stockholder by the weighted average price per share for all shares purchased by the plan administrator in the open market in connection with the dividend. The number of shares of our common stock to be outstanding after giving effect to payment of the dividend cannot be established until the value per share at which additional shares will be issued has been determined and elections of our stockholders have been tabulated.

              There are no brokerage charges or other charges to stockholders who participate in the dividend reinvestment plan. The plan administrator's fees under the plan are paid by us. If a participant elects by notice to the plan administrator in advance of termination to have the plan administrator sell part or all of the shares held by the plan administrator in the participant's account and remit the proceeds to the participant, the plan administrator is authorized to deduct a transaction fee of up to $15 plus a $0.12 per share fee from the proceeds.

              Stockholders whose cash dividends are reinvested in shares of our common stock are subject to the same U.S. federal, state and local tax consequences as are stockholders who elect to receive their dividends in cash. A stockholder's initial basis for determining gain or loss upon the sale of stock

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received in a dividend from us will be equal to the total dollar amount of the dividend payable to the stockholder. Any stock received on reinvestment of a cash dividend will have a new holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. stockholder's account. See "Certain Material U.S. Federal Income Tax Considerations."

              Participants may terminate their accounts under the dividend reinvestment plan by notifying the plan administrator via its website at www.computershare.com/investor, by filling out the transaction request form located at bottom of their statement and sending it to the plan administrator at P.O. Box 43006, Providence, RI 02940-3006 or by calling the plan administrator's hotline at 1-866-365-2497.

              The dividend reinvestment plan may be terminated by us upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment of any dividend by us. All correspondence concerning the dividend reinvestment plan should be directed to the plan administrator via the Internet at www.computershare.com/investor, by mail at P.O. Box 43006, Providence, RI 02940-3006 or by telephone at 1-866-365-2497.

              Additional information about the dividend reinvestment plan may be obtained by contacting the plan administrator via the Internet at www.computershare.com/investor, by mail at P.O. Box 43006, Providence, RI 02940-3006 or by telephone at 1-866-365-2497.

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CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

              The following discussion is a general summary of certain material U.S. federal income tax considerations applicable to us and to an investment in shares of our preferred stock or our common stock and our qualification and taxation as a regulated investment company, or "RIC", for U.S. federal income tax purposes. This discussion does not purport to be a complete description of all of the tax considerations relating thereto. In particular, we have not described certain considerations that may be relevant to certain types of holders subject to special treatment under U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, dealers in securities, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, pension plans and trusts, financial institutions, persons who hold our preferred stock and our common stock as part of a straddle or a hedging or conversion transaction, and U.S. stockholders (as defined below) whose functional currency is not the U.S. dollar. This discussion assumes that investors hold our preferred stock or common stock as capital assets (within the meaning of the Code). This discussion is based upon the Code, its legislative history, existing and proposed U.S. Treasury regulations, published rulings and court decisions, each as of the date of this prospectus and all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion. We have not sought and will not seek any ruling from the Internal Revenue Service (the "IRS") regarding the offerings pursuant to this prospectus or pursuant to any accompanying prospectus supplement unless expressly stated therein. This discussion does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. It does not discuss the special treatment under U.S. federal income tax laws that could result if we invested in tax-exempt securities or certain other investment assets. It also does not discuss the tax aspects of common or preferred stock sold in units with the other securities being registered.

              If we issue preferred stock that may be convertible into or exercisable or exchangeable for securities or other property or preferred stock with other terms that may have different U.S. federal income tax consequences than those described in this summary, the U.S. federal income tax consequences of such preferred stock will be described in the relevant prospectus supplement. This summary does not discuss the consequences of an investment in our subscription rights, debt securities or warrants representing rights to purchase shares of our preferred stock, common stock or debt securities or as units in combination with such securities. The U.S. federal income tax consequences of such an investment will be discussed in the relevant prospectus supplement.

              A "U.S. stockholder" is a beneficial owner of shares of our preferred stock or common stock that is for U.S. federal income tax purposes:

              A "non-U.S. stockholder" is a beneficial owner of shares of our preferred stock or common stock that is neither a U.S. stockholder nor an entity treated as a partnership for U.S. federal income tax purposes.

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              If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of our preferred stock or common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Prospective beneficial owners of shares of our preferred or common stock that are partnerships or partners in such partnerships should consult their own tax advisers with respect to the purchase, ownership and disposition of shares of our preferred stock or common stock.

              Tax matters are very complicated and the tax consequences to investors in our shares will depend on the facts of their particular situation. We encourage investors to consult their own tax advisers regarding the specific consequences of such an investment, including tax reporting requirements, the applicability of U.S. federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.

ELECTION TO BE TAXED AS A RIC

              As a BDC, we have elected to be treated as a RIC under the Code. As a RIC, we generally will not pay U.S. federal corporate-level income tax on any ordinary income or capital gains that we distribute to our stockholders as dividends. To qualify as a RIC, we must, among other things, meet certain source of income and asset diversification requirements (as described below). In addition, we must distribute to our stockholders, for each taxable year, generally an amount equal to at least 90% of our "investment company taxable income," as defined by the Code (the "Annual Distribution Requirement"). See "Risk Factors—Risks Relating to Our Business—We may be subject to additional U.S. federal corporate-level taxes if we fail to maintain our status as a RIC."

TAXATION AS A RIC

              If we:

then we will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain (generally, net long-term capital gain in excess of net short-term capital loss) we distribute (or are deemed to distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gain not distributed (or deemed distributed) to our stockholders.

              We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (collectively, the "Excise Tax Requirement"). We have paid in the past, and can be expected to pay in the future, such excise tax on a portion of our income.

              Moreover, our ability to dispose of assets to meet our distribution requirements may be limited by (1) the illiquid nature of our portfolio and (2) other requirements relating to our status as a RIC, including the Diversification Tests (as defined below). If we dispose of assets to meet the Annual Distribution Requirement, the Diversification Tests, or the Excise Tax Requirement, we may make such dispositions at times that, from an investment standpoint, are not advantageous.

              To qualify as a RIC for U.S. federal income tax purposes, we generally must, among other things:

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              We may be required to recognize taxable income in circumstances in which we do not receive cash, such as income from hedging or foreign currency transactions. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with PIK interest or, in certain cases, that have increasing interest rates or that are issued with warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. Because any original issue discount or other amounts accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement and/or the Excise Tax Requirement, even though we will not have received any corresponding cash amount.

              Furthermore, a portfolio company in which we invest may face financial difficulty that requires us to work-out, modify or otherwise restructure our investment in the portfolio company. Any such restructuring could, depending on the specific terms of the restructuring, result in unusable capital losses and future non-cash income.

              In addition, certain of our investment practices may be subject to special and complex U.S. federal income tax provisions that may, among other things, (a) disallow, suspend or otherwise limit the allowance of certain losses or deductions, (b) convert long-term capital gain (currently taxed at lower rates for non-corporate taxpayers) into higher taxed short-term capital gain or ordinary income, (c) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited), (d) adversely affect the time when a purchase or sale of stock or securities is deemed to occur or (e) adversely alter the characterization of certain complex financial transactions. We will monitor our transactions and may make certain tax elections in order to mitigate the effects of these provisions; however, no assurance can be given that we will be eligible for any such tax elections or that any elections we make will fully mitigate the effects of these provisions.

              Gain or loss recognized by us from warrants acquired by us as well as any loss attributable to the lapse of such warrants generally will be treated as capital gain or loss. Such gain or loss generally will be long-term or short-term, depending on how long we held a particular warrant.

              Our investment in non-U.S. securities may be subject to non-U.S. income, withholding and other taxes. In that case, our yield on those securities would be decreased. Stockholders will generally not be entitled to claim a U.S. foreign tax credit or deduction with respect to non-U.S. taxes paid by us.

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              If we purchase shares in a "passive foreign investment company" (a "PFIC"), we may be subject to U.S. federal income tax on a portion of any "excess distribution" or gain from the disposition of such shares, even if such income is distributed as a taxable dividend by us to our stockholders. Additional charges in the nature of interest may be imposed on us in respect of deferred taxes arising from such distributions or gains. If we invest in a PFIC and elect to treat the PFIC as a "qualified electing fund" under the Code (a "QEF"), in lieu of the foregoing requirements, we will be required to include in income each year a portion of the ordinary earnings and net capital gain of the QEF, even if such income is not distributed to us. Alternatively, we may elect to mark-to-market at the end of each taxable year our shares in such PFIC; in this case, we will recognize as ordinary income any increase in the value of such shares, and as ordinary loss any decrease in such value to the extent it does not exceed prior increases included in income. Our ability to make either election will depend on factors beyond our control, and are subject to limitations which may limit the availability of benefit of these elections. Under either election, we may be required to recognize in any year income in excess of our distributions from PFICs and our proceeds from dispositions of PFIC stock during that year, and such income will nevertheless be subject to the Annual Distribution Requirement and will be taken into account for purposes of determining whether we satisfy the Excise Tax Requirement.

              Our functional currency is the U.S. dollar for U.S. federal income tax purposes. Under Section 988 of the Code, gains or losses attributable to fluctuations in exchange rates between the time we accrue income, expenses or other liabilities denominated in a foreign currency and the time we actually collect such income or pay such expenses or liabilities may be treated as ordinary income or loss. Similarly, gains or losses on foreign currency forward contracts, the disposition of debt denominated in a foreign currency and other financial transactions denominated in foreign currency, to the extent attributable to fluctuations in exchange rates between the acquisition and disposition dates, may also be treated as ordinary income or loss.

              If we borrow money, we may be prevented by loan covenants from declaring and paying dividends in certain circumstances. Even if we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements, under the Investment Company Act, we generally are not permitted to make distributions to our stockholders while our debt obligations and senior securities are outstanding unless certain "asset coverage" tests or other financial covenants are met. Limits on our payment of dividends may prevent us from meeting the Annual Distribution Requirement, and may, therefore, jeopardize our qualification for taxation as a RIC, or subject us to the 4% excise tax on undistributed income.

              Some of the income and fees that we recognize, such as management fees, may not satisfy the 90% Income Test. In order to ensure that such income and fees do not disqualify us as a RIC for a failure to satisfy the 90% Income Test, we may be required to recognize such income or fees through one or more entities treated as U.S. corporations for U.S. federal income tax purposes. While we expect that recognizing such income through such corporations will assist us in satisfying the 90% Income Test, no assurance can be given that this structure will be respected for U.S. federal income tax purposes, which could result in such income not being counted towards satisfying the 90% Income Test. If the amount of such income were too great and we were otherwise unable to mitigate this effect, it could result in our disqualification as a RIC. If, as we expect, the structure is respected, such corporations will be required to pay U.S. corporate income tax on their earnings, which ultimately will reduce the yield on such income and fees.

              If we fail to satisfy the 90% Income Test or the Diversification Tests in any taxable year, we may be eligible for relief provisions if the failures are due to reasonable cause and not willful neglect and if a penalty tax is paid with respect to each failure to satisfy the applicable requirements. Additionally, relief is provided for certain de minimis failures of the diversification requirements where we correct the failure within a specified period. If the applicable relief provisions are not available or cannot be met, all of our income would be subject to U.S. federal corporate-level income tax as

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described below. We cannot provide assurance that we would qualify for any such relief should we fail the 90% Income Test or the Diversification Test.

              If we fail to satisfy the Annual Distribution Requirement or otherwise fail to qualify as a RIC in any taxable year, and are not eligible for relief as described above, we will be subject to tax in that year on all of our taxable income, regardless of whether we make any distributions to our stockholders. In that case, all of our income will be subject to U.S. federal corporate-level income tax, reducing the amount available to be distributed to our stockholders. In contrast, assuming we qualify as a RIC, our U.S. federal corporate-level income tax should be substantially reduced or eliminated. See "Election to Be Taxed as a RIC" above and "Risk Factors—Risks Relating to Our Business—We may be subject to certain corporate-level taxes regardless of whether we continue to qualify as a RIC."

Capital Loss Carryforwards and Unrealized Losses

              As a RIC, we are permitted to carry forward a net capital loss realized in a taxable year beginning on or before January 1, 2011 to offset our capital gain, if any, realized during the eight years following the year of the loss. A capital loss carryforward realized in a taxable year beginning before January 1, 2011 is treated as a short-term capital loss in the year to which it is carried. We are permitted to carry forward a net capital loss realized in taxable years beginning on or after January 1, 2011 to offset capital gain indefinitely. For net capital losses realized in taxable years beginning on or after January 1, 2011, the excess of our net short-term capital loss over our net long-term capital gain is treated as a short-term capital loss arising on the first day of our next taxable year and the excess of our net long-term capital loss over our net short-term capital gain is treated as a long-term capital loss arising on the first day of our next taxable year. If future capital gain is offset by carried-forward capital losses, such future capital gain is not subject to fund-level U.S. federal income tax, regardless of whether distributed to stockholders. A RIC cannot carry back or carry forward any net operating losses.

              It is believed that transactions we have undertaken, including the Allied Acquisition, have resulted in a limitation on our ability to use both our own and Allied Capital's capital loss carryforwards and, potentially, to use unrealized capital losses inherent in the tax basis of our own pre-acquisition assets and Allied Capital's assets we acquired. These limitations, imposed by Section 383 of the Code and based on the principles of Section 382 of the Code, are imposed on an annual basis. Losses in excess of the limitation may be carried forward, subject to the overall eight-year limitation. The Section 382 limitation applied to our and Allied Capital's losses generally will equal the product of the net asset value of each corporation immediately prior to the Allied Acquisition, respectively, and the "long-term tax-exempt rate," published by the IRS, in effect at such time. As of April 2010, the month during which the Allied Acquisition was consummated, the long-term tax-exempt rate was 4.03%. Additionally, under Section 384 of the Code, we may also be prohibited from using Allied Capital's loss carryforwards and unrealized losses against any of our unrealized gains at the time of the Allied Acquisition, to the extent such gains are realized within five years following the Allied Acquisition. While our ability to utilize losses in the future depends upon a variety of factors that cannot be known in advance, because capital loss carryforwards realized in taxable years beginning before January 1, 2011 generally expire eight taxable years following recognition, substantially all of our and Allied Capital's losses may become permanently unavailable. Future transactions we enter into may further limit our ability to utilize losses.

              As of December 31, 2012, for U.S. federal income tax purposes, we had capital loss carryforwards of approximately $0.1 billion, other losses limited under Sections 382 and 384 of the Code of approximately $0.3 billion and net unrealized losses of approximately $0.9 billion. These amounts are estimates and will not be finally determined until we file our 2012 income tax return in 2013.

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TAXATION OF U.S. STOCKHOLDERS

              Whether an investment in the shares of our preferred stock or common stock is appropriate for a U.S. stockholder will depend upon that person's particular circumstances. An investment in the shares of our preferred stock or common stock by a U.S. stockholder may have adverse tax consequences. The following summary generally describes certain U.S. federal income tax consequences of an investment in shares of our preferred stock and common stock by taxable U.S. stockholders and not by U.S. stockholders that generally are exempt from U.S. federal income taxation. U.S. stockholders should consult their own tax advisors before investing in shares of our preferred stock or common stock.

              Distributions by us generally are taxable to U.S. stockholders as ordinary income or long-term capital gain. Distributions of our investment company taxable income (which is, generally, our ordinary income excluding net capital gain) will be taxable as ordinary income to U.S. stockholders to the extent of our current and accumulated earnings and profits, whether paid in cash or reinvested in additional shares of our common stock. Distributions of our net capital gain (which generally is the excess of our net long-term capital gain over our net short-term capital loss) properly reported by us as "capital gain dividends" will be taxable to U.S. stockholders as long-term capital gains (which, under current law, are taxed at preferential rates in the case of individuals, trusts or estates). This is true regardless of U.S. stockholders' holding periods for their preferred stock or common stock and regardless of whether the dividend is paid in cash or reinvested in additional common stock. Distributions in excess of our earnings and profits first will reduce a U.S. stockholder's adjusted tax basis in such stockholder's preferred stock or common stock and, after the adjusted tax basis is reduced to zero, will constitute capital gain to such U.S. stockholder. We have made distributions in excess of our earnings and profits and may continue to do so in the future. As a result, a U.S. stockholder will need to consider the effect of our distributions on such U.S. stockholder's adjusted tax basis in our preferred stock or common stock in their individual circumstances.

              A portion of our ordinary income dividends, but not capital gain dividends, paid to corporate U.S. stockholders may, if certain conditions are met, qualify for the 70% dividends-received deduction to the extent that we have received dividends from certain corporations during the taxable year, but only to the extent such ordinary income dividends are treated as paid out of our earnings and profits. We expect only a small portion of our dividends to qualify for this deduction. A corporate U.S. stockholder may be required to reduce its basis on its preferred stock with respect to certain "extraordinary dividends," as provided under Section 1059 of the Code. Corporate U.S. stockholders should consult their own tax advisors in determining the application of these rules in their particular circumstances.

              In general, "qualified dividend income" realized by non-corporate U.S. stockholders is taxable at the same rate as net capital gain. Generally, qualified dividend income is dividend income attributable to certain U.S. and foreign corporations, as long as certain holding period requirements as met. As long as certain requirements are met, our dividends paid to non-corporate U.S. stockholders attributable to qualified dividend income may be treated by such U.S. stockholders as qualified dividend income, but only to the extent such ordinary income dividends are treated as paid out of our earnings and profits. We expect only a small portion of our dividends to qualify as qualified dividend income.

              Although we currently intend to distribute any of our net capital gain for each taxable year on a timely basis, we may in the future decide to retain some or all of our net capital gain, and may designate the retained amount as a "deemed distribution." In that case, among other consequences, we will pay tax on the retained amount, each U.S. stockholder will be required to include such

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stockholder's share of the deemed distribution in income as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled to claim a credit equal to such stockholder's allocable share of the tax paid thereon by us. The amount of the deemed distribution net of such tax will be added to the U.S. stockholder's adjusted tax basis for such stockholder's preferred stock or common stock.

              Because we expect to pay tax on any retained net capital gain at our regular corporate tax rate, and because that rate currently is in excess of the maximum rate currently payable by individuals on net capital gain, the amount of tax that individual stockholders will be treated as having paid and for which they will receive a credit would exceed the tax they owe on the retained net capital gain. Such excess generally may be claimed as a credit against a U.S. stockholder's other U.S. federal income tax obligations or may be refunded to the extent it exceeds the stockholder's liability for U.S. federal income tax. A U.S. stockholder that is not subject to U.S. federal income tax or otherwise is not required to file a U.S. federal income tax return would be required to file a U.S. federal income tax return on the appropriate form in order to claim a refund for the taxes we paid. In order to utilize the deemed distribution approach, we must provide a written statement to our stockholders reporting the deemed distribution after the close of the relevant taxable year. We cannot treat any of our investment company taxable income as a "deemed distribution."

              We will be subject to the alternative minimum tax, also referred to as the "AMT," but any items that are treated differently for AMT purposes must be apportioned between us and our stockholders and this may affect U.S. stockholders' AMT liabilities. Although regulations explaining the precise method of apportionment have not yet been issued, such items generally will be apportioned in the same proportion that dividends paid to each stockholder bear to our taxable income (determined without regard to the dividends paid deduction), unless a different method for a particular item is warranted under the circumstances.

              For purposes of determining (1) whether the Annual Distribution Requirement is satisfied for any year and (2) the amount of dividends paid for that year, we may, under certain circumstances, elect to treat a dividend that is paid during the following taxable year as if it had been paid during the taxable year in question. If we make such an election, the U.S. stockholder will still be treated as receiving the dividend in the taxable year in which the distribution is made. However, any dividend declared by us in October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following year, will be treated as if it had been received by our U.S. stockholders on December 31 of the year in which the dividend was declared.

              We have the ability to declare a large portion of a dividend in shares of our stock. As long as a portion of such dividend is paid in cash and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, our stockholders will be taxed on 100% of the fair market value of the dividend on the date the dividend is received in the same manner as a cash dividend, even though most of the dividend was paid in shares of our stock, which may result in our U.S. stockholders having to pay tax on such dividends, even if no cash is received, and our non-U.S. stockholders may be subject to withholding tax in respect of amounts distributed in our common stock. In general, any dividend on shares of our preferred stock will be taxable as a dividend, regardless of whether any portion is paid in stock.

              If investors purchase shares of our preferred stock or common stock shortly before the record date of a distribution, the price of the shares will include the value of the distribution and the investors will be subject to tax on the distribution even though it represents a return of their investment. We have built-up or have the potential to build up large amounts of unrealized gain which, when realized and distributed, could have the effect of a taxable return of capital to stockholders.

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              A U.S. stockholder generally will recognize taxable gain or loss if the U.S. stockholder sells or otherwise disposes of such stockholder's shares of our preferred stock or common stock. The amount of gain or loss will be measured by the difference between such stockholder's adjusted tax basis in the stock sold and the amount of the proceeds received in exchange. Any gain arising from such sale or disposition generally will be treated as long-term capital gain or loss if the stockholder has held such stockholder's shares for more than one year. Otherwise, such gain or loss will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or disposition of shares of our preferred stock or common stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of shares of our preferred stock or common stock may be disallowed if substantially identical stock or securities are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition.

              In general, U.S. stockholders that are individuals, trusts or estates are taxed at preferential rates on their net capital gain (generally, the excess of net long-term capital gain over net short-term capital loss for a taxable year, including long-term capital gain derived from an investment in our shares). Such rate is lower than the maximum rate on ordinary income currently payable by individuals. Corporate U.S. stockholders currently are subject to U.S. federal income tax on net capital gain at the maximum rate that also applies to ordinary income. Non-corporate U.S. stockholders with net capital losses for a year (i.e., capital loss in excess of capital gain) generally may deduct up to $3,000 of such losses against their ordinary income each year; any net capital losses of a non-corporate U.S. stockholder in excess of $3,000 generally may be carried forward and used in subsequent years as provided in the Code. Corporate U.S. stockholders generally may not deduct any net capital losses for a year, but may carry back such losses for three years or carry forward such losses for five years.

              We will send to each of our U.S. stockholders, after the end of each calendar year, a notice providing, on a per share and per distribution basis, the amounts includible in such U.S. stockholder's taxable income for such year as ordinary income and as long-term capital gain. In addition, the U.S. federal tax status of each year's distributions generally will be reported to the IRS. Distributions may also be subject to additional state, local and foreign taxes depending on a U.S. stockholder's particular situation.

              We may be required to withhold U.S. federal income tax ("backup withholding") from all taxable distributions to any non-corporate U.S. stockholder (1) who fails to furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding or (2) with respect to whom the IRS notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual's taxpayer identification number is his or her social security number. Backup withholding is not an additional tax. Any amount withheld under backup withholding is allowed as a credit against the U.S. stockholder's U.S. federal income tax liability and may entitle such stockholder to a refund, provided that proper information is timely provided to the IRS.

              For taxable years of non-corporate U.S. holders beginning after December 31, 2012, such holders generally will be subject to a 3.8% Medicare tax on their "net investment income," which ordinarily includes taxable distributions or deemed distributions on stock, such as our preferred stock

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and our common stock, as well as taxable gain on the disposition of stock, including our preferred stock or common stock.

              Under legislation enacted in 2010 and recent guidance from the IRS, the relevant withholding agent generally will be required to withhold 30% of any dividends on our preferred stock and common stock paid after December 31, 2013 and the gross proceeds from a sale of our preferred stock and common stock paid after December 31, 2016 to (i) a foreign financial institution (whether such financial institution is the beneficial owner or an intermediary) unless such foreign financial institution agrees to verify, report and disclose its U.S. accountholders and meets certain other specified requirements or (ii) a non-financial foreign entity (whether such entity is the beneficial owner or an intermediary) unless such entity certifies that it does not have any substantial United States owners or provides the name, address and taxpayer identification number of each substantial United States owner and such entity meets certain other specified requirements. We will not pay any additional amounts in respect to any amounts withheld.

              Under U.S. Treasury regulations, if a stockholder recognizes a loss with respect to shares of $2 million or more for a non-corporate stockholder or $10 million or more for a corporate stockholder in any single taxable year (or a greater loss over a combination of years), the stockholder must file with the IRS a disclosure statement on Form 8886. Direct stockholders of certain portfolio securities in many cases are excepted from this reporting requirement, but under current guidance, stockholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to stockholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer's treatment of the loss is proper. Significant monetary penalties apply to a failure to comply with this reporting requirement. States may also have a similar reporting requirement. Stockholders should consult their own tax advisors to determine the applicability of these regulations in light of their individual circumstances.

TAXATION OF NON-U.S. STOCKHOLDERS

              Whether an investment in shares of our preferred stock or common stock is appropriate for a non-U.S. stockholder will depend upon that person's particular circumstances. An investment in shares of our preferred stock or common stock by a non-U.S. stockholder may have adverse tax consequences and, accordingly, may not be appropriate for a non-U.S. stockholder. Non-U.S. stockholders should consult their own tax advisors before investing in our preferred stock or common stock.

              Distributions of our investment company taxable income to non-U.S. stockholders will be subject to U.S. withholding tax (unless lowered or eliminated by an applicable income tax treaty) to the extent payable from our current and accumulated earnings and profits unless an exception applies.

              If a non-U.S. stockholder receives distributions and such distributions are effectively connected with a U.S. trade or business of the non-U.S. stockholder and, if an income tax treaty applies, attributable to a permanent establishment in the United States of such non-U.S. stockholder, such distributions generally will be subject to U.S. federal income tax at the rates applicable to U.S. persons. In that case, we will not be required to withhold U.S. federal income tax if the non-U.S. stockholder complies with applicable certification and disclosure requirements. Special certification requirements apply to a non-U.S. stockholder that is a foreign trust and such entities are urged to consult their own tax advisors.

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              Actual or deemed distributions of our net capital gain (which generally is the excess of our net long-term capital gain over our net short-term capital loss) to a non-U.S. stockholder, and gains recognized by a non-U.S. stockholder upon the sale of our preferred stock or common stock, will not be subject to withholding of U.S. federal income tax and generally will not be subject to U.S. federal income tax unless (a) the distributions or gains, as the case may be, are effectively connected with a U.S. trade or business of the non-U.S. stockholder and, if an income tax treaty applies, are attributable to a permanent establishment maintained by the non-U.S. stockholder in the United States (as discussed above) or (b) the non-U.S. stockholder is an individual, has been present in the United States for 183 days or more during the taxable year, and certain other conditions are satisfied. For a corporate non-U.S. stockholder, distributions (both actual and deemed), and gains recognized upon the sale of our preferred stock or common stock that are effectively connected with a U.S. trade or business may, under certain circumstances, be subject to an additional "branch profits tax" (unless lowered or eliminated by an applicable income tax treaty). Non-U.S. stockholders of our preferred stock or common stock are encouraged to consult their own advisors as to the applicability of an income tax treaty in their individual circumstances.

              In general, no U.S. source withholding taxes will be imposed on dividends paid by RICs in taxable years beginning before January 1, 2014 to non-U.S. stockholders to the extent the dividends are designated as "interest-related dividends" or "short-term capital gain dividends." Under this exemption, interest-related dividends and short-term capital gain dividends generally represent distributions of interest or short-term capital gain that would not have been subject to U.S. withholding tax at the source if they had been received directly by a non-U.S. stockholder, and that satisfy certain other requirements. However, no assurance can be given that we will distribute any interest-related or short-term capital dividends.

              If we distribute our net capital gain in the form of deemed rather than actual distributions (which we may do in the future), a non-U.S. stockholder will be entitled to a U.S. federal income tax credit or tax refund equal to the non-U.S. stockholder's allocable share of the tax we pay on the capital gain deemed to have been distributed. In order to obtain the refund, the non-U.S. stockholder must obtain a U.S. taxpayer identification number (if one has not been previously obtained) and file a U.S. federal income tax return even if the non-U.S. stockholder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return.

              We have the ability to declare a large portion of a dividend in shares of our common stock. As long as a portion of such dividend is paid in cash (which portion can be as low as 20%) and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, our non-U.S. stockholders will be taxed on 100% of the fair market value of the dividend on the date the dividend is received in the same manner as a cash dividend (including the application of withholding tax rules described above), even though most of the dividend was paid in shares of our common stock. In such a circumstance, we may be required to withhold all or substantially all of the cash we would otherwise distribute to a non-U.S. stockholder. In general, any dividend on shares of our preferred stock will be taxable as a dividend, regardless of whether any portion is paid in stock.

              A non-U.S. stockholder who is otherwise subject to withholding of U.S. federal income tax, may be subject to information reporting and backup withholding of U.S. federal income tax on dividends unless the non-U.S. stockholder provides us or the dividend paying agent with an IRS Form W-8BEN (or an acceptable substitute form) or otherwise meets documentary evidence requirements for establishing that it is a non-U.S. stockholder or otherwise establishes an exemption from backup withholding.

              Under legislation enacted in 2010 and recent guidance from the IRS, the relevant withholding agent generally will be required to withhold 30% of any dividends paid on our preferred stock and

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common stock paid after December 31, 2013 and the gross proceeds from a sale of our preferred stock and common stock paid after December 31, 2016 to (i) a foreign financial institution unless such foreign financial institution agrees to verify, report and disclose its U.S. accountholders and meets certain other specified requirements or (ii) a non-financial foreign entity that is the beneficial owner of the payment unless such entity certifies that it does not have any substantial United States owners or provides the name, address and taxpayer identification number of each substantial United States owner and such entity meets certain other specified requirements. If payment of this withholding tax is made, non-U.S. stockholders that are otherwise eligible for an exemption from, or reduction of, U.S. federal withholding taxes with respect to such dividends or proceeds will be required to seek a credit or refund from the IRS to obtain the benefit of such exemption or reduction. Non-U.S. stockholders should consult their own tax advisers regarding the particular consequences to them of this legislation and guidance. We will not pay any additional amounts in respect to any amounts withheld.

FAILURE TO QUALIFY AS A RIC

              If we were unable to qualify for treatment as a RIC, and relief were not available as discussed above, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders and would not be required to make distributions for tax purposes. Distributions generally would be taxable to our stockholders as ordinary dividend income to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate U.S. stockholders would be eligible for the dividends-received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder's tax basis, and any remaining distributions would be treated as a capital gain. If we were to fail to meet the RIC requirements for more than two consecutive years and then sought to requalify as a RIC, we would be required to recognize gain to the extent of any unrealized appreciation in our assets unless we made a special election to pay corporate-level tax on any such unrealized appreciation recognized during the succeeding 10-year period.

POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING TAX CONSIDERATIONS

              Prospective investors should recognize that the present U.S. federal income tax treatment of an investment in shares of our preferred stock or common stock may be modified by legislative, judicial or administrative action at any time, and that any such action may affect investments and commitments previously made. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department, resulting in revisions of regulations and revised interpretations of established concepts as well as statutory changes. Revisions in U.S. federal tax laws and interpretations thereof could adversely affect the tax consequences of an investment in us.

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DESCRIPTION OF SECURITIES

              This prospectus contains a summary of the common stock, preferred stock, subscription rights, debt securities, warrants and units. These summaries are not meant to be a complete description of each security. However, this prospectus and the accompanying prospectus supplement will contain the material terms and conditions for each security.

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DESCRIPTION OF OUR CAPITAL STOCK

              The following description is based on relevant portions of the Maryland General Corporation Law and on our charter and bylaws. This summary is not necessarily complete, and we refer you to the Maryland General Corporation Law and our charter and bylaws for a more detailed description of the provisions summarized below.

STOCK

              Our authorized stock consists of 500,000,000 shares of stock, par value $0.001 per share, all of which are currently designated as common stock. Our common stock trades on The NASDAQ Global Select Market under the symbol "ARCC." On April 25, 2013, the last reported sales price of our common stock on The NASDAQ Global Select Market was $17.76 per share. There are no outstanding options or warrants to purchase our stock. No stock has been authorized for issuance under any equity compensation plans. Under Maryland law, our stockholders generally are not personally liable for our indebtedness or obligations.

              Under our charter, our board of directors is authorized to classify and reclassify any unissued shares of stock into other classes or series of stock and authorize the issuance of shares of stock without obtaining stockholder approval. As permitted by the Maryland General Corporation Law, our charter provides that the board of directors, without any action by our stockholders, may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue.

Common Stock

              All shares of our common stock have equal rights as to earnings, assets, dividends and voting and, when they are issued, will be duly authorized, validly issued, fully paid and nonassessable. Distributions may be paid to the holders of our common stock if, as and when authorized by our board of directors and declared by us out of funds legally available therefor. Shares of our common stock have no preemptive, exchange, conversion or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract.

              In the event of a liquidation, dissolution or winding up of the Company, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay off all indebtedness and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time.

              Each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of our common stock will possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock can elect all of our directors, and holders of less than a majority of such shares will be unable to elect any director.

              The following are our outstanding classes of capital stock as of April 26, 2013:

(1)
Title of Class
  (2)
Amount Authorized
  (3)
Amount Held by
Registrant
or for its
Account
  (4)
Amount Outstanding
Exclusive of Amount
Shown Under
Column (3)
 

Common Stock

    500,000,000         268,043,157  

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Preferred Stock

              Our charter authorizes our board of directors to classify and reclassify any unissued shares of stock into other classes or series of stock, including preferred stock. Prior to issuance of shares of each class or series, the board of directors is required by Maryland law and by our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, our board of directors could authorize the issuance of shares of our preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest.

              You should note, however, that any issuance of preferred stock must comply with the requirements of the Investment Company Act. The Investment Company Act requires, among other things, that (a) immediately after issuance and before any dividend or other distribution is made with respect to our common stock and before any purchase of common stock is made, such preferred stock together with all other indebtedness and senior securities must not exceed an amount equal to 50% of our total assets after deducting the amount of such dividend, distribution or purchase price, as the case may be and (b) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if dividends on such preferred stock are in arrears by two years or more. Certain matters under the Investment Company Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a BDC. We believe that the availability for issuance of preferred stock may provide us with increased flexibility in structuring future financings and acquisitions.

LIMITATION ON LIABILITY OF DIRECTORS AND OFFICERS; INDEMNIFICATION AND ADVANCE OF EXPENSES

              Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our charter contains such a provision, which eliminates directors' and officers' liability to the maximum extent permitted by Maryland law, subject to the requirements of the Investment Company Act.

              Our charter authorizes us to obligate ourselves, and our bylaws obligate us, to the maximum extent permitted by Maryland law and subject to the requirements of the Investment Company Act, to indemnify any present or former director or officer or any individual who, while a director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee, from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in that capacity and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. The charter and bylaws also permit us to indemnify and advance expenses to any person who served a predecessor of us in any of the capacities described above and any of our employees or agents or any employees or agents of our predecessor. In accordance with the Investment Company Act, we will not indemnify any person for any liability to that such person would be subject by reason of such person's willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.

              In addition to the indemnification provided for in our bylaws, we have entered into indemnification agreements with each of our current directors and certain of our officers and with

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members of our investment adviser's investment committee and we intend to enter into indemnification agreements with each of our future directors, members of our investment committee and certain of our officers. The indemnification agreements attempt to provide these directors, officers and other persons the maximum indemnification permitted under Maryland law and the Investment Company Act. The agreements provide, among other things, for the advancement of expenses and indemnification for liabilities which such person may incur by reason of his or her status as a present or former director or officer or member of our investment adviser's investment committee in any action or proceeding arising out of the performance of such person's services as a present or former director or officer or member of our investment adviser's investment committee.

              Maryland law requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or are threatened to be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation's receipt of (x) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (y) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

PROVISIONS OF THE MARYLAND GENERAL CORPORATION LAW AND OUR CHARTER AND BYLAWS

              The Maryland General Corporation Law and our charter and bylaws contain provisions that could make it more difficult for a potential acquiror to acquire us by means of a tender offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.

Classified Board of Directors

              Our board of directors is divided into three classes of directors serving staggered three-year terms, with the term of office of only one of the three classes expiring each year. A classified board may render a change in control of us or removal of our incumbent management more difficult. We believe, however, that the longer time required to elect a majority of a classified board of directors helps to ensure the continuity and stability of our management and policies.

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Election of Directors

              Our charter and bylaws provide that the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote in the election of directors will be required to elect a director. Pursuant to the charter, our board of directors may amend the bylaws to alter the vote required to elect directors.

Number of Directors; Vacancies; Removal

              Our charter provides that the number of directors will be set only by the board of directors in accordance with our bylaws. Our bylaws provide that a majority of our entire board of directors may at any time increase or decrease the number of directors. However, unless our bylaws are amended, the number of directors may never be less than four or more than eleven. Our charter sets forth our election, subject to certain requirements, to be subject to the provision of Subtitle 8 of Title 3 of the Maryland General Corporation Law regarding the filling of vacancies on the board of directors. Accordingly, except as may be provided by the board of directors in setting the terms of any class or series of preferred stock, any and all vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable requirements of the Investment Company Act.

              Our charter provides that a director may be removed only for cause, as defined in our charter, and then only by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors.

Action by Stockholders

              Under the Maryland General Corporation Law and our charter, stockholder action can be taken only at an annual or special meeting of stockholders or by unanimous written or electronically transmitted consent instead of a meeting. These provisions, combined with the requirements of our bylaws regarding the calling of a stockholder-requested special meeting of stockholders discussed below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.

Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals

              Our bylaws provide that with respect to an annual meeting of stockholders, nominations of individuals for election to the board of directors and the proposal of business to be considered by stockholders may be made only (a) pursuant to our notice of the meeting, (b) by or at the direction of the board of directors or (c) by a stockholder who is a stockholder of record both at the time of giving the advance notice required by the bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with the advance notice procedures of the bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of individuals for election to the board of directors at a special meeting may be made only (a) by or at the direction of the board of directors or (b) provided that the special meeting has been called in accordance with the bylaws for the purpose of electing directors, by a stockholder who is a stockholder of record both at the time of giving the advance notice required by the bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the advance notice provisions of the bylaws.

              The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our board of directors a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed

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necessary or desirable by our board of directors, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do not give our board of directors any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders.

Calling of Special Meetings of Stockholders

              Our bylaws provide that special meetings of stockholders may be called by our board of directors and certain of our officers. Additionally, our bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders will be called by the secretary of the corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast at such meeting.

Approval of Extraordinary Corporate Action; Amendment of Charter and Bylaws

              Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business, unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. See "Risk Factors—Risks Relating to Offerings Pursuant to this Prospectus—Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock." However, a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Our charter generally provides for approval of charter amendments and extraordinary transactions by the stockholders entitled to cast at least a majority of the votes entitled to be cast on the matter. Our charter also provides that certain charter amendments and any proposal for our conversion, whether by merger or otherwise, from a closed-end company to an open-end company or any proposal for our liquidation or dissolution requires the approval of the stockholders entitled to cast at least 80 percent of the votes entitled to be cast on such matter. However, if such amendment or proposal is approved by at least two-thirds of our continuing directors (as defined below) (in addition to approval by our board of directors), such amendment or proposal may be approved by a majority of the votes entitled to be cast on such a matter. The "continuing directors" are defined in our charter as our current directors as well as those directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of the continuing directors then on the board of directors.

              Our charter and bylaws provide that the board of directors will have the exclusive power to adopt, alter or repeal any provision of our bylaws and to make new bylaws.

No Appraisal Rights

              Except with respect to appraisal rights arising in connection with the Control Share Acquisition Act discussed below, as permitted by the Maryland General Corporation Law, our charter provides that stockholders will not be entitled to exercise appraisal rights unless a majority of our board of directors determines that such rights will apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which stockholders would otherwise be entitled to exercise appraisal rights.

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Control Share Acquisitions

              The Control Share Acquisition Act provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror, by officers or by employees who are directors of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power:

              The requisite stockholder approval must be obtained each time an acquiror crosses one of the thresholds of voting power set forth above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions.

              A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

              If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may repurchase for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to repurchase control shares is subject to certain conditions and limitations, including, as provided in our bylaws, compliance with the Investment Company Act, which will prohibit any such repurchase other than in limited circumstances. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of stockholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

              The Control Share Acquisition Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation.

              Our bylaws contain a provision exempting from the Control Share Acquisition Act any and all acquisitions by any person of our shares of stock and, as a result, any control shares of the Company will have the same voting rights as all of the other shares of the Company common stock. Such provision could be amended or eliminated at any time in the future. However, we will amend our bylaws to be subject to the Control Share Acquisition Act only if the board of directors determines that it would be in our best interests and we determine (after consultation with the SEC staff) that our being subject to the Control Share Acquisition Act does not conflict with the Investment Company Act.

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Business Combinations

              Under Maryland law, "business combinations" between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:

              A person is not an interested stockholder under this statute if the board of directors approved in advance the transaction by which such person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

              After the five-year prohibition, any business combination between the corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:

              These super-majority vote requirements do not apply if the corporation's common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

              The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors before the time that the interested stockholder becomes an interested stockholder. Our board of directors has adopted a resolution that any business combination between us and any other person is exempted from the provisions of the Business Combination Act, provided that the business combination is first approved by the board of directors, including a majority of the independent directors. This resolution, however, may be altered or repealed in whole or in part at any time. If this resolution is repealed, or the board of directors does not otherwise approve a business combination, the statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

Conflict with the Investment Company Act

              Our bylaws provide that, if and to the extent that any provision of the Maryland General Corporation Law, including the Control Share Acquisition Act (if we amend our bylaws to be subject to such act) and the Business Combination Act, or any provision of our charter or bylaws conflicts with any provision of the Investment Company Act, the applicable provision of the Investment Company Act will control.

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DESCRIPTION OF OUR PREFERRED STOCK

              In addition to shares of common stock, our charter authorizes the issuance of preferred stock. If we offer preferred stock under this prospectus, we will issue an appropriate prospectus supplement. We may issue preferred stock from time to time in one or more classes or series, without stockholder approval. Prior to issuance of shares of each class or series, our board of directors is required by Maryland law and by our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Any such an issuance must adhere to the requirements of the Investment Company Act, Maryland law and any other limitations imposed by law.

              The Investment Company Act currently requires, among other things, that (a) immediately after issuance and before any distribution is made with respect to common stock, the liquidation preference of the preferred stock, together with all other senior securities, must not exceed an amount equal to 50% of our total assets (taking into account such distribution), (b) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if dividends on the preferred stock are in arrears by two years or more and (c) such class of stock have complete priority over any other class of stock as to distribution of assets and payment of dividends, which dividends shall be cumulative.

              For any series of preferred stock that we may issue, our board of directors will determine and the articles supplementary and the prospectus supplement relating to such series will describe:

              All shares of preferred stock that we may issue will be identical and of equal rank except as to the particular terms thereof that may be fixed by our board of directors, and all shares of each series of preferred stock will be identical and of equal rank except as to the dates from which dividends, if any, thereon will be cumulative.

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DESCRIPTION OF OUR SUBSCRIPTION RIGHTS

GENERAL

              We may issue subscription rights to our stockholders to purchase common stock. Subscription rights may be issued independently or together with any other offered security and may or may not be transferable by the person purchasing or receiving the subscription rights. In connection with a subscription rights offering to our stockholders, we would distribute certificates evidencing the subscription rights and a prospectus supplement to our stockholders on the record date that we set for receiving subscription rights in such subscription rights offering.

              The applicable prospectus supplement would describe the following terms of subscription rights in respect of which this prospectus is being delivered:

              We will not offer any subscription rights to purchase shares of our common stock under this prospectus or an accompanying prospectus supplement without first filing a new post-effective amendment to the registration statement.

EXERCISE OF SUBSCRIPTION RIGHTS

              Each subscription right would entitle the holder of the subscription right to purchase for cash such amount of shares of common stock at such exercise price as shall in each case be set forth in, or be determinable as set forth in, the prospectus supplement relating to the subscription rights offered thereby. Subscription rights may be exercised at any time up to the close of business on the expiration date for such subscription rights set forth in the prospectus supplement. After the close of business on the expiration date, all unexercised subscription rights would become void.

              Subscription rights may be exercised as set forth in the prospectus supplement relating to the subscription rights offered thereby. Upon receipt of payment and the subscription rights certificate properly completed and duly executed at the corporate trust office of the subscription rights agent or any other office indicated in the prospectus supplement we will forward, as soon as practicable, the shares of common stock purchasable upon such exercise. To the extent permissible under applicable law, we may determine to offer any unsubscribed offered securities directly to persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, as set forth in the applicable prospectus supplement.

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DESCRIPTION OF OUR WARRANTS

              The following is a general description of the terms of the warrants we may issue from time to time. Particular terms of any warrants we offer will be described in the prospectus supplement relating to such warrants.

              We may issue warrants to purchase shares of our common stock, preferred stock or debt securities. Such warrants may be issued independently or together with shares of common stock, preferred stock or debt securities and may be attached or separate from such securities. We will issue each series of warrants under a separate warrant agreement to be entered into between us and a warrant agent. The warrant agent will act solely as our agent and will not assume any obligation or relationship of agency for or with holders or beneficial owners of warrants.

              A prospectus supplement will describe the particular terms of any series of warrants we may issue, including the following:

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              We and the warrant agent may amend or supplement the warrant agreement for a series of warrants without the consent of the holders of the warrants issued thereunder to effect changes that are not inconsistent with the provisions of the warrants and that do not materially and adversely affect the interests of the holders of the warrants.

              Prior to exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including, in the case of warrants to purchase debt securities, the right to receive principal, premium, if any, or interest payments, on the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture or, in the case of warrants to purchase common stock or preferred stock, the right to receive dividends, if any, or payments upon our liquidation, dissolution or winding up or to exercise any voting rights.

              Under the Investment Company Act, we may generally only offer warrants provided that (a) the warrants expire by their terms within ten years, (b) the exercise or conversion price is not less than the current market value at the date of issuance, (c) our stockholders authorize the proposal to issue such warrants, and our board of directors approves such issuance on the basis that the issuance is in the best interests of Ares Capital and its stockholders and (d) if the warrants are accompanied by other securities, the warrants are not separately transferable unless no class of such warrants and the securities accompanying them has been publicly distributed. The Investment Company Act also provides that the amount of our voting securities that would result from the exercise of all outstanding warrants, as well as options and rights, at the time of issuance may not exceed 25% of our outstanding voting securities.

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DESCRIPTION OF OUR DEBT SECURITIES

              We may issue debt securities in one or more series. The specific terms of each series of debt securities will be described in the particular prospectus supplement relating to that series. The prospectus supplement may or may not modify the general terms found in this prospectus and will be filed with the SEC. For a complete description of the terms of a particular series of debt securities, you should read both this prospectus and the prospectus supplement relating to that particular series.

              As required by federal law for all bonds and notes of companies that are publicly offered, the debt securities are governed by a document called an "indenture." An indenture is a contract between us and U.S. Bank National Association, a financial institution acting as trustee on your behalf, and is subject to and governed by the Trust Indenture Act of 1939, as amended. The trustee has two main roles. First, the trustee can enforce your rights against us if we default. There are some limitations on the extent to which the trustee acts on your behalf, described in the second paragraph under "Events of Default—Remedies if an Event of Default Occurs." Second, the trustee performs certain administrative duties for us.

