FS Investment unit Walnut Street gets $250 million five-year revolver

By Angela McDaniels

Tacoma, Wash., May 18 - FS Investment Corp.'s new special-purpose financing subsidiary, Walnut Street Funding LLC, entered into a $250 million revolving credit facility due May 17, 2017 on Thursday, according to an 8-K filing with the Securities and Exchange Commission.

The interest rate is Libor for the weighted average Libor interest period of eligible loans owned by Walnut Street plus a spread ranging between 150 basis points and 275 bps, depending on the composition of the portfolio of loans. Interest is payable quarterly. Walnut Street will be subject to a commitment fee beginning four months after May 17.

Wells Fargo Securities, LLC is the administrative agent, and Wells Fargo Bank, NA is the lender, collateral agent, account bank and collateral custodian.

FS Investment may contribute cash or loans to Walnut Street from time to time and will retain a residual interest in any assets contributed through its ownership of Walnut Street or will receive fair market value for any loans sold to Walnut Street. Walnut Street may purchase additional loans from various sources.

Walnut Street has appointed FS Investment to manage its portfolio of loans under a collateral management agreement. Walnut Street's obligations to Wells Fargo under the credit facility are secured by a first priority security interest in substantially all of its assets, including its portfolio of loans. The obligations of Walnut Street under the credit facility are non-recourse to FS Investment.

Borrowings under the credit facility are subject to compliance with a borrowing base. The amount of funds advanced to Walnut Street varies depending on the types of loans in Walnut Street's portfolio.

In connection with the credit facility, Walnut Street must maintain an asset coverage ratio of at least 2 to 1, a net asset value of at least $200 million and its status as a bankruptcy-remote entity.

FS Investment is a business development company based in Philadelphia.

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