JAMES RIVER GROUP HOLDINGS, LTD. (NASDAQ:JRVR) Files An 8-K Entry into a Material Definitive AgreementItem 1.01.
On August 2, 2017, James River Group Holdings, Ltd. (the “Company”), and its wholly-owned subsidiary, JRG Reinsurance Company Ltd. (“JRG Re”, and together with the Company, the “Borrowers”), entered into a credit agreement (the “Credit Agreement”) with BMO Harris Bank N.A., as lender (“BMO”). The Credit Agreement provides the Borrowers with a revolving line of credit of up to $100 million, which may be used for loans and letters of credit made or issued, at Borrowers’ option, on a secured or unsecured basis. The loans and letters of credit made or issued under the revolving line of credit may be used to finance the Borrowers’ general corporate purposes. The Borrowers’ obligations under the Credit Agreement will mature on the date which is 30 days after notice from BMO terminating the availability period or, if earlier, following a default by the Borrowers which is not waived by BMO.
Interest rates for the revolving line of credit are established, at the Borrowers’ option, based on the Eurodollar rate or a defined base rate. Such interest rates range from 1.325% to 1.700% above the Eurodollar rate for unsecured Eurodollar-based loans and from 0.325% to 0.700% above the defined base rate for unsecured base rate loans, in each case depending on the Company’s leverage ratio. Interest rates applicable to secured loans are 0.375% above the Eurodollar rate for Eurodollar-based loans and the defined base rate for base rate loans. Letter of credit fees accrue based on the daily amount available to be drawn under outstanding letters of credit and range from 1.325% to 1.700% for letters of credit issued under the unsecured portion of the revolving line of credit, depending on the Company’s leverage ratio, and 0.375% for letters of credit issued under the secured portion of the revolving line of credit. If the Borrowers default under the Credit Agreement, BMO may increase the interest rate(s) to 2.0% more than the rate(s) otherwise applicable.
The Credit Agreement contains certain financial and other covenants (including minimum consolidated net worth and a maximum ratio of total debt outstanding to total capitalization covenants). The other covenants limit, in certain circumstances, the Borrowers’ ability to take a variety of actions, including but not limited to: incur indebtedness; create or maintain liens on its property or assets; make investments, loans and advances; repurchase shares of its capital stock; engage in acquisitions, mergers, consolidations and asset sales; enter into reinsurance agreements and pay dividends and distributions. The Borrowers’ insurance subsidiaries are required to maintain ratings from A.M. Best Company, Inc. of not lower than “A-”. The Credit Agreement also contains customary default provisions.
In order to secure borrowings and letters of credit made or issued under the secured portion of the revolving line of credit, JRG Re entered into a pledge and security agreement on August 2, 2017 with BMO (the “Pledge and Security Agreement”), to which JRG Re will pledge certain investment securities. In the event the Company elects to pledge investment securities as collateral for the secured portion of the revolving credit facility, the Company will enter into a similar pledge and security agreement.
BMO is a lender and its affiliate is a joint lead arranger under the Company’s Amended and Restated Credit Agreement dated as of December 7, 2016, as amended, and its affiliate was also an underwriter in the December 2014 initial public offering of the Company’s common shares. Additionally, BMO and its affiliates may in the future provide normal banking, investment banking and/or advisory services for the Company and/or its affiliates from time to time.
The foregoing summary is qualified in its entirety by reference to the Credit Agreement and the Pledge and Security Agreement, copies of which are attached hereto and incorporated by reference herein as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K, respectively.
|Item 2.03.||Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.|
The information provided in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.
|Item 9.01.||Financial Statements and Exhibits.|
|10.1||Credit Agreement, dated as of August 2, 2017, among James River Group Holdings, Ltd., JRG Reinsurance Company Ltd. and BMO Harris Bank N.A.|
|10.2||Pledge and Security Agreement, dated as of August 2, 2017, by and between James River Group Holdings, Ltd. and BMO Harris Bank N.A.|
James River Group Holdings, Ltd. ExhibitEX-10.1 2 t1702273_ex10-1.htm EXHIBIT 10.1 Exhibit 10.1 EXECUTION VERSION CREDIT AGREEMENT dated as of August 2,…To view the full exhibit click
About JAMES RIVER GROUP HOLDINGS, LTD. (NASDAQ:JRVR)
James River Group Holdings, Ltd. is an insurance holding company. The Company owns and operates a group of specialty insurance and reinsurance companies. The Company operates through four segments: Excess and Surplus Lines, Specialty Admitted Insurance, Casualty Reinsurance, and Corporate and Other. The Excess and Surplus Lines segment offers excess and surplus commercial lines liability and property insurance. The Specialty Admitted Insurance segment focuses on a range of markets within the standard insurance markets, such as workers’ compensation coverage for residential contractors, light manufacturing operations, transportation workers and healthcare workers. The Casualty Reinsurance segment provides proportional and working layer casualty reinsurance to third parties and to the United-based insurance subsidiaries. The Corporate and Other segment consists of the management and treasury activities of its holding companies and interest expense associated with its debt.