Item 1.01 Entry into a Material Definitive Agreement
On
a Credit Agreement (the “Credit Agreement”) with
joint lead arranger, Coöperatieve Rabobank U.A.,
Harriman,
arrangers, and the various financial institutions party thereto as lenders. The
obligations of the Company under the Credit Agreement are guaranteed by the
Company’s material subsidiaries, including among others,
Capital Funding, LLC
LLC
Exhibit 10.1 to this Form 8-K, and the description of the Credit Agreement in
this Item is qualified by reference to the Exhibit.
The Credit Agreement provides for a revolving credit facility (the “Credit
Facility”), with a total revolving commitment of
incremental facilities of up to
facilities will be permitted during the term of the Credit Facility.
The Credit Facility has a termination date of
the unpaid principal under the Credit Facility, together with all accrued but
unpaid interest, will become due and payable. Lenders whose revolving
commitments equal at least 66.67% of the revolving commitments under the Credit
Facility, or the agent at the direction of those lenders, may require repayment
of all obligations outstanding under the Credit Facility within 10 days on
demand. After such demand, each lender with a revolving loan commitment may, but
is not obligated, to make revolving loans until the termination date of the
Credit Facility.
Revolving loans under the Credit Facility bear interest, at the option of the
Company, at either (i) a base rate per annum equal to (x) the greater of (I) the
Federal Funds Rate plus 0.5% and (II) the prime rate announced by the agent,
plus (y) 1.25%; or (ii) a rate per annum equal to (x) the applicable SOFR
interest rate for a term selected by the Company, plus (y) a margin of 2.365%
for loans bearing interest at a daily SOFR rate, (II) 2.365% for loans with a
one-month tenor, and (III) 2.515% for loans with a three month tenor. Interest
based upon the base rate and interest based upon a daily SOFR rate is payable on
the last day of each calendar month. Interest based upon a term SOFR rate is
payable upon the last date of the applicable term, but not less than quarterly.
The interest rate is increased by 2% if an event of default exists and is
continuing.
The total amount of revolving loans outstanding may not exceed the lesser of the
revolving commitment and a borrowing base, reduced by the amount of the secured
metal loans outstanding under a Master Loan Agreement for Precious Metals
between the Company and Canadian Imperial Bank of Commerce. The borrowing base
is determined on the basis of the amount of certain bank accounts pledged to the
lenders under the Credit Facility, certain pledged inventory, balances in
pledged broker accounts, net unrealized profit or deficit under precious metal
forward contracts, certain pledged receivables, certain loans originated by the
Company’s
Capital Funding, LLC
the Company.
The Credit Agreement contains customary events of default, representations and
warranties and affirmative and negative covenants applicable to the Company and
its subsidiaries (other than excluded subsidiaries, as defined). The negative
covenants include, among other things, restrictions on debt; liens; capital
expenditures; distributions on and redemptions of capital stock; repurchase or
payment of subordinated debt; mergers and sales of assets other than inventory
in the ordinary course; transactions with affiliates; changes in business
activities; investments; cancellation of debt or other claims; and certain other
matters related to the Company’s purchase of materials, storage of inventory,
ownership financing for customer purchases of precious metals, secured leases of
precious metals and loans of the Company’s
subsidiary included in the borrowing base. The Company is also subject to a
variety of financial covenants, including a minimum working capital requirement;
a fixed charge coverage ratio; a ratio of total recourse debt to consolidated
tangible net worth; and limitations on the amount of ownership-based financings
as defined in the Credit Agreement.
The obligations of the Company under the Credit Agreement are secured by a lien
on substantially all of the assets of the Company (excluding
LLC
accounts receivable, leasehold improvements and equipment, and a pledge of the
equity interests in substantially all of the Company’s domestic subsidiaries.
Item 1.02 Termination of a Material Definitive Agreement
On
amounts outstanding under the Company’s uncommitted demand borrowing facility
with a syndicate of banks, for whom Coöperatieve Rabobank U.A. acted as lead
lender and administrative agent (the “Trading Credit Facility”), were paid in
full, and the Trading Credit Facility was terminated.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits: Exhibit No. Description 10.1 Credit Agreement (the "Credit Agreement"), datedDecember 21, 2021 , among the Company, the other loan parties party thereto,CIBC Bank USA , as agent and joint lead arranger, Coöperatieve Rabobank U.A.,Axos Bank , Brown Brothers Harriman,California Bank & Trust andFirst Foundation Bank as joint lead arrangers, and the various financial institutions party thereto as lenders.
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