Full Circle Capital announced the closing of a new three-year, senior revolving credit facility with Sovereign Bank.

Full Circle said the new $32.5 million credit facility has a maturity date of June 3, 2016. Borrowings under the facility will bear interest based on a tiered rate structure, depending upon utilization, ranging from LIBOR plus 3.25% to 4.00% per annum, or from Sovereign’s prime rate plus 1.25% to 2.00% per annum, based on Full Circle’s election at the time of borrowing.

A portion of the borrowings under the credit facility are expected to initially bear interest at a rate of LIBOR plus 3.75% per annum while the remaining borrowings are expected to bear interest at Sovereign’s prime rate plus 1.75% per annum. This represents a significant improvement in the cost of debt capital from Full Circle’s prior revolving credit facility, which bore interest at LIBOR plus 5.50% per annum.

“Refinancing our credit facility with improved interest rates is an important part of the strategic initiatives we have been undertaking to optimize Full Circle’s capital structure,” said John Stuart, chief executive officer of Full Circle Capital. “This new facility positions us to significantly reduce our cost of debt capital which we believe will further our goal of growing net investment income for our stockholders.”

Rye Brook, NY-based Full Circle Capital is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940.