              Because this section is a summary, it does not describe every aspect of the debt securities and the indenture. We urge you to read the indenture because it, and not this description, defines your rights as a holder of debt securities. For example, in this section, we use capitalized words to signify terms that are specifically defined in the indenture. Some of the definitions are repeated in this prospectus, but for the rest you will need to read the indenture. We have filed the form of the indenture with the SEC. See "Available Information" for information on how to obtain a copy of the indenture.

              The prospectus supplement, which will accompany this prospectus, will describe the particular series of debt securities being offered, including, among other things:

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              The debt securities may be secured or unsecured obligations. Unless the prospectus supplement states otherwise, principal (and premium, if any) and interest, if any, will be paid by us in immediately available funds.

              We are permitted, under specified conditions, to issue multiple classes of indebtedness if our asset coverage, calculated pursuant to the Investment Company Act, is at least equal to 200% immediately after each such issuance. In addition, while any indebtedness and senior securities remain outstanding, we must make provisions to prohibit the distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. Specifically, we may be precluded from declaring dividends or repurchasing shares of our common stock unless our asset coverage is at least 200%. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage. For a discussion of the risks associated with leverage, see "Risk Factors—Risks Relating to Our Business—Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital."

GENERAL

              The indenture provides that any debt securities proposed to be sold under this prospectus and the attached prospectus supplement ("offered debt securities") and any debt securities issuable upon the exercise of warrants or upon conversion or exchange of other offered securities ("underlying debt securities"), may be issued under the indenture in one or more series.

              For purposes of this prospectus, any reference to the payment of principal of or premium or interest, if any, on debt securities will include additional amounts if required by the terms of the debt securities.

              The indenture does not limit the amount of debt securities that may be issued thereunder from time to time. Debt securities issued under the indenture, when a single trustee is acting for all debt securities issued under the indenture, are called the "indenture securities." The indenture also provides that there may be more than one trustee thereunder, each with respect to one or more different series of indenture securities. See "Resignation of Trustee" below. At a time when two or more trustees are acting under the indenture, each with respect to only certain series, the term "indenture securities"

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means the one or more series of debt securities with respect to which each respective trustee is acting. In the event that there is more than one trustee under the indenture, the powers and trust obligations of each trustee described in this prospectus will extend only to the one or more series of indenture securities for which it is trustee. If two or more trustees are acting under the indenture, then the indenture securities for which each trustee is acting would be treated as if issued under separate indentures.

              The indenture does not contain any provisions that give you protection in the event we issue a large amount of debt or we are acquired by another entity.

              We refer you to the prospectus supplement for information with respect to any deletions from, modifications of or additions to the Events of Default or our covenants that are described below, including any addition of a covenant or other provision providing event risk or similar protection.

              We have the ability to issue indenture securities with terms different from those of indenture securities previously issued and, without the consent of the holders thereof, to reopen a previous issue of a series of indenture securities and issue additional indenture securities of that series unless the reopening was restricted when that series was created.

              We expect that we will usually issue debt securities in book entry only form represented by global securities.

CONVERSION AND EXCHANGE

              If any debt securities are convertible into or exchangeable for other securities, the prospectus supplement will explain the terms and conditions of the conversion or exchange, including the conversion price or exchange ratio (or the calculation method), the conversion or exchange period (or how the period will be determined), if conversion or exchange will be mandatory or at the option of the holder or us, provisions for adjusting the conversion price or the exchange ratio and provisions affecting conversion or exchange in the event of the redemption of the underlying debt securities. These terms may also include provisions under which the number or amount of other securities to be received by the holders of the debt securities upon conversion or exchange would be calculated according to the market price of the other securities as of a time stated in the prospectus supplement.

PAYMENT AND PAYING AGENTS

              We will pay interest to the person listed in the applicable trustee's records as the owner of the debt security at the close of business on a particular day in advance of each due date for interest, even if that person no longer owns the debt security on the interest due date. That day, usually about two weeks in advance of the interest due date, is called the "record date." Because we will pay all the interest for an interest period to the holders on the record date, holders buying and selling debt securities must work out between themselves the appropriate purchase price. The most common manner is to adjust the sales price of the debt securities to prorate interest fairly between buyer and seller based on their respective ownership periods within the particular interest period. This prorated interest amount is called "accrued interest."

Payments on Global Securities

              We will make payments on a global security in accordance with the applicable policies of the depositary as in effect from time to time. Under those policies, we will make payments directly to the depositary, or its nominee, and not to any indirect holders who own beneficial interests in the global security. An indirect holder's right to those payments will be governed by the rules and practices of the depositary and its participants.

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Payments on Certificated Securities

              We will make payments on a certificated debt security as follows. We will pay interest that is due on an interest payment date by check mailed on the interest payment date to the holder at his or her address shown on the trustee's records as of the close of business on the regular record date. We will make all payments of principal and premium, if any, by check at the office of the applicable trustee in New York, NY and/or at other offices that may be specified in the prospectus supplement or in a notice to holders against surrender of the debt security.

              Alternatively, if the holder asks us to do so, we will pay any amount that becomes due on the debt security by wire transfer of immediately available funds to an account at a bank in New York City, on the due date. To request payment by wire, the holder must give the applicable trustee or other paying agent appropriate transfer instructions at least 15 business days before the requested wire payment is due. In the case of any interest payment due on an interest payment date, the instructions must be given by the person who is the holder on the relevant regular record date. Any wire instructions, once properly given, will remain in effect unless and until new instructions are given in the manner described above.

Payment When Offices Are Closed

              If any payment is due on a debt security on a day that is not a business day, we will make the payment on the next day that is a business day. Payments made on the next business day in this situation will be treated under the indenture as if they were made on the original due date, except as otherwise indicated in the attached prospectus supplement. Such payment will not result in a default under any debt security or the indenture, and no interest will accrue on the payment amount from the original due date to the next day that is a business day.

              Book-entry and other indirect holders should consult their banks or brokers for information on how they will receive payments on their debt securities.

EVENTS OF DEFAULT

              You will have rights if an Event of Default occurs in respect of the debt securities of your series and is not cured, as described later in this subsection.

              The term "Event of Default" in respect of the debt securities of your series means any of the following (unless the prospectus supplement relating to such debt securities states otherwise):

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              An Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series of debt securities issued under the same or any other indenture. The trustee may withhold notice to the holders of debt securities of any default, except in the payment of principal, premium or interest, if it considers the withholding of notice to be in the best interests of the holders.

Remedies if an Event of Default Occurs

              If an Event of Default has occurred and has not been cured, the trustee or the holders of at least 25% in principal amount of the debt securities of the affected series may declare the entire principal amount of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity. In certain circumstances, a declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the debt securities of the affected series.

              The trustee is not required to take any action under the indenture at the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability (called an "indemnity") (Section 315 of the Trust Indenture Act of 1939). If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or remedy will be treated as a waiver of that right, remedy or Event of Default.

              Before you are allowed to bypass your trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the debt securities, the following must occur:

              However, you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date.

              Holders of a majority in principal amount of the debt securities of the affected series may waive any past defaults other than:

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              Book-entry and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the trustee and how to declare or cancel an acceleration of maturity.

              Each year, we will furnish to each trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance with the indenture and the debt securities, or else specifying any default.

MERGER OR CONSOLIDATION

              Under the terms of the indenture, we are generally permitted to consolidate or merge with another entity. We are also permitted to sell all or substantially all of our assets to another entity. However, unless the prospectus supplement relating to certain debt securities states otherwise, we may not take any of these actions unless all the following conditions are met:

MODIFICATION OR WAIVER

              There are three types of changes we can make to the indenture and the debt securities issued thereunder.

Changes Requiring Your Approval

              First, there are changes that we cannot make to your debt securities without your specific approval. The following is a list of those types of changes:

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Changes Not Requiring Approval

              The second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications and certain other changes that would not adversely affect holders of the outstanding debt securities in any material respect. We also do not need any approval to make any change that affects only debt securities to be issued under the indenture after the change takes effect.

Changes Requiring Majority Approval

              Any other change to the indenture and the debt securities would require the following approval:

              The holders of a majority in principal amount of all of the series of debt securities issued under an indenture, voting together as one class for this purpose, may waive our compliance with some of our covenants in that indenture. However, we cannot obtain a waiver of a payment default or of any of the matters covered by the bullet points included above under "—Changes Requiring Your Approval."

Further Details Concerning Voting

              When taking a vote, we will use the following rules to decide how much principal to attribute to a debt security:

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              Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption. Debt securities will also not be eligible to vote if they have been fully defeased as described later under "Defeasance—Full Defeasance."

              We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding indenture securities that are entitled to vote or take other action under the indenture. If we set a record date for a vote or other action to be taken by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding indenture securities of those series on the record date and must be taken within eleven months following the record date.

              Book-entry and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the indenture or the debt securities or request a waiver.

DEFEASANCE

              The following provisions will be applicable to each series of debt securities unless we state in the applicable prospectus supplement that the provisions of covenant defeasance and full defeasance will not be applicable to that series.

Covenant Defeasance

              If certain conditions are satisfied, we can make the deposit described below and be released from some of the restrictive covenants in the indenture under which the particular series was issued. This is called "covenant defeasance." In that event, you would lose the protection of those restrictive covenants but would gain the protection of having money and government securities set aside in trust to repay your debt securities. If applicable, you also would be released from the subordination provisions described under "Indenture Provisions—Subordination" below. In order to achieve covenant defeasance, we must do the following:

              We must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under the Investment Company Act and a legal opinion and officers' certificate stating that all conditions precedent to covenant defeasance have been complied with.

              If we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there were a shortfall in the trust deposit or the trustee is prevented from making payment. For example, if one of the remaining Events of Default occurred (such as our bankruptcy) and the debt

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securities became immediately due and payable, there might be a shortfall. Depending on the event causing the default, you may not be able to obtain payment of the shortfall.

Full Defeasance

              If there is a change in U.S. federal tax law, as described below, we can legally release ourselves from all payment and other obligations on the debt securities of a particular series (called "full defeasance") if we put in place the following other arrangements for you to be repaid:

              If we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt securities. You could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent. If applicable, you would also be released from the subordination provisions described later under "Indenture Provisions—Subordination."

FORM, EXCHANGE AND TRANSFER OF CERTIFICATED REGISTERED SECURITIES

              Holders may exchange their certificated securities, if any, for debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed.

              Holders may exchange or transfer their certificated securities, if any, at the office of their trustee. We have appointed the trustee to act as our agent for registering debt securities in the names of holders transferring debt securities. We may appoint another entity to perform these functions or perform them ourselves.

              Holders will not be required to pay a service charge to transfer or exchange their certificated securities, if any, but they may be required to pay any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer agent is satisfied with the holder's proof of legal ownership.

              If we have designated additional transfer agents for your debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the appointment of

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any particular transfer agent. We may also approve a change in the office through which any transfer agent acts.

              If any certificated securities of a particular series are redeemable and we redeem less than all the debt securities of that series, we may block the transfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers or exchanges of any certificated securities selected for redemption, except that we will continue to permit transfers and exchanges of the unredeemed portion of any debt security that will be partially redeemed.

RESIGNATION OF TRUSTEE

              Each trustee may resign or be removed with respect to one or more series of indenture securities provided that a successor trustee is appointed to act with respect to these series. In the event that two or more persons are acting as trustee with respect to different series of indenture securities under the indenture, each of the trustees will be a trustee of a trust separate and apart from the trust administered by any other trustee.

INDENTURE PROVISIONS—SUBORDINATION

              Upon any distribution of our assets upon our dissolution, winding up, liquidation or reorganization, the payment of the principal of (and premium, if any) and interest, if any, on any indenture securities denominated as subordinated debt securities is to be subordinated to the extent provided in the indenture in right of payment to the prior payment in full of all Senior Indebtedness (as defined below), but our obligation to you to make payment of the principal of (and premium, if any) and interest, if any, on such subordinated debt securities will not otherwise be affected. In addition, no payment on account of principal (or premium, if any), sinking fund or interest, if any, may be made on such subordinated debt securities at any time unless full payment of all amounts due in respect of the principal (and premium, if any), sinking fund and interest on Senior Indebtedness has been made or duly provided for in money or money's worth.

              In the event that, notwithstanding the foregoing, any payment by us is received by the trustee in respect of subordinated debt securities or by the holders of any of such subordinated debt securities before all Senior Indebtedness is paid in full, the payment or distribution must be paid over to the holders of the Senior Indebtedness or on their behalf for application to the payment of all the Senior Indebtedness remaining unpaid until all the Senior Indebtedness has been paid in full, after giving effect to any concurrent payment or distribution to the holders of the Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness upon this distribution by us, the holders of such subordinated debt securities will be subrogated to the rights of the holders of the Senior Indebtedness to the extent of payments made to the holders of the Senior Indebtedness out of the distributive share of such subordinated debt securities.

              By reason of this subordination, in the event of a distribution of our assets upon our insolvency, certain of our senior creditors may recover more, ratably, than holders of any subordinated debt securities. The indenture provides that these subordination provisions will not apply to money and securities held in trust under the defeasance provisions of the indenture.

              "Senior Indebtedness" is defined in the indenture as the principal of (and premium, if any) and unpaid interest on:

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              If this prospectus is being delivered in connection with the offering of a series of indenture securities denominated as subordinated debt securities, the accompanying prospectus supplement will set forth the approximate amount of our Senior Indebtedness outstanding as of a recent date.

THE TRUSTEE UNDER THE INDENTURE

              U.S. Bank National Association will serve as the trustee under the indenture.

CERTAIN CONSIDERATIONS RELATING TO FOREIGN CURRENCIES

              Debt securities denominated or payable in foreign currencies may entail significant risks. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved and will be more fully described in the applicable prospectus supplement.

BOOK-ENTRY DEBT SECURITIES

              The Depository Trust Company ("DTC") will act as securities depository for the debt securities. The debt securities will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for the debt securities, in the aggregate principal amount of such issue, and will be deposited with DTC.

              DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC").

              DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's Ratings Services' highest rating: AAA. The DTC Rules applicable to its participants are on file with the SEC. More information about DTC can be found at www.dtcc.com and www.dtc.org.

              Purchases of debt securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the debt securities on DTC's records. The ownership interest of each actual purchaser of each security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations

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providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the debt securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in debt securities, except in the event that use of the book-entry system for the debt securities is discontinued.

              To facilitate subsequent transfers, all debt securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of debt securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the debt securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such debt securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

              Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

              Redemption notices shall be sent to DTC. If less than all of the debt securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

              Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the debt securities unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to us as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the debt securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

              Redemption proceeds, distributions, and dividend payments on the debt securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from us or the trustee on the payment date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the trustee, or us, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of us or the trustee, but disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

              DTC may discontinue providing its services as securities depository with respect to the debt securities at any time by giving reasonable notice to us or to the trustee. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered. We may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC.

              The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for the accuracy thereof.

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DESCRIPTION OF OUR UNITS

              The following is a general description of the terms of the units we may issue from time to time. Particular terms of any units we offer will be described in the prospectus supplement relating to such units. For a complete description of the terms of particular units, you should read both this prospectus and the prospectus supplement relating to those particular units.

              We may issue units comprised of one or more of the other securities described in this prospectus in any combination. Each unit may also include debt obligations of third parties, such as U.S. Treasury securities. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security.

              A prospectus supplement will describe the particular terms of any series of units we may issue, including the following:

              We will not offer any units under this prospectus or an accompanying prospectus supplement without first filing a new post-effective amendment to the registration statement.

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SALES OF COMMON STOCK BELOW NET ASSET VALUE

              At our 2012 annual stockholders meeting, subject to certain determinations required to be made by our board of directors, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common stock, at a price below the then current net asset value per share during a period that began on June 4, 2012 and expires on the earlier of June 4, 2013 and the date of our 2013 annual stockholders meeting. On April 19, 2013, we filed the 2013 Proxy Statement for our 2013 annual stockholders meeting. The 2013 Proxy Statement sets forth certain proposals to be voted upon at our 2013 annual stockholders meeting (currently expected to take place on June 4, 2013), including a proposal that, if approved by stockholders, would have the effect of extending this approval to the earlier of the one-year anniversary of the date of our 2013 annual stockholders meeting and the date of our 2014 annual stockholders meeting.

              In order to sell shares of common stock pursuant to this authorization, no further authorization from our stockholders has to be solicited, but a majority of our directors who have no financial interest in the sale and a majority of our independent directors must (a) find that the sale is in our best interests and in the best interests of our stockholders and (b) in consultation with any underwriter or underwriters of the offering, make a good faith determination as of a time either immediately prior to the first solicitation by us or on our behalf of firm commitments to purchase such shares of common stock, or immediately prior to the issuance of such common stock, that the price at which such shares of common stock are to be sold is not less than a price which closely approximates the market value of those shares of common stock, less any distributing commission or discount.

              Any offering of common stock below its net asset value per share will be designed to raise capital for investment in accordance with our investment objective.

              In making a determination that an offering of common stock below its net asset value per share is in our and our stockholders' best interests, our board of directors will consider a variety of factors including:

              Our board of directors will also consider the fact that sales of shares of common stock at a discount will benefit our investment adviser as our investment adviser will earn additional investment

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management fees on the proceeds of such offerings, as it would from the offering of any other of our securities or from the offering of common stock at premium to net asset value per share.

              We will not sell shares of our common stock pursuant to stockholder approval (or any rights, warrants or units to purchase shares of our common stock) under this prospectus or an accompanying prospectus supplement without first filing a new post-effective amendment to the registration statement if the cumulative dilution to our net asset value per share from offerings under the registration statement, as amended by such post-effective amendment, exceeds 15%. This would be measured separately for each offering pursuant to the registration statement, as amended by this post-effective amendment, by calculating the percentage dilution or accretion to aggregate net asset value from that offering and then summing the percentage from each offering. For example, if our most recently determined net asset value per share at the time of the first offering is $15.00 and we have 30 million shares of common stock outstanding, the sale of 6 million shares of common stock at net proceeds to us of $7.50 per share (a 50% discount) would produce dilution of 8.33%. If we subsequently determined that our net asset value per share increased to $15.75 on the then 36 million shares of common stock outstanding and then made an additional offering, we could, for example, sell approximately an additional 7.2 million shares of common stock at net proceeds to us of $9.45 per share, which would produce dilution of 6.67%, before we would reach the aggregate 15% limit.

              Sales by us of our common stock at a discount from net asset value per share pose potential risks for our existing stockholders whether or not they participate in the offering, as well as for new investors who participate in the offering. Any sale of common stock at a price below net asset value per share would result in an immediate dilution to existing common stockholders who do not participate in such sale on at least a pro-rata basis. See "Risk Factors—Risks Relating to Offerings Pursuant to this Prospectus—The net asset value per share of our common stock may be diluted if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or securities to subscribe for or convertible into shares of our common stock."

              The following three headings and accompanying tables explain and provide hypothetical examples on the impact of an offering of our common stock at a price less than net asset value per share on three different types of investors:

Impact On Existing Stockholders Who Do Not Participate in the Offering

              Our existing stockholders who do not participate in an offering below net asset value per share or who do not buy additional shares in the secondary market at the same or lower price as we obtain in the offering (after expenses and commissions) face the greatest potential risks. These stockholders will experience an immediate dilution in the net asset value of the shares of common stock they hold and their net asset value per share. These stockholders will also experience a disproportionately greater decrease in their participation in our earnings and assets and their voting power than the increase we will experience in our assets, potential earning power and voting interests due to such offering. These stockholders may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential increases and decreases in net asset value per share. This decrease could be more pronounced as the size of the offering and level of discounts increases. Further, if current stockholders do not purchase any shares to maintain their percentage interest, regardless of whether such offering is above or below the then current net asset value, their voting power will be diluted.

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              The following chart illustrates the level of net asset value dilution that would be experienced by a nonparticipating stockholder in three different hypothetical offerings of different sizes and levels of discount from net asset value per share. It is not possible to predict the level of market price decline that may occur.

              The examples assume that the issuer has 30 million shares outstanding, $600 million in total assets and $150 million in total liabilities. The current net asset value and net asset value per share are thus $450 million and $15.00. The chart illustrates the dilutive effect on Stockholder A of (a) an offering of 1.5 million shares of common stock (5% of the outstanding shares) at $14.25 per share after offering expenses and commissions (a 5% discount from net asset value), (b) an offering of 3 million shares of common stock (10% of the outstanding shares) at $13.50 per share after offering expenses and commissions (a 10% discount from net asset value) and (c) an offering of 6 million shares of common stock (20% of the outstanding shares) at $12.00 per share after offering expenses and commissions (a 20% discount from net asset value). The prospectus supplement pursuant to which any discounted offering is made will include a chart based on the actual number of shares of common stock in such offering and the actual discount to the most recently determined net asset value. It is not possible to predict the level of market price decline that may occur.

 
   
  Example 1   Example 2   Example 3  
 
   
  5% Offering at
5% Discount
  10% Offering at
10% Discount
  20% Offering at
20% Discount
 
 
  Prior to Sale
Below NAV
  Following
Sale
  %
Change
  Following
Sale
  %
Change
  Following
Sale
  %
Change
 

Offering Price

                                           

Price per Share to Public

        $ 15.00       $ 14.21       $ 12.63      

Net Proceeds per Share to Issuer

        $ 14.25       $ 13.50       $ 12.00      

Decrease to Net Asset Value

                                           

Total Shares Outstanding

    30,000,000     31,500,000     5.00 %   33,000,000     10.00 %   36,000,000     20.00 %

Net Asset Value per Share

  $ 15.00   $ 14.96     (0.24 )% $ 14.86     (0.91 )% $ 14.50     (3.33 )%

Dilution to Nonparticipating Stockholder

                                           

Shares Held by Stockholder A

    30,000     30,000     0.00 %   30,000     0.00 %   30,000     0.00 %

Percentage Held by Stockholder A

    0.10 %   0.10 %(1)   (4.76 )%   0.09 %   (9.09 )%   0.08 %   (16.67 )%

Total Net Asset Value Held by Stockholder A

  $ 450,000   $ 448,929     (0.24 )% $ 445,909     (0.91 )% $ 435,000     (3.33 )%

Total Investment by Stockholder A (Assumed to Be $15.00 per Share)

  $ 450,000   $ 450,000         $ 450,000         $ 450,000        

Total Dilution to Stockholder A (Total Net Asset Value Less Total Investment)

        $ (1,071 )       $ (4,091 )       $ (15,000 )      

Investment per Share Held by Stockholder A (Assumed to be $15.00 per Share on Shares Held Prior to Sale)

  $ 15.00   $ 15.00     0.00 % $ 15.00     0.00 % $ 15.00     0.00 %

Net Asset Value per Share Held by Stockholder A

        $ 14.96         $ 14.86         $ 14.50        

Dilution per Share Held by Stockholder A (Net Asset Value per Share Less Investment per Share)

        $ (0.04 )       $ (0.14 )       $ (0.50 )      

Percentage Dilution to Stockholder A (Dilution per Share Divided by Investment per Share)

                (0.24 )%         (0.91 )%         (3.33 )%

(1)
To be carried out to the third decimal place.

Impact On Existing Stockholders Who Do Participate in the Offering

              Our existing stockholders who participate in an offering below net asset value per share or who buy additional shares in the secondary market at the same or lower price as we obtain in the offering (after expenses and commissions) will experience the same types of net asset value dilution as the nonparticipating stockholders, although at a lower level, to the extent they purchase less than the same percentage of the discounted offering as their interest in shares of our common stock immediately prior to the offering. The level of net asset value dilution will decrease as the number of shares such stockholders purchase increases. Existing stockholders who buy more than such percentage will

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experience net asset value dilution but will, in contrast to existing stockholders who purchase less than their proportionate share of the offering, experience accretion in net asset value per share over their investment per share and will also experience a disproportionately greater increase in their participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests due to such offering. The level of accretion will increase as the excess number of shares such stockholder purchases increases. Even a stockholder who over-participates will, however, be subject to the risk that we may make additional discounted offerings in which such stockholder does not participate, in which case such a stockholder will experience net asset value dilution as described above in such subsequent offerings. These stockholders may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential increases and decreases in net asset value per share. This decrease could be more pronounced as the size of the offering and level of discounts increases.

              The following chart illustrates the level of dilution and accretion in the hypothetical 20% discount offering from the prior chart (Example 3) for a stockholder that acquires shares equal to (a) 50% of its proportionate share of the offering (i.e., 3,000 shares, which is 0.05% of an offering of 6 million shares) rather than its 0.10% proportionate share and (b) 150% of such percentage (i.e. 9,000 shares, which is 0.15% of an offering of 6 million shares rather than its 0.10% proportionate share). The prospectus supplement pursuant to which any discounted offering is made will include a chart for these examples based on the actual number of shares in such offering and the actual discount from the most recently determined net asset value per share. It is not possible to predict the level of market price decline that may occur.

 
   
  50% Participation   150% Participation  
 
  Prior to Sale
Below NAV
  Following
Sale
  %
Change
  Following
Sale
  %
Change
 

Offering Price

                               

Price per Share to Public

        $ 12.63         $ 12.63        

Net Proceeds per Share to Issuer

        $ 12.00         $ 12.00        

Decrease/Increase to Net Asset Value

                               

Total Shares Outstanding

    30,000,000     36,000,000     20 %   36,000,000     20 %

Net Asset Value per Share

  $ 15.00   $ 14.50     (3.33 )% $ 14.50     (3.33 )%

Dilution/Accretion to Participating Stockholder Shares Held by Stockholder A            

    30,000     33,000     10 %   39,000     30 %

Percentage Held by Stockholder A

    0.10 %   0.09 %   (8.33 )%   0.11 %   8.33 %

Total Net Asset Value Held by Stockholder A

  $ 450,000   $ 478,500     6.33 % $ 565,500     25.67 %

Total Investment by Stockholder A (Assumed to be $15.00 per Share on Shares Held Prior to Sale)

        $ 487,895         $ 563,684        

Total Dilution/Accretion to Stockholder A (Total Net Asset Value Less Total Investment)

        $ (9,395 )       $ 1,816        

Investment per Share Held by Stockholder A (Assumed to Be $15.00 on Shares Held Prior to Sale)             

  $ 15.00   $ 14.78     (1.44 )% $ 14.45     (3.64 )%

Net Asset Value per Share Held by Stockholder A

        $ 14.50         $ 14.50        

Dilution/Accretion per Share Held by Stockholder A (Net Asset Value per Share Less Investment per Share)

        $ (0.28 )       $ 0.05     0.40 %

Percentage Dilution/Accretion to Stockholder A (Dilution per Share Divided by Investment per Share)

                (1.96 )%         0.32 %

Impact On New Investors

              Investors who are not currently stockholders and who participate in an offering of shares of our common stock below net asset value, but whose investment per share is greater than the resulting net asset value per share due to selling compensation and expenses paid by the Company, will experience an immediate decrease, although small, in the net asset value of their shares and their net asset value per share compared to the price they pay for their shares. Investors who are not currently stockholders and who participate in an offering of shares of our common stock below net asset value

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per share and whose investment per share is also less than the resulting net asset value per share due to selling compensation and expenses paid by the Company being significantly less than the discount per share, will experience an immediate increase in the net asset value of their shares and their net asset value per share compared to the price they pay for their shares. These investors will experience a disproportionately greater participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests due to such offering. These investors will, however, be subject to the risk that we may make additional discounted offerings in which such new stockholder does not participate, in which case such new stockholder will experience dilution as described above in such subsequent offerings. These investors may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential increases and decreases in net asset value per share. This decrease could be more pronounced as the size of the offering and level of discounts increases.

              The following chart illustrates the level of dilution or accretion for new investors that would be experienced by a new investor in the same hypothetical 5%, 10% and 20% discounted offerings as described in the first chart above. The illustration is for a new investor who purchases the same percentage (0.10%) of the shares in the offering as Stockholder A in the prior examples held immediately prior to the offering. The prospectus supplement pursuant to which any discounted offering is made will include a chart for these examples based on the actual number of shares in such offering and the actual discount from the most recently determined net asset value per share. It is not possible to predict the level of market price decline that may occur.

 
   
  Example 1   Example 2   Example 3  
 
   
  5% Offering at
5% Discount
  10% Offering at
10% Discount
  20% Offering at
20% Discount
 
 
  Prior to Sale
Below NAV
  Following
Sale
  %
Change
  Following
Sale
  %
Change
  Following
Sale
  %
Change
 

Offering Price

                                           

Price per Share to Public

        $ 15.00         $ 14.21         $ 12.63        

Net Proceeds per Share to Issuer

        $ 14.25         $ 13.50         $ 12.00        

Decrease/Increase to Net Asset Value

                                           

Total Shares Outstanding

    30,000,000     31,500,000     5 %   33,000,000     10 %   36,000,000     20 %

Net Asset Value per Share

  $ 15.00   $ 14.96     (0.24 )% $ 14.86     (0.91 )% $ 14.50     (3.33 )%

Dilution/Accretion to New Investor A

                                           

Shares Held by Investor A

    0     1,500           3,000           6,000        

Percentage Held by Investor A

    0.00 %   0.00 %         0.01 %         0.02 %      

Total Net Asset Value Held by Investor A

  $ 0   $ 22,446         $ 44,591         $ 87,000        

Total Investment by Investor A (At Price to Public)

        $ 22,500         $ 42,632         $ 75,789        

Total Dilution/Accretion to Investor A (Total Net Asset Value Less Total Investment)

        $ (54 )       $ 1,959         $ 11,211        

Investment per Share Held by Investor A

  $ 0   $ 15.00         $ 14.21         $ 12.63        

Net Asset Value per Share Held by Investor A

        $ 14.96         $ 14.86         $ 14.50        

Dilution/Accretion per Share Held by Investor A (Net Asset Value per Share Less Investment per Share)

        $ (0.04 )       $ 0.65         $ 1.87        

Percentage Dilution/Accretion to Investor A (Dilution per Share Divided by Investment per Share)

                (0.24 )%         4.60 %         14.79 %

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ISSUANCE OF WARRANTS OR SECURITIES TO SUBSCRIBE FOR
OR CONVERTIBLE INTO SHARES OF OUR COMMON STOCK

              At our 2008 annual stockholders meeting, our stockholders approved our ability to sell or otherwise issue warrants or securities to subscribe for or convertible into shares of our common stock, not exceeding 25% of our then outstanding common stock, at an exercise or conversion price that, at the date of issuance, will not be less than the greater of the market value per share of our common stock and the net asset value per share of our common stock. The authorization granted to sell or authorize issue warrants or securities to subscribe for or convertible into shares of our common stock has no expiration. Any exercise of warrants or securities to subscribe for or convertible into shares of our common stock at an exercise or conversion price that is below net asset value at the time of such exercise or conversion would result in an immediate dilution to existing common stockholders. This dilution would include reduction in net asset value as a result of the proportionately greater decrease in the stockholders' interest in our earnings and assets and their voting interest than the increase in our assets resulting from such offering.

              As a result of obtaining this authorization, in order to sell or otherwise issue such securities, (a) the exercise, conversion or subscription rights in such securities must expire by their terms within 10 years, (b) with respect to any warrants, options or rights to subscribe or convert to our common stock that are issued along with other securities, such warrants, options or rights must not be separately transferable, (c) the exercise or conversion price of such securities must not be less than the greater of the market value per share of our common stock and the net asset value per share of our common stock at the date of issuance of such securities, (d) the issuance of such securities must be approved by a majority of the board of directors who have no financial interest in the transaction and a majority of the independent directors on the basis that such issuance is in the best interests of the Company and its stockholders and (e) the number of shares of our common stock that would result from the exercise or conversion of such securities and all other securities convertible, exercisable or exchangeable into shares of our common stock outstanding at the time of issuance of such securities must not exceed 25% of our outstanding common stock at such time.

              We could also sell shares of common stock below net asset value per share in certain other circumstances, including through subscription rights issued in rights offerings. See "Description of Our Subscription Rights" and "Risk Factors—Risks Relating to Offerings Pursuant to this Prospectus—Your interest in us may be diluted if you do not fully exercise your subscription rights in any rights offering. In addition, if the subscription price is less than our net asset value per share, then you will experience an immediate dilution of the aggregate net asset value of your shares."

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REGULATION

              We have elected to be regulated as a BDC under the Investment Company Act and have elected to be treated as a RIC under the Code. As with other companies regulated by the Investment Company Act, a BDC must adhere to certain substantive regulatory requirements. The Investment Company Act contains prohibitions and restrictions relating to certain transactions between BDCs and certain affiliates (including any investment advisers or sub-advisers), principal underwriters and certain affiliates of those affiliates or underwriters. Among other things, we generally cannot invest in any portfolio company in which a fund managed by Ares or any of its downstream affiliates (other than us and our downstream affiliates) currently has an investment (although we may co-invest on a concurrent basis with funds managed by Ares or any of its downstream affiliates, subject to compliance with existing regulatory guidance, applicable regulations and our allocation procedures). Certain types of co-investment transactions would only be permitted pursuant to an exemptive order from the SEC, for which we have applied. Any such order will be subject to certain terms and conditions. Further, there is no assurance that the application for exemptive relief will be granted by the SEC.

              The Investment Company Act also requires that a majority of our directors be persons other than "interested persons," as that term is defined in Section 2(a)(19) of the Investment Company Act, referred to herein as "independent directors." In addition, the Investment Company Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless that change is approved by holders of at least a majority of our outstanding voting securities. Under the Investment Company Act, the vote of holders of at least a "majority of outstanding voting securities" means the vote of the holders of the lesser of: (a) 67% or more of the outstanding shares of our common stock present at a meeting or represented by proxy if holders of more than 50% of the shares of our common stock are present or represented by proxy or (b) more than 50% of the outstanding shares of our common stock.

              We may invest up to 100% of our assets in securities acquired directly from issuers in privately negotiated transactions. With respect to such securities, we may, for the purpose of public resale, be deemed an "underwriter" as that term is defined in the Securities Act. Our intention is to not write (sell) or buy put or call options to manage risks associated with the publicly traded securities of our portfolio companies. We may enter into hedging transactions to manage the risks associated with interest rate and currency fluctuations. We may purchase or otherwise receive warrants or options to purchase the common stock of our portfolio companies in connection with acquisition financings or other investments. In connection with such an acquisition, we may acquire rights to require the issuers of acquired securities or their affiliates to repurchase them under certain circumstances. We also do not intend to acquire securities issued by any investment company that exceed the limits imposed by the Investment Company Act. Under these limits, we generally cannot acquire more than 3% of the voting stock of any investment company (as defined in the Investment Company Act), invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value of our total assets in the securities of investment companies in the aggregate. With regard to that portion of our portfolio invested in securities issued by investment companies, it should be noted that such investments might subject our stockholders to additional expenses.

QUALIFYING ASSETS

              A BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) below. Thus, under the Investment Company Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the Investment Company Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of

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the company's total assets. The principal categories of qualifying assets relevant to our business are the following:

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MANAGERIAL ASSISTANCE TO PORTFOLIO COMPANIES

              In order to count portfolio securities as qualifying assets for the purpose of the 70% test discussed above under "Qualifying Assets," the BDC must either control the issuer of the securities or must offer to make available to the issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where the BDC purchases such securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance (as long as the BDC itself does not make available significant managerial assistance solely in this fashion). Making available managerial assistance means, among other things, exercising control over the management or policies of the portfolio company or any arrangement whereby the BDC, through its directors, officers or employees, offers to provide, and, if the offer is accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.

TEMPORARY INVESTMENTS

              Pending investment in other types of "qualifying assets," as described above, our investments may consist of cash, cash items, U.S. Government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as "temporary investments," so that 70% of our assets are qualifying assets. Typically, we will invest in U.S. Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by cash or securities issued by the U.S. Government or its agencies. A repurchase agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our total assets constitute repurchase agreements from a single counterparty, we may not meet the Diversification Tests in order to qualify as a RIC. Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit. Our investment adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.

INDEBTEDNESS AND SENIOR SECURITIES

              We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, calculated pursuant to the Investment Company Act, is at least equal to 200% immediately after each such issuance. In addition, while any indebtedness and senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. Specifically, we may be precluded from declaring dividends or repurchasing shares of our common stock unless our asset coverage is at least 200%. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage. For a discussion of the risks associated with leverage, see "Risk Factors—Risks Relating to Our Business—Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital."

CODE OF ETHICS

              We and Ares Capital Management have each adopted a code of ethics pursuant to Rule 17j-1 under the Investment Company Act that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to each code may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such investments are made in accordance with the code's requirements. Our code of ethics is filed as an

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exhibit to our registration statement of which this prospectus is a part. For information on how to obtain a copy of the code of ethics, see "Where You Can Find More Information."

PROXY VOTING POLICIES AND PROCEDURES

              SEC-registered advisers that have the authority to vote (client) proxies (which authority may be implied from a general grant of investment discretion) are required to adopt policies and procedures reasonably designed to ensure that the adviser votes proxies in the best interests of its clients. Registered advisers also must maintain certain records on proxy voting. In most cases, we invest in securities that do not generally entitle it to voting rights in its portfolio companies. When we do have voting rights, we delegate the exercise of such rights to Ares Capital Management. Ares Capital Management's proxy voting policies and procedures are summarized below:

              In determining how to vote, officers of our investment adviser consult with each other and other investment professionals of Ares, taking into account our and our investors' interests as well as any potential conflicts of interest. Our investment adviser consults with legal counsel to identify potential conflicts of interest. Where a potential conflict of interest exists, our investment adviser may, if it so elects, resolve it by following the recommendation of a disinterested third party, by seeking the direction of the independent directors of the Company or, in extreme cases, by abstaining from voting. While our investment adviser may retain an outside service to provide voting recommendations and to assist in analyzing votes, our investment adviser will not delegate its voting authority to any third party.

              An officer of Ares Capital Management keeps a written record of how all such proxies are voted. Our investment adviser retains records of (a) proxy voting policies and procedures, (b) all proxy statements received (or it may rely on proxy statements filed on the SEC's EDGAR system in lieu thereof), (c) all votes cast, (d) investor requests for voting information and (e) any specific documents prepared or received in connection with a decision on a proxy vote. If it uses an outside service, our investment adviser may rely on such service to maintain copies of proxy statements and records, so long as such service will provide a copy of such documents promptly upon request.

              Our investment adviser's proxy voting policies are not exhaustive and are designed to be responsive to the wide range of issues that may be subject to a proxy vote. In general, our investment adviser votes our proxies in accordance with these guidelines unless: (a) it has determined otherwise due to the specific and unusual facts and circumstances with respect to a particular vote, (b) the subject matter of the vote is not covered by these guidelines, (c) a material conflict of interest is present or (d) we find it necessary to vote contrary to our general guidelines to maximize stockholder value or the best interests of Ares Capital. In reviewing proxy issues, our investment adviser generally uses the following guidelines:

              Elections of Directors:    In general, our investment adviser will vote in favor of the management-proposed slate of directors. If there is a proxy fight for seats on a portfolio company's board of directors, or our investment adviser determines that there are other compelling reasons for withholding our vote, it will determine the appropriate vote on the matter. Our investment adviser may withhold votes for directors when it (a) believes a direct conflict of interest exists between the interests of the director and the stockholders, (b) concludes that the actions of the director are unlawful, unethical or negligent or (c) believes the board is entrenched in or dealing inadequately with performance problems, and/or acting with insufficient independence between the board and management. Finally, our investment adviser may withhold votes for directors of non-U.S. issuers where there is insufficient information about the nominees disclosed in the proxy statement.

              Appointment of Auditors:    We believe that a portfolio company remains in the best position to choose its independent auditors and our investment adviser will generally support management's recommendation in this regard.

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              Changes in Capital Structure:    Changes in a portfolio company's charter or bylaws may be required by state or federal regulation. In general, our investment adviser will cast our votes in accordance with the management on such proposals. However, our investment adviser will consider carefully any proposal regarding a change in corporate structure that is not required by state or federal regulation.

              Corporate Restructurings, Mergers and Acquisitions:    We believe proxy votes dealing with corporate reorganizations are an extension of the investment decision. Accordingly, our investment adviser will analyze such proposals on a case-by-case basis and vote in accordance with its perception of our interests.

              Proposals Affecting Stockholder Rights:    We will generally vote in favor of proposals that give stockholders a greater voice in the affairs of a portfolio company and oppose any measure that seeks to limit such rights. However, when analyzing such proposals, our investment adviser will balance the financial impact of the proposal against any impairment of stockholder rights as well as of our investment in the portfolio company.

              Corporate Governance:    We recognize the importance of good corporate governance. Accordingly, our investment adviser will generally favor proposals that promote transparency and accountability within a portfolio company.

              Anti-Takeover Measures:    Our investment adviser will evaluate, on a case-by-case basis, any proposals regarding anti-takeover measures to determine the measure's likely effect on stockholder value dilution.

              Stock Splits:    Our investment adviser will generally vote with management on stock split matters.

              Limited Liability of Directors:    Our investment adviser will generally vote with management on matters that could adversely affect the limited liability of directors.

              Social and Corporate Responsibility:    Our investment adviser will review proposals related to social, political and environmental issues to determine whether they may adversely affect stockholder value. Our investment adviser may abstain from voting on such proposals where they do not have a readily determinable financial impact on stockholder value.

              Stockholders may obtain information regarding how we voted proxies with respect to our portfolio securities during the twelve-month period ended June 30, 2012 free of charge by making a written request for proxy voting information to: Ares Capital Corporation, 2000 Avenue of the Stars, 12th Floor, Los Angeles, California 90067 or by calling us collect at (310) 401-4200.

PRIVACY PRINCIPLES

              We are committed to maintaining the privacy of our stockholders and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.

              Generally, we do not receive any non-public personal information relating to our stockholders, although certain non-public personal information of our stockholders may become available to us. The non-public personal information that we may receive falls into the following categories:

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              We do not disclose any non-public personal information about our stockholders or former stockholders to anyone, except:

              When the Company shares non-public stockholder personal information referred to above, the information is made available for limited business purposes and under controlled circumstances designed to protect our stockholders' privacy. The Company does not permit use of stockholder information for any non-business or marketing purpose, nor does the Company permit third parties to rent, sell, trade or otherwise release or disclose information to any other party.

              The Company's service providers, such as its investment adviser, administrator and transfer agent, are required to maintain physical, electronic, and procedural safeguards to protect stockholder non-public personal information to prevent unauthorized access or use and to dispose of such information when it is no longer required.

              Personnel of our affiliates may access stockholder information only for business purposes. The degree of access is based on the sensitivity of the information and on personnel need for the information to service a stockholder's account or comply with legal requirements.

              If a stockholder ceases to be a stockholder, we will adhere to the privacy policies and practices as described above. We may choose to modify our privacy policies at any time. Before we do so, we will notify stockholders and provide a description of our privacy policy.

              In the event of a corporate change in control resulting from, for example, a sale to, or merger with, another entity, or in the event of a sale of assets, we reserve the right to transfer stockholders' non-public personal information to the new party in control or the party acquiring assets.

OTHER

              We have designated a chief compliance officer and established a compliance program pursuant to the requirements of the Investment Company Act. We are periodically examined by the SEC for compliance with the Investment Company Act.

              We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to the Company or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office.

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Compliance with the Sarbanes-Oxley Act of 2002 and The NASDAQ Global Select Market Corporate Governance Regulations

              The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these requirements affect us. The Sarbanes-Oxley Act has required us to review our policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated thereunder. We will continue to monitor our compliance with all future regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.

              In addition, The NASDAQ Global Select Market has adopted various corporate governance requirements as part of its listing standards. We believe we are in compliance with such corporate governance listing standards. We will continue to monitor our compliance with all future listing standards and will take actions necessary to ensure that we are in compliance therewith.


CUSTODIAN, TRANSFER AND DIVIDEND PAYING AGENT AND REGISTRAR

              Our securities are held under a custody agreement by U.S. Bank National Association. The address of the custodian is Corporate Trust Services, One Federal Street, 3rd Floor, Boston, MA 02110. Computershare acts as the transfer agent, dividend paying agent and registrar for our common stock. The principal business address of Computershare is 250 Royall Street, Canton, MA 02021.


BROKERAGE ALLOCATION AND OTHER PRACTICES

              Since we generally acquire and dispose of our investments in privately negotiated transactions, we infrequently use brokers in the normal course of business.

              Subject to policies established by our board of directors, our investment adviser, Ares Capital Management, is primarily responsible for the execution of the publicly traded securities portion of our portfolio transactions and the allocation of brokerage commissions. Our investment adviser does not expect to execute transactions through any particular broker or dealer, but seeks to obtain the best net results for the Company, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm's risk and skill in positioning blocks of securities.

              While our investment adviser generally seeks reasonably competitive trade execution costs, we will not necessarily pay the lowest spread or commission available. Subject to applicable legal requirements, our investment adviser may select a broker based partly upon brokerage or research services provided to our investment adviser and us and any other clients. In return for such services, we may pay a higher commission than other brokers would charge if our investment adviser determines in good faith that such commission is reasonable in relation to the services provided.

              We have not paid any brokerage commissions during the three most recent fiscal years.

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PLAN OF DISTRIBUTION

              We may offer, from time to time, in one or more offerings or series, up to $3,000,000,000 of our common stock, preferred stock, debt securities, subscription rights to purchase shares of our common stock or warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, or units comprised of any combination of the foregoing, in one or more underwritten public offerings, at-the-market offerings, negotiated transactions, block trades, best efforts or a combination of these methods. We may sell the securities through underwriters or dealers, directly to one or more purchasers, including existing stockholders in a rights offering, through agents or through a combination of any such methods of sale. In the case of a rights offering, the applicable prospectus supplement will set forth the number of shares of our common stock issuable upon the exercise of each right and the other terms of such rights offering. Any underwriter or agent involved in the offer and sale of the securities will be named in the applicable prospectus supplement. A prospectus supplement or supplements will also describe the terms of the offering of the securities, including: the purchase price of the securities and the proceeds we will receive from the sale; any over-allotment options under which underwriters may purchase additional securities from us; any agency fees or underwriting discounts and other items constituting agents' or underwriters' compensation; the public offering price; any discounts or concessions allowed or re-allowed or paid to dealers; and any securities exchange or market on which the securities may be listed. Only underwriters named in the prospectus supplement will be underwriters of the securities offered by the prospectus supplement.

              The distribution of the securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at prevailing market prices at the time of sale, at prices related to such prevailing market prices, or at negotiated prices, provided, however, that the offering price per share of our common stock, less any underwriting commissions or discounts, must equal or exceed the net asset value per share of our common stock at the time of the offering except (a) in connection with a rights offering to our existing stockholders, (b) with the consent of the majority of our common stockholders or (c) under such circumstances as the SEC may permit. The price at which securities may be distributed may represent a discount from prevailing market prices.

