1287750--2/28/2008--ARES_CAPITAL

related topics

{investment, property, distribution}

{tax, income, asset}

{acquisition, growth, future}

{stock, price, operating}

{cost, contract, operation}

{competitive, industry, competition}

{personnel, key, retain}

{regulation, change, law}

{operation, international, foreign}

{interest, director, officer}

{loan, real, estate}

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS A failure on our part to maintain our status as a BDC would significantly reduce our operating flexibility. We are dependent upon Ares Capital Management's key personnel for our future success and upon their access to Ares investment professionals. Our financial condition and results of operation depend on our ability to manage future growth effectively. Our ability to grow depends on our ability to raise capital. We operate in a highly competitive market for investment opportunities. We will be subject to corporate-level income tax if we are unable to qualify as a RIC. We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income. Regulations governing our operation as a BDC affect our ability to, and the way in which, we raise additional capital. We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with us. We may in the future determine to fund a portion of our investments with preferred stock, which would magnify the potential for gain or loss and the risks of investing in us in the same way as our borrowings. We are exposed to risks associated with changes in interest rates. Many of our portfolio investments are not publicly traded and, as a result, there is uncertainty as to the value of our portfolio investments. The lack of liquidity in our investments may adversely affect our business. We may experience fluctuations in our quarterly results. There are significant potential conflicts of interest that could impact our investment returns. Our investment adviser's liability is limited under the investment management agreement, and we will 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. We may be obligated to pay our investment adviser incentive compensation even if we incur a loss. Changes in laws or regulations governing our operations, or changes in the interpretation thereof, and any failure by us to comply with laws or regulations governing our operations may adversely affect our business. The Company may not replicate Ares' historical success. Our ability to enter into transactions with our affiliates is restricted.

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1287750--2/28/2008--ARES_CAPITAL_CORP