Fifth Street Asset Management Inc. (NASDAQ:FSAM) Files An 8-K Entry into a Material Definitive AgreementItem 1.01. Entry into a Material Definitive Agreement.
Amended and Restated Credit Agreement
On June 30, 2017, Fifth Street Holdings L.P. (“Fifth Street Holdings”), a direct partially-owned subsidiary of Fifth Street Asset Management Inc. (the “Company”), entered into an amended and restated credit agreement (the “Credit Facility”) with the guarantors party thereto, the lenders party thereto, Sumitomo Mitsui Banking Corporation, as administrative agent, and Cortland Capital Market Services LLC, as collateral agent (the “Credit Agreement”). The Credit Facility is a $100 million term loan facility that matures on August 1, 2019 or when amounts owing under the Credit Facility otherwise become due and payable under the terms of the Credit Agreement. The Credit Agreement provides for monthly amortization of amounts owing under the facility beginning on January 1, 2018 at a rate of 5.0% of the aggregate amount outstanding as of January 1, 2018, subject to certain reductions.
Until January 1, 2018, borrowings under the Credit Facility bear interest at a variable rate based on either LIBOR or a base rate plus an applicable margin, which is subject to change based on a total leverage ratio. As of the date hereof, borrowings under the Credit Facility accrue interest, at Fifth Street Holdings’ option, at an annual rate of either LIBOR plus 3.0% or a base rate plus 2.0%. After January 1, 2018, borrowings under the Credit Facility will bear interest at Fifth Street Holdings’ option, at an annual rate of either LIBOR plus 5.0% or a base rate plus 4.0%. The Credit Facility is secured by substantially all of the assets of Fifth Street Holdings and certain subsidiaries of Fifth Street Holdings.
The Credit Agreement contains customary affirmative and negative covenants for agreements of this type, including financial maintenance requirements, delivery of financial and other information, compliance with laws, further assurances and limitations with respect to indebtedness, liens, fundamental changes, restrictive agreements, dispositions of assets, acquisitions and other investments, conduct of business and transactions with affiliates.
The description of the Credit Agreement is qualified in its entirety by reference to the Credit Agreement that is filed herewith as exhibit 10.1 and incorporated herein by reference.
Purchase Agreement
On June 30, 2017, Fifth Street Holdings entered into a purchase agreement (the “Purchase Agreement”) with New Star Financial, Inc. (“NewStar Financial”). Upon the terms and subject to the conditions set forth in the Purchase Agreement, at the closing, NewStar Financial will acquire 50% of the limited liability company interests of Fifth Street CLO Management LLC (“CLO Management”), a wholly-owned subsidiary of Fifth Street Holdings and the collateral manager for Fifth Street Senior Loan Fund I, LLC (“CLO I”) and Fifth Street SLF II, Ltd. (formerly Fifth Street Senior Loan Fund II, LLC, prior to securitization) (“CLO II”), each a collateralized loan obligation in the Company’s senior loan fund strategy, for an aggregate purchase price of $29.0 million, subject to a post-closing adjustment for working capital. Closing of the transactions contemplated by the Purchase Agreement is subject to the consent of certain holders of notes issued by each of CLO I and CLO II as well as other customary conditions. The Purchase Agreement may be terminated by either party if closing has not occurred by July 20, 2017.
The Purchase Agreement is incorporated herein by reference to provide information regarding the terms of the Purchase Agreement and is not intended to modify or supplement any factual disclosures about the Company in any public reports filed with the Securities and Exchange Commission by the Company. In particular, the assertions embodied in the representations, warranties and covenants contained in the Purchase Agreement were made only for the purposes of the Purchase Agreement, were solely for the benefit of the parties to the Purchase Agreement and may be subject to limitations agreed upon by the contracting parties not set forth in the Purchase Agreement. The representations and warranties set forth in the Purchase Agreement may also be subject to a contractual standard of materiality different from that generally applicable to investors under federal securities laws.
The description of the Purchase Agreement is qualified in its entirety by reference to the Purchase Agreement that is filed herewith as exhibit 10.2 and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 2.03 under the caption “Amended and Restated Credit Agreement” is incorporated by reference into this Item 2.03.
Item 8.01. Other Events.
On July 7, 2017, the Company issued a press release announcing that it had entered into the Purchase Agreement. A copy of the press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| 10.1 | Amended and Restated Credit Agreement dated as of June 30, 2017 among Fifth Street Holdings L.P., the guarantors party thereto, the lenders party thereto, Sumitomo Mitsui Banking Corporation, as administrative agent, and Cortland Capital Market Services LLC, as collateral agent. |
| 10.2 | Purchase Agreement by and between Fifth Street Holdings L.P. and NewStar Financial, Inc., dated as of June 30, 2017. |
| 99.1 | Press release dated July 7, 2017. |
Fifth Street Asset Management Inc. ExhibitEX-10.1 2 v470401_ex10-1.htm EXHIBIT 10.1 Exhibit 10.1 Execution Version AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 30,…To view the full exhibit click here
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.