              In connection with the sale of the securities, underwriters or agents may receive compensation from us or from purchasers of the securities, for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters may sell the securities to or through dealers and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of the securities may be deemed to be underwriters under the Securities Act, and any discounts and commissions they receive from us and any profit realized by them on the resale of the securities may be deemed to be underwriting discounts and commissions under the Securities Act. Any such underwriter or agent will be identified and any such compensation received from us will be described in the applicable prospectus supplement. The maximum aggregate commission or discount to be received by any member of FINRA or independent broker-dealer will not be greater than 8% of the gross proceeds of the sale of securities offered pursuant to this prospectus and any applicable prospectus supplement. We may also reimburse the underwriter or agent for certain fees and legal expenses incurred by it.

              Any underwriter may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance with Regulation M under the Exchange Act. Over-allotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum price. Syndicate-covering or other short-covering transactions involve purchases of the securities, either through exercise of the over-allotment option or in the open market after the distribution is completed, to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are

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purchased in a stabilizing or covering transaction to cover short positions. Those activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of the activities at any time.

              Any underwriters that are qualified market makers on the NASDAQ Global Market may engage in passive market making transactions in our common stock on the NASDAQ Global Market in accordance with Regulation M under the Exchange Act, during the business day prior to the pricing of the offering, before the commencement of offers or sales of our common stock. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent bids are lowered below the passive market maker's bid, however, the passive market maker's bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of the securities at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.

              We may sell securities directly or through agents we designate from time to time. We will name any agent involved in the offering and sale of securities and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus supplement states otherwise, our agent will act on a best-efforts basis for the period of its appointment.

              Unless otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no trading market, other than our common stock, which is traded on The NASDAQ Global Select Market. We may elect to list any other class or series of securities on any exchanges, but we are not obligated to do so. We cannot guarantee the liquidity of the trading markets for any securities.

              Under agreements that we may enter, underwriters, dealers and agents who participate in the distribution of shares of our securities may be entitled to indemnification by us against certain liabilities, including liabilities under the Securities Act, or contribution with respect to payments that the agents or underwriters may make with respect to these liabilities. Underwriters, dealers and agents may engage in transactions with, or perform services for, us in the ordinary course of business.

              If so indicated in the applicable prospectus supplement, we will authorize underwriters or other persons acting as our agents to solicit offers by certain institutions to purchase our securities from us pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must be approved by us. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of our securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts. Such contracts will be subject only to those conditions set forth in the prospectus supplement, and the prospectus supplement will set forth the commission payable for solicitation of such contracts.

              We may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third parties in such sale transactions will be underwriters and, if not identified in this prospectus, will be identified in the applicable prospectus supplement.

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              In order to comply with the securities laws of certain states, if applicable, our securities offered hereby will be sold in such jurisdictions only through registered or licensed brokers or dealers.


LEGAL MATTERS

              The legality of the securities offered hereby will be passed upon for the Company by Proskauer Rose LLP, Los Angeles, California and Venable LLP, Baltimore, Maryland. Certain legal matters in connection with the offering will be passed upon for the underwriters, if any, by the counsel named in the prospectus supplement.


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

              KPMG LLP, located at 355 South Grand Avenue, Los Angeles, California 90071, is the independent registered public accounting firm of the Company.


AVAILABLE INFORMATION

              We have filed with the SEC a registration statement on Form N-2, together with all amendments and related exhibits, under the Securities Act, with respect to the securities offered by this prospectus. The registration statement contains additional information about us and the securities being offered by this prospectus.

              We file with or submit to the SEC annual, quarterly and current periodic reports, proxy statements and other information meeting the informational requirements of the Exchange Act. This information is available free of charge by calling us collect at (310) 201-4200 or on our website at www.arescapitalcorp.com. Information contained on our website is not incorporated into this document and you should not consider such information to be part of this document. You also may inspect and copy these reports, proxy statements and other information, as well as the registration statement and related exhibits and schedules, at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549, the SEC's Northeast Regional Office at 3 World Financial Center, Suite 400, New York, NY 10281 and the SEC's Midwest Regional Office at 175 W. Jackson Blvd., Suite 900, Chicago, IL 60604. Such information is also available from the EDGAR database on the SEC's web site at http://www.sec.gov. You also can obtain copies of such information, after paying a duplicating fee, by sending a request by e-mail to publicinfo@sec.gov or by writing the SEC's Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549. You may obtain information on the operation of the SEC's Public Reference Room by calling the SEC at (202) 551-8090 or (800) SEC-0330.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

  F-2

Consolidated Balance Sheet as of December 31, 2012 and 2011

  F-3

Consolidated Statement of Operations for the years ended December 31, 2012, 2011 and 2010

  F-4

Consolidated Schedules of Investments as of December 31, 2012 and 2011

  F-5

Consolidated Statement of Stockholders' Equity for the years ended December 31, 2012, 2011 and 2010

  F-44

Consolidated Statement of Cash Flows for the years ended December 31, 2012, 2011 and 2010

  F-45

Notes to Consolidated Financial Statements

  F-46

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Ares Capital Corporation:

        We have audited the accompanying consolidated balance sheet of Ares Capital Corporation (and subsidiaries) (the Company) as of December 31, 2012 and 2011, including the consolidated schedules of investments as of December 31, 2012 and 2011, and the related consolidated statements of operations, stockholders' equity, and cash flows, and the financial highlights (included in Note 15), for each of the years in the three-year period ended December 31, 2012. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2012 and 2011, by correspondence with custodians, or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ares Capital Corporation (and subsidiaries) as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Ares Capital Corporation's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of Treadway Commission (COSO), and our report dated February 27, 2013 expressed an unqualified opinion on the effectiveness of Ares Capital Corporation's internal control over financial reporting.

        As explained in Note 8 to the consolidated financial statements, the accompanying consolidated financial statements include investments valued at $5.9 billion (149% of net assets), whose fair values have been estimated by the Board of Directors and management in the absence of readily determinable fair values. Such estimates are based on financial and other information provided by management of its portfolio companies, pertinent market and industry data, as well as input from independent valuation firms. These investments are valued in accordance with FASB ASC 820, Fair Value Measurements and Disclosures, which requires the Company to assume that the portfolio investments are sold in a principal market to market participants. The Company has considered its principal market as the market in which the Company exits its portfolio investments with the greatest volume and level of activity. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to these valuation techniques are observable or unobservable. $5.9 billion of investments at December 31, 2012 are valued based on unobservable inputs. Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, they may fluctuate significantly over short periods of time. These determinations of fair value could differ materially from the values that would have been utilized had a ready market for these investments existed.

LOGO

Los Angeles, California
February 27, 2013

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ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 
  As of December 31,  
 
  2012   2011  

ASSETS

             

Investments at fair value

             

Non-controlled/non-affiliate investments

  $ 3,822,715   $ 3,060,084  

Non-controlled affiliate company investments

    323,059     267,324  

Controlled affiliate company investments

    1,778,781     1,767,098  
           

Total investments at fair value (amortized cost of $5,823,451 and $5,108,663, respectively)

    5,924,555     5,094,506  

Cash and cash equivalents

    269,043     120,782  

Interest receivable

    108,998     99,078  

Receivable for open trades

    131     550  

Other assets

    98,497     72,521  
           

Total assets

  $ 6,401,224   $ 5,387,437  
           

LIABILITIES

             

Debt

  $ 2,195,872   $ 2,073,602  

Management and incentive fees payable

    131,585     92,496  

Accounts payable and other liabilities

    53,178     47,691  

Interest and facility fees payable

    30,603     26,383  

Payable for open trades

    1,640      
           

Total liabilities

    2,412,878     2,240,172  

Commitments and contingencies (Note 7)

             

STOCKHOLDERS' EQUITY

             

Common stock, par value $0.001 per share, 500,000 and 400,000 common shares authorized; 248,653 and 205,130 common shares issued and outstanding, respectively

    249     205  

Capital in excess of par value

    4,117,517     3,390,354  

Accumulated overdistributed net investment income

    (27,910 )   (10,449 )

Accumulated net realized loss on investments, foreign currency transactions, extinguishment of debt and other assets

    (202,614 )   (218,688 )

Net unrealized gain (loss) on investments

    101,104     (14,157 )
           

Total stockholders' equity

    3,988,346     3,147,265  
           

Total liabilities and stockholders' equity

  $ 6,401,224   $ 5,387,437  
           

NET ASSETS PER SHARE

  $ 16.04   $ 15.34  
           

   

See accompanying notes to consolidated financial statements.

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ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

 
  For the Years Ended
December 31,
 
 
  2012   2011   2010  

INVESTMENT INCOME:

                   

From non-controlled/non-affiliate company investments:

                   

Interest income from investments

  $ 328,342   $ 267,159   $ 238,390  

Capital structuring service fees

    58,106     55,013     23,921  

Dividend income

    17,219     12,430     4,340  

Management and other fees

    1,342     1,315     4,797  

Other income

    13,170     6,137     5,310  
               

Total investment income from non-controlled/non-affiliate company investments

    418,179     342,054     276,758  

From non-controlled affiliate company investments:

                   

Interest income from investments

    21,767     30,560     51,386  

Capital structuring service fees

    3,682     730     813  

Dividend income

    1,324     4,294     2,125  

Management and other fees

    200     502     813  

Other income

    529     881     569  
               

Total investment income from non-controlled affiliate company investments

    27,502     36,967     55,706  

From controlled affiliate company investments:

                   

Interest income from investments

    221,363     175,534     103,853  

Capital structuring service fees

    40,348     41,592     29,946  

Dividend income

    21,195     21,643     7,903  

Management and other fees

    17,382     14,925     8,762  

Other income

    2,056     1,771     468  
               

Total investment income from controlled affiliate company investments

    302,344     255,465     150,932  
               

Total investment income

    748,025     634,486     483,396  
               

EXPENSES:

                   

Interest and credit facility fees

    142,976     122,512     79,347  

Incentive fees

    127,045     112,377     76,895  

Base management fees

    86,228     71,603     51,998  

Professional fees

    12,040     16,529     29,941  

Administrative fees

    9,322     9,563     10,979  

Other general and administrative

    10,381     12,025     13,028  
               

Total expenses

    387,992     344,609     262,188  
               

NET INVESTMENT INCOME BEFORE INCOME TAXES

    360,033     289,877     221,208  

Income tax expense, including excise tax

    11,172     7,474     5,392  
               

NET INVESTMENT INCOME

    348,861     282,403     215,816  
               

REALIZED AND UNREALIZED NET GAINS (LOSSES) ON INVESTMENTS:

                   

Net realized gains (losses):

                   

Non-controlled/non-affiliate company investments

    61,857     24,618     26,865  

Non-controlled affiliate company investments

    (36,766 )   13,647     11,965  

Controlled affiliate company investments

    21,643     58,295     6,563  

Foreign currency transactions

            85  
               

Net realized gains

    46,734     96,560     45,478  

Net unrealized gains (losses):

                   

Non-controlled/non-affiliate company investments

    54,522     (29,430 )   138,619  

Non-controlled affiliate company investments

    49,383     (19,395 )   40,595  

Controlled affiliate company investments

    11,356     8,633     51,681  

Foreign currency transactions

            (152 )
               

Net unrealized gains (losses)

    115,261     (40,192 )   230,743  
               

Net realized and unrealized gains on investments

    161,995     56,368     276,221  

GAIN ON THE ACQUISITION OF ALLIED CAPITAL CORPORATION

            195,876  

REALIZED LOSS ON EXTINGUISHMENT OF DEBT

    (2,678 )   (19,318 )   (1,961 )

REALIZED GAIN ON SALE OF OTHER ASSETS

            5,882  
               

NET INCREASE IN STOCKHOLDERS' EQUITY RESULTING FROM OPERATIONS

  $ 508,178   $ 319,453   $ 691,834  
               

BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 10)

  $ 2.21   $ 1.56   $ 3.91  
               

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING— BASIC AND DILUTED (see Note 10)

    230,151     204,860     176,732  
               

   

See accompanying notes to consolidated financial statements.

F-4


Table of Contents

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2012
(dollar amounts in thousands)

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Investment Funds and Vehicles                                      
AGILE Fund I, LLC(9)   Investment partnership   Member interest (0.50% interest)         4/1/2010   $ 124   $ 29 (2)      
                                       
CIC Flex, LP(9)   Investment partnership   Limited partnership units (0.94 unit)         9/7/2007     2,302     3,570 (2)      
                                       
Covestia Capital Partners, LP(9)   Investment partnership   Limited partnership interest (47.00% interest)         6/17/2008     1,059     1,135 (2)      
                                       
Dynamic India Fund IV, LLC(9)   Investment company   Member interest (5.44% interest)         4/1/2010     4,822     3,104        
                                       
HCI Equity, LLC(7)(8)(9)   Investment company   Member interest (100.00% interest)         4/1/2010     452     447        
                                       
Imperial Capital Private Opportunities, LP(9)   Investment partnership   Limited partnership interest (80.00% interest)         5/10/2007     6,051     8,341 (2)      
                                       
Partnership Capital Growth Fund I, L.P.(9)   Investment partnership   Limited partnership interest (25.00% interest)         6/16/2006     1,596     4,197 (2)      
                                       
Partnership Capital Growth Fund III, L.P.(9)   Investment partnership   Limited partnership interest (2.50% interest)         10/5/2011     1,964     1,819 (2)      
                                       
Piper Jaffray Merchant Banking Fund I, L.P.(9)   Investment partnership   Limited partnership interest (2.00% interest)         8/16/2012     286     259 (2)      
                                       
Senior Secured Loan Fund LLC(7)(10)   Co-investment vehicle   Subordinated certificates ($1,244,969 par due 12/2022)   8.31%
(Libor + 8.00%/Q)(21)
    10/30/2009     1,237,887     1,263,644        
                                       
VSC Investors LLC(9)   Investment company   Membership interest (1.95% interest)         1/24/2008     387     854 (2)      
                                   
                        1,256,930     1,287,399     32.28 %
                                   
                                       
Healthcare—Services                                      
California Forensic Medical Group, Incorporated   Correctional facility healthcare operator   Senior secured revolving loan ($2,000 par due 11/2018)   10.25% (Base Rate + 7.00%/Q)     11/16/2012     2,000     2,000 (2)(20)      
        Senior secured loan ($54,182 par due 11/2018)   9.25%
(Libor + 8.00%/Q)
    11/16/2012     54,182     54,182 (2)(20)      
                                   
                        56,182     56,182        
                                       
CCS Group Holdings, LLC   Correctional facility healthcare operator   Class A units (601,937 units)         8/19/2010     602     1,205 (2)      
                                       
CT Technologies Intermediate Holdings, Inc. and CT Technologies Holdings LLC(6)   Healthcare analysis services   Senior secured loan ($7,565 par due 3/2017)   7.75%
(Libor + 6.50%/Q)
    3/15/2011     7,565     7,263 (2)(20)      
        Senior secured loan ($7,172 par due 3/2017)   7.75%
(Libor + 6.50%/Q)
    3/15/2011     7,172     6,885 (3)(20)      
        Class A common stock (9,679 shares)         6/15/2007     4,000     4,772 (2)      
        Class C common stock (1,546 shares)         6/15/2007         1,316 (2)      
                                   
                        18,737     20,236        
                                     

F-5


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
INC Research, Inc.   Pharmaceutical and biotechnology consulting services   Common stock (1,410,000 shares)         9/27/2010     1,512     929 (2)      
                                       
Intermedix Corporation   Revenue cycle management provider to the emergency healthcare industry   Junior secured loan ($112,000 par due 6/2019)   10.25%
(Libor + 9.00%/Q)
    12/27/2012     112,000     112,000 (2)(20)      
                                       
Magnacare Holdings, Inc., Magnacare Administrative Services, LLC, and Magnacare, LLC   Healthcare professional provider   Senior secured loan ($15,298 par due 3/2018)   9.75%
(Libor + 8.75%/Q)
    9/15/2010     15,298     15,298 (2)(20)      
        Senior secured loan ($42,846 par due 3/2018)   9.75%
(Libor + 8.75%/Q)
    9/15/2010     42,846     42,846 (3)(20)      
        Senior secured loan ($4,869 par due 3/2018)   9.75%
(Libor + 8.75%/Q)
    9/15/2010     4,869     4,869 (4)(20)      
        Senior secured loan ($55,307 par due 3/2018)   9.75%
(Libor + 8.75%/Q)
    3/16/2012     55,307     55,307 (2)(20)      
        Senior secured loan ($15,579 par due 3/2018)   9.75%
(Libor + 8.75%/Q)
    3/16/2012     15,579     15,579 (3)(20)      
                                   
                        133,899     133,899        
                                       
MW Dental Holding Corp.   Dental services   Senior secured revolving loan ($3,000 par due 4/2017)   8.50%
(Libor + 7.00%/M)
    4/12/2011     3,000     3,000 (2)(20)      
        Senior secured loan ($55,034 par due 4/2017)   8.50%
(Libor + 7.00%/M)
    4/12/2011     55,034     55,034 (2)(20)      
        Senior secured loan ($49,253 par due 4/2017)   8.50%
(Libor + 7.00%/M)
    4/12/2011     49,253     49,253 (3)(20)      
        Senior secured loan ($9,900 par due 4/2017)   8.50%
(Libor + 7.00%/M)
    4/12/2011     9,900     9,900 (4)(20)      
                                   
                        117,187     117,187        
                                       
Napa Management Services Corporation   Anesthesia management services provider   Senior secured revolving loan ($5,250 par due 4/2016)   7.50%
(Libor + 6.00%/M)
    4/15/2011     5,250     5,250 (2)(20)      
        Senior secured loan ($9,062 par due 4/2016)   7.50%
(Libor + 6.00%/Q)
    4/15/2011     8,984     9,062 (2)(20)      
        Senior secured loan ($28,125 par due 4/2016)   7.50%
(Libor + 6.00%/Q)
    4/15/2011     28,125     28,125 (3)(20)      
        Common units (5,000 units)         4/15/2011     5,000     6,169 (2)      
                                   
                        47,359     48,606        
                                       
Netsmart Technologies, Inc. and NS Holdings, Inc.   Healthcare technology provider   Senior secured loan ($40,095 par due 12/2017)   7.25%
(Libor + 6.00%/Q)
    12/18/2012     40,095     40,095 (2)(17)(20)      
        Common stock (2,500,000 shares)         6/21/2010     2,500     2,611 (2)      
                                   
                        42,595     42,706        
                                       
OnCURE Medical Corp.   Radiation oncology care provider   Common stock (857,143 shares)         8/18/2006     3,000     (2)      
                                       
Passport Health Communications, Inc., Passport Holding Corp. and Prism Holding Corp.   Healthcare technology provider   Series A preferred stock (1,594,457 shares)         7/30/2008     11,156     11,448 (2)      
        Common stock (16,106 shares)         7/30/2008     100     (2)      
                                   
                        11,256     11,448        
                                     

F-6


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
PG Mergersub, Inc. and PGA Holdings, Inc.   Provider of patient surveys, management reports and national databases for the integrated healthcare delivery system   Junior secured loan ($45,000 par due 10/2018)   8.25%
(Libor + 7.00%/Q)
    4/19/2012     45,000     45,000 (2)(20)      
        Preferred stock (333 shares)         3/12/2008     125     14 (2)      
        Common stock (16,667 shares)         3/12/2008     167     697 (2)      
                                   
                        45,292     45,711        
                                       
RCHP, Inc.   Operator of general acute care hospitals   Junior secured loan ($15,000 par due 5/2019)   11.50%
(Libor + 10.00%/S)
    11/4/2011     15,000     15,000 (2)(20)      
        Junior secured loan ($50,000 par due 5/2019)   11.50%
(Libor + 10.00%/S)
    11/4/2011     50,000     50,000 (3)(20)      
                                   
                        65,000     65,000        
                                       
Reed Group, Ltd.   Medical disability management services provider   Equity interests         4/1/2010         435 (2)      
                                       
Respicardia, Inc.   Developer of implantable therapies to improve cardiovascular health   Senior secured loan ($6,000 par due 7/2015)   11.00%     6/28/2012     5,968     6,000 (2)      
        Warrants to purchase up to 99,094 shares of Series C preferred stock         6/28/2012     38     29 (2)      
                                   
                        6,006     6,029        
                                       
Sage Products Holdings III, LLC   Patient infection control and preventive care solutions provider   Junior secured loan ($75,000 par due 6/2020)   9.25%
(Libor + 8.00%/Q)
    12/13/2012     75,000     75,000 (2)(20)      
                                       
Soteria Imaging Services, LLC(6)   Outpatient medical imaging provider   Junior secured loan ($2,521 par due 11/2010)         4/1/2010     2,050     843 (2)(19)      
        Preferred member units (1,823,179 units)         4/1/2010                
                                   
                        2,050     843        
                                       
SurgiQuest, Inc.   Medical device manufacturer   Senior secured loan ($7,000 par due 10/2016)   10.00%     9/28/2012     6,801     7,000 (2)      
        Warrants to purchase up to 54,672 shares of Series D-4 convertible preferred stock         9/28/2012         (2)      
                                   
                        6,801     7,000        
                                       
U.S. Anesthesia Partners, Inc.   Anesthesiology service provider   Senior secured loan ($15,000 par due 12/2018)   6.50%
(Libor + 5.50%/Q)
    12/27/2012     15,000     15,000 (2)(20)      
                                       
Vantage Oncology, Inc.   Radiation oncology care provider   Common stock (62,157 shares)         2/3/2011     4,670     2,616 (2)      
                                   
                        764,148     762,032     19.11 %
                                   
                                     

F-7


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Education                                      
American Academy Holdings, LLC   Provider of education, training, certification, networking, and consulting services to medical coders and other healthcare professionals   Senior secured loan ($541 par due 3/2016)   9.50%
(Libor + 8.50%/Q)
    3/18/2011     541     541 (2)(20)      
        Senior secured loan ($10,357 par due 3/2016)   9.50%
(Libor + 8.50%/Q)
    3/18/2011     10,357     10,357 (2)(20)      
        Senior secured loan ($60,904 par due 3/2016)   9.50%
(Libor + 8.50%/Q)
    3/18/2011     60,904     60,904 (3)(20)      
        Senior secured loan ($4,782 par due 3/2016)   9.50%
(Libor + 8.50%/Q)
    3/18/2011     4,782     4,782 (4)(20)      
                                   
                        76,584     76,584        
                                       
Campus Management Corp. and Campus Management Acquisition Corp.(6)   Education software developer   Preferred stock (485,159 shares)         2/8/2008     10,520     6,589 (2)      
                                       
Community Education Centers, Inc.   Offender re-entry and in-prison treatment services provider   Senior secured loan ($15,000 par due 12/2014)   6.25%
(Libor + 5.25%/Q)
    12/10/2010     15,000     15,000 (2)(15)(20)      
        Senior secured loan ($714 par due 12/2014)   7.50% (Base Rate + 4.25%/Q)     12/10/2010     714     714 (2)(15)(20)      
        Junior secured loan ($33,150 par due 12/2015)   15.33%
(Libor + 8.50% Cash, 6.50% PIK/Q)
    12/10/2010     33,150     29,837 (2)      
        Junior secured loan ($9,978 par due 12/2015)   15.31%
(Libor + 8.50% Cash, 6.50% PIK/Q)
    12/10/2010     9,978     8,980 (2)      
        Warrants to purchase up to 654,618 shares         12/13/2010         (2)      
                                   
                        58,842     54,531        
                                       
eInstruction Corporation   Developer, manufacturer and retailer of educational products   Junior secured loan ($17,000 par due 7/2014)         4/1/2010     15,257     (2)(19)      
        Senior subordinated loan ($31,997 par due 1/2015)         4/1/2010     24,151     (2)(19)      
        Common stock (2,406 shares)         4/1/2010     926     (2)      
                                   
                        40,334            
                                       
ELC Acquisition Corp., ELC Holdings Corporation, and Excelligence Learning Corporation(6)   Developer, manufacturer and retailer of educational products   Preferred stock (99,492 shares)   12.00% PIK     8/1/2011     10,492     11,766 (2)      
        Common stock (50,800 shares)         8/1/2011     51     2,789 (2)      
                                   
                        10,543     14,555        
                                       
Infilaw Holding, LLC   Operator of three for-profit law schools   Senior secured loan ($1 par due 8/2016)   9.50%
(Libor + 8.50%/Q)
    8/25/2011     1     1 (2)(20)      
        Senior secured loan ($19,157 par due 8/2016)   9.50%
(Libor + 8.50%/Q)
    8/25/2011     19,157     19,157 (3)(20)      
        Series A preferred units (124,890 units)   9.50%
(Libor + 8.50%/Q)
    8/25/2011     124,890     124,890 (2)(20)      
        Series B preferred stock (3.91 units)         10/19/2012     9,245     9,524 (2)      
                                   
                        153,293     153,572        
                                     

F-8


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Instituto de Banca y Comercio, Inc. & Leeds IV Advisors, Inc.   Private school operator   Series B preferred stock (1,750,000 shares)         8/5/2010     5,000     7,143 (2)      
        Series C preferred stock (2,512,586 shares)         6/7/2010     689     159 (2)      
        Common stock (20 shares)         6/7/2010         (2)      
                                   
                        5,689     7,302        
                                       
Lakeland Tours, LLC   Educational travel provider   Senior secured loan ($58,826 par due 12/2016)   9.25%
(Libor + 8.25%/Q)
    10/4/2011     58,670     58,826 (14)(20)      
        Senior secured loan ($1,793 par due 12/2016)   5.25%
(Libor + 4.25%/Q)
    10/4/2011     1,789     1,793 (2)(20)      
        Senior secured loan ($40,362 par due 12/2016)   9.25%
(Libor + 8.25%/Q)
    10/4/2011     40,255     40,362 (3)(14)(20)      
        Senior secured loan ($8,967 par due 12/2016)   5.25%
(Libor + 4.25%/Q)
    10/4/2011     8,943     8,967 (3)(20)      
        Common stock (5,000 shares)         10/4/2011     5,000     4,555 (2)      
                                   
                        114,657     114,503        
                                       
R3 Education, Inc. and EIC Acquisitions Corp.   Medical school operator   Preferred stock (8,800 shares)         7/30/2008     2,200     1,936 (2)      
        Common membership interest (26.27% interest)         9/21/2007     15,800     29,829 (2)      
        Warrants to purchase up to 27,890 shares         12/8/2009         (2)      
                                   
                        18,000     31,765        
                                   
                        488,462     459,401     11.52 %
                                   
                                       
Financial Services                                      
AllBridge Financial, LLC(7)   Asset management services   Equity interests         4/1/2010     5,675     7,814        
                                       
Callidus Capital Corporation(7)   Asset management services   Common stock (100 shares)         4/1/2010     3,000     1,718        
                                       
Ciena Capital LLC(7)   Real estate and small business loan servicer   Senior secured revolving loan ($14,000 par due 12/2014)   6.00%     11/29/2010     14,000     14,000 (2)      
        Senior secured loan ($32,000 par due 12/2016)   12.00%     11/29/2010     32,000     32,000 (2)      
        Equity interests         11/29/2010     53,374     18,616 (2)      
                                   
                        99,374     64,616        
                                       
Commercial Credit Group, Inc.   Commercial equipment finance and leasing company   Senior subordinated loan ($28,000 par due 5/2018)   12.75%     5/10/2012     28,000     28,000 (2)      
                                       
Cook Inlet Alternative Risk, LLC   Risk management services   Senior subordinated loan ($2,750 par due 9/2015)   9.00%     9/30/2011     2,750     2,750 (2)      
                                       
Financial Pacific Company   Commercial finance leasing   Preferred stock (6,500 shares)   8.00% PIK     10/13/2010     3,733     13,687        
        Common stock (650,000 shares)         10/13/2010                
                                   
                        3,733     13,687        
                                       
Gordian Acquisition Corporation   Financial services firm   Common stock (526 shares)         11/30/2012                
                                     

F-9


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Imperial Capital Group LLC   Investment services   Class A common units (7,710 units)         5/10/2007     14,997     18,954 (2)      
        2006 Class B common units (2,526 units)         5/10/2007     3     4 (2)      
        2007 Class B common units (315 units)         5/10/2007         1 (2)      
                                   
                        15,000     18,959        
                                       
Ivy Hill Asset Management, L.P.(7)(9)   Asset management services   Member interest (100.00% interest)         6/15/2009     170,961     294,258        
                                   
                        328,493     431,802     10.83 %
                                   
                                       
Restaurants and Food Services                                      
ADF Capital, Inc. & ADF Restaurant Group, LLC   Restaurant owner and operator   Senior secured revolving loan ($1,468 par due 11/2013)   6.50%
(Libor + 3.50%/Q)
    11/27/2006     1,468     1,468 (2)(20)      
        Senior secured revolving loan ($200 par due 11/2013)   6.50% (Base Rate + 2.50%/Q)     11/27/2006     200     200 (2)(20)      
        Senior secured loan ($9,200 par due 11/2014)   12.50%
(Libor + 9.50%/Q)
    11/27/2006     9,200     9,200 (2)(20)      
        Senior secured loan ($11,034 par due 11/2014)   12.50%
(Libor + 9.50%/Q)
    11/27/2006     11,037     11,034 (3)(20)      
        Promissory note ($14,897,360 par due 11/2016)   12.00% PIK     11/27/2006     16,001     18,719 (2)      
        Warrants to purchase up to 0.61 shares         6/1/2006         5,496 (2)      
                                   
                        37,906     46,117        
                                       
Benihana, Inc.   Restaurant owner and operator   Senior secured revolving loan ($431 par due 8/2017)   9.25%
(Libor + 8.00%/M)
    8/21/2012     431     431 (2)(20)      
        Senior secured loan ($21,769 par due 2/2018)   9.25%
(Libor + 8.00%/Q)
    8/21/2012     21,769     21,769 (2)(20)      
        Senior secured loan ($10,000 par due 2/2018)   9.25%
(Libor + 8.00%/Q)
    8/21/2012     10,000     10,000 (4)(20)      
                                   
                        32,200     32,200        
                                       
Hojeij Branded Foods, Inc.   Airport restaurant operator   Senior secured revolving loan ($1,900 par due 2/2017)   9.00%
(Libor + 8.00%/Q)
    2/15/2012     1,900     1,900 (2)(20)      
        Senior secured loan ($22,600 par due 2/2017)   9.00%
(Libor + 8.00%/Q)
    2/15/2012     22,025     22,600 (2)(20)      
        Warrants to purchase up to 7.5% of membership interest         2/15/2012         132 (2)      
        Warrants to purchase up to 324 shares of Class A common stock         2/15/2012     669     1,899 (2)      
                                   
                        24,594     26,531        
                                     

F-10


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Orion Foods, LLC (fka Hot Stuff Foods, LLC)(7)   Convenience food service retailer   Senior secured revolving loan ($7,800 par due 9/2014)   10.75% (Base Rate + 7.50%/M)     4/1/2010     7,800     7,800 (2)(20)      
        Senior secured loan ($33,477 par due 9/2014)   10.00%
(Libor + 8.50%/Q)
    4/1/2010     33,477     33,477 (3)(20)      
        Junior secured loan ($37,552 par due 9/2014)         4/1/2010     23,695     17,807 (2)(19)      
        Preferred units (10,000 units)         10/28/2010         (2)      
        Class A common units (25,001 units)         4/1/2010         (2)      
        Class B common units (1,122,452 units)         4/1/2010         (2)      
                                   
                        64,972     59,084        
                                       
OTG Management, LLC   Airport restaurant operator   Senior secured loan ($25,000 par due 12/2017)   8.75%
(Libor + 7.25%/Q)
    12/11/2012     25,000     25,000 (2)(20)      
        Common units (3,000,000 units)         1/5/2011     3,000     2,042 (2)      
        Warrants to purchase up to 7.73% of common units         6/19/2008     100     4,334 (2)      
                                   
                        28,100     31,376        
                                       
Performance Food Group, Inc. and Wellspring Distribution Corp.   Food service distributor   Junior secured loan ($50,000 par due 5/2015)   11.00%     5/30/2012     50,000     50,000 (2)      
        Junior secured loan ($50,250 par due 5/2015)   11.00%     5/23/2008     49,529     50,250 (2)      
        Junior secured loan ($50,000 par due 5/2015)   11.00%     5/23/2008     49,705     50,000 (3)      
        Class A non-voting common stock (1,366,120 shares)         5/3/2008     7,500     6,732 (2)      
                                   
                        156,734     156,982        
                                   
                                       
Restaurant Holding Company, LLC   Fast food restaurant operator   Senior secured loan ($61,333 par due 2/2017)   9.00%
(Libor + 7.50%/M)
    2/15/2012     60,280     61,333 (3)(20)      
        Senior secured loan ($9,436 par due 2/2017)   9.00%
(Libor + 7.50%/M)
    2/15/2012     9,272     9,436 (4)(20)      
                                   
                        69,552     70,769        
                                       
S.B. Restaurant Company   Restaurant owner and operator   Preferred stock (46,690 shares)         4/1/2010         (2)      
        Warrants to purchase up to 257,429 shares of common stock         4/1/2010         (2)      
                                   
                                   
                                   
                        414,058     423,059     10.61 %
                                   
                                       
Services—Other                                      
Capital Investments and Ventures Corp.   SCUBA diver training and certification provider   Senior secured loan ($64,837 par due 8/2018)   8.50%
(Libor + 7.25%/Q)
    8/9/2012     64,837     64,837 (2)(20)      
        Senior secured loan ($9,975 par due 8/2018)   8.50%
(Libor + 7.25%/Q)
    8/9/2012     9,975     9,975 (4)(20)      
                                   
                        74,812     74,812        
                                     

F-11


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Competitor Group, Inc. and Calera XVI, LLC   Endurance sports media and event operator   Senior secured revolving loan ($2,850 par due 11/2018)   10.00% (Base Rate + 6.75%/Q)     11/30/2012     2,850     2,850 (2)(20)      
        Senior secured revolving loan ($900 par due 11/2018)   9.00%
(Libor + 7.75%/Q)
    11/30/2012     900     900 (2)(20)      
        Senior secured loan ($54,500 par due 11/2018)   9.00%
(Libor + 7.75%/Q)
    11/30/2012     54,500     54,500 (2)(20)      
        Membership units (2,500,000 units)         11/30/2012     2,500     2,500 (2)(9)      
                                   
                        60,750     60,750        
                                       
Massage Envy, LLC   Franchiser in the massage industry   Senior secured loan ($80,494 par due 9/2018)   8.50%
(Libor + 7.25%/Q)
    9/27/2012     80,494     80,494 (2)(20)      
        Common stock (3,000,000 shares)         9/27/2012     3,000     3,000 (2)      
                                   
                        83,494     83,494        
                                       
McKenzie Sports Products, LLC   Designer, manufacturer and distributor of taxidermy forms and supplies   Senior secured loan ($11,833 par due 3/2017)   7.00%
(Libor + 5.50%/M)
    3/30/2012     11,833     11,833 (2)(20)      
        Senior secured loan ($28 par due 3/2017)   7.75% (Base Rate + 4.50%/M)     3/30/2012     28     28 (2)(20)      
        Senior secured loan ($9,902 par due 3/2017)   7.00%
(Libor + 5.50%/M)
    3/30/2012     9,902     9,902 (4)(20)      
        Senior secured loan ($23 par due 3/2017)   7.75% (Base Rate + 4.50%/M)     3/30/2012     23     23 (4)(20)      
                                   
                        21,786     21,786        
                                       
The Dwyer Group(6)   Operator of multiple franchise concepts primarily related to home maintenance or repairs   Senior subordinated loan ($25,400 par due 6/2018)   12.00% Cash, 1.50% PIK     12/22/2010     25,400     25,400 (2)      
        Series A preferred units (13,292,377 units)   8.00% PIK     12/22/2010     6,337     13,962 (2)      
                                   
                        31,737     39,362        
                                       
Wash Multifamily Laundry Systems, LLC (fka Web Services Company, LLC)   Laundry service and equipment provider   Senior secured loan ($27,172 par due 8/2014)   7.00% (Base Rate + 3.75%/Q)     6/26/2012     27,091     27,172 (2)(20)      
        Junior secured loan ($40,000 par due 8/2015)   10.88%
(Libor + 9.38%/Q)
    1/25/2011     40,000     40,000 (2)(20)      
        Junior secured loan ($50,000 par due 8/2015)   10.88%
(Libor + 9.38%/Q)
    1/25/2011     50,000     50,000 (3)(20)      
                                   
                        117,091     117,172        
                                   
                        389,670     397,376     9.96 %
                                   
                                       
Business Services                                      
Access CIG, LLC   Records and information management services provider   Senior secured loan ($1,000 par due 10/2017)   7.00%
(Libor + 5.75%/Q)
    10/5/2012     1,000     1,000 (2)(20)      
                                       
Cast & Crew Payroll, LLC and Centerstage Co-Investors, L.L.C.(6)   Payroll and accounting services provider to the entertainment industry   Senior secured loan ($100,000 par due 12/2017)   7.50%
(Libor + 6.50%/Q)
    12/24/2012     100,000     100,000 (2)(20)      
        Class A membership units (2,500,000 units)         12/24/2012     2,500     2,500 (2)      
        Class B membership units (2,500,000 units)         12/24/2012     2,500     2,500 (2)      
                                   
                        105,000     105,000        
                                     

F-12


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
CIBT Investment Holdings, LLC   Expedited travel document processing services   Class A shares (2,500 shares)         12/15/2011     2,500     3,543 (2)      
                                       
CitiPostal Inc.(7)   Document storage and management services   Senior secured revolving loan ($1,000 par due 12/2013)   6.75% (Base Rate + 3.25%/Q)     4/1/2010     1,000     1,000 (2)(20)      
        Senior secured loan ($523 par due 12/2013)   8.50% Cash, 5.50% PIK     4/1/2010     523     523 (2)      
        Senior secured loan ($53,561 par due 12/2013)   8.50% Cash, 5.50% PIK     4/1/2010     53,561     53,561 (3)      
        Senior subordinated loan ($17,224 par due 12/2015)         4/1/2010     13,038     1,556 (2)(19)      
        Common stock (37,024 shares)         4/1/2010                
                                   
                        68,122     56,640        
                                       
Command Alkon, Inc.   Software solutions provider to the ready-mix concrete industry   Junior secured loan ($39,130 par due 3/2018)   9.75%
(Libor + 8.50%/Q)
    9/28/2012     39,130     39,130 (2)(20)      
                                       
Cornerstone Records Management, LLC   Physical records storage and management service provider   Senior secured loan ($18,460 par due 8/2016)   10.50%
(Libor + 9.00%/Q)
    8/12/2011     18,460     17,722 (2)(20)      
                                       
HCP Acquisition Holdings, LLC(7)   Healthcare compliance advisory services   Class A units (12,287,082 units)         6/26/2008     12,347     (2)      
                                       
IfByPhone Inc.   Voice-based marketing automation software provider   Senior secured loan ($2,000 par due 11/2015)   11.00%     10/15/2012     1,917     2,000 (2)      
        Senior secured loan ($1,000 par due 1/2016)   11.00%     10/15/2012     1,000     1,000 (2)      
        Warrant to purchase up to 124,300 shares of Series C preferred stock         10/15/2012     88     88 (2)      
                                   
                        3,005     3,088        
                                       
Impact Innovations Group, LLC   IT consulting and outsourcing services   Member interest (50.00% interest)         4/1/2010         200        
                                       
Investor Group Services, LLC(6)   Business consulting for private equity and corporate clients   Limited liability company membership interest (10.00% interest)         6/22/2006         711        
                                       
Itel Laboratories, Inc.   Data services provider for building materials to property insurance industry   Senior secured loan ($12,263 par due 6/2018)   6.25%
(Libor + 5.00%/Q)
    6/29/2012     12,263     12,263 (2)(20)      
        Preferred units (1,798,391 units)         6/29/2012     1,000     1,093 (2)      
                                   
                        13,263     13,356        
                                       
Multi-Ad Services, Inc.(6)   Marketing services and software provider   Preferred units (1,725,280 units)         4/1/2010     788     2,037        
        Common units (1,725,280 units)         4/1/2010                
                                   
                        788     2,037        
                                     

F-13


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
MVL Group, Inc.(7)   Marketing research provider   Senior secured revolving loan ($806 par due 6/2012)   4.94%
(Libor + 4.50%/Q)
    6/28/2012     806     806 (2)      
        Senior subordinated loan ($36,766 par due 7/2012)         4/1/2010     34,636     5,330 (2)(19)      
        Junior subordinated loan ($185 par due 7/2012)         4/1/2010         (2)(19)      
        Common stock (560,716 shares)         4/1/2010         (2)      
                                   
                        35,442     6,136        
                                       
Performant Financial Corporation   Collections services   Common stock (772,130 shares)         4/1/2010     1,191     7,799 (2)      
        Common stock (207,912 shares)         2/5/2005     241     2,100 (2)      
                                   
                        1,432     9,899        
                                       
Pillar Processing LLC and PHL Holding Co.(6)   Mortgage services   Senior secured loan ($7,033 par due 11/2018)         7/31/2008     6,709     7,033 (2)(19)      
        Senior secured loan ($7,375 par due 5/2019)         11/20/2007     6,661     522 (2)(19)      
        Class A common stock (576 shares)         7/31/2012     3,768     (2)      
                                   
                        17,138     7,555        
                                       
Powersport Auctioneer Holdings, LLC   Powersport vehicle auction operator   Common units (1,972 units)         3/2/2012     1,000     736 (2)      
                                       
Prommis Holdings, LLC   Bankruptcy and foreclosure processing services   Class B common units (1,727 units)         6/12/2012         (2)      
                                       
Promo Works, LLC   Marketing services   Senior secured loan ($8,655 par due 12/2013)         4/1/2010     3,249     2,042 (2)(19)      
                                       
R2 Acquisition Corp.   Marketing services   Common stock (250,000 shares)         5/29/2007     250     137 (2)      
                                       
Strident Holding, Inc.   Recovery audit services provider to commercial and governmental healthcare payors   Senior secured loan ($7,935 par due 7/2018)   6.50%
(Libor + 5.25%/Q)
    7/26/2012     7,935     7,935 (2)(20)      
        Senior secured loan ($9,975 par due 7/2018)   6.50%
(Libor + 5.25%/Q)
    7/26/2012     9,975     9,975 (4)(20)      
                                   
                        17,910     17,910        
                                       
Summit Business Media Parent Holding Company LLC   Business media consulting services   Limited liability company membership interest (45.98% interest)         5/20/2011         873 (2)      
                                       
TOA Technologies, Inc.   Cloud based, mobile workforce management applications provider   Senior secured loan ($13,000 par due 10/2016)   10.25%     10/31/2012     12,415     12,480 (2)      
        Warrant to purchase up to 2,509,770 shares of Series D preferred stock         10/31/2012     605     617 (2)      
                                   
                        13,020     13,097        
                                       
Tradesmen International, Inc.   Construction labor support   Warrants to purchase up to 771,036 shares         4/1/2010         10,150        
                                     

F-14


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Tripwire, Inc.   IT security software provider   Senior secured loan ($50,000 par due 5/2018)   6.00%
(Libor + 4.75%/Q)
    5/23/2011     50,000     50,000 (3)(20)      
        Senior secured loan ($10,000 par due 5/2018)   6.00%
(Libor + 4.75%/Q)
    5/23/2011     10,000     10,000 (4)(20)      
        Class A common stock (2,970 shares)         5/23/2011     2,970     6,941 (2)      
        Class B common stock (2,655,638 shares)         5/23/2011     30     70 (2)      
                                   
                        63,000     67,011        
                                       
Venturehouse-Cibernet Investors, LLC   Financial settlement services for intercarrier wireless roaming   Equity interest         4/1/2010         (2)      
                                       
VSS-Tranzact Holdings, LLC(6)   Management consulting services   Common membership interest (5.98% interest)         10/26/2007     10,204     3,652        
                                   
                        426,260     381,625     9.57 %
                                   
                                       
Containers—Packaging                                      
ICSH, Inc.   Industrial container manufacturer, reconditioner and servicer   Senior secured loan ($22,569 par due 8/2016)   8.00%
(Libor + 7.00%/Q)
    8/31/2011     22,569     22,569 (2)(20)      
        Senior secured loan ($3,750 par due 8/2016)   9.25% (Base Rate + 6.00%/Q)     8/31/2011     3,750     3,750 (2)(20)      
        Senior secured loan ($24,217 par due 8/2016)   8.04%
(Libor + 7.00%/Q)
    8/31/2011     24,217     24,217 (2)(20)      
        Senior secured loan ($67,961 par due 8/2016)   8.04%
(Libor + 7.00%/Q)
    8/31/2011     67,961     67,961 (3)(20)      
        Senior secured loan ($353 par due 8/2016)   8.00%
(Libor + 7.00%/Q)
    8/31/2011     353     353 (3)(20)      
        Senior secured loan ($14,795 par due 8/2016)   8.04%
(Libor + 7.00%/Q)
    8/31/2011     14,795     14,795 (4)(20)      
        Senior secured loan ($77 par due 8/2016)   8.00%
(Libor + 7.00%/Q)
    8/31/2011     77     77 (4)(20)      
                                   
                        133,722     133,722        
                                       
Microstar Logistics LLC, Microstar Global Asset Management LLC and MStar Holding Corporation   Keg management solutions provider   Junior secured loan ($165,000 par due 12/2018)   8.50%
(Libor + 7.50%/Q)
    12/14/2012     165,000     165,000 (2)(20)      
        Common Stock (50,000 shares)         12/14/2012     5,000     5,000 (2)      
                                   
                        170,000     170,000        
                                       
Pregis Corporation, Pregis Intellipack Corp. and Pregis Innovative Packaging Inc.   Provider of highly-customized, tailored protective packaging solutions   Senior secured loan ($3 par due 3/2017)   8.50% (Base Rate + 5.25%/Q)     4/25/2012     3     3 (2)(20)      
        Senior secured loan ($992 par due 3/2017)   7.75%
(Libor + 6.25%/Q)
    4/25/2012     992     992 (2)(20)      
                                   
                        995     995        
                                   
                        304,717     304,717     7.64 %
                                   
                                     

F-15


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Consumer Products—Non-durable                                      
Gilchrist & Soames, Inc.   Personal care manufacturer   Senior secured revolving loan ($9,200 par due 10/2013)   6.25%
(Libor + 5.00%/M)
    4/1/2010     9,200     9,200 (2)(20)      
        Senior secured loan ($21,941 par due 10/2013)   13.44%     4/1/2010     21,710     20,847 (2)      
                                   
