(1888PressRelease) May 27, 2009
- The facilities have been amended to provide similar terms which, among other things, extend the maturities of all facilities to September 30, 2010 and eliminate all mark to market provisions. In addition to eliminating outstanding margin calls and the right to make future margin calls, existing scheduled amortization payments were replaced with cash management requirements as described below. The new interest rate on the facilities is the greater of 30-day LIBOR plus 3.50% or 5.50%. These amendments are subject to completion of certain post-closing collateral asset transfers and other customary matters.
The Secured Creditors will continue to hold the same primary collateral consisting of EU. and non-EU denominated commercial real estate loan assets. All cash received from these assets will first be used to pay interest and then to reduce that lender's principal balance. The Company has agreed that the principal balance for each Secured Creditor will be reduced through this process by an agreed upon amount, measured on a cumulative basis, at the end of each quarter starting with the period ending September 30, 2009. If such required reduction is not satisfied, the Company has 90 days to cure such shortfall or an event of default would occur.
In addition, the lenders received a security interest in all unencumbered assets of the Company as well as a subordinated second lien on each other's primary collateral. The cash flows generated by the bulk of the formerly unencumbered assets will be deposited monthly into a cash management account that will be available for use by the Company for its operations pursuant to a prescribed budget subject to (i) no defaults under the facilities and (ii) the cure of any outstanding deficiency in the required reductions of the principal balance of any Secured Creditor. In the event of an uncured event of default, the cash management account proceeds must be used to pay down the relevant lender's debt until the deficiency has been cured.
The existing financial covenants were modified and apply to each facility as follows:
- Tangible net worth cannot fall below $400 million at any quarter end, and cannot fall by more than 20% in any one quarter or more than 40% in any four quarter period
- Debt service coverage ratio must be at least 1.40
- Total debt to tangible net worth ratio may not exceed 2.5