Article 1.01. The conclusion of an important definitive agreement.

At October 4, 2021 Saratoga Investment Corp. (the “Company”), in its capacity as collateral manager and shareholder, and its wholly-owned specific subsidiary, Saratoga Investment Funding II, LLC (“SIF II” or the “Borrower”), as the borrower, has entered into a senior secured credit facility (the “Credit Facility”) with Encina Lender Finance, LLC (“Encina”), acting as administrative agent and as guarantee agent.

The Credit Facility is evidenced by the Credit and Guarantee Agreement, dated October 4, 2021 (the “Credit Agreement”), by and among the Borrower, the Company, as collateral manager and shareholder, the lenders party thereto, Encina, as administrative agent for the secured parties and the ‘guarantee agent, and National Association of American Banks, as collateral depository for the secured parties and as collateral administrator. The credit facility provides for borrowings in we dollars up to a total of $ 50.0 million. During the first two years following the closing date, SIF II may request an increase in the amount of the commitment of $ 50.0 million up to $ 75.0 million. The terms of the credit facility require a minimum amount drawn from $ 12.5 million at any time during the first six months after the balance sheet date, which increases to the greater of the following amounts: $ 25.0 million or 50% of the amount of the commitment in effect at any time thereafter. The term of the credit facility is three years. The advances are available during the term of the credit facility and must be repaid in full when due. SIF II may request an extension of the term for an additional year, subject to the agreement of the lenders.

Advances under the credit facility are subject to a borrowing basis calculation, with prepayment rates on eligible loans ranging from 50% to 75%. The credit facility has many eligibility criteria for loans to be included in the borrowing base. Advances under the credit facility bear interest at an annual variable rate equal to LIBOR plus 4.0%, with a LIBOR floor of 0.75%, and with the usual arrangements for choice by the lender and the company. a replacement reference rate. The Borrower shall pay an unused commission on the amount of the excess of the amount of the commitment over the principal unpaid each day at an annual rate equal to 0.75% if the use is less than 50% of the amount of commitment, or 0.50% if the use is less than or equal to 50% of the amount of the commitment. The obligations of the Borrower to lenders under the Credit Facility are secured by a first ranking security interest over substantially all of the assets of the Borrower. In addition, the Borrower’s obligations towards the lenders under the Credit Facility are guaranteed by a pledge by the Company of its interests in SIF II, evidenced by the Equity Pledge Agreement, dated October 4, 2021 (the “Share Pledge Agreement”), by and between the Company and Encina, as a guarantee agent for the secured parties.

Under the Credit Agreement, the Company and SIF II have entered into a Loan and Contribution Sale Agreement, dated October 4, 2021 (the “Sale and Contribution Agreement”), under which the Company will sell or contribute certain loans held by the Company to SIF II for use in supporting the borrowing base under the credit facility. The Credit Facility allows loan proceeds and excess cash from the Borrower’s collection accounts to be distributed to the Company on a weekly basis after payment of other outstanding amounts, subject to compliance with various conditions, including the absence default or event of default, the absence of an advance on the loan basis and the absence of breach of financial covenants.

In connection with the credit facility, the Company has made certain customary representations and warranties and is required to comply with various covenants, reporting obligations and other customary requirements for similar financings. Under the terms of the Credit Agreement, the Borrower must comply with the following financial covenants: (i) an Interest Coverage Test and (ii) an Over-Collateralization Test.


                                       1




The Credit Facility contains typical events of default for similar financing transactions. In the event of default and during the persistence of an Event of Default, Encina may terminate the covenants and report outstanding advances and all other obligations under the Credit Facility immediately due and payable, subject to certain grace periods. and status quo described in the credit agreement.

The foregoing description is only a summary of the material provision of the Credit Facility and is qualified in its entirety by reference to the copies of the Credit and Guarantee Agreement, the Equity Collateral Agreement and the sales and contribution agreement, which are filed as attachments10. 1, 10.2 and 10.3, respectively, to this current report on Form 8-K and incorporated by reference herein. Capitalized terms not defined herein will have the meanings given to them in the Credit and Guarantee Agreement.

Article 2.03. Creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a registrant.

The information set out in Section 1.01 of this current report on Form 8-K is incorporated herein by reference.

Article 9.01. Financial statements and supporting documents.


(d) Exhibits



Exhibit No.   Description

10.1            Credit and Security Agreement, dated as of October 4, 2021, by and
              among Saratoga Investment Funding II, LLC, Saratoga Investment Corp., as
              collateral manager and equityholder, the lenders party thereto, Encina
              Lender Finance, LLC, as administrative agent for the secured parties and
              the collateral agent, and U.S. Bank National Association, as collateral
              custodian for the secured parties thereto and as collateral
              administrator
10.2            Equity Pledge Agreement, dated as of October 4, 2021, by and between
              Saratoga Investment Corp. and Encina Lender Finance, LLC, as collateral
              agent for the secured parties thereto
10.3            Loan Sale and Contribution Agreement, dated as of October 4, 2021, by
              and between Saratoga Investment Corp., as seller, and Saratoga
              Investment Funding II LLC, as purchaser




                                       2

© Edgar online, source Previews


Source link

About The Author

Related Posts

Leave a Reply

Your email address will not be published.