                        30,910     30,047        
                                       
Implus Footcare, LLC   Provider of footwear and other accessories   Preferred stock (455 shares)   6.00% PIK     10/31/2011     4,873     4,873 (2)      
        Common stock (455 shares)         10/31/2011     455     196 (2)      
                                   
                        5,328     5,069        
                                       
Insight Pharmaceuticals Corporation(6)   OTC drug products manufactuer   Junior secured loan ($19,310 par due 8/2017)   13.25%
(Libor + 11.75%/Q)
    8/26/2011     19,136     19,310 (3)(20)      
        Class A common stock (155,000 shares)         8/26/2011     6,035     8,277 (2)      
        Class B common stock (155,000 shares)         8/26/2011     6,035     8,277 (2)      
                                   
                        31,206     35,864        
                                       
Matrixx Initiatives, Inc. and Wonder Holdings Acquisition Corp.   Developer and marketer of over-the-counter healthcare products   Senior secured revolving loan ($9,500 par due 6/2016)   13.00%
(Libor + 12.00%/M)
    6/30/2011     9,500     8,550 (2)(20)      
        Senior secured loan ($38,781 par due 6/2016)   13.00%
(Libor + 12.00%/Q)
    6/30/2011     38,581     34,903 (3)(20)      
        Warrants to purchase up to 1,654,678 shares of common stock         7/27/2011         (2)      
        Warrants to purchase up to 1,489 shares of preferred stock         7/27/2011         (2)      
                                   
                        48,081     43,453        
                                       
Oak Parent, Inc.   Manufacturer of athletic apparel   Senior secured loan ($41,299 par due 4/2018)   8.00%
(Libor + 7.00%/Q)
    4/2/2012     41,125     41,299 (2)(20)      
        Senior secured loan ($9,428 par due 4/2018)   8.00%
(Libor + 7.00%/Q)
    4/2/2012     9,388     9,428 (4)(20)      
                                   
                        50,513     50,727        
                                       
PG-ACP Co-Invest, LLC   Supplier of medical uniforms, specialized medical footwear and accessories   Class A membership units (1,000,0000 units)         8/29/2012     1,000     1,293 (2)      
                                       
The Step2 Company, LLC   Toy manufacturer   Junior secured loan ($27,000 par due 4/2015)   10.00%     4/1/2010     26,092     27,000 (2)      
        Junior secured loan ($32,814 par due 4/2015)   10.00% Cash, 6.00% PIK     4/1/2010     31,859     28,876 (2)      
        Common units (1,116,879 units)         4/1/2010     24     94        
        Warrants to purchase up to 3,157,895 units         4/1/2010         269        
                                   
                        57,975     56,239        
                                       
The Thymes, LLC(7)   Cosmetic products manufacturer   Preferred units (6,283 units)   8.00% PIK     6/21/2007     5,631     5,244        
        Common units (5,400 units)         6/21/2007         3,138        
                                   
                        5,631     8,382        
                                     

F-16


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Woodstream Corporation   Pet products manufacturer   Senior secured loan ($3,000 par due 8/2014)   6.50%
(Libor + 5.00%/Q)
    4/18/2012     3,000     3,000 (2)(20)      
        Senior secured loan ($15,000 par due 8/2014)   6.50%
(Libor + 5.00%/Q)
    4/18/2012     15,000     15,000 (4)(20)      
        Senior subordinated loan ($45,000 par due 2/2015)   12.00%     1/22/2010     41,637     45,000 (2)      
        Common stock (4,254 shares)         1/22/2010     1,222     2,999 (2)      
                                   
                        60,859     65,999        
                                   
                        291,503     297,073     7.45 %
                                   
                                       
Energy                                      
Centinela Funding, LLC   Solar power generation facility developer and operator   Senior secured loan ($45,000 par due 11/2020)   10.00%
(Libor + 8.75%/Q)
    11/14/2012     45,000     45,000 (2)(20)      
                                       
EquiPower Resources Holdings, LLC   Gas-fired power generation facilities operator   Junior secured loan ($22,500 par due 6/2019)   10.00%
(Libor + 8.50%/Q)
    6/27/2012     22,073     22,500 (2)(20)      
                                       
La Paloma Generating Company, LLC   Natural gas fired, combined cycle plant operator   Junior secured loan ($59,000 par due 8/2018)   10.25%
(Libor + 8.75%/Q)
    8/9/2011     57,908     56,640 (2)(20)      
                                       
Panda Sherman Power, LLC   Developer and operator of a gas turbine power plant   Senior secured loan ($32,500 par due 9/2018)   9.00%
(Libor + 7.50%/Q)
    9/14/2012     32,500     32,500 (2)(20)      
                                       
Panda Temple Power, LLC   Developer and operator of a gas turbine power plant   Senior secured loan ($60,000 par due 7/2018)   11.50%
(Libor + 10.00%/Q)
    7/17/2012     58,157     60,000 (2)(20)      
                                   
                        215,638     216,640     5.43 %
                                   
                                       
Automotive Services                                      
Driven Holdings, LLC   Automotive aftermarket car care franchisor   Preferred stock (247,500 units)         12/16/2011     2,475     2,688 (2)      
        Common stock (25,000 units)         12/16/2011     25     137 (2)      
                                   
                        2,500     2,825        
                                       
Eckler Industries, Inc.   Restoration parts and accessories provider for classic automobiles   Senior secured revolving loan ($1,300 par due 7/2017)   8.25% (Base Rate + 5.00%/M)     7/12/2012     1,300     1,300 (2)(20)      
        Senior secured loan ($52,071 par due 7/2017)   7.25%
(Libor + 6.00%/M)
    7/12/2012     52,071     52,071 (2)(20)      
        Series A preferred stock (1,800 shares)         7/12/2012     1,800     1,871 (2)      
        Common stock (20,000 shares)         7/12/2012     200     200 (2)      
                                   
                        55,371     55,442        
                                       
EcoMotors, Inc.   Engine developer   Senior secured loan ($5,000 par due 7/2016)   10.13%     12/28/2012     4,850     5,000 (2)      
        Warrant to purchase up to 321,888 shares of Series C Preferred Stock         12/28/2012         84 (2)      
                                   
                        4,850     5,084        
                                     

F-17


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Service King Paint & Body, LLC   Collision repair site operators   Senior secured loan ($122,850 par due 8/2017)   8.50%
(Libor + 7.25%/Q)
    8/20/2012     122,850     122,850 (2)(16)(20)      
        Senior secured loan ($9,925 par due 8/2017)   5.50%
(Libor + 4.25%/Q)
    8/20/2012     9,925     9,925 (2)(20)      
        Membership interest         8/20/2012     5,000     6,684 (2)      
                                   
                        137,775     139,459        
                                   
                        200,496     202,810     5.09 %
                                   
                                       
Manufacturing                                      
Cambrios Technologies Corporation   Nanotechnology-based solutions for electronic devices and computers   Senior secured loan ($4,848 par due 8/2015)   12.00%     8/7/2012     4,848     4,848 (2)      
        Warrants to purchase up to 400,000 shares of Series D-4 convertible preferred stock         8/2/2012         8 (2)      
                                   
                        4,848     4,856        
                                       
Component Hardware Group, Inc.   Commercial equipment   Junior secured loan ($3,202 par due 12/2014)   7.00% Cash, 3.00% PIK     8/4/2010     3,202     3,202 (2)      
        Senior subordinated loan ($11,142 par due 12/2014)   7.50% Cash, 5.00% PIK     4/1/2010     8,343     11,142 (2)      
        Warrants to purchase up to 1,462,500 shares of common stock         8/4/2010         7,322 (2)      
                                   
                        11,545     21,666        
                                       
MWI Holdings, Inc.   Provider of engineered springs, fasteners, and other precision components   Senior secured loan ($38,274 par due 6/2017)   10.00%
(Libor + 8.00%/Q)
    6/15/2011     38,274     38,274 (2)(20)      
        Senior secured loan ($10,000 par due 6/2017)   10.00%
(Libor + 8.00%/Q)
    6/15/2011     10,000     10,000 (4)(20)      
                                   
                        48,274     48,274        
                                       
NetShape Technologies, Inc.   Metal precision engineered components   Senior secured revolving loan ($415 par due 2/2013)   3.96%
(Libor + 3.75%/M)
    4/1/2010     415     373 (2)      
                                       
Pelican Products, Inc.   Flashlights   Senior secured loan ($7,960 par due 7/2018)   7.00%
(Libor + 5.50%/Q)
    7/13/2012     7,960     7,960 (4)(20)      
        Junior secured loan ($32,000 par due 6/2019)   11.50%
(Libor + 10.00%/Q)
    7/13/2012     32,000     32,000 (2)(20)      
                                   
                        39,960     39,960        
                                       
Protective Industries, Inc. dba Caplugs   Plastic protection products   Senior secured revolving loan ($1,633 par due 5/2016)   5.75%
(Libor + 4.25%/M)
    5/23/2011     1,633     1,633 (2)(20)      
        Senior secured loan ($1,500 par due 5/2017)   5.75%
(Libor + 4.25%/M)
    11/30/2012     1,500     1,500 (2)(20)      
        Senior subordinated loan ($695 par due 5/2018)   8.00% Cash, 7.25% PIK     5/23/2011     695     695 (2)      
        Preferred stock (2,379,361 shares)         5/23/2011     2,307     4,644 (2)      
                                   
                        6,135     8,472        
                                       
Saw Mill PCG Partners LLC   Metal precision engineered components   Common units (1,000 units)         1/30/2007     1,000     (2)      
                                       
Sigma International Group, Inc.   Water treatment parts   Junior secured loan ($4,195 par due 4/2014)   10.00%
(Libor + 5.00% Cash, 5.00% PIK/Q)
    7/8/2011     4,195     4,195 (2)(20)      
                                     

F-18


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
SSH Environmental Industries, Inc. and SSH Non-Destructive Testing, Inc.   Magnetic sensors and supporting sensor products   Senior secured loan ($11,625 par due 12/2016)   9.00%
(Libor + 7.50%/Q)
    3/23/2012     11,424     11,625 (2)(20)      
                                   
                        127,796     139,421     3.50 %
                                   
                                       
Aerospace and Defense                                      
ILC Industries, LLC   Designer and manufacturer of protective cases and technically advanced lighting systems   Senior secured loan ($4,925 par due 7/2018)   7.50%
(Libor + 6.00%/Q)
    7/13/2012     4,838     4,925 (2)(20)      
        Senior secured loan ($19,950 par due 7/2018)   7.50%
(Libor + 6.00%/Q)
    7/13/2012     19,574     19,950 (4)(20)      
                                   
                        24,412     24,875        
                                       
PRV Aerospace, LLC   Aerospace precision components manufacturer   Senior secured loan ($1,136 par due 5/2018)   6.50%
(Libor + 5.25%/Q)
    5/15/2012     1,130     1,136 (2)(20)      
        Senior secured loan ($8,460 par due 5/2018)   6.50%
(Libor + 5.25%/Q)
    5/15/2012     8,383     8,460 (4)(20)      
        Junior secured loan ($80,000 par due 5/2019)   10.50%
(Libor + 9.25%/Q)
    5/10/2012     80,000     80,000 (2)(20)      
                                   
                        89,513     89,596        
                                       
Wyle Laboratories, Inc. and Wyle Holdings, Inc.   Provider of specialized engineering, scientific and technical services   Senior preferred stock (775 shares)   8.00% PIK     1/17/2008     103     103 (2)      
        Common stock (1,885,195 shares)         1/17/2008     2,291     2,346 (2)      
                                   
                        2,394     2,449        
                                   
                        116,319     116,920     2.93 %
                                   
                                       
Telecommunications                                      
American Broadband Communications, LLC, American Broadband Holding Company, Cameron Holdings of NC, Inc., and Dialog Telecom LLC   Broadband communication services   Senior secured loan ($7,666 par due 9/2013)   7.50%
(Libor + 5.50%/Q)
    9/1/2010     7,666     7,666 (2)(20)      
        Senior secured loan ($16,476 par due 12/2013)   12.00%
(Libor + 11.50%/Q)
    6/20/2011     16,476     16,476 (2)(20)      
        Senior subordinated loan ($10,741 par due 11/2014)   12.00% Cash, 2.00% PIK     9/1/2010     10,741     10,312 (2)      
        Senior subordinated loan ($34,104 par due 11/2014)   12.00% Cash, 2.00% PIK     11/7/2007     34,104     32,740 (3)      
        Senior subordinated loan ($23,513 par due 11/2014)   10.00% Cash, 4.00% PIK     11/7/2007     23,513     22,574 (2)      
        Warrants to purchase up to 378 shares         11/7/2007         2,533        
        Warrants to purchase up to 200 shares         9/1/2010         1,340 (2)      
                                   
                        92,500     93,641        
                                       
Startec Equity, LLC(7)   Communication services   Member interest         4/1/2010                
                                   
                        92,500     93,641     2.35 %
                                   
                                     

F-19


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Consumer Products—Durable                                      
Bushnell Inc.   Sports optics manufacturer   Junior secured loan ($48,825 par due 2/2016)   9.00%
(Libor + 7.50%/Q)
    4/1/2010     44,000     48,338 (2)(20)      
        Junior secured loan ($43,675 par due 2/2016)   9.50%
(Libor + 8.00%/Q)
    4/30/2012     43,675     43,675 (2)(20)      
                                   
                        87,675     92,013     2.31 %
                                   
                                       
Oil and Gas                                      
Geotrace Technologies, Inc.   Reservoir processing and development   Warrants to purchase up to 69,978 shares of common stock         4/1/2010     88     (2)      
        Warrants to purchase up to 210,453 shares of preferred stock         4/1/2010     2,805     1,757 (2)      
                                   
                        2,893     1,757        
                                       
UL Holding Co., LLC and Universal Lubricants, LLC(6)   Petroleum product manufacturer   Junior secured loan ($4,935 par due 12/2014)   9.19%
(Libor + 7.19% Cash, 2.00% PIK/Q)
    4/30/2012     4,935     4,935 (2)      
        Junior secured loan ($25,413 par due 12/2014)   9.19%
(Libor + 7.19% Cash, 2.00% PIK/Q)
    4/30/2012     25,413     25,413 (3)      
        Junior secured loan ($4,920 par due 12/2014)   12.00% Cash, 2.00% PIK     4/30/2012     4,920     4,920 (2)      
        Junior secured loan ($5,078 par due 12/2014)   12.00% Cash, 3.00% PIK     4/30/2012     5,078     5,078 (2)      
        Junior secured loan ($18,614 par due 12/2014)   12.00% Cash, 2.00% PIK     4/30/2012     18,614     18,614 (3)      
        Class A common units (10,782 units)         6/17/2011     1,512     57 (2)      
        Class B-5 common units (599,200 units)         4/25/2008     5,472     226 (2)      
        Class B-4 common units (50,000 units)         6/17/2011     500     19 (2)      
        Class C common units (618,091 units)         4/25/2008         287 (2)      
                                   
                        66,444     59,549        
                                   
                        69,337     61,306     1.54 %
                                   
                                       
Retail                                      
Fulton Holdings Corp.   Airport restaurant operator   Senior secured loan ($40,000 par due 5/2016)   12.50%     5/28/2010     40,000     40,000 (3)(12)      
        Common stock (19,672 shares)         5/28/2010     1,967     1,873        
                                   
                        41,967     41,873        
                                       
Things Remembered Inc. and TRM Holdings Corporation   Personalized gifts retailer   Senior secured loan ($14,962 par due 5/2018)   8.00%
(Libor + 6.50%/Q)
    5/24/2012     14,962     14,962 (4)(20)      
                                   
                        56,929     56,835     1.43 %
                                   
                                       
Printing, Publishing and Media                                      
Batanga, Inc.   Independent digital media company   Senior secured loan ($5,500 par due 10/2016)   9.60%     10/31/2012     5,500     5,594 (2)(18)      
                                       
Earthcolor Group, LLC   Printing management services   Limited liability company interests (9.30%)         5/18/2012                
                                     

F-20


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
National Print Group, Inc.   Printing management services   Senior secured revolving loan ($913 par due 10/2013)   9.00%
(Libor + 6.00%/Q)
    3/2/2006     913     895 (2)(20)      
        Senior secured revolving loan ($1,038 par due 10/2013)   9.00% (Base Rate + 5.00%/M)     3/2/2006     1,038     1,017 (2)(20)      
        Senior secured loan ($6,903 par due 10/2013)   10.00%
(Libor + 9.00% Cash, 1.00% PIK/Q)
    3/2/2006     6,631     6,834 (2)(20)      
        Senior secured loan ($331 par due 10/2013)   10.00% (Base Rate + 9.00% Cash, 1.00% PIK/Q)     3/2/2006     318     327 (2)(20)      
        Preferred stock (9,344 shares)         3/2/2006     2,000     (2)      
                                   
                        10,900     9,073        
                                       
The Teaching Company, LLC and The Teaching Company Holdings, Inc.   Education publications provider   Senior secured loan ($21,319 par due 3/2017)   9.00%
(Libor + 7.50%/Q)
    9/29/2006     21,319     21,319 (2)(20)      
        Senior secured loan ($9,902 par due 3/2017)   9.00%
(Libor + 7.50%/Q)
    9/29/2006     9,902     9,902 (4)(20)      
        Preferred stock (10,663 shares)         9/29/2006     1,066     3,225 (2)      
        Common stock (15,393 shares)         9/29/2006     3     8 (2)      
                                   
                        32,290     34,454        
                                   
                        48,690     49,121     1.23 %
                                   
                                       
Environmental Services                                      
AWTP, LLC(7)   Water treatment services   Junior secured loan ($4,212 par due 6/2015)   10.00%     4/18/2011     4,212     4,212 (2)      
        Junior secured loan ($6,121 par due 6/2015)   15.00% PIK     4/18/2011     6,121     6,121 (2)      
        Membership interests (90% interest)         4/18/2011         4,580 (2)      
                                   
                        10,333     14,913        
                                       
RE Community Holdings II, Inc. and Pegasus Community Energy, LLC.   Operator of municipal recycling facilities   Preferred stock (1,000 shares)         3/1/2011     8,839     1,487 (2)      
                                       
Waste Pro USA, Inc   Waste management services   Preferred Class A common equity (611,615 shares)         11/9/2006     12,263     24,219 (2)      
                                   
                        31,435     40,619     1.02 %
                                   
                                       
Transportation                                      
PODS Funding Corp.   Storage and warehousing   Junior subordinated loan ($40,228 par due 5/2017)   12.75% Cash, 2.75% PIK     11/29/2011     40,228     40,228 (2)      
                                       
United Road Towing, Inc.   Towing company   Warrants to purchase up to 607 shares         4/1/2010                
                                   
                        40,228     40,228     1.01 %
                                   
                                       
Commercial Real Estate Finance                                      
10th Street, LLC(6)   Real estate holding company   Senior subordinated loan ($25,208 par due 11/2014)   8.93% Cash, 4.07% PIK     4/1/2010     25,208     25,208 (2)      
        Member interest (10.00% interest)         4/1/2010     594            
        Option (25,000 units)         4/1/2010     25     501        
                                   
                        25,827     25,709        
                                     

F-21


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
American Commercial Coatings, Inc.   Real estate property   Commercial mortgage loan ($2,505 par due 12/2025)         4/1/2010     926     2,061 (19)      
                                       
Cleveland East Equity, LLC   Hotel operator   Real estate equity interests         4/1/2010     1,026     3,639        
                                       
Commons R-3, LLC   Real estate developer   Real estate equity interests         4/1/2010                
                                       
Crescent Hotels & Resorts, LLC and affiliates(7)   Hotel operator   Senior subordinated loan ($2,236 par due 9/2011)         4/1/2010         (2)(19)      
        Senior subordinated loan ($2,092 par due 6/2017)         4/1/2010         (2)(19)      
        Common equity interest         4/1/2010                
        Limited liability company membership interest (100% interest)         6/19/2012         (2)      
                                   
                                   
                                       
Hot Light Brands, Inc.(7)   Real estate holding company   Senior secured loan ($32,957 par due 2/2011)         4/1/2010     1,664     1,128 (2)(19)      
        Common stock (93,500 shares)         4/1/2010         (2)      
                                   
                        1,664     1,128        
                                       
NPH, Inc.   Hotel property   Real estate equity interests         4/1/2010     5,291     6,123        
                                   
                        34,734     38,660     0.97 %
                                   
                                       
Health Clubs                                      
Athletic Club Holdings, Inc.   Premier health club operator   Senior secured loan ($11,500 par due 10/2013)   4.71%
(Libor + 4.50%/M)
    10/11/2007     11,500     11,500 (2)(13)      
                                       
CFW Co-Invest, L.P. and NCP Curves, L.P.   Health club franchisor   Limited partnership interest (4,152,165 shares)         7/31/2012     4,152     4,152 (2)      
        Limited partnership interest (1,847,835 shares)         7/31/2012     1,848     1,848 (2)      
                                   
                        6,000     6,000        
                                   
                        17,500     17,500     0.43 %
                                   
                                       
Food and Beverage                                      
Apple & Eve, LLC and US Juice Partners, LLC(6)   Juice manufacturer   Senior units (50,000 units)         10/5/2007     5,000     1,398        
                                       
Charter Baking Company, Inc.   Baked goods manufacturer   Senior subordinated loan ($8,885 par due 2/2013)   16.00% PIK     2/6/2008     8,885     8,885 (2)      
        Preferred stock (6,258 shares)         9/1/2006     2,568     1,617 (2)      
                                   
                        11,453     10,502        
                                       
Distant Lands Trading Co.   Coffee manufacturer   Class A common stock (1,294 shares)         4/1/2010     980     (2)      
        Class A-1 common stock (2,157 shares)         4/1/2010         (2)      
                                   
                        980            
                                   
                        17,433     11,900     0.29 %
                                   
                                     

F-22


Table of Contents

Company(1)
  Business Description   Investment   Interest(5)(11)   Acquisition
Date
  Amortized
Cost
  Fair Value   Percentage
of Net
Assets
 
Wholesale Distribution                                      
BECO Holding Company, Inc.   Wholesale distributor of first response fire protection equipment and related parts   Common stock (25,000 shares)         7/30/2010     2,500     2,457 (2)      
                                   
                        2,500     2,457     0.05 %
                                   
                      $ 5,823,451   $ 5,924,555     148.55 %
                                   

(1)
Other than the Company's investments listed in footnote 7 below (subject to the limitations set forth therein), the Company does not "Control" any of its portfolio companies, for the purposes of the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the "Investment Company Act"). In general, under the Investment Company Act, the Company would "Control" a portfolio company if the Company owned more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company. All of the Company's portfolio company investments, which as of December 31, 2012 represented 149% of the Company's net assets or 93% of the Company's total assets, are subject to legal restrictions on sales.

(2)
These assets are pledged as collateral for the Revolving Credit Facility and, as a result, are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company's obligations under the Revolving Credit Facility (see Note 5 to the consolidated financial statements).

(3)
These assets are owned by the Company's consolidated subsidiary Ares Capital CP Funding LLC ("Ares Capital CP"), are pledged as collateral for the Revolving Funding Facility and, as a result, are not directly available to the creditors of the Company to satisfy any obligations of the Company other than Ares Capital CP's obligations under the Revolving Funding Facility (see Note 5 to the consolidated financial statements).

(4)
These assets are owned by the Company's consolidated subsidiary Ares Capital JB Funding LLC ("ACJB"), are pledged as collateral for the SMBC Funding Facility and, as a result, are not directly available to the creditors of the Company to satisfy any obligations of the Company other than ACJB's obligations under the SMBC Funding Facility (see Note 5 to the consolidated financial statements).

(5)
Investments without an interest rate are non-income producing.

(6)
As defined in the Investment Company Act, the Company is deemed to be an "Affiliated Person" of a portfolio company because it owns 5% or more of the portfolio company's outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions during the year ended December 31, 2012 in which the issuer was an Affiliated company (but not a portfolio company that the Company ("Controls") are as follows:

 
Company
  Purchases
(cost)
  Redemptions
(cost)
  Sales
(cost)
  Interest
income
  Capital
structuring
service fees
  Dividend
income
  Other
income
  Net
realized
gains (losses)
  Net
unrealized
gains (losses)
 
 

10th Street, LLC

  $   $   $   $ 3,227   $   $   $   $   $ (54 )
 

Apple & Eve, LLC and US Juice Partners, LLC

  $ 500   $ 32,344   $   $ 3,393   $   $   $ 44   $   $ (1,928 )
 

Campus Management Corp. and Campus Management Acquisition Corp

  $   $   $   $   $   $   $   $   $ (4,508 )
 

Cast & Crew Payroll, LLC and Centerstage Co-Investors, L.L.C.

  $ 105,000   $   $   $ 167   $ 2,788   $ 36   $ 2   $   $  
 

CT Technologies Intermediate Holdings, Inc. and CT Technologies Holdings, LLC

  $   $ 188   $   $ 1,169   $   $   $   $   $ (3,898 )
 

Direct Buy Holdings, Inc. and Direct Buy Investors, LP

  $   $   $ 10,927   $   $   $   $   $ (10,927 ) $ 10,927  
 

The Dwyer Group

  $   $   $   $ 2,959   $ 162   $ 785   $ 85   $   $ 5,027  
 

ELC Acquisition Corp. and ELC Holdings Corporation

  $   $   $   $   $   $ 343   $ 6   $   $ 5,058  
 

Firstlight Financial Corporation

  $   $ 28,890   $ 84,153   $ 1,773   $   $   $ 200   $ (25,959 ) $ 43,321  
 

Insight Pharmaceuticals Corporation

  $   $ 5,636   $   $ 3,242   $   $   $ 171   $ 54   $ (1,649 )
 

Investor Group Services, LLC

  $   $   $   $   $   $ 160   $ 15   $   $ (148 )
 

Multi-Ad Services, Inc.

  $   $   $   $   $   $   $   $   $ 209  
 

Pillar Processing LLC and PHL Holding Co.

  $   $ 5,479   $   $   $   $   $ 9   $ 2   $ 1,110  
 

Soteria Imaging Services, LLC

  $   $ 441   $   $   $   $   $   $ 64   $ (584 )
 

VSS-Tranzact Holdings, LLC

  $   $   $ 867   $   $   $   $   $   $ 3,453  
 

UL Holding Co., LLC

  $ 44,532   $ 13,766   $   $ 5,837   $ 732   $   $ 197   $   $ (6,953 )
(7)
As defined in the Investment Company Act, the Company is deemed to be both an "Affiliated Person" and "Control" this portfolio company because it owns more than 25% of the portfolio company's outstanding voting securities or it has the power to exercise control over the management or policies of such

F-23


Table of Contents

 
Company
  Purchases   Redemptions
(cost)
  Sales
(cost)
  Interest
income
  Capital
structuring
service fees
  Dividend
income
  Other
income
  Net
realized
gains (losses)
  Net
unrealized
gains (losses)
 
 

AGILE Fund I, LLC

  $   $ 9   $   $   $   $ 1   $   $   $ (19 )
 

Allied Capital REIT, Inc.

  $   $   $ 375   $   $   $ 41   $   $ 147   $ (314 )
 

AllBridge Financial, LLC

  $   $   $   $   $   $   $   $   $ 1,801  
 

Aviation Properties Corporation

  $   $   $   $   $   $   $   $ 291   $  
 

AWTP, LLC

  $   $   $   $ 1,296   $   $   $ 50   $   $ 6,229  
 

BenefitMall Holdings, Inc.

  $   $ 40,326   $ 53,510   $ 2,440   $   $   $ 167   $ 12,546   $ (6,479 )
 

Callidus Capital Corporation

  $   $   $   $   $   $   $   $   $ 942  
 

Ciena Capital LLC

  $   $   $   $ 4,758   $   $   $   $   $ (1,436 )
 

Citipostal, Inc.

  $   $ 2,710   $   $ 7,715   $   $   $ 112   $   $ (18 )
 

Crescent Hotels & Resorts, LLC and affiliates

  $   $   $ 2,843   $ 20   $   $   $   $ (5,473 ) $ 5,595  
 

HCI Equity, LLC

  $   $   $   $   $   $   $   $   $ (108 )
 

HCP Acquisition Holdings, LLC

  $ 1,254   $   $   $   $   $   $   $   $ (6,177 )
 

Hot Light Brands, Inc.

  $   $ 2,282   $   $   $   $   $   $   $ (282 )
 

Huddle House Inc.

  $   $ 20,801   $   $ 678   $   $   $ 187   $ (2,291 ) $ 1,701  
 

Ivy Hill Asset Management, L.P.

  $ 58,085   $   $   $   $   $ 19,939   $   $   $ 41,576  
 

Ivy Hill Middle Market Credit Fund, Ltd.

  $   $ 25,000   $ 30,515   $ 3,943   $   $   $   $ 1,655   $ 1,515  
 

LVCG Holdings, LLC

  $   $   $ 6,600   $   $   $   $   $ (6,590 ) $ 6,600  
 

Making Memories Wholesale, Inc.

  $   $ 2,229   $   $   $   $   $   $ (12,281 ) $ 12,476  
 

MVL Group, Inc.

  $ 2,540   $ 25,607   $   $ 4,394   $   $   $   $   $ (27,867 )
 

Orion Foods, LLC

  $ 6,500   $ 5,142   $   $ 7,200   $   $   $ 806   $   $ (10,260 )
 

Senior Secured Loan Fund LLC*

  $ 269,967   $ 66,334   $   $ 184,701   $ 40,348   $   $ 17,865   $ 3,641   $ 833  
 

Stag-Parkway, Inc.

  $   $ 34,500   $ 3,090   $ 4,218   $   $ 733   $ 251   $ 29,998   $ (16,639 )
 

The Thymes, LLC

  $   $ 560   $   $   $   $ 481   $   $   $ 1,687  
(8)
Non-U.S. company or principal place of business outside the U.S. and as a result is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(9)
Excepted from the definition of investment company under Section 3(c) of the Investment Company Act and as a result is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(10)
In the first quarter of 2011, the staff of the Securities and Exchange Commission (the "Staff") informally communicated to certain business development companies the Staff's belief that certain entities, which would be classified as an "investment company" under the Investment Company Act but for the exception from the definition of "investment company" set forth in Rule 3a-7 promulgated under the Investment Company Act, could not be treated as eligible portfolio companies (as defined in Section 2(a)(46) of the Investment Company Act). Subsequently, in August 2011 the Securities and Exchange Commission issued a concept release (the "Concept Release") which states that "[a]s a general matter, the Commission presently does not believe that Rule 3a-7 issuers are the type of small, developing and financially troubled businesses in which Congress intended BDCs primarily to invest" and requested comment on whether or not a 3a-7 issuer should be considered an "eligible portfolio company". Ares Capital provided a comment letter in respect of the Concept Release and continues to believe that the language of Section 2(a)(46) of the Investment Company Act permits a business development company to treat as "eligible portfolio companies" entities that rely on the 3a-7 exception. However, given the current uncertainty in this area (including the language in the Concept Release) and subsequent discussions with the Staff, Ares Capital has, solely for purposes of calculating the composition of its portfolio pursuant to Section 55(a) of the Investment Company Act, identified these entities in the Company's schedule of investments as "non-qualifying assets" should the Staff ultimately disagree with Ares Capital's position.

(11)
Variable rate loans to the Company's portfolio companies bear interest at a rate that may be determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the Prime Rate), at the borrower's option, which reset annually (A), semi-annually (S), quarterly (Q), bi-monthly (B), monthly (M) or daily (D). For each such loan, the Company has provided the interest rate in effect on the date presented.

(12)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 5.00% on $16 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.

(13)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 2.50% on $12 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.

(14)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 4.00% on $65 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.

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(15)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 1.13% on $19 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.

(16)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 3.00% on $73 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.

(17)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 3.13% on $56 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.

(18)
The Company is entitled to receive a fixed fee upon the occurrence of certain events as defined in the credit agreement governing the Company's debt investment in the portfolio company. The fair value of such fee is included in the fair value of the debt investment.

(19)
Loan was on non-accrual status as of December 31, 2012.

(20)
Loan includes interest rate floor feature.

(21)
In addition to the interest earned based on the stated contractual interest rate of this security, the certificates entitle the holders thereof to receive a portion of the excess cash flow from the SSLP's loan portfolio, which may result in a return to the Company greater than the contractual stated interest rate.

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Table of Contents


ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of December 31, 2011
(dollar amounts in thousands)

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
Investment Funds and Vehicles                                      
AGILE Fund I, LLC(6)(8)   Investment partnership   Member interest (0.50% interest)         4/1/2010   $ 216   $ 132        
                                       
CIC Flex, LP(8)   Investment partnership   Limited partnership units (0.94 unit)         9/7/2007     2,533     3,130        
                                       
Covestia Capital Partners, LP(8)   Investment partnership   Limited partnership interest (47.00% interest)         6/17/2008     1,059     1,111        
                                       
Dynamic India Fund IV, LLC(8)   Investment company   Member interest (5.44% interest)         4/1/2010     4,822     4,728        
                                       
Firstlight Financial Corporation(5)(8)   Investment company   Senior subordinated loan ($71,542 par due 12/2016)   1.00% PIK     12/31/2006     71,269     67,947        
        Class A common stock (10,000 shares)         12/31/2006     10,000            
        Class B common stock (30,000 shares)         12/31/2006     30,000            
                                   
                        111,269     67,947        
                                       
HCI Equity, LLC(6)(7)(8)   Investment company   Member interest (100.00% interest)         4/1/2010     808     730        
                                       
Imperial Capital Private Opportunities, LP(8)   Investment partnership   Limited partnership interest (80.00% interest)         5/10/2007     6,643     5,120        
                                       
Ivy Hill Middle Market Credit Fund, Ltd.(6)(7)(8)   Investment company   Class B deferrable interest notes ($40,000 par due 11/2018)   6.25% (Libor + 6.00%/Q)     11/20/2007     40,000     38,000        
        Subordinated notes ($16 par due 11/2018)   15.00%     11/20/2007     15,515     16,000        
                                   
                        55,515     54,000        
                                       
Kodiak Funding, LP(8)   Investment partnership   Limited partnership interest (1.52% interest)         4/1/2010     868     823        
                                       
Novak Biddle Venture Partners III, L.P.(8)   Investment partnership   Limited partnership interest (2.47% interest)         4/1/2010     221     196        
                                       
Partnership Capital Growth Fund I, L.P.(8)   Investment partnership   Limited partnership interest (25.00% interest)         6/16/2006     1,791     3,726        
                                       
Partnership Capital Growth Fund III, L.P.(8)   Investment partnership   Limited partnership interest (2.50% interest)         10/5/2011     1,322     1,250        
                                       
Senior Secured Loan Fund LLC(6)(9)   Co-investment vehicle   Subordinated certificates ($1,044,977 par due 12/2020)   8.38% (Libor + 8.00%/Q)(17)     10/30/2009     1,034,254     1,059,178        
                                       
VSC Investors LLC(8)   Investment company   Membership interest (1.95% interest)         1/24/2008     1,139     997        
                                   
                        1,222,460     1,203,068     38.23 %
                                   
                                       
Healthcare—Services                                      
BenefitMall Holdings Inc.(6)   Employee benefits broker services company   Senior subordinated loan ($40,326 par due 6/2014)   18.00%     4/1/2010     40,326     40,326        
        Common stock (39,274,290 shares)         4/1/2010     53,510     59,990        
        Warrants         4/1/2010                
                                   
                        93,836     100,316        
                                       
CCS Group Holdings, LLC   Correctional facility healthcare operator   Class A units (601,937 units)         8/19/2010     602     1,158        
                                       
CT Technologies Intermediate Holdings, Inc. and CT Technologies Holdings LLC(5)   Healthcare analysis services   Senior secured loan ($7,245 par due 3/2017)   7.75% (Libor + 6.50%/Q)     3/15/2011     7,245     6,883 (2)(16)      

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
        Senior secured loan ($18 par due 3/2017)   8.75% (Base Rate + 5.50%/Q)     3/15/2011     18     17 (2)(16)      
        Senior secured loan ($7,642 par due 3/2017)   7.75% (Libor + 6.50%/Q)     3/15/2011     7,642     7,260 (3)(16)      
        Senior secured loan ($19 par due 3/2017)   8.75% (Base Rate + 5.50%/Q)     3/15/2011     19     18 (3)(16)      
        Class A common stock (9,679 shares)         6/15/2007     4,000     8,745        
        Class C common stock (1,546 shares)         6/15/2007         1,397        
                                   
                        18,924     24,320        
                                       
INC Research, Inc.   Pharmaceutical and biotechnology consulting services   Common stock (1,410,000 shares)         9/27/2010     1,512     1,403        
                                       
Magnacare Holdings, Inc., Magnacare Administrative Services, LLC, and Magnacare, LLC   Healthcare professional provider   Senior secured loan ($12,638 par due 9/2016)   9.75% (Libor + 8.75%/Q)     9/15/2010     12,638     12,638 (16)      
        Senior secured loan ($44,393 par due 9/2016)   9.75% (Libor + 8.75%/Q)     9/15/2010     44,393     44,393 (2)(16)      
        Senior secured loan ($8,257 par due 9/2016)   9.75% (Libor + 8.75%/Q)     9/15/2010     8,257     8,257 (3)(16)      
                                   
                        65,288     65,288        
                                       
MW Dental Holding Corp.   Dental services   Senior secured revolving loan ($1,700 par due 4/2017)   8.50% (Libor + 7.00%/M)     4/12/2011     1,700     1,700 (16)      
        Senior secured loan ($15,384 par due 4/2017)   8.50% (Libor + 7.00%/M)     4/12/2011     15,384     15,384 (16)      
        Senior secured loan ($49,750 par due 4/2017)   8.50% (Libor + 7.00%/M)     4/12/2011     49,750     49,750 (2)(16)      
        Senior secured loan ($2,686 par due 4/2017)   8.50% (Libor + 7.00%/M)     4/12/2011     2,686     2,686 (3)(16)      
                                   
                        69,520     69,520        
                                       
Napa Management Services Corporation   Anesthesia management services provider   Senior secured loan ($10,892 par due 4/2016)   8.50% (Libor + 7.00%/Q)     4/15/2011     10,563     10,892 (16)      
        Senior secured loan ($29,437 par due 4/2016)   8.50% (Libor + 7.00%/Q)     4/15/2011     29,437     29,437 (2)(16)      
        Senior secured loan ($7,752 par due 4/2016)   8.50% (Libor + 7.00%/Q)     4/15/2011     7,752     7,752 (3)(16)      
        Common units (5,000 units)         4/15/2011     5,000     5,513        
                                   
                        52,752     53,594        
                                       
NS Merger Sub. Inc. and NS Holdings, Inc.   Healthcare technology provider   Senior subordinated loan ($579 par due 6/2017)   13.50%     6/21/2010     579     579        
        Senior subordinated loan ($50,000 par due 6/2017)   13.50%     6/21/2010     50,000     50,000 (2)      
        Common stock (2,500,000 shares)         6/21/2010     2,500     2,985        
                                   
                        53,079     53,564        
                                       
OnCURE Medical Corp.   Radiation oncology care provider   Common stock (857,143 shares)         8/18/2006     3,000     3,073        
                                       
Passport Health Communications, Inc., Passport Holding Corp. and Prism Holding Corp.   Healthcare technology provider   Series A preferred stock (1,594,457 shares)         7/30/2008     11,156     9,218        
        Common stock (16,106 shares)         7/30/2008     100            
                                   
                        11,256     9,218        
                                       
PG Mergersub, Inc. and PGA Holdings, Inc.   Provider of patient surveys, management reports and national databases for the integrated healthcare delivery system   Senior secured loan ($9,108 par due 11/2015)   6.75% (Libor + 5.00%/Q)     11/3/2010     9,085     9,108 (3)(16)      

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
        Senior subordinated loan ($4,000 par due 3/2016)   12.50%     3/12/2008     3,956     4,000        
        Preferred stock (333 shares)         3/12/2008     125     15        
        Common stock (16,667 shares)         3/12/2008     167     754        
                                   
                        13,333     13,877        
PRA Holdings, Inc.   Drug testing services   Senior secured loan ($11,330 par due 12/2014)   4.56% (Libor + 4.00%/Q)     12/14/2007     11,034     11,103 (2)      
        Senior secured loan ($12,000 par due 12/2014)   4.56% (Libor + 4.00%/Q)     12/14/2007     11,682     11,760 (3)      
                                   
                        22,716     22,863        
                                       
RCHP, Inc.   Operator of general acute care hospitals   Junior secured loan ($15,000 par due 5/2019)   11.50% (Libor + 10.00%/Q)     11/4/2011     15,000     15,000 (16)      
        Junior secured loan ($50,000 par due 5/2019)   11.50% (Libor + 10.00%/Q)     11/4/2011     50,000     50,000 (2)(16)      
                                   
                        65,000     65,000        
                                       
Reed Group, Ltd.   Medical disability management services provider   Senior secured revolving loan ($1,650 par due 12/2013)         4/1/2010     1,497     1,402 (15)      
        Senior secured loan ($10,755 par due 12/2013)         4/1/2010     9,129     9,142 (15)      
        Senior secured loan ($20,777 par due 12/2013)         4/1/2010     15,918     2,431 (15)      
        Equity interests         4/1/2010     203            
                                   
                        26,747     12,975        
                                       
Soteria Imaging Services, LLC(5)   Outpatient medical imaging provider   Junior secured loan ($1,189 par due 11/2010)   14.50%     4/1/2010     1,057     808        
        Junior secured loan ($1,699 par due 11/2010)   12.50%     4/1/2010     1,529     1,154        
        Preferred member units (1,823,179 units)         4/1/2010                
                                   
                        2,586     1,962        
                                       
Sunquest Information Systems, Inc.   Laboratory software solutions provider   Junior secured loan ($75,000 par due 6/2017)   9.75% (Libor + 8.50%/Q)     12/16/2010     75,000     74,250 (16)      
        Junior secured loan ($50,000 par due 6/2017)   9.75% (Libor + 8.50%/Q)     12/16/2010     50,000     49,500 (2)(16)      
                                   
                        125,000     123,750        
                                       
U.S. Renal Care, Inc.   Dialysis provider   Senior secured loan ($7,444 par due 12/2016)   5.50% (Libor + 4.00%/Q)     6/9/2011     7,407     7,295 (16)      
        Senior subordinated loan ($50,569 par due 6/2018)   11.25% Cash, 2.00% PIK     5/24/2010     50,569     50,569 (2)      
                                   
                        57,976     57,864        
                                       
Vantage Oncology, Inc.   Radiation oncology care provider   Common stock (62,157 shares)         2/3/2011     4,670     5,057        
                                   
                        687,797     684,802     21.76 %
                                   
                                       
Education                                      
American Academy Holdings, LLC   Provider of education, training, certification, networking, and consulting services to medical coders and other healthcare professionals   Senior secured revolving loan ($100 par due 3/2016)   9.50% (Libor + 8.50%/Q)     3/18/2011     100     100 (16)      
        Senior secured loan ($26,199 par due 3/2016)   9.50% (Libor + 8.50%/Q)     3/18/2011     26,199     26,199 (16)      
        Senior secured loan ($53,468 par due 3/2016)   9.50% (Libor + 8.50%/Q)     3/18/2011     53,468     53,468 (2)(16)      
                                   
                        79,767     79,767        
                                       
Campus Management Corp. and Campus Management Acquisition Corp.(5)   Education software developer   Preferred stock (485,159 shares)         2/8/2008     10,520     11,096        
                                     

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
Community Education Centers, Inc.   Offender re-entry and in-prison treatment services provider   Senior secured loan ($17,857 par due 12/2014)   6.25% (Libor + 5.25%/Q)     12/10/2010     17,857     17,857 (16)      
        Junior secured loan ($31,835 par due 12/2015)   15.40% (Libor + 11.00% Cash, 4.00% PIK /Q)     12/10/2010     31,835     31,835        
        Junior secured loan ($9,582 par due 12/2015)   15.46% (Libor + 11.00% Cash, 4.00% PIK /Q)     12/10/2010     9,582     9,582        
        Warrants to purchase up to 578,427 shares         12/10/2010         258        
                                   
                        59,274     59,532        
                                       
eInstruction Corporation   Developer and manufacturer of educational software products   Junior secured loan ($17,000 par due 7/2014)   12.00% (Base Rate + 8.25%/M)     4/1/2010     15,396     12,410        
        Senior subordinated loan ($27,281 par due 1/2015)         4/1/2010     24,151     1,467 (15)      
        Common stock (2,406 shares)         4/1/2010     926            
                                   
                        40,473     13,877        
                                       
ELC Acquisition Corp., ELC Holdings Corporation, and Excelligence Learning Corporation(5)   Developer, manufacturer and distributor of educational products   Preferred stock (99,492 shares)         8/1/2011     10,149     9,154        
        Common stock (50,800 shares)         8/1/2011     51            
                                   
                        10,200     9,154        
                                       
Infilaw Holding, LLC   Operator of for-profit law schools   Senior secured loan ($29,925 par due 8/2016)   9.50% (Libor + 8.50%/Q)     8/25/2011     29,925     29,925 (2)(16)      
        Series A preferred units (131,000 units)   10.75% (Base Rate + 7.50%/Q)     8/25/2011     131,000     131,000 (16)      
                                   
                        160,925     160,925        
                                       
Instituto de Banca y Comercio, Inc. & Leeds IV Advisors, Inc.   Private school operator   Series B preferred stock (1,750,000 shares)         8/5/2010     5,000     6,153        
        Series C preferred stock (2,512,586 shares)         6/7/2010     689     303        
        Common stock (20 shares)         6/7/2010                
                                   
                        5,689     6,456        
                                       
JTC Education Holdings, Inc.   Postsecondary school operator   Senior secured revolving loan ($2,225 par due 12/2014)   12.75% (Base Rate + 9.50%/Q)     12/31/2009     2,225     2,225 (16)      
        Senior secured loan ($20,056 par due 12/2014)   12.50% (Libor + 9.50%/M)     12/31/2009     20,056     20,056 (16)      
        Senior secured loan ($9,714 par due 12/2014)   12.50% (Libor + 9.50%/M)     12/31/2009     9,714     9,714 (3)(16)      
                                   
                        31,995     31,995        
                                       
Lakeland Tours, LLC   Educational travel provider   Senior secured revolving loan ($3,750 par due 12/2016)   6.75% (Base Rate + 3.50%/Q)     10/4/2011     3,750     3,750 (16)      
        Senior secured loan ($64,338 par due 12/2016)   10.00% (Libor + 8.50%/Q)     10/4/2011     64,136     64,338 (13)(16)      
        Senior secured loan ($15,362 par due 12/2016)   6.00% (Libor + 4.50%/Q)     10/4/2011     15,314     15,362 (16)      
        Senior secured loan ($40,362 par due 12/2016)   10.00% (Libor + 8.50%/Q)     10/4/2011     40,231     40,362 (2)(13)(16)      
        Senior secured loan ($9,638 par due 12/2016)   6.00% (Libor + 4.50%/Q)     10/4/2011     9,606     9,638 (2)(16)      
        Common stock (5,000 shares)         10/4/2011     5,000     5,000        
                                   
