Atlanticus Holdings Corporation (NASDAQ:ATLC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On November 14, 2019, Access Financial Holdings, LLC (“Access”), a wholly owned subsidiary of Atlanticus Holdings Corporation (the “Company”), sold 50.5 million Class B preferred units (the “Preferred Units”) to investment funds managed or advised by TowerBrook Capital Partners L.P. (“TowerBrook”) at a purchase price of $1.00 per Preferred Unit. The Preferred Units carry a 16% preferred return to be paid quarterly, with up to 6 percentage points of the preferred return to be paid through the issuance of additional Preferred Units or cash, at the Company’s election. The Preferred Units have both call and put rights and also are subject to various covenants including a minimum book value, which if not satisfied, could allow for the securities to be put back to the Company. Subject to satisfying certain closing conditions, Access has the right to issue up to 50.5 million additional Preferred Units on the same terms. The proceeds from the transaction will be used for Access’ general corporate purposes.
In February 2017, Perimeter Funding Corporation, a wholly owned subsidiary of the Company, established a program under which it sells certain receivables to a trust and securitizes such receivables though the issuance by the trust of notes that are secured by the receivables and other assets of the trust. Simultaneously with the establishment of the program, the trust sold variable funding notes to an affiliate of TowerBrook to a facility that currently can be drawn upon up to $70 million to the extent of outstanding eligible principal receivables.
On November 19, 2019, the Company and certain of its subsidiaries (the “Subsidiary Guarantors”) entered into the Eighth Amendment to Loan and Security Agreement (the “Amendment”) with respect to the Loan and Security Agreement, dated November 26, 2014 (the “Original Agreement”) as previously amended, among the Company, the Subsidiary Guarantors and Dove Ventures, LLC, a Nevada limited liability company (“Dove”).
The Amendment (i) extended the termination date of the $40.0 million term loan from November 21, 2019 to December 20, 2019 and (ii) released one of the Subsidiary Guarantors. The extension is intended to allow the parties to negotiate a longer-term, market-based extension or replacement. For more information regarding the Original Agreement, see the Form 8-K filed by the Company with the SEC on December 2, 2014 and the copy of the Original Agreement filed with the Securities and Exchange Commission as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
Dove is a limited liability company owned by three trusts. David G. Hanna is the sole shareholder and the President of the corporation that serves as the sole trustee of one of the trusts, and David G. Hanna and members of his immediate family are the beneficiaries of this trust. Frank J. Hanna, III is the sole shareholder and the President of the corporation that serves as the sole trustee of the other two trusts, and Frank J. Hanna, III and members of his immediate family are the beneficiaries of these other two trusts. David G. Hanna is the Chief Executive Officer and Chairman of the Board of the Company.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
To the extent applicable, the information contained in Item 1.01 of this Current Report is incorporated by reference into this Item 2.03.
About Atlanticus Holdings Corporation (NASDAQ:ATLC)
Atlanticus Holdings Corporation is focused on providing financial services. Through its subsidiaries, the Company offers an array of financial products and services. The Company operates through two segments: Credit and Other Investments, and Auto Finance. The Company’s Credit and Other Investments segment includes its point-of-sale and direct-to-consumer finance operations, investments in and servicing of its various credit card receivables portfolios and other product development and limited investment in consumer finance technology platforms that capitalize on its credit infrastructure. The Company’s Auto Finance segment operations are principally conducted through its CAR platform, which purchases and services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. The Company also provides loan servicing activities.
