February 25, 2010 / 10:21 PM / in 8 years

UPDATE 1-Fifth Street Finance receives $150 mln financing

* Facility a third source of funding for new investments

* Facility has a targeted initial close of $65 mln

Feb 25 (Reuters) - Business development company Fifth Street Finance Corp FSC.N said it received a $150 million financing commitment from ING Capital LLC, a unit of ING Bank NV ING.AS, for a syndicated three-year revolving credit facility.

The facility is a two-year secured revolving credit facility with a one-year term out, and will bear interest at a rate of LIBOR plus 4.5 percent per annum, with no floor, it said.

The facility has a targeted initial close of $65 million, the company said.

The financing comes after Fifth Street’s unit received committee approval for a license from the U.S. Small Business Administration (SBA) to operate as a small business investment company (SBIC) in January. [ID:nSGE60C0JJ]

Under the SBIC program, if a business development company (BDC) is seeking a loan of $150 million, it should first make investments of $75 million out of its own funds.

Fifth Street said in January it will offer 7 million of its common shares at a price of $11.20 apiece.

BDCs make loans to small and mid-sized businesses in return for equity stakes.

Shares of the company closed at $11.24 Thursday on the New York Stock Exchange. (Reporting by Abhinav Sharma in Bangalore; Editing by Maju Samuel)

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