                        138,037     138,450        
                                       
R3 Education, Inc. and EIC Acquisitions Corp.(7)   Medical school operator   Senior secured loan ($6,162 par due 4/2013)   9.00% (Libor + 6.00%/Q)     9/21/2007     6,162     11,508 (16)      
        Senior secured loan ($4,819 par due 4/2013)   9.00% (Libor + 6.00%/Q)     9/21/2007     4,819     8,996 (3)(16)      

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
        Senior secured loan ($6,509 par due 4/2013)   13.00% PIK     12/8/2009     4,030     12,149        
        Preferred stock (8,800 shares)         7/30/2008     2,200     1,650        
        Common membership interest (26.27% interest)         9/21/2007     15,800     23,207        
        Warrants to purchase up to 27,890 shares         12/8/2009                
                                   
                        33,011     57,510        
                                   
                        569,891     568,762     18.07 %
                                   
Restaurants and Food Services                                      
ADF Capital, Inc. & ADF Restaurant Group, LLC   Restaurant owner and operator   Senior secured revolving loan ($2,010 par due 11/2013)   6.50% (Libor + 3.50%/Q)     11/27/2006     2,010     2,010 (16)      
        Senior secured revolving loan ($258 par due 11/2013)   6.50% (Base Rate + 2.50%/Q)     11/27/2006     258     258 (16)      
        Senior secured loan ($7,305 par due 11/2013)   6.50% (Libor + 3.50%/Q)     11/27/2006     7,305     7,305 (16)      
        Senior secured loan ($64 par due 11/2013)   6.50% (Base Rate + 2.50%/Q)     11/27/2006     64     64 (16)      
        Senior secured loan ($11,277 par due 11/2014)   12.50% (Libor + 9.50%/Q)     11/27/2006     11,280     11,277 (2)(16)      
        Senior secured loan ($9,402 par due 11/2014)   12.50% (Libor + 9.50%/Q)     11/27/2006     9,402     9,402 (3)(16)      
        Promissory note ($14,897,360 par due 11/2016)         6/1/2006     14,886     10,905        
        Warrants to purchase up to 0.61 shares         6/1/2006                
                                   
                        45,205     41,221        
                                       
Huddle House, Inc.(6)   Restaurant owner and operator   Senior subordinated loan ($20,924 par due 12/2015)   12.00% Cash, 3.00% PIK     4/1/2010     20,641     18,939        
        Common stock (358,279 shares)         4/1/2010                
                                   
                        20,641     18,939        
                                       
Orion Foods, LLC (fka Hot Stuff Foods, LLC)(6)   Convenience food service retailer   Senior secured revolving loan ($3,300 par due 9/2014)   10.75% (Base Rate + 7.50%/M)     4/1/2010     3,300     3,300 (16)      
        Senior secured loan ($33,917 par due 9/2014)   10.00% (Libor + 8.50%/Q)     4/1/2010     33,917     33,917 (2)(16)      
        Junior secured loan ($37,552 par due 9/2014)   14.00%     4/1/2010     26,111     30,483        
        Preferred units (10,000 units)         10/28/2010                
        Class A common units (25,001 units)         4/1/2010                
        Class B common units (1,122,452 units)         4/1/2010                
                                   
                        63,328     67,700        
                                       
OTG Management, Inc.   Airport restaurant operator   Senior secured revolving loan ($1,875 par due 8/2016)   8.50% (Libor + 7.00%/Q)     8/9/2011     1,875     1,875 (16)      
        Senior secured revolving loan ($937 par due 8/2016)   9.25% (Base Rate + 6.00%/M)     8/9/2011     937     937 (16)      
        Senior secured loan ($17,187 par due 8/2016)   8.50% (Libor + 7.00%/Q)     8/9/2011     17,187     17,187 (16)      
        Junior secured loan ($29,285 par due 8/2016)   14.50% (Libor + 13.00%/M)     8/9/2011     29,285     29,285 (16)      
        Common units (3,000,000 units)         1/5/2011     3,000     2,610        
        Warrants to purchase up to 100,866 shares of common stock         6/19/2008     100     4,544        
                                   
                        52,384     56,438        
                                       
PMI Holdings, Inc.   Restaurant owner and operator   Senior secured revolving loan ($2,500 par due 5/2015)   10.00% (Libor + 8.00%/M)     5/5/2010     2,500     2,500 (16)      
        Senior secured revolving loan ($250 par due 5/2015)   10.25% (Base Rate + 7.00%/Q)     5/5/2010     250     250 (16)      
        Senior secured loan ($9,008 par due 5/2015)   10.00% (Libor + 8.00%/M)     5/5/2010     9,008     9,008 (2)(16)      

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
        Senior secured loan ($4 par due 5/2015)   10.25% (Base Rate + 7.00%/M)     5/5/2010     4     4 (2)(16)      
        Senior secured loan ($9,008 par due 5/2015)   10.00% (Libor + 8.00%/M)     5/5/2010     9,008     9,008 (3)(16)      
        Senior secured loan ($4 par due 5/2015)   10.25% (Base Rate + 7.00%/M)     5/5/2010     4     4 (3)(16)      
                                   
                        20,774     20,774        
                                       
S.B. Restaurant Company   Restaurant owner and operator   Senior secured loan ($34,575 par due 7/2012)   13.00% (Libor + 9.00% Cash, 2.00% PIK /Q)     4/1/2010     31,283     34,575 (16)      
        Preferred stock (46,690 shares)         4/1/2010         117        
        Warrants to purchase up to 257,429 shares of common stock         4/1/2010                
                                   
                        31,283     34,692        
                                       
Vistar Corporation and Wellspring Distribution Corp.   Food service distributor   Junior secured loan ($70,250 par due 5/2015)   11.00%     5/23/2008     68,885     70,250        
        Junior secured loan ($30,000 par due 5/2015)   11.00%     5/23/2008     30,000     30,000 (2)      
        Class A non-voting common stock (1,366,120 shares)         5/3/2008     7,500     6,211        
                                   
                        106,385     106,461        
                                   
                        340,000     346,225     11.00 %
                                   
                                       
Business Services                                      
Acentia (fka Interactive Technology Solutions, LLC)   IT services provider   Senior secured loan ($7,332 par due 6/2015)   8.75% (Base Rate + 5.50%/Q)     10/21/2010     7,332     7,332 (16)      
        Senior secured loan ($8,214 par due 6/2015)   8.75% (Base Rate + 5.50%/Q)     10/21/2010     8,214     8,214 (3)(16)      
                                   
                        15,546     15,546        
                                       
Aviation Properties Corporation(6)   Aviation services   Common stock (100 shares)         4/1/2010                
                                       
CIBT Investment Holdings, LLC   Expedited travel document processing services   Class A shares (2,500 shares)         12/15/2011     2,500     2,500        
                                       
CitiPostal Inc.(6)   Document storage and management services   Senior secured revolving loan ($3,200 par due 12/2013)   6.75% (Base Rate + 3.25%/Q)     4/1/2010     3,200     3,200 (16)      
        Senior secured loan ($499 par due 12/2013)   8.50% Cash, 5.50% PIK     4/1/2010     499     499        
        Senior secured loan ($51,161 par due 12/2013)   8.50% Cash, 5.50% PIK     4/1/2010     51,161     51,161 (2)      
        Senior subordinated loan ($14,698 par due 12/2015)         4/1/2010     13,038     1,574 (15)      
        Common stock (37,024 shares)         4/1/2010                
                                   
                        67,898     56,434        
                                       
Cornerstone Records Management, LLC   Physical records storage and management service provider   Senior secured loan ($18,377 par due 8/2016)   8.50% (Libor + 7.00%/Q)     8/12/2011     18,377     18,193 (16)      
                                       
Coverall North America, Inc.(6)   Commercial janitorial service provider   Subordinated notes ($9,386 par due 2/2016)   10.00% Cash, 2.00% PIK     2/22/2011     9,386     9,386        
                                       
Diversified Collections Services, Inc.   Collections services   Senior secured loan ($34,000 par due 9/2012)   14.00% (Base Rate+ 10.75%/M)     6/25/2010     34,000     34,000 (2)(16)      
        Senior secured loan ($5,263 par due 3/2012)   7.75% (Base Rate + 4.50%/M)     6/25/2010     5,263     5,263 (3)(16)      
        Senior secured loan ($2,000 par due 9/2012)   14.00% (Base Rate + 10.75%/M)     6/25/2010     2,000     2,000 (3)(16)      
        Preferred stock (14,927 shares)         5/18/2006     169     328        
        Common stock (478,816 shares)         4/1/2010     1,478     3,274        

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
        Common stock (114,004 shares)         2/5/2005     295     918        
                                   
                        43,205     45,783        
                                       
HCP Acquisition Holdings, LLC(6)   Healthcare compliance advisory services   Class A units (11,092,585 units)         6/26/2008     11,093     4,923        
                                       
Impact Innovations Group, LLC   IT consulting and outsourcing services   Member interest (50.00% interest)         4/1/2010         200        
                                       
Investor Group Services, LLC(5)   Business consulting for private equity and corporate clients   Limited liability company membership interest (10.00% interest)         6/22/2006         859        
                                       
Multi-Ad Services, Inc.(5)   Marketing services and software provider   Preferred units (1,725,280 units)         4/1/2010     788     1,828        
        Common units (1,725,280 units)         4/1/2010                
                                   
                        788     1,828        
MVL Group, Inc.(6)   Marketing research provider   Senior secured loan ($22,772 par due 7/2012)   12.00%     4/1/2010     22,772     22,772        
        Senior subordinated loan ($35,851 par due 7/2012)   12.00% Cash, 2.50% PIK     4/1/2010     35,283     33,844        
        Junior subordinated loan ($144 par due 7/2012)   10.00%     4/1/2010                
        Common stock (560,716 shares)         4/1/2010                
                                   
                        58,055     56,616        
                                       
Pillar Processing LLC and PHL Holding Co.(5)   Mortgage services   Senior secured loan ($7,375 par due 5/2014)         7/31/2008     7,375     1,250 (15)      
        Senior secured loan ($7,142 par due 11/2013)         11/20/2007     7,064     6,571 (15)      
        Senior secured loan ($4,458 par due 11/2013)         11/20/2007     4,409     4,101 (3)(15)      
        Common stock (85 shares)               3,768            
                                   
                        22,616     11,922        
                                       
Prommis Solutions, LLC, E-Default Services, LLC, Statewide Tax and Title Services, LLC & Statewide Publishing Services, LLC   Bankruptcy and foreclosure processing services   Senior subordinated loan ($44,926 par due 2/2014)         2/9/2007     43,819     5,273 (15)      
        Preferred units (30,000 units)         4/11/2006     3,000            
                                   
                        46,819     5,273        
                                       
Promo Works, LLC   Marketing services   Senior secured loan ($8,655 par due 12/2013)         4/1/2010     4,222     3,389 (15)      
                                       
R2 Acquisition Corp.   Marketing services   Common stock (250,000 shares)         5/29/2007     250     157        
                                       
Summit Business Media Parent Holding Company LLC   Business media consulting services   Limited liability company membership interest (45.98% interest)         5/20/2011         566        
                                       
Tradesmen International, Inc.   Construction labor support   Junior secured loan ($10,050 par due 5/2014)   13.00% Cash, 1.00% PIK     4/1/2010     7,872     10,050        
        Warrants to purchase up to 771,036 shares         4/1/2010         5,002        
                                   
                        7,872     15,052        
                                       
Tripwire, Inc.   IT security software provider   Senior secured loan ($30,000 par due 5/2018)   8.50% (Libor + 7.25%/Q)     5/23/2011     30,000     30,000 (16)      
        Senior secured loan ($50,000 par due 5/2018)   8.50% (Libor + 7.25%/Q)     5/23/2011     50,000     50,000 (2)(16)      
        Class B common stock (2,655,638 shares)         5/23/2011     30     38        
        Class A common stock (2,970 shares)         5/23/2011     2,970     3,754        
                                   
                        83,000     83,792        
                                     

F-32


Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
Venturehouse-Cibernet Investors, LLC   Financial settlement services for intercarrier wireless roaming   Equity interest         4/1/2010                
                                       
VSS-Tranzact Holdings, LLC(5)   Management consulting services   Series B preferred units (854 units)         11/7/2011     867     768        
        Common membership interest (8.54% interest)         10/26/2007     10,204     200        
        Warrants to purchase up to 4,206 units         11/7/2011         98        
                                   
                        11,071     1,066        
                                   
                        402,698     333,485     10.60 %
                                   
                                       
Financial Services                                      
AllBridge Financial, LLC(6)   Asset management services   Equity interests         4/1/2010     11,395     11,733        
                                       
Callidus Capital Corporation(6)   Asset management services   Common stock (100 shares)         4/1/2010     3,000     776        
                                       
Ciena Capital LLC(6)   Real estate and small business loan servicer   Senior secured revolving loan ($14,000 par due 12/2013)   6.00%     11/29/2010     14,000     14,000        
        Senior secured loan ($32,000 par due 12/2015)   12.00%     11/29/2010     32,000     32,000        
        Equity interests         11/29/2010     53,374     20,051        
                                   
                        99,374     66,051        
                                       
Commercial Credit Group, Inc.   Commercial equipment finance and leasing company   Senior subordinated loan ($19,500 par due 6/2015)   15.00%     4/1/2010     19,500     19,500        
                                       
Cook Inlet Alternative Risk, LLC   Risk management services   Senior subordinated loan ($3,750 par due 9/2015)   9.00%     9/30/2011     3,750     3,550        
                                       
Financial Pacific Company   Commercial finance leasing   Preferred stock (6,500 shares)   8.00% PIK     10/13/2010     6,500     7,822        
        Common stock (650,000 shares)         10/13/2010                
                                   
                        6,500     7,822        
                                       
Imperial Capital Group, LLC   Investment services   Class A common units (7,710 units)         5/10/2007     14,997     20,445        
        2006 Class B common units (2,526 units)         5/10/2007     3     4        
        2007 Class B common units (315 units)         5/10/2007                
                                   
                        15,000     20,449        
                                       
Ivy Hill Asset Management, L.P.(6)(8)   Asset management services   Member interest (100.00% interest)         6/15/2009     112,876     194,597        
                                   
                        271,395     324,478     10.31 %
                                   
                                       
Consumer Products— Non-durable                                      
Augusta Sportswear, Inc.   Manufacturer of athletic apparel   Senior secured loan ($26 par due 7/2015)   9.50% (Base Rate + 6.25%/Q)     9/3/2010     26     26 (3)(16)      
        Senior secured loan ($8,819 par due 7/2015)   8.50% (Libor + 7.50%/Q)     9/3/2010     8,819     8,819(3 )(16)      
                                   
                        8,845     8,845        
                                       
Gilchrist & Soames, Inc.   Personal care manufacturer   Senior secured loan ($21,941 par due 10/2013)   13.44%     4/1/2010     21,435     21,941        
                                       
Implus Footcare, LLC   Provider of footwear and other accessories   Preferred stock (455 shares)   6.00% PIK     10/31/2011     4,591     4,591        

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
        Common stock (455 shares)         10/31/2011     455     455        
                                   
                        5,046     5,046        
                                       
Insight Pharmaceuticals Corporation(5)   OTC drug products manufacturer   Junior secured loan ($25,000 par due 8/2017)   13.25% (Libor + 11.75%/Q)     8/26/2011     24,740     24,000 (2)(16)      
        Class A common stock (155,000 shares)         8/26/2011     6,035     9,559        
        Class B common stock (155,000 shares)         8/26/2011     6,035     9,559        
                                   
                        36,810     43,118        
                                       
Making Memories Wholesale, Inc.(6)   Scrapbooking branded products manufacturer   Senior secured revolving loan ($2,250 par due 8/2014)         8/21/2009     2,229     963 (15)      
        Senior secured loan ($9,625 par due 8/2014)         8/21/2009     7,193     (15)      
        Senior secured loan ($5,973 par due 8/2014)         8/21/2009     3,874     (15)      
        Common stock (100 shares)         8/21/2009                
                                   
                        13,296     963        
                                       
Matrixx Initiatives, Inc. and Wonder Holdings Acquisition Corp.   Developer and marketer of over-the-counter healthcare products   Senior secured revolving loan ($10,000 par due 6/2016)   13.00% (Libor + 12.00%/M)     6/30/2011     10,000     9,700 (16)      
        Senior secured loan ($41,437 par due 6/2016)   13.00% (Libor + 12.00%/Q)     6/30/2011     41,178     40,194 (2)(16)      
        Warrants to purchase up to 1,654,678 shares of common stock         7/27/2011                
        Warrants to purchase up to 1,489 shares of preferred stock         7/27/2011         1,504        
                                   
                        51,178     51,398        
                                       
The Step2 Company, LLC   Toy manufacturer   Junior secured loan ($27,000 par due 4/2015)   10.00%     4/1/2010     25,764     27,000        
        Junior secured loan ($31,178 par due 4/2015)   10.00% Cash, 5.00% PIK     4/1/2010     29,879     28,060        
        Common units (1,116,879 units)         4/1/2010     24     25        
        Warrants to purchase up to 3,157,895 units         4/1/2010         72        
                                   
                        55,667     55,157        
                                       
The Thymes, LLC(6)   Cosmetic products manufacturer   Preferred units (6,283 units)   8.00% PIK     6/21/2007     6,111     6,420        
        Common units (5,400 units)         6/21/2007         754        
                                   
                        6,111     7,174        
                                       
Woodstream Corporation   Pet products manufacturer   Senior subordinated loan ($45,000 par due 2/2015)   12.00%     1/22/2010     40,444     44,100        
        Common stock (4,254 shares)         1/22/2010     1,222     2,280        
                                   
                        41,666     46,380        
                                   
                        240,054     240,022     7.63 %
                                   
                                       
Containers—Packaging                                      
ICSH, Inc.   Industrial container manufacturer, reconditioner and servicer   Senior secured loan ($71,318 par due 8/2016)   8.00% (Libor + 7.00%/Q)     8/31/2011     71,318     69,891 (16)      
        Senior secured loan ($49,873 par due 8/2016)   8.00% (Libor + 7.00%/Q)     8/31/2011     49,873     48,875 (2)(16)      
                                   
                        121,191     118,766        
                                       
Microstar Logistics LLC   Keg management solutions provider   Junior secured loan ($60,000 par due 8/2016)   10.00% (Libor + 9.00%/Q)     8/5/2011     60,000     60,000 (16)      

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
        Junior secured loan ($50,000 par due 8/2016)   10.00% (Libor + 9.00%/Q)     8/5/2011     50,000     50,000 (2)(16)      
                                   
                        110,000     110,000        
                                   
                        231,191     228,766     7.27 %
                                   
                                       
Aerospace and Defense                                      
AP Global Holdings, Inc.   Safety and security equipment manufacturer   Senior secured loan ($134,475 par due 7/2017)   7.25% (Libor + 5.75%/M)     7/22/2011     134,475     132,794 (14)(16)      
        Senior secured loan ($49,875 par due 7/2017)   7.25% (Libor + 5.75%/M)     7/22/2011     49,875     49,252 (2)(16)      
                                   
                        184,350     182,046        
                                       
Wyle Laboratories, Inc. and Wyle Holdings, Inc.   Provider of specialized engineering, scientific and technical services   Senior preferred stock (775 shares)   8.00% PIK     1/17/2008     95     95        
        Common stock (1,885,195 shares)         1/17/2008     2,291     1,920        
                                   
                        2,386     2,015        
                                   
                        186,736     184,061     5.85 %
                                   
                                       
Manufacturing                                      
Component Hardware Group, Inc.   Commercial equipment   Junior secured loan ($3,106 par due 12/2014)   7.00% Cash, 3.00% PIK     8/4/2010     3,106     3,106        
        Senior subordinated loan ($10,596 par due 12/2014)   7.50% Cash, 5.00% PIK     4/1/2010     6,932     10,596        
        Warrants to purchase up to 1,462,500 shares of common stock         8/4/2010         3,181        
                                   
                        10,038     16,883        
                                       
HOPPY Holdings Corp.   Automotive and recreational vehicle aftermarket products   Senior secured loan ($13,988 par due 6/2016)   5.00% (Libor + 3.75%/M)     6/3/2011     13,988     13,289 (16)      
                                       
MWI Holdings, Inc.   Provider of highly engineered springs, fasteners, and other precision components   Senior secured loan ($29,914 par due 6/2017)   10.00% (Libor + 8.00%/Q)     6/15/2011     29,914     29,914 (16)      
                                       
NetShape Technologies, Inc.   Metal precision engineered components manufacturer   Senior secured revolving loan ($91 par due 2/2013)   3.96% (Libor + 3.75%/M)     4/1/2010     44     69        
        Senior secured revolving loan ($778 par due 2/2013)   4.33% (Libor + 3.75%/Q)     4/1/2010     374     587        
                                   
                        418     656        
                                       
Protective Industries, Inc.   Plastic protection products   Senior secured loan ($14 par due 5/2017)   6.25% (Base Rate + 3.00%/M)     5/23/2011     14     14 (16)      
        Senior secured loan ($5,589 par due 5/2017)   5.75% (Libor + 4.25%/M)     5/23/2011     5,589     5,421 (16)      
        Senior subordinated loan ($720 par due 5/2018)   8.00% Cash, 7.25% PIK     5/23/2011     720     720        
        Preferred stock (2,379,361 shares)         5/23/2011     2,307     3,101        
                                   
                        8,630     9,256        
                                       
Saw Mill PCG Partners LLC   Metal precision engineered components   Common units (1,000 units)         1/30/2007     1,000            
                                       
Sigma International Group, Inc.(7)   Water treatment parts   Junior secured loan ($4,048 par due 4/2014)   10.00% (Libor + 3.50% Cash, 5.00% PIK /A)     7/8/2011     4,048     3,036 (16)      
                                       
WP CPP Holdings, LLC   Precision engineered castings   Senior secured loan ($20,822 par due 10/2017)   8.50% (Libor + 7.00%/M)     10/11/2011     20,720     20,406 (16)      
        Senior secured loan ($50,000 par due 10/2017)   8.50% (Libor + 7.00%/M)     10/11/2011     49,745     49,000 (2)(16)      

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
                                   
                        70,465     69,406        
                                   
                        138,501     142,440     4.53 %
                                   
                                       
Services—Other                                      
The Dwyer Group(5)   Operator of multiple franchise concepts primarily related to home maintenance or repairs   Senior subordinated loan ($17,100 par due 12/2016)   14.50%     12/22/2010     17,100     17,100        
        Series A preferred units (13,292,377 units)   8.00% PIK     12/22/2010     14,413     17,011        
                                   
                        31,513     34,111        
                                       
Wash Multifamily Laundry Systems, LLC (fka Web Services Company, LLC)   Laundry service and equipment provider   Senior secured loan ($4,850 par due 8/2014)   7.00% (Base Rate + 3.75%/Q)     6/15/2009     4,723     4,850 (3)(16)      
        Junior secured loan ($36,900 par due 8/2015)   10.88% (Libor + 9.38%/Q)     1/25/2011     36,900     36,900 (16)      
        Junior secured loan ($50,000 par due 8/2015)   10.88% (Libor + 9.38%/Q)     1/25/2011     50,000     50,000 (2)(16)      
        Junior secured loan ($3,100 par due 8/2015)   10.88% (Libor + 9.38%/Q)     1/25/2011     3,100     3,100 (3)(16)      
                                   
                        94,723     94,850        
                                   
                        126,236     128,961     4.10 %
                                   
                                       
Telecommunications                                      
American Broadband Communications, LLC, American Broadband Holding Company and Cameron Holdings of NC, Inc.   Broadband communication services   Senior secured loan ($8,754 par due 9/2013)   7.50% (Libor + 5.50%/Q)     9/1/2010     8,754     8,754 (3)(16)      
        Senior subordinated loan ($10,529 par due 11/2014)   12.00% Cash, 2.00% PIK     11/7/2007     10,529     10,529        
        Senior subordinated loan ($22,150 par due 11/2014)   12.00% Cash, 4.00% PIK     9/1/2010     22,150     22,150        
        Senior subordinated loan ($33,429 par due 11/2014)   12.00% Cash, 2.00% PIK     2/8/2008     33,429     33,429 (2)      
        Warrants to purchase up to 378 shares         11/7/2007         6,286        
        Warrants to purchase up to 200 shares         9/1/2010         3,326        
                                   
                        74,862     84,474        
                                       
Dialog Telecom LLC   Broadband communication services   Senior secured loan ($16,412 par due 12/2012)   12.08% (Libor + 7.50% Cash, 4.00% PIK /Q)     6/20/2011     16,412     16,412 (16)      
                                       
Startec Equity, LLC(6)   Communication services   Member interest         4/1/2010                
                                   
                        91,274     100,886     3.21 %
                                   
                                       
Grocery                                      
Grocery Outlet Inc.   Value grocery retailer   Senior secured revolving loan ($3,100 par due 12/2017)   11.25% (Base Rate + 8.00%/Q)     12/15/2011     3,100     3,100 (16)      
        Senior secured loan ($91,500 par due 12/2017)   10.50% (Libor + 9.00%/Q)     12/15/2011     91,500     91,500 (16)      
                                   
                        94,600     94,600        
                                   
                        94,600     94,600     3.01 %
                                   
                                       
Retail                                      
Direct Buy Holdings, Inc. and Direct Buy Investors, LP(5)   Membership based buying club franchisor and operator   Limited partnership interest (66,667 shares)         4/1/2010     2,594            
        Limited partnership interest (83,333 shares)         11/30/2007     8,333            
                                   

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
                        10,927            
                                       
Fulton Holdings Corp.   Airport restaurant operator   Senior secured loan ($40,000 par due 5/2016)   12.50%     5/28/2010     40,000     40,000 (2)(11)      
        Common stock (19,672 shares)         5/28/2010     1,967     1,618        
                                   
                        41,967     41,618        
                                       
Savers, Inc. and SAI Acquisition Corporation   For-profit thrift retailer   Common stock (1,218,481 shares)         8/8/2006     4,909     12,556        
                                       
Things Remembered Inc. and TRM Holdings Corporation   Personalized gifts retailer   Senior secured loan ($21,433 par due 3/2014)   9.00% (Base Rate + 7.00%/M)     9/28/2006     21,414     21,433 (16)      
        Senior secured loan ($8,226 par due 3/2014)   9.00% (Base Rate + 7.00%/M)     9/28/2006     8,302     8,226 (3)(16)      
        Class B Preferred stock (73 shares)         3/19/2009         2,056        
        Preferred stock (80 shares)         9/28/2006     1,800     2,249        
        Common stock (800 shares)         9/28/2006     200     2,172        
        Warrants to purchase up to 859 shares of preferred stock         3/19/2009         2,324        
                                   
                        31,716     38,460        
                                   
                        89,519     92,634     2.94 %
                                   
                                       
Energy                                      
La Paloma Generating Company, LLC   Natural gas fired, combined cycle plant operator   Junior secured loan ($59,000 par due 8/2018)   10.25% (Libor + 8.75%/Q)     8/9/2011     57,775     56,050 (16)      
                                       
USG Nevada LLC   Geothermal, renewable energy, developer for electrical power and direct uses   Junior secured loan ($7,500 par due 6/2012)   3.94% (Libor + 3.50%/Q)     11/9/2011     7,500     7,500        
                                   
                        65,275     63,550     2.02 %
                                   
                                       
Automotive Services                                      
Driven Holdings, LLC   Automotive aftermarket car care franchisor   Preferred stock (247,500 units)         12/16/2011     2,475     2,475        
        Common stock (25,000 units)         12/16/2011     25     25        
                                   
                        2,500     2,500        
                                       
Stag-Parkway, Inc.(6)   Automotive aftermarket components supplier   Senior secured loan ($34,500 par due 12/2014)   12.50% (Libor + 11.00%/Q)     9/30/2010     34,500     34,500 (16)      
        Preferred stock (4,200 shares)   16.50% PIK     9/30/2010     2,368     4,200        
        Common stock (10,200 shares)         9/30/2010         14,807        
                                   
                        36,868     53,507        
                                   
                        39,368     56,007     1.78 %
                                   
                                       
Commercial Real Estate Finance                                      
10th Street, LLC(5)   Real estate holding company   Senior subordinated loan ($24,213 par due 11/2014)   8.93% Cash, 4.07% PIK     4/1/2010     24,213     24,213        
        Member interest (10.00% interest)         4/1/2010     594     529        
        Option (25,000 units)         4/1/2010     25     25        
                                   
                        24,832     24,767        
                                       
Allied Capital REIT, Inc.(6)   Real estate investment trust   Real estate equity interests         4/1/2010     50     50        
        Real estate equity interests         4/1/2010     325     639        
                                   
                        375     689        
                                       
American Commercial Coatings, Inc.   Real estate property   Commercial mortgage loan ($2,000 par due 12/2025)         4/1/2010     1,611     1,967 (15)      
                                     

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Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
Aquila Binks Forest Development, LLC   Real estate developer   Commercial mortgage loan ($13,477 par due 12/2014)         4/1/2010     11,900     4,013 (15)      
        Real estate equity interests         4/1/2010                
                                   
                        11,900     4,013        
                                       
Cleveland East Equity, LLC   Hotel operator   Real estate equity interests         4/1/2010     1,026     2,507        
                                       
Commons R-3, LLC   Real estate developer   Real estate equity interests         4/1/2010                
                                       
Crescent Hotels & Resorts, LLC and affiliates(6)   Hotel operator   Senior secured loan ($433 par due 6/2010)   10.00%     4/1/2010     433     444        
        Senior subordinated loan ($9,071 par due 1/2012)         4/1/2010     1,475     138 (15)      
        Senior subordinated loan ($9,399 par due 6/2017)         4/1/2010     2,410     241 (15)      
        Senior subordinated loan ($10,967 par due 9/2012)         4/1/2010     2,051     202 (15)      
        Senior subordinated loan ($261 par due 3/2013)         4/1/2010     263     9 (15)      
        Senior subordinated loan ($2,236 par due 9/2011)         4/1/2010         (15)      
        Preferred equity interest         4/1/2010         39        
        Common equity interest         4/1/2010     35            
                                   
                        6,667     1,073        
                                       
Hot Light Brands, Inc.(6)   Real estate holding company   Senior secured loan ($35,239 par due 2/2011)         4/1/2010     3,945     3,692 (15)      
        Common stock (93,500 shares)         4/1/2010                
                                   
                        3,945     3,692        
                                       
NPH, Inc.   Hotel property   Real estate equity interests         4/1/2010     5,291     7,959        
                                   
                        55,647     46,667     1.48 %
                                   
                                       
Food and Beverage                                      
Apple & Eve, LLC and US Juice Partners, LLC(5)   Juice manufacturer   Senior secured revolving loan ($2,000 par due 10/2013)   12.00% (Libor + 9.00%/M)     10/5/2007     2,000     2,000 (16)      
        Senior secured revolving loan ($2,500 par due 10/2013)   12.00% (Base Rate + 8.00%/Q)     10/5/2007     2,500     2,500 (16)      
        Senior secured loan ($13,325 par due 10/2013)   12.00% (Libor + 9.00%/M)     10/5/2007     13,325     13,325 (16)      
        Senior secured loan ($14,019 par due 10/2013)   12.00% (Libor + 9.00%/M)     10/5/2007     14,019     14,019 (3)(16)      
        Senior units (50,000 units)         10/5/2007     5,000     3,326        
                                   
                        36,844     35,170        
                                       
Charter Baking Company, Inc.   Baked goods manufacturer   Senior subordinated loan ($7,615 par due 2/2013)   16.00% PIK     2/6/2008     7,615     7,615        
        Preferred stock (6,258 shares)         9/1/2006     2,500     1,519        
                                   
                        10,115     9,134        
                                       
Distant Lands Trading Co.   Coffee manufacturer   Class A common stock (1,294 shares)         4/1/2010     980     568        
        Class A-1 common stock (2,157 shares)         4/1/2010                
                                   
                        980     568        
                                   
                        47,939     44,872     1.43 %
                                   
                                       
Consumer Products—Durable                                      
Bushnell Inc.   Sports optics manufacturer   Junior secured loan ($41,325 par due 2/2014)   7.08% (Libor + 6.50%/Q)     4/1/2010     33,467     37,192        
                                   
                        33,467     37,192     1.18 %
                                   
                                       
Transportation                                      
PODS Funding Corp.   Storage and warehousing   Junior subordinated loan ($37,020 par due 5/2017)   10.50% Cash, 5.00% PIK     11/29/2011     37,020     37,020        

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
                                       
United Road Towing, Inc.   Towing company   Warrants to purchase up to 607 shares         4/1/2010                
                                   
                        37,020     37,020     1.18 %
                                   
                                       
Environmental Services                                      
AWTP, LLC(6)   Water treatment services   Junior secured loan ($4,109 par due 6/2015)   5.00% Cash, 5.00% PIK     4/18/2011     4,109     4,109        
        Junior secured loan ($896 par due 6/2015)   15.00% PIK     4/18/2011     896     623        
        Junior secured loan ($4,518 par due 6/2015)   15.00% PIK     4/18/2011     4,518     3,142 (3)      
        Membership interests (90% interest)         4/18/2011                
                                   
                        9,523     7,874        
                                       
RE Community Holdings II, Inc.and Pegasus Community Energy, LLC.   Operator of municipal recycling facilities   Preferred stock (1,000 shares)   12.50% PIK     3/1/2011     8,311     8,283        
                                       
Waste Pro USA, Inc   Waste management services   Preferred Class A common equity (611,615 shares)         11/9/2006     12,263     20,540        
                                   
                        30,097     36,697     1.17 %
                                   
                                       
Oil and Gas                                      
Geotrace Technologies, Inc.   Reservoir processing, and development   Warrants to purchase up to 69,978 shares of common stock         4/1/2010     88            
        Warrants to purchase up to 210,453 shares of preferred stock         4/1/2010     2,805     172        
                                   
                        2,893     172        
                                       
UL Holding Co., LLC   Petroleum product manufacturer   Junior secured loan ($2,098 par due 12/2012)   9.31% (Libor + 8.88%/Q)     12/24/2007     2,098     2,098        
        Junior secured loan ($4,073 par due 12/2012)   14.00%     12/24/2007     4,073     4,073        
        Junior secured loan ($2,000 par due 12/2012)   9.45% (Libor + 8.88%/Q)     6/17/2011     2,000     2,000        
        Junior secured loan ($5,000 par due 12/2012)   15.00%     8/13/2010     5,000     5,000        
        Junior secured loan ($2,926 par due 12/2012)   14.00%     12/24/2007     2,926     2,926 (2)      
        Junior secured loan ($835 par due 12/2012)   9.31% (Libor + 8.88%/Q)     12/24/2007     835     835 (3)      
        Junior secured loan ($1,801 par due 12/2012)   14.00%     12/24/2007     1,801     1,801 (3)      
        Junior secured loan ($10,728 par due 12/2012)   9.32% (Libor + 8.88%/Q)     12/24/2007     10,728     10,728 (3)      
        Class A common units (8,982 units)         6/17/2011     90     46        
        Class B-4 common units (50,000 units)         4/25/2008     500     255        
        Class B-5 common units (499,000 units)         6/17/2011     4,990     2,541        
        Class C common units (549,491 units)         4/25/2008         2,798        
                                   
                        35,041     35,101        
                                   
                        37,934     35,273     1.12 %
                                   
                                       

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Table of Contents

Company(1)
  Business Description   Investment   Interest(4)(10)   Acquisition
Date
  Amortized
Cost
  Fair
Value
  Percentage
of Net
Assets
 
Chemicals, Plastic and Rubber                                      
Emerald Performance Materials, LLC   Polymers and performance materials manufacturer   Senior secured loan ($3,603 par due 11/2013)   13.00% Cash, 3.00% PIK     5/22/2006     3,603     3,603        
        Senior secured loan ($9,967 par due 11/2013)   10.25% (Base Rate + 3.50%/M)     6/29/2011     9,967     9,967 (16)      
        Senior secured loan ($6,639 par due 11/2013)   10.00% (Libor + 6.00%/M)     6/29/2011     6,639     6,639 (16)      
        Senior secured loan ($5,246 par due 11/2013)   13.00% Cash, 3.00% PIK     5/22/2006     5,246     5,246 (2)      
        Senior secured loan ($8,227 par due 11/2013)   8.25% (Libor + 4.25%/M)     5/22/2006     8,227     8,227 (3)(16)      
        Senior secured loan ($915 par due 11/2013)   10.25% (Base Rate + 3.50%/M)     6/29/2011     915     915 (3)(16)      
        Senior secured loan ($610 par due 11/2013)   10.00% (Libor + 6.00%/M)     6/29/2011     610     610 (3)(16)      
                                   
                        35,207     35,207        
                                   
                        35,207     35,207     1.12 %
                                   
                                       
Printing, Publishing and Media                                      
EarthColor, Inc.(6)   Printing management services   Common stock (89,435 shares)         4/1/2010                
                                       
LVCG Holdings LLC(6)   Commercial printer   Membership interests (56.53% interest)         10/12/2007     6,600            
                                       
National Print Group, Inc.   Printing management services   Senior secured revolving loan ($1,141 par due 10/2013)   9.00% (Libor + 6.00%/M)     3/2/2006     1,141     1,027 (16)      
        Senior secured revolving loan ($1,031 par due 10/2013)   9.00% (Base Rate + 5.00%/M)     3/2/2006     1,031     928 (16)      
        Senior secured loan ($20 par due 10/2013)   10.00% (Libor + 6.00% Cash, 1.00% PIK/Q)     3/2/2006     20     18 (16)      
        Senior secured loan ($7,520 par due 10/2013)   10.00% (Libor + 6.00% Cash, 1.00% PIK/Q)     3/2/2006     7,217     6,919 (3)(16)      
        Senior secured loan ($181 par due 10/2013)   10.00% (Base Rate + 5.00% Cash, 1.00% PIK/M)     3/2/2006     174     166 (3)(16)      
        Preferred stock (9,344 shares)         3/2/2006     2,000            
                                   
                        11,583     9,058        
                                       
The Teaching Company, LLC and The Teaching Company Holdings, Inc.   Education publications provider   Preferred stock (21,711 shares)         9/29/2006     2,171     5,339        
        Common stock (15,393 shares)         9/29/2006     3     13        
                                   
                        2,174     5,352        
                                   
                        20,357     14,410     0.46 %
                                   
                                       
Health Clubs                                      
Athletic Club Holdings, Inc.   Premier health club operator   Senior secured loan ($11,500 par due 10/2013)   4.80% (Libor + 4.50%/M)     10/11/2007     11,500     11,270 (3)(12)      
                                   
                        11,500     11,270     0.36 %
                                   
                                       
Wholesale Distribution                                      
BECO Holding Company, Inc.   Wholesale distributor of first response fire protection equipment and related parts   Common stock (25,000 shares)         7/30/2010     2,500     3,151        
                                   
                        2,500     3,151     0.10 %
                                   
                      $ 5,108,663   $ 5,094,506     161.87 %
                                   

(1)
Other than the Company's investments listed in footnote 6 below, the Company does not "Control" any of its portfolio companies, for purposes of the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the "Investment Company Act"). In general, under the Investment Company Act, the Company would "Control" a portfolio company if it owned more than 25% of its outstanding voting securities (i.e., securities with the right to elect directors) and/or had the power to exercise control over the management or policies of such portfolio company. All of the Company's portfolio company investments, which as of December 31, 2011 represented 162% of the Company's net assets or 95% of the Company's total assets, are subject to legal restrictions on sales.

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Table of Contents


The investments not otherwise pledged as collateral for the Debt Securitization or the Revolving Funding Facility by the respective obligors thereunder are pledged as collateral by the Company and certain of its other subsidiaries for the Revolving Credit Facility (see Note 5 to the consolidated financial statements) (except for a limited number of exceptions as provided in the credit agreement governing the Revolving Credit Facility).

(2)
These assets are owned by the Company's consolidated subsidiary, Ares Capital CP, are pledged as collateral for the Revolving Funding Facility and, as a result, are not directly available to the creditors of the Company to satisfy any obligations of the Company other than Ares Capital CP's obligations under the Revolving Funding Facility (see Note 5 to the consolidated financial statements).

(3)
Pledged as collateral for the Debt Securitization.

(4)
Investments without an interest rate are non-income producing.

(5)
As defined in the Investment Company Act, the Company is deemed to be an "Affiliated Person" of a portfolio company because the Company owns 5% or more of the portfolio company's outstanding voting securities or the Company has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions during the year ended December 31, 2011 in which the issuer was an Affiliated company (but not a portfolio company that the Company "Controls") are as follows:

Company
  Purchases   Redemptions
(cost)
  Sales
(cost)
  Interest
income
  Capital
structuring
service fees
  Dividend
Income
  Other
income
  Net realized
gains
(losses)
  Net
unrealized
gains (losses)
 

10th Street, LLC

  $   $   $   $ 3,096   $   $   $   $   $ (48 )

Apple & Eve, LLC and US Juice Partners, LLC

  $ 5,500   $ 3,918   $   $ 3,478   $   $   $ 35   $   $ (1,709 )

BB&T Capital Partners/Windsor Mezzanine Fund, LLC

  $   $ 2,640   $ 9,260   $   $   $   $   $ 3,902   $ (3,804 )

Carador, PLC

  $   $   $ 9,033   $   $   $ 160   $   $ (2,989 ) $ 3,700  

Campus Management Corp. and Campus Management Acquisition Corp.

  $ 571   $   $   $   $   $   $   $   $ (3,308 )

CT Technologies Intermediate Holdings, Inc. and CT Technologies Holdings, LLC

  $   $ 75   $ 8,763   $ 943   $   $ 2,590   $   $ 1,561   $ (1,364 )

Direct Buy Holdings, Inc. and Direct Buy Investors, LP

  $ 38,800   $ 80,315   $ 40,695   $ 2,637   $   $   $   $ (17,661 ) $ (9,356 )

Driven Brands, Inc.

  $   $ 3,569   $ 4,939   $ 255   $   $   $   $ 4,510   $ (1,473 )

DSI Renal, Inc.

  $   $ 77,774   $ 19,684   $ 7,919   $   $   $ 33   $ 27,522   $ (21,565 )

The Dwyer Group

  $   $   $ 11,708   $ 3,479   $   $ 1,135   $   $   $ 2,598  

ELC Acquisition Corp., ELC Holdings Corporation, and Excelligence Learning Corporation

  $ 137,200   $ 135,661   $   $ 1,056   $   $ 203   $ 22   $   $ (1,046 )

Firstlight Financial Corporation

  $   $ 2,988   $   $ 681   $   $   $ 250   $ 12   $ 16,197  

Growing Family, Inc. and GFH Holdings, LLC

  $   $ 34   $ 10,296   $ 615   $   $   $ 13   $ (1,545 ) $ 5,991  

Industrial Container Services, LLC

  $ 3,304   $ 8,491   $ 1,800   $ 69   $   $   $ 109   $ 19,881   $ (13,403 )

Insight Pharmaceuticals Corporation

  $ 24,730   $ 56,080   $   $ 4,424   $ 730   $   $ 765   $   $ 4,944  

Investor Group Services, LLC

  $ 500   $ 500   $   $ 3   $   $ 206   $ 9   $   $ 295  

Multi-Ad Services, Inc.

  $   $   $   $   $   $   $   $   $ 462  

Pillar Processing LLC and PHL Holding Co.

  $   $ 12,450   $   $ 1,584   $   $   $ 147   $   $ (12,628 )

Primis Marketing Group, Inc. and Primis Holdings, LLC

  $   $ 154   $ 14,068   $   $   $   $   $ (14,068 ) $ 14,120  

Regency Healthcare Group, LLC

  $   $   $ 2,007   $   $   $   $   $ 380   $ 335  

Soteria Imaging Services, LLC

  $   $ 1,419   $   $ 321   $   $   $   $ 72   $ 12  

VSS-Tranzact Holdings, LLC

  $ 867   $   $   $   $   $   $   $   $ (6,275 )

Universal Environmental Services, LLC

  $   $   $   $   $   $   $   $   $  

Universal Trailer Corporation

  $   $   $ 7,930   $   $   $   $   $ (7,930 ) $ 7,930  
(6)
As defined in the Investment Company Act, the Company is deemed to be both an "Affiliated Person" and to "Control" this portfolio company because it owns more than 25% of the portfolio company's outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio

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Table of Contents

Company
  Purchases   Redemptions
(cost)
  Sales
(cost)
  Interest
income
  Capital
structuring
service
fees
  Dividend
Income
  Other
income
  Net realized
gains
(losses)
  Net
unrealized
gains (losses)
 

AGILE Fund I, LLC

  $   $ 36   $   $   $   $ 10   $   $   $ (37 )

Allied Capital REIT, Inc.

  $ 325   $ 115   $   $   $   $   $   $ 585   $ (255 )

AllBridge Financial, LLC

  $   $   $   $   $   $   $   $   $ (1,379 )

Aviation Properties Corporation

  $   $   $   $   $   $   $   $   $  

AWTP, LLC

  $ 2,926   $   $   $ 751   $   $   $   $   $ (1,648 )

BenefitMall Holdings, Inc.

  $   $   $   $ 7,360   $   $   $ 500   $   $ 9,541  

Border Foods, Inc.

  $   $ 28,526   $ 34,818   $ 1,401   $   $   $   $ 5,174   $ 3,601  

Callidus Capital Corporation

  $ 6,000   $ 3,000   $   $   $   $   $   $   $ (2,470 )

Ciena Capital LLC

  $   $   $   $ 3,549   $   $   $   $   $ (27,011 )

Citipostal, Inc.

  $ 2,850   $ 2,802   $   $ 7,356   $   $   $ 353   $   $ (10,960 )

Coverall North America, Inc.

  $   $ 30,907   $   $ 642   $   $   $   $ (12,334 ) $ 7,624  

Crescent Hotels & Resorts, LLC and affiliates

  $   $   $   $ 213   $   $   $   $   $ (2,666 )

EarthColor, Inc.

  $   $   $   $   $   $   $   $   $  

HCI Equity, LLC

  $   $   $   $   $   $   $   $   $ (263 )

HCP Acquisition Holdings, LLC

  $ 1,048   $   $   $   $   $   $   $   $ (1,196 )

Hot Light Brands, Inc.

  $   $ 929   $   $   $   $   $   $   $ (8 )

Huddle House Inc.

  $   $   $   $ 3,123   $   $   $ 750   $   $ 2,129  

Industrial Air Tool, LP and affiliates

  $   $   $ 13,419   $   $   $ 1,170   $ 185   $ 581   $ (1,517 )

Ivy Hill Asset Management, L.P.

