Bank Facilities
On November 9, 2021, the Company entered into a new $100.0 million multi-currency credit facility with Sumitomo Mitsui Banking Corporation
(“SMBC”). SMBC has committed a total of $100.0 million in credit capacity subject to borrowing base, leverage and other restrictions. The new credit facility also includes an uncommitted accordion feature expandable up to
$150.0 million. The interest rate applicable to borrowings under the new credit facility is LIBOR plus 1.875% and the advance rate under the new credit facility is a maximum of 75% against eligible loans. The new credit facility matures in
November 2026, including a 12-month amortization period.
As of December 31, 2021, there were no outstanding
borrowings under Hercules’ $400.0 million committed credit facility with Union Bank as Agent and $29.9 million of outstanding borrowings under Hercules’ $100.0 million committed credit facility with SMBC.
Leverage
As of December 31, 2021, Hercules’
GAAP leverage ratio, including its SBA debentures, was 95.6%. Hercules’ regulatory leverage, or debt-to-equity ratio, excluding its SBA debentures, was 84.1% and
net regulatory leverage, a non-GAAP measure (excluding cash of approximately $133.1 million), was 73.9%. Hercules’ net leverage ratio, including its SBA debentures, was 85.4%.
Available Unfunded Commitments – Representing 11.0% of Total Assets
The Company’s unfunded commitments and contingencies consist primarily of unused commitments to extend credit in the form of loans to select portfolio
companies. A portion of these unfunded contractual commitments are dependent upon the portfolio company reaching certain milestones in order to gain access to additional funding. Furthermore, the credit agreements the Company enters into with its
portfolio companies contain customary lending provisions that allow us relief from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial
condition or business outlook for the company. In addition, since a portion of these commitments may also expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements.
As of December 31, 2021, the Company had $286.8 million of available unfunded commitments at the request of the portfolio company and unencumbered
by any milestones, including undrawn revolving facilities, representing 11.0% of Hercules’ total assets. This decreased from the previous quarter of $309.9 million of available unfunded commitments or 11.1% of Hercules’ total assets.
Existing Pipeline and Signed Term Sheets
After
closing $947.8 million in new debt and equity commitments in Q4 2021, Hercules has pending commitments of $382.3 million in signed non-binding term sheets outstanding as of February 18, 2022.
Since the close of Q4 2021 and as of February 18, 2022, Hercules has closed new gross debt and equity commitments of $238.5 million and funded $117.5 million.
Signed non-binding term sheets are subject to satisfactory completion of Hercules’ due diligence and final
investment committee approval process as well as negotiations of definitive documentation with the prospective portfolio companies. These non-binding term sheets generally convert to contractual commitments in
approximately 90 days from signing and some portion may be assigned or allocated to or directly originated by private funds managed by Hercules Adviser prior to or after closing.
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