NICHOLAS FINANCIAL, INC. (NASDAQ:NICK) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
On March30, 2018, Nicholas Financial, Inc. (the “Company”) entered into an amendment to its existing loan and security agreement governing the terms and conditions of its credit facility. A copy of the amendment is attached hereto as Exhibit 10.1 and incorporated herein by reference. Among other things, the amendment:
| • | extends the maturity date by one year to March31, 2019; |
| • | reduces the maximum amount the Company may borrow under the credit facility from $250,000,000 to $200,000,000 (in each case subject to availability calculations in accordance with the terms of the agreement); |
| • | adjusts the calculation of available funds under the credit facility; |
| • | provides for monthly rather than quarterly calculation of the interest coverage ratio; |
| • | requires a minimum interest coverage ratio as of April30, 2018 and May31, 2018 of 0.7:1.0, and as of June30, 2018 and thereafter of 1.0:1.0; and |
| • | adds an additional event of default for any stay, injunction or other non-monetary sanction imposed by a governmental authority which is reasonably like to have a material adverse effect on the Company. |
The interest coverage ratio is calculated as of each month end for the three-month period then endedas the ratio of (A)the Company’s adjusted net earnings plus interest expense and provision for income tax for the applicable period to (B)the Company’s interest expenses for such period. The interest rates for borrowings under the credit facility remain at base rate plus 3.0% or LIBOR plus 4.0%.
The Company’s obligations under the loan and security agreement are secured by substantially all of the operating assets of the Company as collateral. The loan and security agreement contains other events of default and requires the Company to comply with certain other financial ratios and covenants and to satisfy specified financial tests, including maintenance of asset quality and portfolio performance tests. Failure to meet any required financial ratios, covenants or financial tests could result in an event of default under the loan and security agreement. If an event of default occurs, the Company’s lenders could increase borrowing costs, restrict the Company’s ability to obtain additional borrowings under the facility, accelerate all amounts outstanding under the facility, or enforce their interest against collateral pledged under the facility.
Item 1.01 Regulation FD Disclosure.
On April4, 2018, the Company issued a press release in connection with the event reported above. A copy of the press release is furnished as Exhibit 99.1.
In accordance with General Instruction B.2. of Form 8-K, the information in this Item 1.01 and Exhibit 99.1 hereto is being furnished for informational purposes only and shall not be deemed “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.
The statements contained in this Current Report on Form 8-K that are not purely historical are forward-looking statements within the meaning of Section27A of the Securities Act of 1933 and Section31E of the Securities Exchange Act of 1934, including statements regarding the Company’s expectations, hopes, beliefs, intentions, or strategies regarding the future. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. All forward-looking statements included in this document are based on information available to the Company on the date hereof and the Company assumes no obligation to update any such forward-looking statement. Prospective investors should also consult the risks described from time to time in the Company’s Reports on Forms 10-K, 10-Q and 8-K and Annual Reports to Shareholders.
Item 1.01 Financial Statements and Exhibits.
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Exhibit# |
Description |
| 10.1 | Amendment No.8, dated as of March30, 2018, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto. |
| 99.1 | Press Release of Nicholas Financial, Inc., dated April4, 2018. |
NICHOLAS FINANCIAL INC ExhibitEX-10.1 2 d521836dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 Execution Copy WAIVER AND AMENDMENT NO. 8 TO LOAN AGREEMENT THIS WAIVER AND AMENDMENT NO. 8 TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of March 30,…To view the full exhibit click here
About NICHOLAS FINANCIAL, INC. (NASDAQ:NICK)
Nicholas Financial, Inc. (Nicholas Financial-Canada) is a holding company. The Company’s business activities are conducted through its subsidiary, Nicholas Financial, Inc. (Nicholas Financial). Nicholas Financial is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts (Contracts) for purchases of new and used automobiles and light trucks. Nicholas Financial also originates direct consumer loans (Direct Loans) and sells consumer-finance related products. Another subsidiary, Nicholas Data Services, Inc. (NDS), acts as the interim holding company for Nicholas Financial. The Company is engaged in the business of providing financing programs, primarily on behalf of purchasers of new and used cars and light trucks. The Company originates Direct Loans in Florida and North Carolina. As of March 31, 2016, the Company’s automobile finance programs were conducted in 18 states.