  $ 9,419   $   $   $   $   $ 19,048   $   $   $ 48,943  

Ivy Hill Middle Market Credit Fund, Ltd.

  $   $   $   $ 4,879   $   $   $   $   $ 1,899  

Knightsbridge CLO 2007-1 Ltd.

  $   $   $ 14,852   $ 1,019   $   $   $   $ 3,724   $ 307  

Knightsbridge CLO 2008-1 Ltd.

  $   $ 36,996   $   $ 2,568   $   $   $   $ 1,254   $ 3,108  

LVCG Holdings, LLC

  $   $   $   $   $   $   $   $   $  

Making Memories Wholesale, Inc.

  $ 1,750   $ 345   $   $ 34   $   $   $ 2   $   $ (7,090 )

MVL Group, Inc.

  $   $   $   $ 8,452   $   $   $   $   $ (2,525 )

Orion Foods, LLC

  $ 3,300   $ 330   $   $ 10,265   $   $   $ 811   $   $ (6,832 )

Penn Detroit Diesel Allison, LLC

  $   $ 4,077   $ 15,993   $   $   $   $ 500   $ 18,388   $ (1,987 )

Reflexite Corporation

  $   $ 9,281   $ 27,435   $ 1,130   $   $   $ 39   $ 40,923   $ (3,088 )

Senior Secured Loan Fund LLC*

  $ 496,816   $   $   $ 118,420   $ 41,592   $   $ 13,307   $   $ 688  

Stag-Parkway, Inc.

  $   $   $   $ 4,372   $   $ 925   $ 249   $   $ 780  

Startec Equity, LLC

  $   $   $   $   $   $   $   $   $  

The Thymes, LLC

  $   $ 1,162   $   $   $   $ 490   $   $   $ 945  
(7)
Non-U.S. company or principal place of business outside the U.S. and as a result is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(8)
Excepted from the definition of investment company under Section 3(c) of the Investment Company Act and as a result is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

(9)
In the first quarter of 2011, the Staff informally communicated to certain business development companies the Staff's belief that certain entities, which would be classified as an "investment company" under the Investment Company Act but for the exception from the definition of "investment company" set forth in Rule 3a-7 promulgated under the Investment Company Act, could not be treated as eligible portfolio companies (as defined in Section 2(a)(46) of the Investment Company Act). Subsequently, in August 2011 the Securities and Exchange Commission issued a Concept Release which states that "[a]s a general matter, the Commission presently does not believe that Rule 3a-7 issuers are the type of small, developing and financially troubled businesses in which Congress intended BDCs primarily to invest" and requested comment on whether or not a 3a-7 issuer should be considered an "eligible portfolio company". Ares Capital provided a comment letter in respect of the Concept Release and continues to believe that the language of Section 2(a)(46) of the Investment Company Act permits a business development company to treat as "eligible portfolio companies" entities that rely on the 3a-7 exception. However, given the current uncertainty in this area (including the language in the Concept Release) and subsequent discussions with the Staff, Ares Capital has, solely for purposes of calculating the composition of its portfolio pursuant to Section 55(a) of the Investment Company Act, identified these entities in the Company's schedule of investments as "non-qualifying assets" should the Staff ultimately disagree with Ares Capital's position.

(10)
Variable rate loans to the Company's portfolio companies bear interest at a rate that may be determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the Prime Rate), at the borrower's option, which reset annually (A), semi-annually (S), quarterly (Q), bi-monthly (B), monthly (M) or daily (D). For each such loan, the Company has provided the interest rate in effect on the date presented.

(11)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 5.00% on $18 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.

(12)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 2.50% on $12 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out"

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(13)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 4.00% on $45 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.

(14)
In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 1.25% on $74 million aggregate principal amount of a "first out" tranche of the portfolio company's senior term debt previously syndicated by the Company into "first out" and "last out" tranches, whereby the "first out" tranche will have priority as to the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder.

(15)
Loan was on non-accrual status as of December 31, 2011.

(16)
Loan includes interest rate floor feature.

(17)
In addition to the interest earned based on the stated contractual interest rate of this security, the certificates entitle the holders thereof to receive a portion of the excess cash flow from the SSLP's loan portfolio, which may result in a return to the Company greater than the contractual stated interest rate.

   

See accompanying notes to consolidated financial statements.

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ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(in thousands, except per share data)

 
   
   
   
   
  Accumulated Net
Realized Loss
on Investments,
Foreign Currency
Transactions,
Extinguishment of
Debt and Other Assets
   
   
 
 
  Common Stock    
  Accumulated
Overdistributed
Net Investment
Income
   
   
 
 
  Capital in
Excess of
Par Value
  Net Unrealized
Gain (Loss) on
Investments
  Total
Stockholders'
Equity
 
 
  Shares   Amount  

Balance at December 31, 2009

    109,945   $ 110   $ 1,490,458   $ 3,143   $ (31,115 ) $ (204,708 ) $ 1,257,888  

Issuances of common stock in add-on offerings (net of offering and underwriting costs)

    34,458     34     457,815                 457,849  

Shares issued in connection with dividend reinvestment plan

    1,523     2     22,529                 22,531  

Issuance of common stock in the acquisition of Allied Capital Corporation

    58,493     58     872,669                 872,727  

Gain on the acquisition of Allied Capital Corporation

                    195,876         195,876  

Net increase in stockholders' equity resulting from operations (excluding gain on the acquisition of Allied Capital Corporation)

                215,816     49,399     230,743     495,958  

Dividends declared ($1.40 per share)

                (252,296 )           (252,296 )

Tax reclassification of stockholders' equity in accordance with generally accepted accounting principles

            361,855     22,001     (383,856 )        
                               

Balance at December 31, 2010

    204,419   $ 204   $ 3,205,326   $ (11,336 ) $ (169,696 ) $ 26,035   $ 3,050,533  
                               

Shares issued in connection with dividend reinvestment plan

   
711
   
1
   
11,552
   
   
   
   
11,553
 

Issuances of the Convertible Unsecured Notes (See Note 5)

            54,716                 54,716  

Net increase in stockholders' equity resulting from operations

                282,403     77,242     (40,192 )   319,453  

Dividends declared ($1.41 per share)

                (288,990 )           (288,990 )

Tax reclassification of stockholders' equity in accordance with generally accepted accounting principles

            118,760     7,474     (126,234 )        
                               

Balance at December 31, 2011

    205,130   $ 205   $ 3,390,354   $ (10,449 ) $ (218,688 ) $ (14,157 ) $ 3,147,265  
                               

Issuances of common stock in add-on offerings (net of offering and underwriting costs)

   
42,297
   
43
   
679,938
   
   
   
   
679,981
 

Shares issued in connection with dividend reinvestment plan

    1,226     1     20,448                 20,449  

Issuances of the Convertible Unsecured Notes (See Note 5)

            9,967                 9,967  

Net increase in stockholders' equity resulting from operations

                348,861     44,056     115,261     508,178  

Dividends declared ($1.60 per share)

                (377,494 )           (377,494 )

Tax reclassification of stockholders' equity in accordance with generally accepted accounting principles

            16,810     11,172     (27,982 )        
                               

Balance at December 31, 2012

    248,653   $ 249   $ 4,117,517   $ (27,910 ) $ (202,614 ) $ 101,104   $ 3,988,346  
                               

   

See accompanying notes to consolidated financial statements.

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ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

 
  For the Years Ended December 31,  
 
  2012   2011   2010  

OPERATING ACTIVITIES:

                   

Net increase in stockholders' equity resulting from operations

  $ 508,178   $ 319,453   $ 691,834  

Adjustments to reconcile net increase in stockholders' equity resulting from operations:

                   

Gain on the acquisition of Allied Capital Corporation

            (195,876 )

Realized loss on extinguishment of debt

    2,678     19,318     1,961  

Realized gain on sale of other assets

            (5,882 )

Net realized gains on investments

    (46,734 )   (96,560 )   (45,478 )

Net unrealized (gains) losses on investments

    (115,261 )   40,192     (230,743 )

Net accretion of discount on investments

    (13,747 )   (15,894 )   (12,594 )

Increase in payment-in-kind interest and dividends

    (25,036 )   (30,070 )   (45,002 )

Collections of payment-in-kind interest and dividends

    21,465     55,814     32,668  

Amortization of debt issuance costs

    13,140     13,145     8,824  

Accretion of discount on notes payable

    11,310     11,057     8,201  

Depreciation

    829     876     923  

Proceeds from sales and repayments of investments

    2,494,062     2,516,090     1,562,356  

Purchases of investments

    (3,160,021 )   (3,263,626 )   (1,559,819 )

Acquisition of Allied Capital Corporation, net of cash acquired

            (774,190 )

Changes in operating assets and liabilities:

                   

Interest receivable

    (9,920 )   (26,530 )   (4,076 )

Other assets

    19,042     2,440     12,547  

Management and incentive fees payable

    39,089     40,099     (14,098 )

Accounts payable and accrued expenses

    5,774     12,662     (93,484 )

Interest and facility fees payable

    4,220     4,620     5,437  
               

Net cash used in operating activities

    (250,932 )   (396,914 )   (656,491 )
               

FINANCING ACTIVITIES:

                   

Net proceeds from issuances of common stock

    679,981         1,330,577  

Borrowings on debt

    3,212,458     2,458,067     1,737,264  

Repayments and repurchases of debt

    (3,091,531 )   (1,738,632 )   (2,154,884 )

Debt issuance costs

    (44,383 )   (25,341 )   (25,176 )

Dividends paid

    (357,332 )   (277,150 )   (229,765 )
               

Net cash provided by financing activities

    399,193     416,944     658,016  
               

CHANGE IN CASH AND CASH EQUIVALENTS

    148,261     20,030     1,525  

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

    120,782     100,752     99,227  
               

CASH AND CASH EQUIVALENTS, END OF PERIOD

  $ 269,043   $ 120,782   $ 100,752  
               

Supplemental Information:

                   

Interest paid during the period

  $ 108,761   $ 87,421   $ 53,117  

Taxes, including excise tax, paid during the period

  $ 10,149   $ 9,112   $ 1,323  

Dividends declared during the period

  $ 377,494   $ 288,990   $ 252,296  

   

See accompanying notes to consolidated financial statements.

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ARES CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2012
(in thousands, except per share data, percentages and as otherwise indicated;
for example, with the words "million," "billion" or otherwise)

1.     ORGANIZATION

        Ares Capital Corporation (the "Company" or "ARCC") is a specialty finance company that is a closed-end, non-diversified management investment company incorporated in Maryland. The Company has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the "Investment Company Act"). The Company has elected to be treated as a regulated investment company, or a "RIC", under the Internal Revenue Code of 1986, as amended (the "Code") and operates in a manner so as to qualify for the tax treatment applicable to RICs.

        On April 1, 2010, the Company consummated its acquisition of Allied Capital Corporation ("Allied Capital"), in an all stock merger where each existing share of common stock of Allied Capital was exchanged for 0.325 shares of the Company's common stock (the "Allied Acquisition"). The Allied Acquisition was valued at approximately $908 million as of April 1, 2010. In connection therewith, the Company issued approximately 58.5 million shares of its common stock to Allied Capital's then-existing stockholders (see Note 17).

        The Company's investment objective is to generate both current income and capital appreciation through debt and equity investments. The Company invests primarily in first lien senior secured loans (including "unitranche" loans, which are loans that combine both senior and mezzanine debt, generally in a first lien position), second lien senior secured loans and mezzanine debt, which in some cases includes an equity component. To a lesser extent, the Company also makes equity investments.

        The Company is externally managed by Ares Capital Management LLC ("Ares Capital Management" or the Company's "investment adviser"), a wholly owned subsidiary of Ares Management LLC ("Ares Management"), a global alternative asset manager and a Securities and Exchange Commission ("SEC") registered investment adviser. Ares Operations LLC ("Ares Operations" or the Company's "administrator"), a wholly owned subsidiary of Ares Management, provides the administrative services necessary for the Company to operate.

2.     SIGNIFICANT ACCOUNTING POLICIES

        The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with Generally Accepted Accounting Principles or ("GAAP"), and include the accounts of the Company and its consolidated subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition as of and for the periods presented. All significant intercompany balances and transactions have been eliminated.

        Cash and cash equivalents include funds from time to time deposited with financial institutions and short-term, liquid investments in a money market fund. Cash and cash equivalents are carried at cost which approximates fair value.

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        The Company places its cash and cash equivalents with financial institutions and, at times, cash held in money market accounts may exceed the Federal Deposit Insurance Corporation insured limit.

        Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. Unrealized gains or losses primarily reflect the change in investment values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized.

        Investments for which market quotations are readily available are typically valued at such market quotations. In order to validate market quotations, the Company looks at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available (i.e., substantially all of the Company's investments) are valued at fair value as determined in good faith by the Company's board of directors, based on, among other things, the input of the Company's investment adviser, audit committee and independent third-party valuation firms that have been engaged at the direction of the Company's board of directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing 12 month period (with certain de minimis exceptions) and under a valuation policy and a consistently applied valuation process. The valuation process is conducted at the end of each fiscal quarter, and a minimum of 50% of the Company's portfolio at fair value is subject to review by an independent valuation firm each quarter. In addition, the Company's independent accountants review the Company's valuation process as part of their overall integrated audit.

        As part of the valuation process, the Company may take into account the following types of factors, if relevant, in determining the fair value of the Company's investments: the enterprise value of a portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company's ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company's securities to any similar publicly traded securities, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company considers the pricing indicated by the external event to corroborate its valuation.

        Because there is not a readily available market value for most of the investments in its portfolio, the Company values substantially all of its portfolio investments at fair value as determined in good faith by its board of directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company's investments may fluctuate from period to period. Additionally, the fair value of the Company's investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it.

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        In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

        The Company's board of directors undertakes a multi-step valuation process each quarter, as described below:

        See Note 8 for more information on the Company's valuation process.

        Interest income is recorded on an accrual basis and includes the accretion of discounts and amortization of premiums. Discounts from and premiums to par value on securities purchased are accreted/amortized into interest income over the life of the respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortization of premiums, if any.

        Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management's judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current. The Company may make exceptions to this if the loan has sufficient collateral value and is in the process of collection.

        Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

        The Company has loans in its portfolio that contain payment-in-kind ("PIK") provisions. The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan and recorded as interest income. To maintain the Company's status as a RIC, this non-cash source of income must be paid out to stockholders in the form of dividends, even though the Company has not yet collected the cash.

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        The Company's investment adviser seeks to provide assistance to its portfolio companies and in return the Company may receive fees for capital structuring services. These fees are generally only available to the Company as a result of the Company's underlying investments, are normally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when earned upon closing of the investment. The services that the Company's investment adviser provides vary by investment, but generally include reviewing existing credit facilities, arranging bank financing, arranging equity financing, structuring financing from multiple lenders, structuring financing from multiple equity investors, restructuring existing loans, raising equity and debt capital, and providing general financial advice, which concludes upon closing of the investment. Any services of the above nature subsequent to the closing would generally generate a separate fee payable to the Company. In certain instances where the Company is invited to participate as a co-lender in a transaction and does not provide significant services in connection with the investment, a portion of loan fees paid to the Company in such situations will be deferred and amortized over the estimated life of the loan. The Company's investment adviser may also take a seat on the board of directors of a portfolio company, or observe the meetings of the board of directors without taking a formal seat.

        Other income includes fees for management and consulting services, loan guarantees, commitments, amendments and other services rendered by the Company to portfolio companies. Such fees are recognized as income when earned or the services are rendered.

        The Company's books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

        Results of operations based on changes in foreign exchange rates are separately disclosed in the statement of operations, if any. Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities.

        The Company's offering costs, excluding underwriters' fees, are charged against the proceeds from equity offerings when received.

        Debt issuance costs are amortized over the life of the related debt instrument using the straight line method, which closely approximates the effective yield method.

        The Company has elected to be treated as a RIC under the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must, among

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other things, timely distribute to its stockholders at least 90% of its investment company taxable income, as defined by the Code, for each year. The Company, among other things, has made and intends to continue to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal income taxes.

        Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year dividend distributions from such income into the next tax year and pay a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as such taxable income is earned.

        Certain of the Company's consolidated subsidiaries are also subject to U.S. federal and state income taxes.

        Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by the Company's board of directors each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are generally distributed, although the Company may decide to retain such capital gains for investment.

        The Company has adopted a dividend reinvestment plan that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Company's board of directors authorizes, and the Company declares, a cash dividend, then the Company's stockholders who have not "opted out" of the Company's dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of the Company's common stock, rather than receiving the cash dividend. The Company intends to use primarily newly issued shares to implement the dividend reinvestment plan (so long as the Company is trading at a premium to net asset value). If the Company's shares are trading at a significant enough discount to net asset value and the Company is otherwise permitted under applicable law to purchase such shares, the Company intends to purchase shares in the open market in connection with the Company's obligations under the dividend reinvestment plan. However, the Company reserves the right to issue new shares of the Company's common stock in connection with the Company's obligations under the dividend reinvestment plan even if the Company's shares are trading below net asset value.

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of actual and contingent assets and liabilities at the date of the financial statements and the reported amounts of income or loss and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the valuation of investments.

3.     AGREEMENTS

        The Company is party to an investment advisory and management agreement (the "investment advisory and management agreement") with Ares Capital Management. Subject to the overall supervision of the Company's board of directors, Ares Capital Management provides investment advisory and management services to the Company. For providing these services, Ares Capital Management receives a fee from the Company consisting of two components—a base management fee and an incentive fee.

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        The base management fee is calculated at an annual rate of 1.5% based on the average value of the Company's total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of the two most recently completed calendar quarters. The base management fee is payable quarterly in arrears.

        The incentive fee has two parts. The first part is calculated and payable quarterly in arrears based on the Company's pre-incentive fee net investment income for the quarter. Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the administration agreement, and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities, accrued income that the Company has not yet received in cash. The Company's investment adviser is not under any obligation to reimburse the Company for any part of the incentive fees it received that was based on accrued interest that the Company never actually received.

        Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses, unrealized capital appreciation, unrealized capital depreciation or income tax expense related to realized gains. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter where the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the hurdle rate (as defined below) for a quarter, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to realized and/or unrealized capital losses.

        Pre-incentive fee net investment income, expressed as a rate of return on the value of the Company's net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed "hurdle rate" of 1.75% per quarter. If market credit spreads rise, the Company may be able to invest its funds in debt instruments that provide for a higher return, which may increase the Company's pre-incentive fee net investment income and make it easier for the Company's investment adviser to surpass the fixed hurdle rate and receive an incentive fee based on such net investment income. To the extent the Company has retained pre-incentive fee net investment income that has been used to calculate this part of the incentive fee, it is also included in the amount of the Company's total assets (other than cash and cash equivalents but including assets purchased with borrowed funds) used to calculate the 1.5% base management fee.

        The Company pays its investment adviser an incentive fee with respect to the Company's pre-incentive fee net investment income in each calendar quarter as follows:

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        These calculations are adjusted for any share issuances or repurchases during the quarter.

        The second part of the incentive fee (the "Capital Gains Fee"), is determined and payable in arrears as of the end of each calendar year (or, upon termination of the investment advisory and management agreement, as of the termination date) and is calculated at the end of each applicable year by subtracting (a) the sum of the Company's cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (b) the Company's cumulative aggregate realized capital gains, in each case calculated from October 8, 2004 (the date the Company completed its initial public offering). Realized capital gains and losses include gains and losses on investments and foreign currencies, as well as gains and losses on extinguishment of debt and other assets. If such amount is positive at the end of such year, then the Capital Gains Fee for such year is equal to 20% of such amount, less the aggregate amount of Capital Gains Fees paid in all prior years. If such amount is negative, then there is no Capital Gains Fee for such year.

        The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in the Company's portfolio when sold and (b) the accreted or amortized cost basis of such investment.

        The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the net sales price of each investment in the Company's portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.

        The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company's portfolio as of the applicable Capital Gains Fee calculation date and (b) the accreted or amortized cost basis of such investment.

        Notwithstanding the foregoing, as a result of an amendment to the capital gains portion of the incentive fee under the investment advisory and management agreement that was adopted on June 6, 2011, if the Company is required by GAAP to record an investment at its fair value as of the time of acquisition instead of at the actual amount paid for such investment by the Company (including, for example, as a result of the application of the acquisition method of accounting), then solely for the purposes of calculating the Capital Gains Fee, the "accreted or amortized cost basis" of an investment shall be an amount (the "Contractual Cost Basis") equal to (1) (x) the actual amount paid by the Company for such investment plus (y) any amounts recorded in the Company's financial statements as required by GAAP that are attributable to the accretion of such investment plus (z) any other adjustments made to the cost basis included in the Company's financial statements, including PIK interest or additional amounts funded (net of repayments) minus (2) any amounts recorded in the Company's financial statements as required by GAAP that are attributable to the amortization of such investment, whether such calculated Contractual Cost Basis is higher or lower than the fair value of such investment (as determined in accordance with GAAP) at the time of acquisition.

        The Company defers cash payment of any incentive fee otherwise earned by the Company's investment adviser if during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made the sum of (a) the aggregate distributions to the Company's stockholders and (b) the change in net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) is less than 7.0% of the Company's net assets (defined as total assets less indebtedness) at the beginning of such period. Any deferred incentive fees are carried over for payment in subsequent calculation periods to the extent such payment is payable under the investment advisory and management agreement.

        The Capital Gains Fee payable to the Company's investment adviser as calculated under the investment advisory and management agreement (as described above) for the year ended December 31,

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2012 was $11,523. For the years ended December 31, 2011 and 2010, there were no Capital Gains Fees payable under the investment advisory and management agreement. However, in accordance with GAAP, the Company has cumulatively accrued a capital gains incentive fee of $80,820 as of December 31, 2012. GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the investment advisory and management agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains fee plus the aggregate cumulative unrealized capital appreciation. If such amount is positive at the end of a period, then GAAP requires the Company to record a capital gains fee equal to 20% of such cumulative amount, less the aggregate amount of actual capital gains fees paid or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future.

        For the year ended December 31, 2012, base management fees were $86,228, incentive fees related to pre-incentive fee net investment income were $95,182 and incentive fees related to capital gains accrued in accordance with GAAP were $31,863. As of December 31, 2012, $131,585 was included in "management and incentive fees payable" in the accompanying consolidated balance sheet, of which $62,288 is currently payable to the Company's investment adviser under the investment advisory and management agreement.

        For the year ended December 31, 2011, base management fees were $71,603, incentive fees related to pre-incentive fee net investment income were $79,029 and incentive fees related to capital gains accrual in accordance with GAAP were $33,348. For the year ended December 31, 2010, base management fees were $51,998, incentive fees related to pre-incentive fee net investment income were $61,286 and incentive fees related to capital gains accrued in accordance with GAAP were $15,609.

        The Company is party to an administration agreement, referred to herein as the "administration agreement", with its administrator, Ares Operations. Pursuant to the administration agreement, Ares Operations furnishes the Company with office equipment and clerical, bookkeeping and record keeping services at the Company's office facilities. Under the administration agreement, Ares Operations also performs, or oversees the performance of, the Company's required administrative services, which include, among other things, providing assistance in accounting, legal, compliance, operations, technology, and investor relations, being responsible for the financial records that the Company is required to maintain and preparing reports to its stockholders and reports filed with the SEC. In addition, Ares Operations assists the Company in determining and publishing its net asset value, assists the Company in providing managerial assistance to its portfolio companies, oversees the preparation and filing of the Company's tax returns and the printing and dissemination of reports to its stockholders, and generally oversees the payment of its expenses and the performance of administrative and professional services rendered to the Company by others. Payments under the Company's administration agreement are equal to an amount based upon its allocable portion of Ares Operations' overhead and other expenses (including travel expenses) incurred by Ares Operations in performing its obligations under the administration agreement, including the Company's allocable portion of the compensation of certain of its officers (including the Company's chief compliance officer, chief financial officer, general counsel, treasurer and assistant treasurer) and their respective staffs. The administration

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agreement may be terminated by either party without penalty upon 60 days' written notice to the other party.

        For the years ended December 31, 2012, 2011 and 2010, the Company incurred $9,322, $9,563 and $10,979, respectively, in administrative fees. As of December 31, 2012, $2,516 of these fees were unpaid and included in "accounts payable and other liabilities" in the accompanying consolidated balance sheet.

4.     INVESTMENTS

        As of December 31, 2012 and 2011, the Company's investments consisted of the following:

 
  As of December 31,  
 
  2012   2011  
 
  Amortized Cost(1)   Fair Value   Amortized Cost(1)   Fair Value  

Senior term debt

  $ 3,587,770   $ 3,555,144   $ 2,691,018   $ 2,671,114  

Subordinated Certificates of the SSLP(2)

    1,237,887     1,263,644     1,034,254     1,059,178  

Senior subordinated debt

    321,331     259,820     592,618     515,014  

Collateralized loan obligations

            55,515     54,000  

Preferred equity securities

    238,837     250,118     251,192     251,064  

Other equity securities

    430,380     584,005     463,861     527,002  

Commercial real estate

    7,246     11,824     20,205     17,134  
                   

Total

  $ 5,823,451   $ 5,924,555   $ 5,108,663   $ 5,094,506  
                   

(1)
The amortized cost represents the original cost adjusted for the accretion of discounts and amortization of premiums, if any.

(2)
The proceeds from these certificates were applied to co-investments with GE Global Sponsor Finance LLC and General Electric Capital Corporation to fund first lien senior secured loans to 36 and 32 different borrowers as of December 31, 2012 and 2011, respectively.

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        The industrial and geographic compositions of the Company's portfolio at fair value at December 31, 2012 and 2011 were as follows:

 
  As of December 31,  
 
  2012   2011  

Industry

             

Investment Funds and Vehicles(1)

    21.7 %   23.6 %

Healthcare Services

    12.9     13.4  

Education

    7.8     11.2  

Financial Services

    7.3     6.4  

Restaurants and Food Services

    7.1     6.8  

Other Services

    6.7     2.5  

Consumer Products

    6.6     5.4  

Business Services

    6.4     6.6  

Containers and Packaging

    5.1     4.5  

Energy

    3.7     1.3  

Automotive Services

    3.4     1.1  

Manufacturing

    2.4     2.8  

Aerospace and Defense

    2.0     3.6  

Telecommunications

    1.6     2.0  

Oil and Gas

    1.0     0.7  

Other

    4.3     8.1  
           

Total

    100.0 %   100.0 %
           

(1)
Includes the Company's investment in the SSLP, which had made first lien senior secured loans to 36 and 32 different borrowers as of December 31, 2012 and 2011, respectively. The portfolio companies in the SSLP are in industries similar to the companies in the Company's portfolio.

 
  As of December 31,  
 
  2012   2011  

Geographic Region

             

West

    49.1 %   48.4 %

Midwest

    19.2     14.5  

Southeast

    14.7     21.2  

Mid Atlantic

    12.8     12.8  

Northeast

    2.3     1.7  

International

    1.9     1.4  
           

Total

    100.0 %   100.0 %
           

        As of December 31, 2012, 2.3% of total investments at amortized cost (or 0.6% of total investments at fair value) were on non-accrual status. As of December 31, 2011, 3.3% of total investments at amortized cost (or 0.9% of total investments at fair value) were on non-accrual status.

        The Company co-invests in first lien senior secured loans of middle market companies with GE Global Sponsor Finance LLC and General Electric Capital Corporation (together, "GE") through an unconsolidated Delaware limited liability company, the Senior Secured Loan Fund LLC (d/b/a the "Senior Secured Loan Program") or the "SSLP". The SSLP is capitalized as transactions are completed

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and all portfolio decisions and generally all other decisions in respect of the SSLP must be approved by an investment committee of the SSLP consisting of representatives of the Company and GE (with approval from a representative of each required). The Company provides capital to the SSLP in the form of subordinated certificates (the "SSLP Certificates").

        As of December 31, 2012 and 2011, the SSLP had available capital of $9.0 billion and $7.7 billion, respectively, of which approximately $6.3 billion and $5.0 billion in aggregate principal amount was funded at December 31, 2012 and 2011, respectively. As of December 31, 2012 and 2011, the Company had agreed to make available to the SSLP approximately $1.8 billion and $1.5 billion, respectively, of which approximately $1.2 billion and $1.0 billion was funded, respectively. Investment of any unfunded amount must still be approved by the investment committee of the SSLP as described above.

        As of December 31, 2012 and 2011, the SSLP had total assets of $6.3 billion and $5.1 billion, respectively. As of December 31, 2012 and 2011, GE's investment in the SSLP consisted of senior notes of $4.8 billion and $3.8 billion, respectively, and SSLP Certificates of $178 million and $149 million, respectively. The SSLP Certificates are junior in right of payment to the senior notes held by GE. The Company owned 87.5% of the outstanding SSLP Certificates as of December 31, 2012 and 2011 and GE owned the remainder. The SSLP's portfolio consisted of first lien senior secured loans to 36 and 32 different borrowers as of December 31, 2012 and 2011, respectively. As of December 31, 2012 and 2011, the portfolio was comprised of all first lien senior secured loans to U.S. middle-market companies and none of these loans was on non-accrual status. As of December 31, 2012 and 2011, the largest loan to a single borrower in the SSLP's portfolio in aggregate principal amount was $330.0 million and $300.0 million, respectively, and the five largest loans to borrowers in the SSLP each totaled $1.4 billion. The portfolio companies in the SSLP are in industries similar to the companies in the Company's portfolio.

        The amortized cost and fair value of the SSLP Certificates held by the Company was $1.2 billion and $1.3 billion, respectively, as of December 31, 2012, and $1.0 billion and $1.1 billion, respectively, as of December 31, 2011. The SSLP Certificates pay a weighted average coupon of approximately LIBOR plus 8.0% and also entitle the holders thereof to receive a portion of the excess cash flow from the loan portfolio, which may result in a return to the holders of the SSLP Certificates that is greater than the contractual coupon. The Company's yield on its investment in the SSLP at fair value was 15.4% and 15.7% as of December 31, 2012 and 2011, respectively. For the years ended December 31, 2012, 2011 and 2010 the Company earned interest income of $184.7 million, $118.4 million and $50.0 million, respectively, from its investment in the SSLP Certificates. The Company is also entitled to certain fees in connection with the SSLP.

        Effective March 30, 2012, Ares Capital Management assumed from the Company the role of co-manager of the SSLP. However, this change did not impact the Company's economics in respect of its participation in the SSLP and Ares Capital Management does not receive any remuneration in respect of its co-manager role.

5.     DEBT

        In accordance with the Investment Company Act, with certain limited exceptions, the Company is only allowed to borrow amounts such that its asset coverage, as calculated in accordance with the Investment Company Act, is at least 200% after such borrowing. As of December 31, 2012 the Company's asset coverage was 282%.

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        The Company's outstanding debt obligations as of December 31, 2012 and 2011 were as follows:

 
  As of December 31,  
 
  2012   2011  
(in millions)
  Total
Aggregate
Principal
Amount
Committed/
Outstanding(1)
  Principal
Amount
Outstanding
  Carrying
Value
  Total
Aggregate
Principal
Amount
Committed/
Outstanding(1)
  Principal
Amount
Outstanding
  Carrying
Value
 

Revolving Credit Facility

  $ 900,000 (2) $   $   $ 810,000   $ 395,000   $ 395,000  

Revolving Funding Facility

    620,000 (3)   300,000     300,000     500,000     463,000     463,000  

SMBC Funding Facility

    400,000                      

Debt Securitization

                77,531     77,531     77,531  

February 2016 Convertible Notes

    575,000     575,000     548,521 (4)   575,000     575,000     541,152 (4)

June 2016 Convertible Notes

    230,000     230,000     218,761 (4)   230,000     230,000     215,931 (4)

2017 Convertible Notes

    162,500     162,500     158,312 (4)            

2018 Convertible Notes

    270,000     270,000     262,829 (4)            

February 2022 Notes

    143,750     143,750     143,750              

October 2022 Notes

    182,500     182,500     182,500              

2040 Notes

    200,000     200,000     200,000     200,000     200,000     200,000  

2047 Notes

    230,000     230,000     181,199 (5)   230,000     230,000     180,988 (5)
                           

Total

  $ 3,913,750   $ 2,293,750   $ 2,195,872   $ 2,622,531   $ 2,170,531   $ 2,073,602  
                           

(1)
Subject to borrowing base and leverage restrictions. Represents the total aggregate amount committed or outstanding, as applicable, under such instrument.

(2)
Provides for a feature that allows the Company, under certain circumstances, to increase the size of the Revolving Credit Facility to a maximum of $1,350,000 as of December 31, 2012.

(3)
Provides for a feature that allows the Company and Ares Capital CP, under certain circumstances, to increase the size of the Revolving Funding Facility to a maximum of $865,000 as of December 31, 2012.

(4)
Represents the aggregate principal amount outstanding of the Convertible Unsecured Notes (as defined below) less the unaccreted discount initially recorded upon issuance of the Convertible Unsecured Notes. The total unaccreted discount for the February 2016 Convertible Notes, the June 2016 Convertible Notes, the 2017 Convertible Notes and the 2018 Convertible Notes was $26,479, $11,239, $4,188 and $7,171 respectively, as of December 31, 2012. The total unaccreted discount for the February 2016 Convertible Notes and the June 2016 Convertible Notes was $33,848 and $14,069, respectively, at December 31, 2011.

(5)
Represents the aggregate principal amount outstanding less the unaccreted purchased discount. The total unaccreted purchased discount on the 2047 Notes was $48,801 and $49,012 as of December 31, 2012 and 2011, respectively.

        The weighted average stated interest rate and weighted average maturity, both on aggregate principal amount, of all the Company's outstanding debt as of December 31, 2012 were 5.5% and 9.8 years, respectively, and as of December 31, 2011 were 4.8% and 9.3 years, respectively.

        In December 2005, the Company entered into a senior secured revolving credit facility (as amended and restated, the "Revolving Credit Facility"), which as of December 31, 2012, allowed the Company to borrow up to $900,000 at any one time outstanding. In May 2012, the Company amended and restated the Revolving Credit Facility to, among other things, increase the size of the facility from $810,000 to $900,000, extend the expiration of the revolving period from January 22, 2013 to May 4,

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2015 and extend the stated maturity date from January 22, 2013 to May 4, 2016. The Revolving Credit Facility also includes a feature that allows, under certain circumstances, for an increase in the size of the facility to a maximum of $1,350,000. The Revolving Credit Facility generally requires payments of interest at the end of each LIBOR interest period, but no less frequently than quarterly, on LIBOR based loans, and monthly payments of interest on other loans. From the end of the revolving period to the stated maturity date, the Company is required to repay outstanding principal amounts under the Revolving Credit Facility on a monthly basis in an amount equal to 1/12th of the outstanding principal amount at the end of the revolving period.

        Under the Revolving Credit Facility, the Company is required to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation, covenants related to: (a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain investments, (c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders' equity, (e) maintaining a ratio of total assets (less total liabilities other than indebtedness) to total indebtedness of the Company and its consolidated subsidiaries of not less than 2.0:1.0, (f) limitations on pledging certain unencumbered assets, and (g) limitations on the creation or existence of agreements that prohibit liens on certain properties of the Company and certain of its subsidiaries. These covenants are subject to important limitations and exceptions that are described in the documents governing the Revolving Credit Facility. Borrowings under the Revolving Credit Facility (and the incurrence of certain other permitted debt) are also subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company's portfolio that are pledged as collateral. As of December 31, 2012, the Company was in compliance in all material respects with the terms of the Revolving Credit Facility.

        As of December 31, 2012 and 2011, there was $0 and $395,000 outstanding, respectively, under the Revolving Credit Facility. The Revolving Credit Facility also provides for a sub-limit for the issuance of letters of credit for up to an aggregate amount of $125,000. As of December 31, 2012 and 2011, the Company had $43,667 and $47,249, respectively, in standby letters of credit issued through the Revolving Credit Facility. The amount available for borrowing under the Revolving Credit Facility is reduced by any standby letters of credit issued. As of December 31, 2012, there was $856,333 available for borrowing (net of standby letters of credit issued) under the Revolving Credit Facility.

        After May 4, 2012, subject to certain exceptions, the interest rate charged on the Revolving Credit Facility is based on LIBOR plus an applicable spread of 2.25% or a "base rate" (as defined in the agreements governing the Revolving Credit Facility) plus an applicable spread of 1.25%. From January 22, 2010 through May 4, 2012, the interest rate charged on the Revolving Credit Facility was based on LIBOR plus an applicable spread of between 2.50% and 4.00% or on a "base rate" plus an applicable spread of between 1.50% and 3.00%, in each case, based on a pricing grid depending upon the Company's credit ratings. Prior to an amendment and restatement of the Revolving Credit Facility on January 22, 2010, the interest rate charged on the Revolving Credit Facility was based on LIBOR plus an applicable spread of 1.00% or a "base rate". As of December 31, 2012, the one, two, three and six month LIBOR was 0.21%, 0.25%, 0.31% and 0.51%, respectively. As of December 31, 2011, the one, two, three and six month LIBOR was 0.30%, 0.43%, 0.58% and 0.81%, respectively. In addition to the stated interest expense on the Revolving Credit Facility, after May 4, 2012, the Company is required to pay a commitment fee of 0.375% per annum on any unused portion of the Revolving Credit Facility and a letter of credit fee of 2.50% per annum on letters of credit issued, both of which are payable quarterly. Prior to May 4, 2012, the commitment fee was 0.50%, and the letter of credit fee was 3.25%.

        The Revolving Credit Facility is secured by certain assets in the Company's portfolio and excludes investments held by Ares Capital CP under the Revolving Funding Facility and those held by ACJB under the SMBC Funding Facility and prior to the termination of the Debt Securitization, those

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previously held as part of the Debt Securitization, each as discussed below, and certain other investments.

        The components of interest and credit facility fees expense, cash paid for interest expense, average interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the Revolving Credit Facility were as follows:

 
  For the Year Ended December 31,  
 
  2012   2011   2010  

Stated interest expense

  $ 3,523   $ 5,541   $ 10,370  

Facility fees

    4,260     3,864     3,158  

Amortization of debt issuance costs

    4,207     6,510     6,635  
               

Total interest and credit facility fees expense

  $ 11,990   $ 15,915   $ 20,163  
               

Cash paid for interest expense

  $ 4,128   $ 5,278   $ 10,301  

Average stated interest rate

    2.82 %   3.40 %   4.25 %

Average outstanding balance

  $ 124,855   $ 163,216   $ 244,254  

        In October 2004, the Company established through its consolidated subsidiary, Ares Capital CP Funding LLC ("Ares Capital CP"), a revolving funding facility (as amended, the "Revolving Funding Facility"), which as of December 31, 2012, allowed Ares Capital CP to borrow up to $620,000 at any one time outstanding. The Revolving Funding Facility is secured by all of the assets held by, and the membership interest in, Ares Capital CP. In June 2012, the Company and Ares Capital CP amended the Revolving Funding Facility to, among other things, (i) increase the size of the Revolving Funding Facility from $500,000 to $580,000, (ii) add a feature that allows, under certain circumstances, for an increase in the size of the facility to a maximum of $865,000, (iii) extend the reinvestment period from January 18, 2015 to April 18, 2015, and (iv) extend the stated maturity date from January 18, 2017 to April 18, 2017. In July 2012, the Company and Ares Capital CP received an increase in the commitments under the Revolving Funding Facility of $40,000, bringing the total commitments to $620,000.

        Amounts available to borrow under the Revolving Funding Facility are subject to a borrowing base that applies different advance rates to different types of assets held by Ares Capital CP. Ares Capital CP is also subject to limitations with respect to the loans securing the Revolving Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests, loans with fixed rates and loans with certain investment ratings, as well as restrictions on portfolio company leverage, which may also affect the borrowing base and therefore amounts available to borrow. The Company and Ares Capital CP are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the agreements governing the Revolving Funding Facility. As of December 31, 2012, the Company and Ares Capital CP were in compliance in all material respects with the terms of the Revolving Funding Facility.

        As of December 31, 2012 and 2011, there was $300,000 and $463,000 outstanding, respectively, under the Revolving Funding Facility. After a January 18, 2012 amendment to the Revolving Funding Facility, and as of December 31, 2012, the interest rate charged on the Revolving Funding Facility was based on LIBOR plus an applicable spread of 2.50% or on a "base rate" (as defined in the agreements governing the Revolving Funding Facility) plus an applicable spread of 1.50%. See Note 19 for subsequent events relating to the Revolving Funding Facility. From January 22, 2010 through January 18, 2012, the interest rate charged on the Revolving Funding Facility was based on LIBOR plus an applicable spread of between 2.25% and 3.75% or on a "base rate" plus an applicable spread of

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between 1.25% to 2.75%, in each case, based on a pricing grid depending upon the Company's credit ratings. Prior to an amendment of the Revolving Funding Facility on January 22, 2010, the interest rate charged on the Revolving Funding Facility was based on the commercial paper rate plus 3.50%. As of December 31, 2012 and 2011, the interest rate in effect was based on one month LIBOR, which was 0.21% and 0.30%, respectively. Ares Capital CP is also required to pay a commitment fee of between 0.50% and 1.75% depending on the size of the unused portion of the Revolving Funding Facility.

        The components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the Revolving Funding Facility were as follows:

 
  For the Year Ended December 31,  
 
  2012   2011   2010  

Stated interest expense

  $ 10,557   $ 7,380   $ 7,458  

Facility fees

    1,209     2,226     1,453  

Amortization of debt issuance costs

    1,772     2,225     1,787  
               

Total interest and credit facility fees expense

  $ 13,538   $ 11,831   $ 10,698  
               

Cash paid for interest expense

  $ 11,979   $ 6,281   $ 7,224  

Average stated interest rate

    2.80 %   3.03 %   3.01 %

Average outstanding balance

  $ 377,098   $ 243,639   $ 247,490  

        In January 2012, the Company established through its consolidated subsidiary, Ares Capital JB Funding LLC ("ACJB"), a revolving funding facility (as amended, the "SMBC Funding Facility") with ACJB, as the borrower, Sumitomo Mitsui Banking Corporation ("SMBC"), as the administrative agent, collateral agent, and lender, which as of December 31, 2012 allowed ACJB to borrow up to $400,000 at any one time outstanding. In September 2012, the Company and ACJB amended the SMBC Funding Facility to, among other things, (i) increase the size of the SMBC Funding Facility from $200,000 to $400,000, (ii) extend the reinvestment period from January 20, 2015 to September 14, 2015 and (iii) extend the stated maturity date from January 20, 2020 to September 14, 2020. The reinvestment period and the stated maturity date are both subject to two one-year extensions by mutual agreement.

        Amounts available to borrow under the SMBC Funding Facility are subject to a borrowing base that applies an advance rate to assets held by ACJB. The Company and ACJB are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the SMBC Funding Facility. As of December 31, 2012, the Company and ACJB were in compliance in all material respects with the terms of the SMBC Funding Facility.

        As of December 31, 2012, there were no amounts outstanding under the SMBC Funding Facility. Subject to certain exceptions, the interest rate charged on the SMBC Funding Facility is based on one month LIBOR plus an applicable spread of 2.125% or a "base rate" (as defined in the agreements governing the SMBC Funding Facility) plus an applicable spread of 1.125%. As of December 31, 2012, one-month LIBOR was 0.21%. Prior to July 20, 2012, there was no commitment fee required to be paid. Beginning on July 20, 2012, ACJB was required to pay a commitment fee of 0.50% depending on the size of the unused portion of the SMBC Funding Facility. As a result of the September 2012 amendment to the SMBC Funding Facility described above, ACJB is not required to pay a commitment fee until September 15, 2013, at which time ACJB will be required to pay a commitment fee of 0.50% depending on the size of the unused portion of the SMBC Funding Facility.

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        The components of interest and credit facility fees expense, cash paid for interest expense, average interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the SMBC Funding Facility were as follows:

 
  For the Year Ended
December 31,
2012
 

Stated interest expense

  $ 1,419  

Facility fees

    3  

Amortization of debt issuance costs

    629  
       

Total interest and credit facility fees expense

  $ 2,051  
       

Cash paid for interest expense

  $ 1,404  

Average stated interest rate

    2.41 %

Average outstanding balance

  $ 58,987  

        In July 2006, through ARCC Commercial Loan Trust 2006, a vehicle serviced by the Company's consolidated subsidiary, ARCC CLO 2006 LLC ("ARCC CLO"), the Company completed a $400,000 debt securitization (the "Debt Securitization") and issued approximately $314,000 aggregate principal amount of asset backed notes to third parties (the "CLO Notes") that were secured by a pool of middle market loans that were purchased or originated by the Company. The Company initially retained approximately $86,000 of aggregate principal amount of certain "BBB" and non-rated securities in the Debt Securitization and subsequently repurchased $34,790 of the CLO Notes. In June 2012, the Company repaid in full the $60,049 aggregate principal amount outstanding of the CLO Notes and terminated or discharged the agreements governing the Debt Securitization.

        The classes, amounts and interest rates (expressed as a spread to LIBOR) of the CLO Notes as of December 31, 2011 were as follows:

Class
  Amount   LIBOR
Spread
(basis points)
 

A-1A

  $ 4,896     25  

A-1A VFN

    12,520     28  

A-1B

    14,000     37  

A-2B

    13,905     35  

B

    9,000     43  

C

    23,210     70  
             

Total

  $ 77,531        
             

        The interest charged under the Debt Securitization was based on three month LIBOR, which as of December 31, 2011 was 0.56%. The blended interest rate charged on the CLO Notes, excluding fees, at December 31, 2011, was approximately three month LIBOR plus 45 basis points. The Company was also required to pay a commitment fee of 0.175% for any unused portion of the Class A-1A VFN Notes through June 17, 2011, the end of the reinvestment period, which is included in facility fees below.

        In connection with the repayment in full of the CLO Notes ahead of their scheduled maturities, the remaining unamortized debt issuance costs related to the CLO Notes of $2,678 were expensed and resulted in a realized loss on the extinguishment of debt.

