Fifth Street Asset Management Inc. (NASDAQ:FSAM) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On March 20, 2017, Fifth Street Finance Corp. (FSC) held a
special meeting of its stockholders at which the FSC stockholders
approved a fourth amended and restated investment advisory
agreement (the Fourth Amended and Restated Investment Advisory
Agreement) by and between Fifth Street Management LLC (Fifth
Street Management), a subsidiary of Fifth Street Asset Management
Inc. (the Company), and FSC. The Company and FSC subsequently
signed the Fourth Amended and Restated Investment Advisory
Agreement. The Fourth Amended and Restated Investment Advisory
Agreement, which is effective beginning with FSCs fiscal quarter
that commenced on January 1, 2017, changes the structure of the
subordinated incentive fee on income (the Part I Fee) as
described below. The other commercial terms of Fifth Street
Managements existing investment advisory relationship with FSC,
including payment by FSC of a base management fee on total gross
assets (excluding cash and cash equivalents) of 1.75%, remain
unchanged.
Under the Fourth Amended and Restated Investment Advisory
Agreement, effective beginning with FSCs fiscal quarter that
commenced on January 1, 2017, calculation of the Part I Fee with
respect to FSCs pre-incentive fee net investment income for each
quarter is as follows:
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No Part I Fee is payable to Fifth Street Management in any fiscal quarter in which FSCs pre-incentive fee net investment income does not exceed the preferred return rate of 1.75% (the Preferred Return) on net assets; |
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100% of FSCs pre-incentive fee net investment income, if any, that exceeds the Preferred Return but is less than or equal to 2.1875% in any fiscal quarter is payable to Fifth Street Management. This portion of FSCs Part I Fee is referred to as the catch up and is intended to provide Fifth Street Management with an incentive fee of 20% on all of FSCs pre-incentive fee net investment income when FSCs Pre-Incentive Fee Net Investment Income reaches 2.1875% on net assets in any fiscal quarter; and |
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For any quarter in which FSCs pre-incentive fee net investment income exceeds 2.1875% on net assets, the Part I Fee is equal to 20% of the amount of FSCs pre-incentive fee net investment income, as the Preferred Return and catch-up will have been achieved. |
In the event the cumulative Part I Fee accrued for the Lookback
Period (after giving effect to any reduction(s) to this paragraph
for any prior fiscal quarters of the Lookback Period but not the
quarter of calculation) exceeds 20.0% of the cumulative net
increase in net assets resulting from operations during the
Lookback Period, then the Part I Fee for the quarter shall be
reduced by an amount equal to (1) 25% of the Part I Fee
calculated for such quarter (prior to giving effect to any
reduction to this paragraph) less (2) any base management fees
waived by Fifth Street Management for such fiscal quarter. For
this purpose, the cumulative net increase in net assets resulting
from operations is an amount, if positive, equal to the sum of
pre-incentive fee net investment income, base management fees,
realized gains and losses and unrealized capital appreciation and
depreciation of FSC for the Lookback Period. Lookback Period
means (1) through December 31, 2019, the period which commenced
on January 1, 2017 and ends on the last day of the fiscal quarter
for which the Part I Fee is being calculated, and (2) after
December 31, 2019, the fiscal quarter for which the Part I Fee is
being calculated and the eleven preceding fiscal quarters.
The foregoing description of the Fourth Amended and Restated
Investment Advisory Agreement does not purport to be complete and
is qualified in its entirety by reference to the Fourth Amendment
and Restated Investment Advisory Agreement, attached hereto as
Exhibit 10.1 and incorporated by reference herein.
Item 2.02 Results of Operations and Financial
Condition.
On March 21, 2017, the Company issued a press release announcing
its financial results for the quarter and year ended December 31,
2016. A copy of the press release is attached hereto as Exhibit
99.1 and incorporated by reference herein.
The information furnished to this Item 2.02, including Exhibit
99.1, shall not be deemed filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject
to the liabilities under that Section and shall not be deemed to
be incorporated by reference into any filing under the Securities
Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| 10.1 |
Fourth Amended and Restated Investment Advisory Agreement by and between Fifth Street Management LLC and Fifth Street Finance Corp., effective as of January 1, 2017 |
| 99.1 | Press release dated March 21, 2017 |
About Fifth Street Asset Management Inc. (NASDAQ:FSAM)
Fifth Street Asset Management Inc. is an alternative asset manager. The Company provides asset management services to its investment funds (the Fifth Street Funds or the funds), which consist of Fifth Street Finance Corp. (FSC) and Fifth Street Senior Floating Rate Corp. (FSFR), both publicly-traded business development companies (together, the BDCs). Its segment provides asset management services to the Fifth Street Funds. The Company conducts all of its operations through its subsidiaries, Fifth Street Management LLC (FSM), Fifth Street CLO Management LLC (CLO Management) and FSCO GP LLC (FSCO GP). The funds, managed by the Company, provide financing solutions to small and mid-sized companies across their capital structures, mainly in connection with investments by private equity sponsors. It provides credit solutions across the capital structure, including one-stop financing, unitranche debt, senior secured debt, mezzanine debt, equity co-investments and venture debt financing. Fifth Street Asset Management Inc. (NASDAQ:FSAM) Recent Trading Information
Fifth Street Asset Management Inc. (NASDAQ:FSAM) closed its last trading session down -0.10 at 4.95 with 48,727 shares trading hands.