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        The components of interest and credit facility fees expense, cash paid for interest expense, average interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the Debt Securitization were as follows:

 
  For the Year Ended December 31,  
 
  2012   2011   2010  

Stated interest expense

  $ 321   $ 897   $ 1,534  

Facility fees

        25     21  

Amortization of debt issuance costs

    179     356     358  
               

Total interest and credit facility fees expense

  $ 500   $ 1,278   $ 1,913  
               

Cash paid for interest expense

  $ 347   $ 903   $ 1,536  

Average stated interest rate

    1.01 %   0.70 %   0.68 %

Average outstanding balance

  $ 31,829   $ 128,468   $ 228,252  

        In January 2011, the Company issued $575,000 aggregate principal amount of unsecured convertible senior notes that mature on February 1, 2016 (the "February 2016 Convertible Notes"), unless previously converted or repurchased in accordance with their terms. In March 2011, the Company issued $230,000 aggregate principal amount of unsecured convertible senior notes that mature on June 1, 2016 (the "June 2016 Convertible Notes"), unless previously converted or repurchased in accordance with their terms. In March 2012, the Company issued $162,500 aggregate principal amount of unsecured convertible senior notes that mature on March 15, 2017 (the "2017 Convertible Notes"), unless previously converted or repurchased in accordance with their terms. In the fourth quarter of 2012, the Company issued $270,000 aggregate principal amount of unsecured convertible senior notes that mature on January 15, 2018 (the "2018 Convertible Notes" and together with the 2017 Convertible Notes, February 2016 Convertible Notes and the June 2016 Convertible Notes, the "Convertible Unsecured Notes"), unless previously converted or repurchased in accordance with their terms. The Company does not have the right to redeem the Convertible Unsecured Notes prior to maturity. The February 2016 Convertible Notes, the June 2016 Convertible Notes, the 2017 Convertible Notes and the 2018 Convertible Notes bear interest at a rate of 5.75%, 5.125%, 4.875% and 4.75%, respectively, per year, payable semi-annually.

        In certain circumstances, the Convertible Unsecured Notes will be convertible into cash, shares of the Company's common stock or a combination of cash and shares of its common stock, at the Company's election, at their respective conversion rates (listed below as of December 31, 2012) subject to customary anti-dilution adjustments and the requirements of their respective indenture (the "Convertible Unsecured Notes Indentures"). Prior to the close of business on the business day immediately preceding their respective conversion date (listed below), holders may convert their Convertible Unsecured Notes only under certain circumstances set forth in the Convertible Unsecured Notes Indentures. On or after their respective conversion dates until the close of business on the scheduled trading day immediately preceding their respective maturity date, holders may convert their Convertible Unsecured Notes at any time. In addition, if the Company engages in certain corporate events as described in their respective Convertible Unsecured Notes Indenture, holders of the Convertible Unsecured Notes may require the Company to repurchase for cash all or part of the Convertible Unsecured Notes at a repurchase price equal to 100% of the principal amount of the Convertible Unsecured Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the required repurchase date.

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        Certain key terms related to the convertible features for each of the Convertible Unsecured Notes are listed below.

 
  February 2016
Convertible Notes
  June 2016
Convertible Notes
  2017
Convertible Notes
  2018
Convertible Notes
 

Conversion premium

    17.5 %   17.5 %   17.5 %   17.5 %

Closing stock price at issuance

    $16.28     $16.20     $16.46     $16.91  

Closing stock price date

    January 19, 2011     March 22, 2011     March 8, 2012     October 3, 2012  

Conversion price as of December 31, 2012

    $18.89     $18.80     $19.21     $19.81  

Conversion rate as of December 31, 2012 (shares per one thousand dollar principal amount)

    52.9289     53.1903     52.0606     50.4731  

Conversion dates

    August 15, 2015     December 15, 2015     September 15, 2016     July 15, 2017  

        As of December 31, 2012, the principal amounts of each series of the Convertible Unsecured Notes exceeded the value of the underlying shares multiplied by the per share closing price of the Company's common stock.

        The Convertible Unsecured Notes Indentures contain certain covenants, including covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a)(1) of the Investment Company Act and to provide financial information to the holders of the Convertible Unsecured Notes under certain circumstances. These covenants are subject to important limitations and exceptions that are described in the Convertible Unsecured Notes Indentures. As of December 31, 2012, the Company was in compliance in all material respects with the terms of the Convertible Unsecured Notes Indentures.

        The Convertible Unsecured Notes are accounted for in accordance with Accounting Standards Codification ("ASC") 470-20. Upon conversion of any of the Convertible Unsecured Notes, the Company intends to pay the outstanding principal amount in cash and to the extent that the conversion value exceeds the principal amount, the Company has the option to pay in cash or shares of the Company's common stock (or a combination of cash and shares) in respect of the excess amount, subject to the requirements of the Convertible Unsecured Notes Indentures. The Company has determined that the embedded conversion options in the Convertible Unsecured Notes are not required to be separately accounted for as a derivative under GAAP. In accounting for the Convertible Unsecured Notes, the Company estimated at the time of issuance that the values of the debt and equity components were approximately 93% and 7%, respectively, for each of the February 2016 Convertible Notes and the June 2016 Convertible Notes, approximately 97% and 3%, respectively, for the 2017 Convertible Notes and approximately 98% and 2%, respectively, for the 2018 Convertible Notes. The original issue discount equal to the equity components of the Convertible Unsecured Notes was recorded in "capital in excess of par value" in the accompanying consolidated balance sheet. As a result, the Company records interest expense comprised of both stated interest expense as well as accretion of the original issue discount. Additionally, the issuance costs associated with the Convertible Unsecured Notes were allocated to the debt and equity components in proportion to the allocation of the proceeds and accounted for as debt issuance costs and equity issuance costs, respectively.

        At the time of issuance, the debt issuance costs and equity issuance costs for the February 2016 Convertible Notes were $15,778 and $1,188, respectively, for the June 2016 Convertible Notes were $5,913 and $445, respectively, for the 2017 Convertible Notes were $4,813 and $149, respectively, and for the 2018 Convertible Notes were $5,712 and $116, respectively. At the time of issuance and as of December 31, 2012, the equity component, net of issuance costs as recorded in the "capital in excess of par value" in the accompanying consolidated balance sheet for the February 2016 Convertible Notes, the June 2016 Convertible Notes, the 2017 Convertible Notes and the 2018 Convertible Notes was $39,062, $15,654, $4,724 and $5,243, respectively.

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        As of December 31, 2012, the components of the carrying value of the Convertible Unsecured Notes, the stated interest rate and the effective interest rate were as follows:

 
  February 2016
Convertible Notes
  June 2016
Convertible Notes
  2017
Convertible Notes
  2018
Convertible Notes
 

Principal amount of debt

  $ 575,000   $ 230,000   $ 162,500   $ 270,000  

Original issue discount, net of accretion

    (26,479 )   (11,239 )   (4,188 )   (7,171 )
                   

Carrying value of debt

  $ 548,521   $ 218,761   $ 158,312   $ 262,829  
                   

Stated interest rate

    5.75 %   5.125 %   4.875 %   4.750 %

Effective interest rate(1)

    7.1 %   6.4 %   5.4 %   5.1 %

(1)
The effective interest rate of the debt component of the Convertible Unsecured Notes is equal to the stated interest rate plus the accretion of original issue discount.

        For the years ended December 31, 2012 and 2011, the components of interest expense and cash paid for interest expense for the Convertible Unsecured Notes were as follows:

 
  For year ended December 31,  
 
  2012   2011  

Stated interest expense

  $ 53,877   $ 39,797  

Accretion of original issue discount

    11,099     8,434  

Amortization of debt issuance costs

    5,436     3,813  
           

Total interest expense

  $ 70,412   $ 52,044  
           

Cash paid for interest expense

  $ 48,833   $ 25,039  

        In February 2012, the Company issued $143,750 aggregate principal amount of senior unsecured notes that mature on February 15, 2022 (the "February 2022 Notes"). The February 2022 Notes bear interest at a rate of 7.00% per year, payable quarterly and all principal is due upon maturity. The February 2022 Notes may be redeemed in whole or in part at any time or from time to time at the Company's option on or after February 15, 2015, at a par redemption price of $25.00 per security plus accrued and unpaid interest. Total proceeds from the issuance of the February 2022 Notes, net of underwriting discounts and offering costs, were approximately $138,338.

        In September 2012 and October 2012, the Company issued $182,500 aggregate principal amount of senior unsecured notes that mature on October 1, 2022 (the "October 2022 Notes"). The October 2022 Notes bear interest at a rate of 5.875% per year, payable quarterly commencing on January 1, 2013 and all principal is due upon maturity. The October 2022 Notes may be redeemed in whole or in part at any time or from time to time at the Company's option on or after October 1, 2015, at a par redemption price of $25.00 per security plus accrued and unpaid interest. Total proceeds from the issuance of the October 2022 Notes, net of underwriting discounts and offering costs, were approximately $176,054.

        In October 2010, the Company issued $200,000 aggregate principal amount of senior unsecured notes that mature on October 15, 2040 (the "2040 Notes"). The 2040 Notes bear interest at a rate of

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7.75% per year, payable quarterly and all principal is due upon maturity. The 2040 Notes may be redeemed in whole or in part at any time or from time to time at the Company's option on or after October 15, 2015, at a par redemption price of $25.00 per security plus accrued and unpaid interest. Total proceeds from the issuance of the 2040 Notes, net of underwriting discounts and offering costs, were approximately $193,000.

        The components of interest expense and cash paid for interest expense for the February 2022 Notes, the October 2022 Notes and the 2040 Notes are as follows:

 
  For the year ended December 31,  
 
  2012   2011   2010  

Stated interest expense

  $ 27,544   $ 15,500   $ 3,014  

Amortization of debt issuance costs

    917     242     44  
               

Total interest expense

  $ 28,461   $ 15,742   $ 3,058  
               

Cash paid for interest expense

  $ 26,258   $ 15,242   $  

        As part of the Allied Acquisition, the Company assumed all outstanding debt obligations of Allied Capital, including Allied Capital's unsecured notes, which consisted of 6.625% Notes due on July 15, 2011 (the "2011 Notes"), 6.000% Notes due on April 1, 2012 (the "2012 Notes") and 6.875% Notes due on April 15, 2047 (the "2047 Notes" and, together with the 2011 Notes and the 2012 Notes, the "Allied Unsecured Notes"). In accordance with ASC 805-10, the initial carrying value of the Allied Unsecured Notes was equal to the fair value as of April 1, 2010 resulting in an initial unaccreted discount from the principal amount of the Allied Unsecured Notes of approximately $65,800. Accretion expense related to this discount is included in "interest and credit facility fees" in the accompanying statement of operations.

        March 16, 2011 the Company redeemed the remaining balance of the 2011 Notes for a total redemption price (including a redemption premium) of $306,800, in accordance with the terms of the indenture governing the 2011 Notes, which realized a loss on the extinguishment of debt of $8,860. On April 27, 2011, the Company redeemed the remaining balance of the 2012 Notes for a total redemption price (including a redemption premium) of $169,338, in accordance with the terms of the indenture governing the 2012 Notes, which resulted in a realized loss on the extinguishment of debt of $10,458. During the year ended December 31, 2010, the Company purchased $19,350 principal amount of the 2011 Notes and $34,400 principal amount of the 2012 Notes. As a result of these transactions, the Company recognized a realized loss on the extinguishment of debt of $1,961.

        As of December 31, 2012 and 2011, the 2047 Notes were outstanding as follows:

 
  As of December 31,  
 
  2012   2011  
 
  Outstanding
Principal
  Carrying
Value(1)
  Outstanding
Principal
  Carrying
Value(1)
 

2047 Notes

  $ 230,000   $ 181,199   $ 230,000   $ 180,988  
                   

(1)
Represents the principal amount of the 2047 Notes less the unaccreted purchased discount initially recorded as a part of the Allied Acquisition.

        The 2047 Notes bear interest at a rate of 6.875% and mature on April 15, 2047. The 2047 Notes require payment of interest quarterly, and all principal is due upon maturity. The 2047 Notes may be redeemed in whole or in part at any time or from time to time at the Company's option, at a par

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redemption price of $25.00 per security plus accrued and unpaid interest and upon the occurrence of certain tax events as described in the indenture governing the 2047 Notes.

        The components of interest expense and cash paid for interest expense for the Allied Unsecured Notes are as follows:

 
  For the Year Ended December 31,  
 
  2012   2011   2010  

Stated interest expense

  $ 15,813   $ 23,078   $ 35,314  

Accretion of original issue discount

    211     2,624     8,201  
               

Total interest expense

  $ 16,024   $ 25,702   $ 43,515  
               

Cash paid for interest expense

  $ 15,812   $ 34,678   $ 34,056  

        The February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes contain certain covenants, including covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a)(1) of the Investment Company Act and to provide financial information to the holders of such notes under certain circumstances. These covenants are subject to important limitations and exceptions set forth in the indentures governing such notes. As of December 31, 2012, the Company was in compliance in all material respects with the terms of the indentures governing the February 2022 Notes, the October 2022 Notes, the 2040 Notes and the 2047 Notes.

        The Convertible Unsecured Notes and the Unsecured Notes are the Company's senior unsecured obligations and rank senior in right of payment to its existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Unsecured Notes and the Unsecured Notes; equal in right of payment to the Company's existing and future unsecured indebtedness that is not expressly subordinated; effectively junior in right of payment to any of its secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company's subsidiaries, financing vehicles or similar facilities.

6.     DERIVATIVE INSTRUMENTS

        In October 2008, the Company entered into an interest rate swap agreement that terminated on December 20, 2010 to mitigate the Company's exposure to adverse fluctuations in interest rates for a total notional amount of $75,000. Under the interest rate swap agreement, the Company paid a fixed interest rate of 2.985% and received a floating rate based on the prevailing three-month LIBOR. For the year ended December 31, 2010, the Company recognized $1,741 in unrealized appreciation related to this swap agreement. Upon termination of this swap agreement in 2010, no realized gain or loss was recognized.

7.     COMMITMENTS AND CONTINGENCIES

        The Company has various commitments to fund investments in its portfolio as described below.

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        As of December 31, 2012 and 2011, the Company had the following commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to fund which are at (or substantially at) the Company's discretion:

 
  As of December 31,  
 
  2012   2011  

Total revolving and delayed draw commitments

  $ 466,630   $ 565,630  

Less: funded commitments

    (107,121 )   (125,037 )
           

Total unfunded commitments

    359,509     440,593  

Less: commitments substantially at discretion of the Company

    (6,000 )   (64,750 )

Less: unavailable commitments due to borrowing base or other covenant restrictions

    (571 )   (5,518 )
           

Total net adjusted unfunded revolving and delayed draw commitments

  $ 352,938   $ 370,325  
           

        Included within the total revolving and delayed draw commitments as of December 31, 2012 were commitments to issue up to $62,250 in standby letters of credit through a financial intermediary on behalf of certain portfolio companies. Under these arrangements, if the standby letters of credit were to be issued, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations. As of December 31, 2012, the Company had $41,354 in standby letters of credit issued and outstanding under these commitments on behalf of the portfolio companies, of which no amounts were recorded as a liability on the Company's balance sheet as such letters of credit are considered in the valuation of the investments in the portfolio company. Of these letters of credit $41,288 expire in 2013 and $66 expire in 2014.

        As of December 31, 2012 and 2011, the Company was party to subscription agreements to fund equity investments in private equity investment partnerships as follows:

 
  As of December 31,  
 
  2012   2011  

Total private equity commitments

  $ 131,042   $ 132,030  

Less: funded private equity commitments

    (66,533 )   (67,428 )
           

Total unfunded private equity commitments

    64,509     64,602  

Less: private equity commitments substantially at discretion of the Company

    (53,088 )   (53,525 )
           

Total net adjusted unfunded private equity commitments

  $ 11,421   $ 11,077  
           

        In addition, as of each of December 31, 2012 and 2011, the Company had outstanding guarantees or similar obligations on behalf of certain portfolio companies totaling $800.

        In the ordinary course of business, the Company may sell certain of its investments to third party purchasers. In particular, in connection with the sale of certain controlled portfolio company equity investments (as well as certain other sales) the Company has, and may continue to do so in the future, agreed to indemnify such purchasers for future liabilities arising from the investments and the related sale transaction. Such indemnification provisions may give rise to future liabilities.

        As of December 31, 2012, one of the Company's portfolio companies, Ciena Capital LLC ("Ciena"), had one non-recourse securitization Small Business Administration ("SBA") loan warehouse facility, which has reached its maturity date but remains outstanding. Ciena is working with the providers of the SBA loan warehouse facility with regard to the repayment of that facility. Allied

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Capital had previously issued a performance guaranty (which the Company succeeded to as a result of the Allied Acquisition) whereby the Company must indemnify the warehouse providers for any damages, losses, liabilities and related costs and expenses that they may incur as a result of Ciena's failure to perform any of its obligations as loan originator, loan seller or loan servicer under the warehouse facility. As of December 31, 2012, there are no known issues or claims with respect to this performance guaranty.

        The Company is obligated under a number of operating leases and a sublease for office spaces with terms ranging from less than one year to more than 15 years. Rent expense for the years ended December 31, 2012, 2011 and 2010 was $3,958, $3,343 and $5,167, respectively.

        The following table shows future minimum payments under the Company's operating leases and subleases:

For the year ending December 31,
  Amount  

2013

  $ 7,101  

2014

    6,603  

2015

    5,198  

2016

    5,380  

2017

    5,529  

Thereafter

    43,172  
       

Total

  $ 72,983  
       

        For certain of its operating leases, the Company has entered into subleases including ones with Ares Management and Ivy Hill Asset Management, L.P. ("IHAM"), a wholly owned portfolio company of the Company. See Note 13 for further description of these subleases.

        The following table shows future expected rental payments to be received under the Company's subleases:

For the year ending December 31,
  Amount  

2013

  $ 2,505  

2014

    2,271  

2015

    1,567  

2016

    1,625  

2017

    1,671  

Thereafter

    14,460  
       

Total

  $ 24,099  
       

8.     FAIR VALUE OF FINANCIAL INSTRUMENTS

        The Company follows ASC 825-10, which provides companies the option to report selected financial assets and liabilities at fair value. ASC 825-10 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect of the company's choice to use fair value on its earnings. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. The Company has not elected the ASC 825-10 option to report selected financial assets and liabilities at fair value. With the exception of the line items entitled "other assets" and "debt," which are reported at amortized cost, all assets and liabilities approximate fair value on the balance sheet. The carrying value of the line items

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entitled "interest receivable," "receivable for open trades," "payable for open trades," "accounts payable and accrued expenses," "management and incentive fees payable" and "interest and facility fees payable" approximate fair value due to their short maturity.

        The Company also follows ASC 820-10, which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements. ASC 820-10 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Company to assume that the portfolio investment is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820-10, the Company has considered its principal market as the market in which the Company exits its portfolio investments with the greatest volume and level of activity. ASC 820-10 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820-10, these inputs are summarized in the three broad levels listed below:

        In addition to using the above inputs in investment valuations, the Company continues to employ the net asset valuation policy approved by the Company's board of directors that is consistent with ASC 820-10 (see Note 2). Consistent with the Company's valuation policy, it evaluates the source of inputs, including any markets in which the Company's investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. The Company's valuation policy considers the fact that because there is not a readily available market value for most of the investments in the Company's portfolio, the fair value of the investments must typically be determined using unobservable inputs.

        The Company's portfolio investments (other than as discussed below in the following paragraph) are typically valued using two different valuation techniques. The first valuation technique is an analysis of the enterprise value ("EV") of the portfolio company. Enterprise value means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The primary method for determining EV uses a multiple analysis whereby appropriate multiples are applied to the portfolio company's EBITDA (net income before net interest expense, income tax expense, depreciation and amortization). EBITDA multiples are typically determined based upon review of market comparable transactions and publicly traded comparable companies, if any. The second method for determining EV uses a discounted cash flow analysis whereby future expected cash flows of the portfolio company are discounted to determine a present value using estimated discount rates (typically a weighted average cost of capital based on costs of debt and equity consistent with current market conditions). The EV analysis is performed to determine the value of equity investments, the value of debt investments in portfolio companies where the Company has control or could gain control through an option or warrant security, and to determine if there is credit impairment for debt investments. If debt investments are credit impaired, an EV analysis may be used to value such debt investments; however, in addition to the methods outlined above, other methods such as a liquidation or wind-down analysis may be utilized to estimate enterprise value. The second valuation technique is a yield analysis, which is typically performed for non-credit

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impaired debt investments in portfolio companies where the Company does not own a controlling equity position. To determine fair value using a yield analysis, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk. In the yield analysis, the Company considers the current contractual interest rate, the maturity and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the enterprise value of the portfolio company. As debt investments held by the Company are substantially illiquid with no active transaction market, the Company depends on primary market data, including newly funded transactions, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.

        For other portfolio investments such as investments in collateralized loan obligations and the SSLP Certificates, discounted cash flow analysis is the primary technique utilized to determine fair value. Expected future cash flows associated with the investment are discounted to determine a present value using a discount rate that reflects estimated market return requirements.

        The following table summarizes the significant unobservable inputs the Company used to value the majority of its investments categorized within Level 3 as of December 31, 2012. The table is not intended to be all-inclusive, but instead captures the significant unobservable inputs relevant to the Company's determination of fair values.

 
   
   
  Unobservable Input  
Asset Category
  Fair
Value
  Primary
Valuation Technique
  Input   Range   Weighted
Average
 

Senior term debt

  $ 3,555,144   Yield Analysis   Market Yield   5.3% - 21.9%     9.8 %

Subordinated Certificates of the SSLP

    1,263,644   Discounted Cash Flow   Discount Rate   11.5% - 14.5%     13.5 %

Senior subordinated debt

    259,820   Yield Analysis   Market Yield   10.0% - 18.6%     14.9 %

Preferred equity securities

    250,118   EV Market Multiple Analysis   EBITDA Multiple   4.5x - 10.5x     8.1 x

Other equity securities and other

    585,931   EV Market Multiple Analysis   EBITDA Multiple   4.5x - 12.8x     7.4 x
                         

Total

  $ 5,914,657                    
                         

        Changes in market yields, discount rates or EBITDA multiples, each in isolation, may change the fair value of certain of the Company's investments. Generally, an increase in market yields or discount rates or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company's investments.

        Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company's investments may fluctuate from period to period. Additionally, the fair value of the Company's investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, it could realize significantly less than the value at which the Company has recorded it.

        In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

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        The following table presents fair value measurements of cash and cash equivalents and investments as of December 31, 2012:

 
  Fair Value Measurements Using  
 
  Total   Level 1   Level 2   Level 3  

Cash and cash equivalents

  $ 269,043   $ 269,043   $   $  

Investments

  $ 5,924,555   $ 9,898   $   $ 5,914,657  

        The following table presents fair value measurements of cash and cash equivalents and investments as of December 31, 2011:

 
  Fair Value Measurements Using  
 
  Total   Level 1   Level 2   Level 3  

Cash and cash equivalents

  $ 120,782   $ 120,782   $   $  

Investments

  $ 5,094,506   $   $   $ 5,094,506  

        The following table presents changes in investments that use Level 3 inputs as of and for the year ended December 31, 2012:

 
  As of and for the
year ended
December 31, 2012
 

Balance as of December 31, 2011

  $ 5,094,506  

Net realized and unrealized gains

    155,587  

Purchases

    3,161,661  

Sales

    (667,550 )

Redemptions

    (1,862,848 )

Payment-in-kind interest and dividends

    25,036  

Accretion of discount on securities

    13,747  

Net transfers in and/or out of Level 3

    (5,482 )
       

Balance as of December 31, 2012

  $ 5,914,657  
       

        As of December 31, 2012, the net unrealized appreciation on the investments that use Level 3 inputs was $92,638.

        The following table presents changes in investments that use Level 3 inputs as of and for the year ended December 31, 2011:

 
  As of and for the
year ended
December 31, 2011
 

Balance as of December 31, 2010

  $ 4,312,657  

Net realized and unrealized gains

    69,658  

Purchases

    3,239,023  

Sales

    (994,989 )

Redemptions

    (1,553,167 )

Payment-in-kind interest and dividends

    30,070  

Accretion of discount on securities

    15,894  

Net transfers in and/or out of Level 3

    (24,640 )
       

Balance as of December 31, 2011

  $ 5,094,506  
       

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        As of December 31, 2011, the net unrealized depreciation on the investments that use Level 3 inputs was $14,157.

        Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

        Following are the carrying and fair values of the Company's debt obligations as of December 31, 2012 and 2011. Fair value is estimated by discounting remaining payments using applicable current market rates, which take into account changes in the Company's marketplace credit ratings, or market quotes, if available.

 
  As of December 31,  
 
  2012   2011  
 
  Carrying value(1)   Fair value   Carrying value(1)   Fair value  

Revolving Credit Facility

  $   $   $ 395,000   $ 399,400  

Revolving Funding Facility

    300,000     303,209     463,000     467,900  

Debt Securitization

            77,531     68,215  

February 2016 Convertible Notes (principal amount outstanding of $575,000)

    548,521 (2)   617,550     541,152 (2)   545,445  

June 2016 Convertible Notes (principal amount outstanding of $230,000)

    218,761 (2)   243,797     215,931 (2)   215,717  

2017 Convertible Notes (principal amount outstanding of $162,500)

    158,312 (2)   168,495          

2018 Convertible Notes (principal amount outstanding of $270,000)

    262,829 (2)   272,813              

February 2022 Notes (principal amount outstanding of $143,750)

    143,750     151,549          

October 2022 Notes (principal amount outstanding of $182,500)

    182,500     179,361          

2040 Notes (principal amount outstanding of $200,000)

    200,000     208,968     200,000     198,808  

2047 Notes (principal amount outstanding of $230,000)

    181,199 (3)   225,558     180,988 (3)   212,218  
                   

  $ 2,195,872 (4) $ 2,371,300   $ 2,073,602 (4) $ 2,107,703  
                   

(1)
Except for the Convertible Unsecured Notes and the 2047 Notes, all carrying values are the same as the principal amounts outstanding.

(2)
Represents the aggregate principal amount outstanding of the Convertible Unsecured Notes less the unaccreted discount initially recorded upon issuance of each respective series of the Convertible Unsecured Notes.

(3)
Represents the aggregate principal amount outstanding of the 2047 Notes less the unaccreted purchased discount.

(4)
Total principal amount of debt outstanding totaled $2,293,750 and $2,170,531 as of December 31, 2012 and 2011, respectively.

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        The following table presents fair value measurements of the Company's debt obligations as of December 31, 2012 and 2011:

 
  As of December 31,  
Fair Value Measurements Using
  2012   2011  

Level 1

  $ 765,436   $ 411,026  

Level 2

    1,605,864     1,696,677  
           

Total

  $ 2,371,300   $ 2,107,703  
           

9.     STOCKHOLDERS' EQUITY

        The following table summarizes the total shares issued and proceeds received in public offerings of the Company's common stock net of underwriting discounts and offering costs for the years ended December 31, 2012 and 2010:

 
  Shares
issued
  Offering price
per share
  Proceeds net of
underwriting discounts
and offering costs
 

2012

                   

August 2012 public offering

    25,875   $ 16.55 (1) $ 427,566  

January 2012 public offering

    16,422   $ 15.41 (2) $ 252,415  
                 

Total for the year ended December 31, 2012

    42,297         $ 679,981  

2010

                   

November 2010 public offering

    11,500   $ 16.50   $ 180,642  

February 2010 public offering

    22,958   $ 12.75   $ 277,207  
                 

Total for the year ended December 31, 2010

    34,458         $ 457,849  

(1)
The shares were sold to the underwriters for a price of $16.55 per share, which the underwriters were then permitted to sell at variable prices to the public.

(2)
The shares were sold to the underwriters for a price of $15.41 per share, which the underwriters were then permitted to sell at variable prices to the public.

        The Company used the net proceeds from the 2012 and 2010 public equity offerings to repay outstanding debt and for general corporate purposes, which included funding investments in accordance with our investment objective.

        There were no sales of the Company's equity securities for the year ended December 31, 2011.

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10.   EARNINGS PER SHARE

        The following information sets forth the computations of basic and diluted net increase in stockholders' equity resulting from operations per share for the years ended December 31, 2012, 2011, and 2010:

 
  For the years ended December 31,  
 
  2012   2011   2010  

Net increase in stockholders' equity resulting from operations available to common stockholders:

  $ 508,178   $ 319,453   $ 691,834  

Weighted average shares of common stock outstanding—basic and diluted:

    230,151     204,860     176,732  

Basic and diluted net increase in stockholders' equity resulting from operations per share:

  $ 2.21   $ 1.56   $ 3.91  

        For the purpose of calculating diluted earnings per share, the average closing price of the Company's common stock for the year ended December 31, 2012, for the period from the time of issuance of the 2017 Convertible Notes through December 31, 2012 and for the period from the time of issuance of the 2018 Convertible Notes through December 31, 2012, was each less than the conversion price in effect for such period for each applicable series of the Convertible Unsecured Notes and therefore, the underlying shares for the intrinsic value of the embedded options in the Convertible Unsecured Notes had no impact on this calculation. The average closing price of the Company's common stock for the year ended December 31, 2011, for the period from the time of issuance of the February 2016 Convertible Notes through December 31, 2011 and for the period from the time of issuance of the June 2016 Convertible Notes through December 31, 2011, was each less than the conversion price in effect for such period for each applicable series of the Convertible Unsecured Notes and therefore, the underlying shares for the intrinsic value of the embedded options in the Convertible Unsecured Notes had no impact on this calculation.

11.   INCOME AND EXCISE TAXES

        For income tax purposes, dividends paid and distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. Dividends paid per common share for the years ended December 31, 2012, 2011 and 2010 were taxable as follows (unaudited):

 
  For the years ended December 31,  
 
  2012   2011   2010  

Ordinary income(1)

  $ 1.56   $ 1.16   $ 1.40  

Capital gains

    0.04     0.25      
               

Total

  $ 1.60   $ 1.41   $ 1.40  
               

(1)
For the years ended December 31, 2012, 2011 and 2010, ordinary income included dividend income of approximately $0.0918, $0.0619 and $0.0164, per share, respectively, that qualified to be taxed at the 15% maximum capital gains rate. For certain eligible corporate shareholders, these dividends were eligible for the dividend received deduction.

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        The following reconciles net increase in stockholders' equity resulting from operations to taxable income for the years ended December 31, 2012, 2011 and 2010:

 
  For the years ended December 31,  
 
  2012   2011   2010  
 
  (Estimated)(1)
   
   
 

Net increase in stockholders' equity resulting from operations

  $ 508,178   $ 319,453   $ 691,834  

Adjustments:

                   

Net unrealized (gain) loss on investments

    (115,261 )   40,192     (230,743 )

Items related to the Allied Acquisition:

                   

Gain on the Allied Acquisition

            (195,876 )

Other merger-related items

            (4,007 )

Other income not currently taxable

    (33,742 )   (55,936 )   (36,486 )

Other income for tax but not book

    48,701     73,657     71,997  

Expenses not currently deductible

    46,333     59,019     33,499  

Other deductible expenses

    (4,628 )   (1,210 )   (786 )

Other realized gain/loss differences

    (9,944 )   (33,720 )   (12,736 )
               

Taxable income

  $ 439,637   $ 401,455   $ 316,696  
               

(1)
The calculation of estimated 2012 taxable income includes a number of estimated inputs, including information received from third parties and, as a result, actual 2012 taxable income will not be finally determined until the Company's 2012 tax return is filed in 2013 (and, therefore, such estimate is subject to change).

        Taxable income generally differs from net increase in stockholders' equity resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized gains or losses, as unrealized gains or losses are generally not included in taxable income until they are realized. Additionally, on April 1, 2010, the Company acquired Allied Capital in a tax free merger and recorded a book gain of $195,876, which was not a realized event for tax purposes. Similarly, there were certain merger-related items that vary in their deductibility for GAAP and tax.

        Capital losses in excess of capital gains earned in a tax year may generally be carried forward and used to offset capital gains, subject to certain limitations. As of December 31, 2012, the Company estimates that it will have a capital loss carryforward of approximately $148.0 million available for use in later tax years. Because of the loss limitation rules of the Code, some of the tax basis capital losses may be limited in their use. The unused balance will be carried forward and utilized as gains are realized, subject to such limitations. In addition to the capital loss carryforwards, the Company realized net losses totaling approximately $0.3 billion from the Allied Capital portfolio since the acquisition through December 31, 2012, that have not yet been deducted for tax purposes as their deductibility in 2012, 2011 and 2010 was limited by the Code. While the Company's ability to utilize losses in the future depends upon a variety of factors that cannot be known in advance, substantially all of the Company's capital loss carryforwards and the net realized losses from the Allied Capital portfolio may become permanently unavailable due to limitations by the Code.

        For 2011, the Company had taxable income in excess of distributions made from such taxable income of approximately $177 million and therefore, the Company carried forward the excess for distribution to shareholders in 2012. For 2012, the Company had taxable income in excess of the distributions made from such taxable income during the year, and therefore, the Company has elected to carry forward the excess for distribution to shareholders in 2013. The amount carried forward to 2013 is estimated to be approximately $239 million, although this amount will not be finalized until the 2012 tax returns are filed in 2013. To the extent that the Company determines that its estimated current

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year annual taxable income will be in excess of estimated current year dividend distributions from such income, the Company accrues excise tax on estimated excess taxable income. For the years ended December 31, 2012, 2011 and 2010, a net expense of $7,937, $6,605 and $2,229, respectively, was recorded for U.S. federal excise tax.

        As of December 31, 2012, the cost basis of investments for tax purposes was $6.8 billion resulting in estimated gross unrealized gains and losses of $0.3 billion and $1.2 billion, respectively. As of December 31, 2011, the cost basis of investments for tax purposes was $6.1 billion resulting in estimated gross unrealized gains and losses of $0.2 billion and $1.2 billion, respectively. As of December 31, 2012 and 2011, the cost of investments for tax purposes was greater than the amortized cost of investments for book purposes of $5.8 billion and $5.1 billion, respectively, primarily as a result of the Allied Acquisition. The Allied Acquisition qualified as a tax free merger, which resulted in the acquired assets retaining Allied Capital's cost basis at the merger date.

        In general, the Company may make certain adjustments to the classification of stockholders' equity as a result of permanent book-to-tax differences, which may include merger-related items, differences in the book and tax basis of certain assets and liabilities, and nondeductible federal taxes, among other items. During the year ended December 31, 2012, the Company decreased accumulated overdistributed net investment income by $11,172, increased accumulated net realized loss on investments, foreign currency transactions, extinguishment of debt and other assets by $27,982 and increased capital in excess of par value by $16,810. During the year ended December 31, 2011, the Company decreased accumulated overdistributed net investment income by $7,474, increased accumulated net realized loss on investments, foreign currency transactions, extinguishment of debt and other assets by $126,234 and increased capital in excess of par value by $118,760. During the year ended December 31, 2010, as a result of certain permanent book-to-tax differences, including the nontaxability of the book gain on the Allied Acquisition and the nondeductibility of certain merger-related expenses, the Company decreased accumulated overdistributed net investment income by $22,001, increased accumulated net realized loss on investments, foreign currency transactions, extinguishment of debt and other assets by $383,856 and increased capital in excess of par value by $361,855.

        Certain of the Company's consolidated subsidiaries are subject to U.S. federal and state income taxes. For the years ended December 31, 2012, 2011 and 2010, the Company recorded a tax expense of approximately $3,235, $869 and $3,163, respectively, for these subsidiaries.

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12.   DIVIDENDS AND DISTRIBUTIONS

        The following table summarizes the Company's dividends declared for the years ended December 31, 2012, 2011 and 2010:

Date declared
  Record date   Payment date   Per share
amount
  Total amount  

November 5, 2012

    December 14, 2012     December 28, 2012   $ 0.38   $ 94,360  

November 5, 2012

    December 14, 2012     December 28, 2012   $ 0.05 (1)   12,415  

August 7, 2012

    September 14, 2012     September 28, 2012   $ 0.38     94,250  

August 7, 2012

    September 14, 2012     September 28, 2012   $ 0.05 (1)   12,401  

May 8, 2012

    June 15, 2012     June 29, 2012   $ 0.37     82,094  

February 28, 2012

    March 15, 2012     March 30, 2012   $ 0.37     81,974  
                       

Total declared for 2012

              $ 1.60   $ 377,494  
                       

November 8, 2011

    December 15, 2011     December 30, 2011   $ 0.36   $ 74,137  

August 4, 2011

    September 15, 2011     September 30, 2011   $ 0.35     71,643  

May 3, 2011

    June 15, 2011     June 30, 2011   $ 0.35     71,663  

March 1, 2011

    March 15, 2011     March 31, 2011   $ 0.35     71,547  
                       

Total declared for 2011

              $ 1.41   $ 288,990  
                       

November 4, 2010

    December 15, 2010     December 31, 2010   $ 0.35   $ 71,423  

August 5, 2010

    September 15, 2010     September 30, 2010   $ 0.35     67,266  

May 10, 2010

    June 15, 2010     June 30, 2010   $ 0.35     67,091  

February 25, 2010

    March 15, 2010     March 31, 2010   $ 0.35     46,516  
                       

Total declared for 2010

              $ 1.40   $ 252,296  
                       

(1)
Represents an additional dividend.

        The Company has a dividend reinvestment plan that was amended effective March 28, 2012, whereby the Company may buy shares of its common stock in the open market or issue new shares in order to satisfy dividend reinvestment requests. Prior to the amendment, if the Company issued new shares to implement the dividend reinvestment plan, the issue price was equal to the closing price of its common stock on the dividend record date. As a result of the amendment, when the Company issues new shares in connection with the dividend reinvestment plan, the issue price is equal to the closing price of its common stock on the dividend payment date. Dividend reinvestment plan activity for the years ended December 31, 2012, 2011, and 2010, was as follows:

 
  2012   2011   2010  

Shares issued

    1,226     711     1,523  

Average price per share

  $ 16.68   $ 16.24   $ 14.79  

Shares purchased by plan agent for shareholders

        785      

Average price per share

  $   $ 14.71   $  

13.   RELATED PARTY TRANSACTIONS

        In accordance with the investment advisory and management agreement, the Company bears all costs and expenses of the operation of the Company and reimburses its investment adviser for certain of such costs and expenses incurred in the operation of the Company. For the years ended December 31, 2012, 2011 and 2010, the investment adviser incurred such expenses totaling $3,528, $4,646 and $3,264, respectively. As of December 31, 2012, $583 was unpaid and such payable is included in "accounts payable and accrued expenses" in the accompanying consolidated balance sheet.

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        The Company has entered into separate subleases with Ares Management and IHAM pursuant to which Ares Management and IHAM sublease approximately 15% and 20%, respectively, of the Company's New York office space for a fixed rent equal to 15% and 20%, respectively, of the base annual rent payable by the Company under the Company's lease for this space, plus certain additional costs and expenses. For the years ended December 31, 2012 and 2011, amounts payable to the Company totaled $1,587 and $812, respectively. Under the Company's previous New York office space lease that expired on February 27, 2011, the Company was party to a sublease agreement with Ares Management whereby Ares Management subleased approximately 25% of such office space for a fixed rent equal to 25% of the basic annual rent payable by the Company under this lease, plus certain additional costs and expenses. For the years ended December 31, 2011 and 2010, amounts payable to the Company in connection with such previous lease totaled $396 and $253, respectively.

        In April 2012, the Company entered into an office sublease with Ares Commercial Real Estate Management LLC ("ACREM"), a wholly owned subsidiary of Ares Management and manager of Ares Commercial Real Estate Corporation, pursuant to which the Company is subleasing approximately 12% of ACREM's Chicago office space for a fixed rent equal to 12% of the basic annual rent payable by ACREM under its office lease, plus certain additional costs and expenses. For the year ended December 31, 2012, amounts payable under this sublease by the Company to ACREM totaled $55.

        As of December 31, 2012, Ares Investments Holdings LLC, an affiliate of Ares Management, owned approximately 2.9 million shares of the Company's common stock representing approximately 1.2% of the total shares outstanding as of December 31, 2012.

        See Notes 3 and 14 for descriptions of other related party transactions.

14.   IVY HILL ASSET MANAGEMENT, L.P. AND OTHER MANAGED VEHICLES

        The Company has made investments in its portfolio company, IHAM, which became an SEC registered investment adviser, effective March 30, 2012, as well as in certain vehicles managed by IHAM. As of December 31, 2012, IHAM managed 13 credit vehicles and served as the sub-manager/sub-servicer for three other vehicles (these vehicles managed or sub-managed/sub-serviced by IHAM are collectively, the "IHAM Vehicles"). As of December 31, 2011, the Company also had investments in two of the IHAM Vehicles.

        As of December 31, 2012, the Company's total investment in IHAM at fair value was $294,258, including unrealized appreciation of $123,297. As of December 31, 2011, the Company's total investment in IHAM at fair value was $194,597, including unrealized appreciation of $81,721. For the years ended December 31, 2012, 2011 and 2010, the Company received distributions consisting entirely of dividend income from IHAM of $19,939, $19,048 and $7,320, respectively.

        From time to time, IHAM or certain IHAM Vehicles may purchase investments from the Company or sell investments to it. For any such purchases or sales by the IHAM Vehicles from or to the Company, the IHAM Vehicles must obtain approval from third parties unaffiliated with the Company or IHAM, as applicable. IHAM or certain of the IHAM Vehicles purchased investments from the Company of $256,925 and $261,322, during the years ended December 31, 2012 and 2011, respectively. A net realized gain of $2,326 and $51 was recorded on these transactions for the years ended December 31, 2012 and 2011, respectively. For the year ended December 31, 2011, the Company also purchased $3,777 of investments from certain of the IHAM Vehicles.

        In October 2012, the Company contributed to IHAM its entire investment in FirstLight Financial Corporation ("FirstLight Corp.") at a price equal to the fair value at the time of the contribution of $58,085 ($51,760 for its senior subordinated loan position and $6,325 for its equity position). As a result of the contribution, the Company fully exited its investment in FirstLight Corp., which reduced its investment commitments by $84,153, and recognized a net loss of $26,068. Prior to such contribution,

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IHAM served as a sub-adviser to FirstLight Funding I, Ltd., a wholly owned subsidiary of FirstLight Corp. ("FirstLight Funding"). Following such contribution, FirstLight Funding distributed to FirstLight Corp. substantially all of its assets (in the form of cash and investments). In turn, FirstLight Corp. repaid in full the total outstanding amount of its senior subordinated loans (including the portion held by IHAM following the contribution transaction) and made a distribution to its stockholders (including IHAM following the contribution transaction). In connection with the foregoing, IHAM ceased to be a sub-adviser to FirstLight Funding and IHAM became the collateral manager to FirstLight Corp. and the other entity invested in FirstLight Corp.

        IHAM is party to an administration agreement, referred to herein as the "IHAM administration agreement," with Ares Operations. Pursuant to the IHAM administration agreement, Ares Operations provides IHAM with, among other things, office facilities, equipment, clerical, bookkeeping and record keeping services, services relating to the marketing and sale of interests in vehicles managed by IHAM, services of, and oversight of, custodians, depositories, accountants, attorneys, underwriters and such other persons in any other capacity deemed to be necessary. Under the IHAM administration agreement, IHAM reimburses Ares Operations for all of the actual costs associated with such services, including Ares Operations' allocable portion of overhead and the cost of its officers, employees and respective staff in performing its obligations under the IHAM administration agreement.

        As part of the Allied Acquisition, the Company acquired the management rights for an unconsolidated vehicle, the AGILE Fund I, LLC ("AGILE Fund"). Effective March 30, 2012, the management rights for the AGILE Fund were transferred for de minimis, non-monetary consideration to an unrelated third party. The Company's investment in AGILE Fund was $29 and $132 at fair value, respectively, including unrealized depreciation of $95 and $84, respectively, as of December 31, 2012 and 2011.

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15.   FINANCIAL HIGHLIGHTS

        The following is a schedule of financial highlights as of and for the years ended December 31, 2012, 2011 and 2010:

 
  As of and for the year ended  
Per Share Data:
  December 31, 2012   December 31, 2011   December 31, 2010  

Net asset value, beginning of period(1)

  $ 15.34   $ 14.92   $ 11.44  

Issuances of common stock

    0.05         0.95  

Issuances of the Convertible Unsecured Notes

    0.04     0.27      

Net investment income for period(2)

    1.52     1.38     1.23  

Gain on the Allied Acquisition(2)

            1.11  

Net realized and unrealized gains for period(2)

    0.69     0.18     1.59  
               

Net increase in stockholders' equity

    2.30     1.83     4.88  

Distributions from net investment income

    (1.56 )   (1.16 )   (1.40 )

Distributions from net realized gains

    (0.04 )   (0.25 )    
               

Total distributions to stockholders

    (1.60 )   (1.41 )   (1.40 )
               

Net asset value at end of period(1)

  $ 16.04   $ 15.34   $ 14.92  
               

Per share market value at end of period

  $ 17.50   $ 15.45   $ 16.48  

Total return based on market value(3)

    23.62 %   2.31 %   43.61 %

Total return based on net asset value(4)

    14.34 %   10.45 %   31.61 %

Shares outstanding at end of period

    248,653     205,130     204,419  

Ratio/Supplemental Data:

                   

Net assets at end of period

  $ 3,988,346   $ 3,147,265   $ 3,050,533  

Ratio of operating expenses to average net assets(5)(6)

    10.70 %   10.94 %   11.02 %

Ratio of net investment income to average net assets(5)(7)

    9.62 %   8.97 %   9.07 %

Portfolio turnover rate(5)

    45 %   53 %   45 %

(1)
The net assets used equals the total stockholders' equity on the consolidated balance sheets.

(2)
Weighted average basic per share data.

(3)
For the year ended December 31, 2012, the total return based on market value equalled the increase of the ending market value at December 31, 2012 of $17.50 per share over the ending market value at December 31, 2011 of $15.45 per share plus the declared dividends of $1.60 per share for the year ended December 31, 2012, divided by the market value at December 31, 2011. For the year ended December 31, 2011, the total return based on market value for the year ended December 31, 2011 equalled the decrease of the ending market value at December 30, 2011 of $15.45 per share from the ending market value at December 31, 2010 of $16.48 per share plus the declared dividends of $1.41 per share for the year ended December 31, 2011, divided by the market value at December 31, 2010. For the year ended December 31, 2010, the total return based on market value for the year ended December 31, 2010 equalled the increase of the ending market value at December 31, 2010 of $16.48 per share over the ending market value at December 31, 2009 of $12.45 per share plus the declared dividends of $1.40 per share for the year ended December 31, 2010, divided by the market value at December 31, 2009. Total return based on market value is not annualized. The Company's shares fluctuate in value. The Company's performance changes over time and currently may be different than that shown. Past performance is no guarantee of future results.

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(4)
For the year ended December 31, 2012, the total return based on net asset value equalled the change in net asset value during the period plus the declared dividends of $1.60 per share for the year ended December 31, 2012, divided by the beginning net asset value. For the year ended December 31, 2011, the total return based on net asset value equalled the change in net asset value during the period plus the declared dividends of $1.41 per share for the year ended December 31, 2011 divided by the beginning net asset value for the period. For the year ended December 31, 2010, the total return based on net asset value equalled the change in net asset value during the period plus the declared dividends of $1.40 per share for the year ended December 31, 2010 divided by the beginning net asset value for the period.These calculations are adjusted for shares issued in connection with the dividend reinvestment plan and the issuance of common stock in connection with any equity offerings. Total return based on net asset value is not annualized. The Company's performance changes over time and currently may be different than that shown. Past performance is no guarantee of future results.

(5)
The ratios reflect an annualized amount.

(6)
For the year ended December 31, 2012, the ratio of operating expenses to average net assets consisted of 2.38% of base management fees, 3.50% of incentive fees, 3.94% of the cost of borrowing and 0.88% of other operating expenses. For the year ended December 31, 2011, the ratio of operating expenses to average net assets consisted of 2.27% of base management fees, 3.57% of incentive fees, 3.89% of the cost of borrowing and other operating expenses of 1.21%. For the year ended December 31, 2010, the ratio of operating expenses to average net assets consisted of 2.19% of base management fees, 3.23% of incentive fees, 3.34% of the cost of borrowing and other operating expenses of 2.27%. These ratios reflect annualized amounts.

(7)
The ratio of net investment income to average net assets excludes income taxes related to realized gains.

16.   SELECTED QUARTERLY DATA (Unaudited)

 
  2012  
 
  Q4   Q3   Q2   Q1  

Total investment income

  $ 212,160   $ 190,572   $ 177,555   $ 167,738  

Net investment income before net realized and unrealized gains and incentive compensation

  $ 138,249   $ 123,599   $ 110,634   $ 103,424  

Incentive compensation

  $ 43,787   $ 34,139   $ 22,733   $ 26,386  

Net investment income before net realized and unrealized gains

  $ 94,462   $ 89,460   $ 87,901   $ 77,038  

Net realized and unrealized gains

  $ 80,682   $ 47,095   $ 3,031   $ 28,509  

Net increase in stockholders' equity resulting from operations

  $ 175,144   $ 136,555   $ 90,932   $ 105,547  

Basic and diluted earnings per common share

  $ 0.71   $ 0.59   $ 0.41   $ 0.49  

Net asset value per share as of the end of the quarter

  $ 16.04   $ 15.74   $ 15.51   $ 15.47  

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  2011  
 
  Q4   Q3   Q2   Q1  

Total investment income

  $ 187,123   $ 167,365   $ 144,307   $ 135,691  

Net investment income before net realized and unrealized gains (losses) and incentive compensation

  $ 121,990   $ 108,517   $ 85,509   $ 78,764  

Incentive compensation

  $ 29,531   $ 10,159   $ 41,746   $ 30,941  

Net investment income before net realized and unrealized gains (losses)

  $ 92,459   $ 98,358   $ 43,763   $ 47,823  

Net realized and unrealized gains (losses)

  $ 25,666   $ (57,719 ) $ (6,840 ) $ 75,943  

Net increase in stockholders' equity resulting from operations

  $ 118,125   $ 40,639   $ 36,923   $ 123,766  

Basic and diluted earnings per common share

  $ 0.58   $ 0.20   $ 0.18   $ 0.61  

Net asset value per share as of the end of the quarter

  $ 15.34   $ 15.13   $ 15.28   $ 15.45  

 

 
  2010  
 
  Q4   Q3   Q2   Q1  

Total investment income

  $ 157,170   $ 138,126   $ 121,590   $ 66,510  

Net investment income before net realized and unrealized gains and incentive compensation

  $ 99,323   $ 89,025   $ 64,514   $ 39,849  

Incentive compensation

  $ 35,973   $ 17,805   $ 14,973   $ 8,144  

Net investment income before net realized and unrealized gains

  $ 63,350   $ 71,220   $ 49,541   $ 31,705  

Net realized and unrealized gains

  $ 93,538   $ 57,157   $ 280,613 (1) $ 44,710  

Net increase in stockholders' equity resulting from operations

  $ 156,888   $ 128,377   $ 330,154   $ 76,415  

Basic and diluted earnings per common share

  $ 0.79   $ 0.67   $ 1.73   $ 0.61  

Net asset value per share as of the end of the quarter

  $ 14.92   $ 14.43   $ 14.11   $ 11.78  

(1)
Includes gain on the Allied Acquisition of $195,876.

17.   ALLIED ACQUISITION

        On April 1, 2010, the Company completed the Allied Acquisition by acquiring the outstanding shares of Allied Capital in exchange for shares of the Company's common stock in a transaction valued at approximately $908 million as of the closing date. Concurrently with the completion of the Allied Acquisition, the Company repaid in full the $137 million of remaining principal amounts outstanding on Allied Capital's $250 million senior secured term loan. The Company also assumed all of Allied Capital's other outstanding debt obligations, including approximately $745 million in aggregate principal amount outstanding of the Allied Unsecured Notes.

        Under the terms of the Allied Acquisition each Allied Capital stockholder received 0.325 shares of the Company's common stock for each share of Allied Capital common stock then owned by such stockholder. In connection with the Allied Acquisition, approximately 58.5 million shares of the Company's common stock (including the effect of outstanding in-the money Allied Capital stock options) were issued to Allied Capital's then-existing stockholders, resulting in the Company's then-existing stockholders owning approximately 69% of the combined company and the then-existing Allied Capital stockholders owning approximately 31% of the combined company.

        The Allied Acquisition was accounted for in accordance with the acquisition method of accounting as detailed in ASC 805-10. The acquisition method of accounting requires an acquirer to recognize the assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity based on their fair values as of the date of acquisition. As described in more detail in ASC 805-10, if the total

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acquisition date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred, the excess will be recognized as a gain. Upon completion of the Company's determination of the fair value of Allied Capital's identifiable net assets as of April 1, 2010, the fair value of such net assets exceeded the fair value of the consideration transferred, resulting in the recognition of a gain. The valuation of the investments acquired as part of the Allied Acquisition was done in accordance with Ares Capital's valuation policy (see Notes 2 and 8).

        Set forth below is the allocation of the purchase price to the assets acquired and liabilities assumed in connection with the Allied Acquisition:

Common stock issued

  $ 872,727  

Payments to holders of "in-the-money" Allied Capital stock options

    35,011 (1)
       

Total purchase price

  $ 907,738  
       

Assets acquired:

       

Investments

  $ 1,833,766  

Cash and cash equivalents

    133,548  

Other assets

    80,078  
       

Total assets acquired

    2,047,392  

Debt and other liabilities assumed

    (943,778 )
       

Net assets acquired

    1,103,614  
       

Gain on Allied Acquisition

    (195,876 )
       

  $ 907,738  
       

(1)
Represents cash payment for holders of any "in-the-money" Allied Capital stock options that elected to receive cash.

        The following pro forma condensed combined financial information does not purport to be indicative of actual financial position or results of the Company's operations had the Allied Acquisition actually been consummated at the beginning of the period presented. Certain one-time charges have been eliminated. For year ended December 31, 2010, the Company recognized $19,833 in professional fees and other costs related to the Allied Acquisition. The pro forma adjustments reflecting the allocation of the purchase price of Allied Capital and the gain of $195,876 recognized on the Allied Acquisition have been eliminated from the period presented. The pro forma condensed combined financial information did not reflect the potential impact of possible synergies and did not reflect any impact of additional accretion which would have been recognized on the transaction, except for that which was recorded after the transaction was consummated on April 1, 2010.

 
  For the Year Ended
December 31, 2010
 

Total investment income

  $ 537,488  

Net investment income

  $ 238,982  

Net increase in stockholders' equity resulting from operations

  $ 479,979  

Net increase in stockholders' equity resulting from operations per share

  $ 2.51  

        Prior to the completion of the Allied Acquisition, the Company purchased $340,000 of assets from Allied Capital in arm's length transactions. Additionally, during the same period of time, IHAM purchased $69,000 of assets from Allied Capital, also in arm's length transactions.

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18.   LITIGATION

        The Company is party to certain lawsuits in the normal course of business. In addition, Allied Capital was involved in various legal proceedings that the Company assumed in connection with the Allied Acquisition. Furthermore, third parties may try to seek to impose liability on the Company in connection with the activities of its portfolio companies. While the outcome of any such legal proceedings cannot at this time be predicted with certainty, the Company does not expect that these legal proceedings will materially affect its business, financial condition or results of operations.

19.   SUBSEQUENT EVENTS

        The Company's management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-K or would be required to be recognized in the Consolidated Financial Statements as of and for the year ended December 31, 2012, except as disclosed below.

        On January 25, 2013, Ares Capital and Ares Capital CP, entered into an amendment to the Revolving Funding Facility. The amendment, among other things, modified the interest charged on the Revolving Funding Facility from the previous applicable spreads of 2.50% over LIBOR and 1.50% over "base rate" (as defined in the agreements governing the Revolving Funding Facility) to applicable spreads ranging from 2.25% to 2.50% over LIBOR and ranging from 1.25% to 1.50% over "base rate," in each case, determined monthly based on the composition of the borrowing base relative to outstanding borrowings under the facility. After giving effect to the amendment and the relevant borrowing base and amounts outstanding thereunder, the interest charged on the Revolving Funding Facility as of January 25, 2013 was based on a spread over one-month LIBOR of 2.25% or a spread over "base rate" of 1.25%. As of such date, one-month LIBOR was 0.2037% and the "base rate" was 3.25%.

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PART C

Other information

ITEM 25.    FINANCIAL STATEMENTS AND EXHIBITS

(1)
Financial Statements

              The following statements of Ares Capital Corporation (the "Company" or the "Registrant") are included in Part B of this Registration Statement:

Audited Annual Financial Statements

   

Report of Independent Registered Public Accounting Firm

  F-2

Consolidated Balance Sheet as of December 31, 2012 and 2011

  F-3

Consolidated Statement of Operations for the years ended December 31, 2012, 2011 and 2010

  F-4

Consolidated Schedule of Investments as of December 31, 2012 and 2011

  F-5

Consolidated Statement of Stockholders' Equity for the years ended December 31, 2012, 2011 and 2010

  F-44

Consolidated Statement of Cash Flows for the years ended December 31, 2012, 2011 and 2010

  F-45

Notes to Consolidated Financial Statements

  F-46
(2)
Exhibits

(a)   Articles of Amendment and Restatement, as amended(1)

(b)

 

Second Amended and Restated Bylaws, as amended(2)

(c)

 

Not Applicable

(d)(1)

 

Form of Stock Certificate(3)

(d)(2)

 

Statement of Eligibility of Trustee on Form T-1*

(d)(3)

 

Form of Subscription Certificate(4)

(d)(4)

 

Indenture, dated June 16, 2006, between Allied Capital Corporation and The Bank of New York, as trustee(5)

(d)(5)

 

Form of Note under the Indenture, dated June 16, 2006, between Allied Capital Corporation and The Bank of New York, as trustee(contained in Exhibit (d)(4) to this Registration Statement)(5)

(d)(6)

 

Statement of Eligibility of The Bank of New York as Trustee on Form T-1(6)

(d)(7)

 

Third Supplemental Indenture, dated as of March 28, 2007, between Allied Capital Corporation and The Bank of New York, as trustee(7)

(d)(8)

 

Form of 6.875% Notes due 2047(7)

(d)(9)

 

Fourth Supplemental Indenture, dated as of April 1, 2010, among Ares Capital Corporation, Allied Capital Corporation and The Bank of New York Mellon, as trustee(8)

(d)(10)

 

Indenture, dated as of October 21, 2010, between Ares Capital Corporation and U.S. Bank National Association, as trustee(9)

(d)(11)

 

First Supplemental Indenture, dated as of October 21, 2010, relating to the 7.75% Senior Notes due 2040, between Ares Capital Corporation and U.S. Bank National Association, as trustee(9)

(d)(12)

 

Form of 7.75% Senior Notes due 2040(9)

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(d)(13)   Second Supplemental Indenture, dated as of February 2, 2012, relating to the 7.00% Senior Notes due 2022, between Ares Capital Corporation and U.S. Bank National Association, as trustee(10)

(d)(14)

 

Form of 7.00% Senior Notes due 2022(10)

(d)(15)

 

Third Supplemental Indenture, dated as of September 25, 2012, relating to the 5.875% Senior Notes due 2022, between Ares Capital Corporation and U.S. Bank National Association, as trustee(11)

(d)(16)

 

Form of 5.875% Senior Notes due 2022(11)

(d)(17)

 

Indenture, dated as of January 25, 2011, between Ares Capital Corporation and U.S. Bank National Association, as trustee(12)

(d)(18)

 

Form of 5.75% Convertible Senior Notes due 2016(12)

(d)(19)

 

Indenture, dated as of March 28, 2011, between Ares Capital Corporation and U.S. Bank National Association, as trustee(13)

(d)(20)

 

Form of 5.125% Convertible Senior Notes due 2016(13)

(d)(21)

 

Indenture, dated as of March 14, 2012, between Ares Capital Corporation and U.S. Bank National Association, as trustee(14)

(d)(22)

 

Form of 4.875% Convertible Senior Notes due 2017(14)

(d)(23)

 

Indenture, dated as of October 10, 2012, between Ares Capital Corporation and U.S. Bank National Association, as trustee(15)

(d)(24)

 

Form of 4.75% Convertible Senior Notes due 2018(15)

(e)

 

Dividend Reinvestment Plan of Ares Capital Corporation(16)

(f)

 

Not Applicable

(g)

 

Restated Investment Advisory and Management Agreement, dated as of June 6, 2011, between Registrant and Ares Capital Management LLC(17)

(h)(1)

 

Form of Underwriting Agreement for Equity Securities*

(h)(2)

 

Form of Underwriting Agreement for Debt Securities*

(i)

 

Not Applicable

(j)

 

Amended and Restated Custodian Agreement, dated as of May 15, 2009, between Ares Capital Corporation and U.S. Bank National Association(18)

(k)(1)

 

Amended and Restated Administration Agreement, dated as of June 1, 2007, between Ares Capital Corporation and Ares Operations LLC(19)

(k)(2)

 

Trademark License Agreement between Ares Capital Corporation and Ares Management LLC(20)

(k)(3)

 

Form of Indemnification Agreement between Ares Capital Corporation and directors and certain officers*

(k)(4)

 

Form of Indemnification Agreement between Ares Capital Corporation and members of Ares Capital Management LLC investment committee*

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(k)(5)   Amended and Restated Purchase and Sale Agreement, dated as of January 22, 2010, among Ares Capital Corporation, as seller, and Ares Capital CP Funding Holdings LLC, as purchaser(21)

(k)(6)

 

Amendment No. 1 to Amended and Restated Purchase and Sale Agreement, dated as of June 7, 2012, among Ares Capital Corporation, as seller, and Ares Capital CP Funding Holdings LLC, as purchaser(22)

(k)(7)

 

Second Tier Purchase and Sale Agreement, dated as of January 22, 2010, among Ares Capital CP Funding Holdings LLC, as seller, and Ares Capital CP Funding LLC, as purchaser(21)

(k)(8)

 

Amendment No. 1 to Second Tier Purchase and Sale Agreement, dated as of June 7, 2012, among Ares Capital CP Funding Holdings LLC, as seller, and Ares Capital CP Funding LLC, as purchaser(22)

(k)(9)

 

Amended and Restated Sale and Servicing Agreement, dated as of January 22, 2010, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer, Wachovia Bank, National Association, as note purchaser, U.S. Bank National Association, as trustee and collateral custodian, and Wells Fargo Securities, LLC, as agent(21)

(k)(10)

 

Amendment No. 1 to the Amended and Restated Sale and Servicing Agreement, dated as of May 6, 2010, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer, Wells Fargo Bank, National Association, as successor by merger to Wachovia Bank, as note purchaser, U.S. Bank National Association, as trustee and collateral custodian, and Wells Fargo Securities, LLC, as agent(23)

(k)(11)

 

Amendment No. 2 to the Amended and Restated Sale and Servicing Agreement, dated as of January 18, 2011, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer, Wells Fargo Bank, National Association, as successor by merger to Wachovia Bank, as note purchaser, U.S. Bank National Association, as trustee and collateral custodian, and Wells Fargo Securities, LLC, as agent(24)

(k)(12)

 

Amendment No. 3 to the Amended and Restated Sale and Servicing Agreement, dated as of October 13, 2011, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and as transferor, Wells Fargo Bank, National Association (as successor by merger to Wachovia Bank, National Association), as note purchaser, U.S. Bank National Association, as trustee, collateral custodian and bank, and Wells Fargo Securities, LLC, as agent(25)

(k)(13)

 

Amendment No. 4 to the Amended and Restated Sale and Servicing Agreement, dated as of January 18, 2012, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Bank, National Association (as successor by merger to Wachovia Bank, National Association), as note purchaser, Wells Fargo Securities, LLC, as agent, and U.S. Bank National Association, as collateral custodian, trustee and bank(26)

(k)(14)

 

Amendment No. 5 to Amended and Restated Sale and Servicing Agreement, dated as of June 7, 2012, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Bank, National Association (as successor by merger to Wachovia Bank, National Association), as note purchaser, Wells Fargo Securities, LLC, as agent, and U.S. Bank National Association, as collateral custodian, trustee and bank(22)

(k)(15)

 

Amendment No. 6 to Loan and Servicing Agreement, dated as of January 25, 2013, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Securities, LLC, as agent, and Wells Fargo Bank, National Association, as swingline lender(27)

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(k)(16)   Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of May 4, 2012, between Ares Capital Corporation, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent(28)

(k)(17)

 

First Amendment Agreement and Waiver, dated as of November 13, 2007, between Ares Capital Corporation, as borrower, Ares Capital FL Holdings LLC, ARCC CIC Flex Corp., ARCC Imperial Corporation and ARCC Imperial LLC, as subsidiary guarantors, and BMO Capital Markets Financing, Inc., Merrill Lynch Capital Corporation, SunTrust Bank, Commerzbank AG, New York and Grand Cayman Branches, UBS Loan Finance LLC, JPMorgan Chase Bank, N.A., Wachovia Bank, National Association and KBC Bank N.V., as lenders(29)

(k)(18)

 

Custodian Agreement, dated as of April 3, 2009, between Allied Capital Corporation and U.S. Bank National Association(30)

(k)(19)

 

Loan and Servicing Agreement, dated as of January 20, 2012, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, collateral agent and lender, and U.S. Bank National Association, as collateral custodian and bank(31)

(k)(20)

 

Purchase and Sale Agreement, dated as of January 20, 2012, between Ares Capital JB Funding LLC, as purchaser, and Ares Capital Corporation, as seller(31)

(l)(1)

 

Opinion and Consent of Venable LLP, Maryland counsel for Ares Capital Corporation*

(l)(2)

 

Opinion and Consent of Proskauer Rose LLP, counsel for Ares Capital Corporation*

(m)

 

Not Applicable

(n)(1)

 

Consent of independent registered public accounting firm for Ares Capital Corporation*

(n)(2)

 

Report of independent registered public accounting firm for Ares Capital Corporation, regarding "senior securities" table contained herein*

(o)

 

Not Applicable

(p)

 

Not Applicable

(q)

 

Not Applicable

(r)

 

Code of Ethics*

99.1

 

Statement of Computation of Ratio of Earnings to Fixed Charges**

99.2

 

Form of Preliminary Prospectus Supplement For Common Stock Offerings(32)

99.3

 

Form of Preliminary Prospectus Supplement For Preferred Stock Offerings(32)

99.4

 

Form of Preliminary Prospectus Supplement For Debt Offerings(32)

99.5

 

Form of Preliminary Prospectus Supplement For Rights Offerings(32)

99.6

 

Form of Preliminary Prospectus Supplement For Warrant Offerings(32)

99.7

 

Form of Preliminary Prospectus Supplement For Unit Offerings(32)

*
Filed herewith.

**
To be filed by amendment.

(1)
Incorporated by reference to Exhibit 3.1 to the Registrant's Form 10-Q (File No. 814-00663) for the quarter ended September 30, 2012, filed on November 5, 2012.

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(2)
Incorporated by reference to Exhibit 3.2 to the Registrant's Form 10-Q (File No. 814-00663) for the quarter ended June 30, 2010, filed on August 5, 2010.

(3)
Incorporated by reference to Exhibit (d) to the Registrant's pre-effective Amendment No. 2 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-114656), filed on September 28, 2004.

(4)
Incorporated by reference to Exhibit (d)(4) to the Registrant's pre-effective Amendment No. 2 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-149139), filed on April 9, 2008.

(5)
Incorporated by reference to Exhibit d.2 to Allied Capital's Registration Statement under the Securities Act of 1933, as amended, on Form N-2/A (File No. 333-133755), filed on June 21, 2006.

(6)
Incorporated by reference to Exhibit d.3 to Allied Capital's Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-133755), filed on May 3, 2006.

(7)
Incorporated by reference to Exhibits d.8 and d.9, as applicable, to Allied Capital's post-effective Amendment No. 3 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2/A (File No. 333-133755), filed on March 28, 2007.

(8)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on April 7, 2010.

(9)
Incorporated by reference to Exhibits 4.1, 4.2 and 4.3, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on October 22, 2010.

(10)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on February 2, 2012.

(11)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on September 25, 2012.

(12)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on January 28, 2011.

(13)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on March 28, 2011.

(14)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on March 14, 2012.

(15)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on October 10, 2012.

(16)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on February 27, 2012.

(17)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on June 8, 2011.

(18)
Incorporated by reference to Exhibit (j) to the Registrant's pre-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-158211), filed on May 28, 2009.

(19)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 10-Q (File No. 814-00663) for the quarter ended June 30, 2007, filed on August 9, 2007.

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(20)
Incorporated by reference to Exhibit (k)(3) to the Registrant's pre-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-114656), filed on September 17, 2004.

(21)
Incorporated by reference to Exhibits 10.2 through 10.4, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on January 25, 2010.

(22)
Incorporated by reference to Exhibits 10.1 through 10.3, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on June 8, 2012.

(23)
Incorporated by reference to Exhibit 10.5 to the Registrant's Form 10-Q (File No. 814-00663) for the quarter ended March 31, 2010, filed on May 10, 2010.

(24)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on January 19, 2011.

(25)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on October 14, 2011.

(26)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on January 19, 2012.

(27)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on January 28, 2013.

(28)
Incorporated by reference to Exhibit (k)(13) to the Registrant's Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-181563), filed on May 21, 2012.

(29)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663) filed on November 14, 2007.

(30)
Incorporated by reference to Exhibit 10.44 to Allied Capital's Form 10-Q (File No. 814-00138) for the quarter ended March 31, 2009, filed on May 11, 2009.

(31)
Incorporated by reference to Exhibits 10.1 and 10.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on January 24, 2012.

(32)
Incorporated by reference to Exhibits 99.2, 99.3, 99.4, 99.5, 99.6 and 99.7, as applicable, to the Registrant's pre-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-181563), filed on July 19, 2012.

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ITEM 26.    MARKETING ARRANGEMENTS

              The information contained under the heading "Plan of Distribution" on this Registration Statement is incorporated herein by reference and any information concerning any underwriters for a particular offering will be contained in the prospectus supplement related to that offering.

ITEM 27.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Commission registration fee

  $ 409,200 **

NASDAQ Global Select Market Listing Fee

      (1)*

FINRA filing fee

      *

Accounting fees and expenses

      (1)*

Legal fees and expenses

      (1)*

Printing

      (1)*

Miscellaneous fees and expenses

      (1)*
       

Total

      (1)*
       

*
To be provided by amendment

**
$234,397 of this amount has been offset against a filing fee associated with unsold securities registered under a previous registration statement.

(1)
These amounts are estimates.

ITEM 28.    PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

Direct Subsidiaries

              The following list sets forth each of our subsidiaries, the state or country under whose laws the subsidiary is organized, and the percentage of voting securities or membership interests owned by us in such subsidiary:

10th Street Equity, LLC (Delaware)

    100 %

A.C. Corporation (Delaware)

    100 %

AC Notes Holdings LLC (Delaware)

    100 %

ARCC S2 LLC (f/k/a/ AC Postle, LLC) (Delaware)

    100 %

ACC Universal Corporation (Delaware)

    86.26 %

AIC Universal Corporation (Delaware)

    86.26 %

Alaris Consulting, LLC (Delaware)

    100 %

Albras Equity, LLC (Delaware)

    100 %

ALD TBB/Win Equity, LLC (Delaware)

    100 %

Allbridge Equity, LLC (Delaware)

    100 %

Allied Asset Holdings, LLC (Delaware)

    100 %

Allied Capital Holdings LLC (Delaware)

    100 %

ARCC Imperial POF LLC (f/k/a Amerex Equity LLC) (Delaware)

    100 %

Amerex Equity Corporation (Delaware)

    100 %

ARCC AXC LLC (Delaware)

    100 %

ARCC BB Corp. (Delaware)

    100 %

ARCC BM LLC (Delaware)

    100 %

ARCC C&C Corp. (Delaware)

    100 %

ARCC CCS, Inc. (Delaware)

    100 %

ARCC CIC Flex Corporation (Delaware)

    100 %

ARCC CLPB Corporation (Delaware)

    100 %

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ARCC Covestia Corp. (Delaware)

    100 %

ARCC Crescent LLC (Delaware)

    100 %

ARCC ECG LLC (Delaware)

    100 %

ARCC GAC LLC (Delaware)

    100 %

ARCC GF, LLC (Delaware)

    100 %

ARCC HBF LLC (Delaware)

    100 %

ARCC IGS Corp. (Delaware)

    100 %

ARCC Imperial Corporation (Delaware)

    100 %

ARCC JTC LLC (Delaware)

    100 %

ARCC LVCG Investors LLC (Delaware)

    100 %

ARCC OTG Corp. (Delaware)

    100 %

ARCC PAH Corp. (Delaware)

    100 %

ARCC PCGI III AIV Blocker Inc. (Delaware)

    100 %

ARCC PJMB LLC (Delaware)

    100 %

ARCC SK Blocker Corp. (Delaware)

    100 %

ARCC NPA Corp. (f/k/a ARCC PSSI Corp.) (Delaware)

    100 %

ARCC Sage Inc. (Delaware)

    100 %

ARCC TTL Corp. (Delaware)

    100 %

ARCC Universal Corp. (Delaware)

    100 %

ARCC VTH Corp. (Delaware)

    100 %

Ares Capital CP Funding Holdings LLC (Delaware)

    100 %

Ares Capital JB Funding LLC (Delaware)

    100 %

Aviation Properties Corporation (Delaware)

    100 %

Binks Equity Corp. (Delaware)

    100 %

Calder Capital Partners LLC (Delaware)

    100 %

Calder Equity, LLC (Delaware)

    100 %

Calder Investment Partners LLC (Delaware)

    100 %

Cleveland East Equity, LLC (Delaware)

    100 %

Conectel, Inc. (Delaware)

    100 %

Crescent Equity Corp. (Delaware)

    86.26 %

Dynamic Equity, LLC (Delaware)

    100 %

Financial Pacific Company (Washington)

    92.76 %

Foresite Equity, LLC (Delaware)

    100 %

GlobalCom Equity, LLC (Delaware)

    100 %

Havco Equity Corporation (Delaware)

    86.26 %

IAT Equity, LLC (Delaware)

    100 %

Ivy Hill Asset Management GP, LLC (Delaware)

    100 %

Multiad Equity Corp. (Delaware)

    86.26 %

NPH, Inc. (Maryland)

    100 %

Old Orchard Equity Corp. (Delaware)

    100 %

Postle Equity Corp. (Delaware)

    86.26 %

RWI, LLC (Delaware)

    100 %

S2 Equity Corp. (Delaware)

    86.26 %

Slate Equity, LLC (Delaware)

    100 %

SMF II Equity, LLC (Delaware)

    100 %

Soteria Mezzanine Corporation (Delaware)

    86.26 %

Stag Equity, LLC (Delaware)

    100 %

Startec Equity, LLC (Delaware)

    100 %

Subfractional Motors, Inc. (Delaware)

    100 %

Transamerican Equity Corporation (Delaware)

    86.26 %

Van Ness Hotel, Inc. (Delaware)

    100 %

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Indirect Subsidiaries

              The following list sets forth each of our indirect subsidiaries, the state under whose laws the subsidiary is organized, and the percentage of voting securities or membership interests owned by the sole member of such subsidiary:

A.C. Management Services, LLC (Delaware)

    100 %

AC Finance LLC (Delaware)

    100 %

ACGP I, LLC (Delaware)

    100 %

ACE Products Holding Corp. (Delaware)

    100 %

Allied Crescent Equity, LLC (Delaware)

    100 %

AMP Admin LLC (Delaware)

    100 %

ARCC Imperial LLC (Delaware)

    100 %

Ares Capital CP Funding LLC (Delaware)

    100 %

Crescent Sliver Equity LLC (Delaware)

    100 %

HCI Equity, LLC (Illinois)

    100 %

              Each of our direct and indirect subsidiaries listed above is consolidated for financial reporting purposes.

              In addition, we may be deemed to control certain portfolio companies. See "Portfolio Companies" in the Prospectus.

ITEM 29.    NUMBER OF HOLDERS OF SECURITIES

              The following table sets forth the approximate number of record holders of the Company's common stock and each class of the Company's senior securities (including bank loans) as of March 31, 2013.

TITLE OF CLASS
  NUMBER OF
RECORD HOLDERS

Common stock, $0.001 par value

  1,889 (including Cede & Co.)

Revolving Credit Facility

  16

Revolving Funding Facility

  3

SMBC Funding Facility

  1

February 2016 Convertible Notes

  56

June 2016 Convertible Notes

  54

2017 Convertible Notes

  28

2018 Convertible Notes

  29

February 2022 Notes

  70

October 2022 Notes

  62

2040 Notes

  72

2047 Notes

  87

ITEM 30.    INDEMNIFICATION

              Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our charter contains such a provision which eliminates directors' and officers' liability to the maximum extent permitted by Maryland law, subject to the requirements of the Investment Company Act.

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              Our charter authorizes us, to the maximum extent permitted by Maryland law and subject to the requirements of the Investment Company Act, to obligate us to indemnify any present or former director or officer or any individual who, while a director or officer and at our request, serves or has served another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee, from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her status as a present or former director or officer and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. Our bylaws obligate us, to the maximum extent permitted by Maryland law and subject to the requirements of the Investment Company Act, to indemnify any present or former director or officer or any individual who, while a director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee and who is made or threatened to be made a party to a proceeding by reason of his or her service in that capacity from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in that capacity and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. The charter and bylaws also permit us to indemnify and advance expenses to any person who served a predecessor of us in any of the capacities described above and any of our employees or agents or any employees or agents of our predecessor. In accordance with the Investment Company Act, we will not indemnify any person for any liability to which such person would be subject by reason of such person's willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. In addition to the indemnification provided for in our bylaws, we have entered into indemnification agreements with each of our current directors and certain of our officers and with members of our investment adviser's investment committee and we intend to enter into indemnification agreements with each of our future directors, members of our investment adviser's investment committee and certain of our officers. The indemnification agreements attempt to provide these directors and senior officers the maximum indemnification permitted under Maryland law and the Investment Company Act. The agreements provide, among other things, for the advancement of expenses and indemnification for liabilities which such person may incur by reason of his or her status as a present or former director or officer or member of our investment adviser's investment committee in any action or proceeding arising out of the performance of such person's services as a present or former director or officer or member of our investment adviser's investment committee.

              Maryland law requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or are threatened to be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation's receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

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              The investment advisory and management agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, our investment adviser Ares Capital Management and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of our investment adviser's services under the investment advisory and management agreement or otherwise as an investment adviser of the Company.

              The administration agreement provides that, absent willful misfeasance, bad faith or negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Ares Operations and its officers, manager, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of Ares Operations' services under the administration agreement or otherwise as administrator for the Company.

              Insofar as indemnification for liability arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

ITEM 31.    BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

              A description of any other business, profession, vocation or employment of a substantial nature in which Ares Capital Management, and each partner, director or executive officer of Ares Capital Management, is or has been, during the past two fiscal years, engaged in for his or her own account or in the capacity of director, officer, employee, partner or trustee, is set forth in Part A of this Registration Statement in the sections entitled "Management." Additional information regarding Ares Capital Management and its officers and directors are set forth in its Form ADV, as filed with the Securities and Exchange Commission (SEC File No. 801-63168), and is incorporated herein by reference.

ITEM 32.    LOCATION OF ACCOUNTS AND RECORDS

              All accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940, and the rules thereunder are maintained at the offices of:

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ITEM 33.    MANAGEMENT SERVICES

              Not Applicable.

ITEM 34.    UNDERTAKINGS

              The Registrant undertakes:

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SIGNATURES

              Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form N-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, in the State of New York, on the 26th day of April, 2013.

    ARES CAPITAL CORPORATION

 

 

By:

 

/s/ MICHAEL J. AROUGHETI

Michael J. Arougheti
President

              KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Michael J. Arougheti, Penni F. Roll, Joshua M. Bloomstein and Michael D. Weiner, and each of them acting individually, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement on Form N-2 and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

              Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. This document may be executed by the signatories hereto on any number of counterparts, all of which constitute one and the same instrument.

SIGNATURE
 
TITLE
 
DATE

 

 

 

 

 
/s/ MICHAEL J. AROUGHETI

Michael J. Arougheti
  President and Director
(principal executive officer)
  April 26, 2013

/s/ PENNI F. ROLL

Penni F. Roll

 

Chief Financial Officer
(principal financial and accounting officer)

 

April 26, 2013

/s/ STEVE BARTLETT

Steve Bartlett

 

Director

 

April 26, 2013

/s/ ANN TORRE BATES

Ann Torre Bates

 

Director

 

April 26, 2013

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SIGNATURE
 
TITLE
 
DATE

 

 

 

 

 
/s/ STEVEN B. MCKEEVER

Steven B. McKeever
  Director   April 26, 2013

/s/ FRANK E. O'BRYAN

Frank E. O'Bryan

 

Director

 

April 26, 2013

/s/ ANTONY P. RESSLER

Antony P. Ressler

 

Director

 

April 26, 2013

/s/ ROBERT L. ROSEN

Robert L. Rosen

 

Director

 

April 26, 2013

/s/ BENNETT ROSENTHAL

Bennett Rosenthal

 

Chairman and Director

 

April 26, 2013

/s/ ERIC B. SIEGEL

Eric B. Siegel

 

Director

 

April 26, 2013

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EXHIBIT INDEX

(a)   Articles of Amendment and Restatement, as amended(1)

(b)

 

Second Amended and Restated Bylaws, as amended(2)

(c)

 

Not Applicable

(d)(1)

 

Form of Stock Certificate(3)

(d)(2)

 

Statement of Eligibility of Trustee on Form T-1*

(d)(3)

 

Form of Subscription Certificate(4)

(d)(4)

 

Indenture, dated June 16, 2006, between Allied Capital Corporation and The Bank of New York, as trustee(5)

(d)(5)

 

Form of Note under the Indenture, dated June 16, 2006, between Allied Capital Corporation and The Bank of New York, as trustee(contained in Exhibit (d)(4) to this Registration Statement)(5)

(d)(6)

 

Statement of Eligibility of The Bank of New York as Trustee on Form T-1(6)

(d)(7)

 

Third Supplemental Indenture, dated as of March 28, 2007, between Allied Capital Corporation and The Bank of New York, as trustee(7)

(d)(8)

 

Form of 6.875% Notes due 2047(7)

(d)(9)

 

Fourth Supplemental Indenture, dated as of April 1, 2010, among Ares Capital Corporation, Allied Capital Corporation and The Bank of New York Mellon, as trustee(8)

(d)(10)

 

Indenture, dated as of October 21, 2010, between Ares Capital Corporation and U.S. Bank National Association, as trustee(9)

(d)(11)

 

First Supplemental Indenture, dated as of October 21, 2010, relating to the 7.75% Senior Notes due 2040, between Ares Capital Corporation and U.S. Bank National Association, as trustee(9)

(d)(12)

 

Form of 7.75% Senior Notes due 2040(9)

(d)(13)

 

Second Supplemental Indenture, dated as of February 2, 2012, relating to the 7.00% Senior Notes due 2022, between Ares Capital Corporation and U.S. Bank National Association, as trustee(10)

(d)(14)

 

Form of 7.00% Senior Notes due 2022(10)

(d)(15)

 

Third Supplemental Indenture, dated as of September 25, 2012, relating to the 5.875% Senior Notes due 2022, between Ares Capital Corporation and U.S. Bank National Association, as trustee(11)

(d)(16)

 

Form of 5.875% Senior Notes due 2022(11)

(d)(17)

 

Indenture, dated as of January 25, 2011, between Ares Capital Corporation and U.S. Bank National Association, as trustee(12)

(d)(18)

 

Form of 5.75% Convertible Senior Notes due 2016(12)

(d)(19)

 

Indenture, dated as of March 28, 2011, between Ares Capital Corporation and U.S. Bank National Association, as trustee(13)

(d)(20)

 

Form of 5.125% Convertible Senior Notes due 2016(13)

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(d)(21)   Indenture, dated as of March 14, 2012, between Ares Capital Corporation and U.S. Bank National Association, as trustee(14)

(d)(22)

 

Form of 4.875% Convertible Senior Notes due 2017(14)

(d)(23)

 

Indenture, dated as of October 10, 2012, between Ares Capital Corporation and U.S. Bank National Association, as trustee(15)

(d)(24)

 

Form of 4.75% Convertible Senior Notes due 2018(15)

(e)

 

Dividend Reinvestment Plan of Ares Capital Corporation(16)

(f)

 

Not Applicable

(g)

 

Restated Investment Advisory and Management Agreement, dated as of June 6, 2011, between Registrant and Ares Capital Management LLC(17)

(h)(1)

 

Form of Underwriting Agreement for Equity Securities*

(h)(2)

 

Form of Underwriting Agreement for Debt Securities*

(i)

 

Not Applicable

(j)

 

Amended and Restated Custodian Agreement, dated as of May 15, 2009, between Ares Capital Corporation and U.S. Bank National Association(18)

(k)(1)

 

Amended and Restated Administration Agreement, dated as of June 1, 2007, between Ares Capital Corporation and Ares Operations LLC(19)

(k)(2)

 

Trademark License Agreement between Ares Capital Corporation and Ares Management LLC(20)

(k)(3)

 

Form of Indemnification Agreement between Ares Capital Corporation and directors and certain officers*

(k)(4)

 

Form of Indemnification Agreement between Ares Capital Corporation and members of Ares Capital Management LLC investment committee*

(k)(5)

 

Amended and Restated Purchase and Sale Agreement, dated as of January 22, 2010, among Ares Capital Corporation, as seller, and Ares Capital CP Funding Holdings LLC, as purchaser(21)

(k)(6)

 

Amendment No. 1 to Amended and Restated Purchase and Sale Agreement, dated as of June 7, 2012, among Ares Capital Corporation, as seller, and Ares Capital CP Funding Holdings LLC, as purchaser(22)

(k)(7)

 

Second Tier Purchase and Sale Agreement, dated as of January 22, 2010, among Ares Capital CP Funding Holdings LLC, as seller, and Ares Capital CP Funding LLC, as purchaser(21)

(k)(8)

 

Amendment No. 1 to Second Tier Purchase and Sale Agreement, dated as of June 7, 2012, among Ares Capital CP Funding Holdings LLC, as seller, and Ares Capital CP Funding LLC, as purchaser(22)

(k)(9)

 

Amended and Restated Sale and Servicing Agreement, dated as of January 22, 2010, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer, Wachovia Bank, National Association, as note purchaser, U.S. Bank National Association, as trustee and collateral custodian, and Wells Fargo Securities, LLC, as agent(21)

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(k)(10)   Amendment No. 1 to the Amended and Restated Sale and Servicing Agreement, dated as of May 6, 2010, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer, Wells Fargo Bank, National Association, as successor by merger to Wachovia Bank, as note purchaser, U.S. Bank National Association, as trustee and collateral custodian, and Wells Fargo Securities, LLC, as agent(23)

(k)(11)

 

Amendment No. 2 to the Amended and Restated Sale and Servicing Agreement, dated as of January 18, 2011, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer, Wells Fargo Bank, National Association, as successor by merger to Wachovia Bank, as note purchaser, U.S. Bank National Association, as trustee and collateral custodian, and Wells Fargo Securities, LLC, as agent(24)

(k)(12)

 

Amendment No. 3 to the Amended and Restated Sale and Servicing Agreement, dated as of October 13, 2011, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and as transferor, Wells Fargo Bank, National Association (as successor by merger to Wachovia Bank, National Association), as note purchaser, U.S. Bank National Association, as trustee, collateral custodian and bank, and Wells Fargo Securities, LLC, as agent(25)

(k)(13)

 

Amendment No. 4 to the Amended and Restated Sale and Servicing Agreement, dated as of January 18, 2012, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Bank, National Association (as successor by merger to Wachovia Bank, National Association), as note purchaser, Wells Fargo Securities, LLC, as agent, and U.S. Bank National Association, as collateral custodian, trustee and bank(26)

(k)(14)

 

Amendment No. 5 to Amended and Restated Sale and Servicing Agreement, dated as of June 7, 2012, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Bank, National Association (as successor by merger to Wachovia Bank, National Association), as note purchaser, Wells Fargo Securities, LLC, as agent, and U.S. Bank National Association, as collateral custodian, trustee and bank(22)

(k)(15)

 

Amendment No. 6 to Loan and Servicing Agreement, dated as of January 25, 2013, among Ares Capital CP Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Wells Fargo Securities, LLC, as agent, and Wells Fargo Bank, National Association, as swingline lender(27)

(k)(16)

 

Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of May 4, 2012, between Ares Capital Corporation, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent(28)

(k)(17)

 

First Amendment Agreement and Waiver, dated as of November 13, 2007, between Ares Capital Corporation, as borrower, Ares Capital FL Holdings LLC, ARCC CIC Flex Corp., ARCC Imperial Corporation and ARCC Imperial LLC, as subsidiary guarantors, and BMO Capital Markets Financing, Inc., Merrill Lynch Capital Corporation, SunTrust Bank, Commerzbank AG, New York and Grand Cayman Branches, UBS Loan Finance LLC, JPMorgan Chase Bank, N.A., Wachovia Bank, National Association and KBC Bank N.V., as lenders(29)

(k)(18)

 

Custodian Agreement, dated as of April 3, 2009, between Allied Capital Corporation and U.S. Bank National Association(30)

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(k)(19)   Loan and Servicing Agreement, dated as of January 20, 2012, among Ares Capital JB Funding LLC, as borrower, Ares Capital Corporation, as servicer and transferor, Sumitomo Mitsui Banking Corporation, as administrative agent, collateral agent and lender, and U.S. Bank National Association, as collateral custodian and bank(31)

(k)(20)

 

Purchase and Sale Agreement, dated as of January 20, 2012, between Ares Capital JB Funding LLC, as purchaser, and Ares Capital Corporation, as seller(31)

(l)(1)

 

Opinion and Consent of Venable LLP, Maryland counsel for Ares Capital Corporation*

(l)(2)

 

Opinion and Consent of Proskauer Rose LLP, counsel for Ares Capital Corporation*

(m)

 

Not Applicable

(n)(1)

 

Consent of independent registered public accounting firm for Ares Capital Corporation*

(n)(2)

 

Report of independent registered public accounting firm for Ares Capital Corporation, regarding "senior securities" table contained herein*

(o)

 

Not Applicable

(p)

 

Not Applicable

(q)

 

Not Applicable

(r)

 

Code of Ethics*

99.1

 

Statement of Computation of Ratio of Earnings to Fixed Charges**

99.2

 

Form of Preliminary Prospectus Supplement For Common Stock Offerings(32)

99.3

 

Form of Preliminary Prospectus Supplement For Preferred Stock Offerings(32)

99.4

 

Form of Preliminary Prospectus Supplement For Debt Offerings(32)

99.5

 

Form of Preliminary Prospectus Supplement For Rights Offerings(32)

99.6

 

Form of Preliminary Prospectus Supplement For Warrant Offerings(32)

99.7

 

Form of Preliminary Prospectus Supplement For Unit Offerings(32)

*
Filed herewith.

**
To be filed by amendment.

(1)
Incorporated by reference to Exhibit 3.1 to the Registrant's Form 10-Q (File No. 814-00663) for the quarter ended September 30, 2012, filed on November 5, 2012.

(2)
Incorporated by reference to Exhibit 3.2 to the Registrant's Form 10-Q (File No. 814-00663) for the quarter ended June 30, 2010, filed on August 5, 2010.

(3)
Incorporated by reference to Exhibit (d) to the Registrant's pre-effective Amendment No. 2 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-114656), filed on September 28, 2004.

(4)
Incorporated by reference to Exhibit (d)(4) to the Registrant's pre-effective Amendment No. 2 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-149139), filed on April 9, 2008.

(5)
Incorporated by reference to Exhibit d.2 to Allied Capital's Registration Statement under the Securities Act of 1933, as amended, on Form N-2/A (File No. 333-133755), filed on June 21, 2006.

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(6)
Incorporated by reference to Exhibit d.3 to Allied Capital's Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-133755), filed on May 3, 2006.

(7)
Incorporated by reference to Exhibits d.8 and d.9, as applicable, to Allied Capital's post-effective Amendment No. 3 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2/A (File No. 333-133755), filed on March 28, 2007.

(8)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on April 7, 2010.

(9)
Incorporated by reference to Exhibits 4.1, 4.2 and 4.3, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on October 22, 2010.

(10)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on February 2, 2012.

(11)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on September 25, 2012.

(12)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on January 28, 2011.

(13)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on March 28, 2011.

(14)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on March 14, 2012.

(15)
Incorporated by reference to Exhibits 4.1 and 4.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on October 10, 2012.

(16)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on February 27, 2012.

(17)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on June 8, 2011.

(18)
Incorporated by reference to Exhibit (j) to the Registrant's pre-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-158211), filed on May 28, 2009.

(19)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 10-Q (File No. 814-00663) for the quarter ended June 30, 2007, filed on August 9, 2007.

(20)
Incorporated by reference to Exhibit (k)(3) to the Registrant's pre-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-114656), filed on September 17, 2004.

(21)
Incorporated by reference to Exhibits 10.2 through 10.4, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on January 25, 2010.

(22)
Incorporated by reference to Exhibits 10.1 through 10.3, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on June 8, 2012.

(23)
Incorporated by reference to Exhibit 10.5 to the Registrant's Form 10-Q (File No. 814-00663) for the quarter ended March 31, 2010, filed on May 10, 2010.

(24)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on January 19, 2011.

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(25)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on October 14, 2011.

(26)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on January 19, 2012.

(27)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663), filed on January 28, 2013.

(28)
Incorporated by reference to Exhibit (k)(13) to the Registrant's Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-181563), filed on May 21, 2012.

(29)
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 814-00663) filed on November 14, 2007.

(30)
Incorporated by reference to Exhibit 10.44 to Allied Capital's Form 10-Q (File No. 814-00138) for the quarter ended March 31, 2009, filed on May 11, 2009.

(31)
Incorporated by reference to Exhibits 10.1 and 10.2, as applicable, to the Registrant's Form 8-K (File No. 814-00663), filed on January 24, 2012.

(32)
Incorporated by reference to Exhibits 99.2, 99.3, 99.4, 99.5, 99.6 and 99.7, as applicable, to the Registrant's pre-effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-181563), filed on July 19, 2012.

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