On Deck Capital, Inc. (NYSE:ONDK) Files An 8-K Entry into a Material Definitive Agreement


On Deck Capital, Inc. (NYSE:ONDK) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01

Entry into a Material Definitive Agreement.
Credit Suisse Facility
On December 8, 2016, Prime OnDeck Receivable Trust II, LLC (PORT
II), a wholly-owned subsidiary of On Deck Capital, Inc. (the
Company), established a new asset-backed revolving debt facility
(the Credit Suisse Facility). On that date, PORT II entered into
that certain Credit Agreement (the CS Credit Agreement)>by and
among PORT II, as Borrower, the Lenders party thereto from time to
time, Credit Suisse, AG, New York Branch (Credit Suisse), as
Administrative Agent for the Class A Lenders (the Administrative
Agent), and Wells Fargo Bank, N.A., as Paying Agent and as
Collateral Agent. The Company may now obtain funding through the
Credit Suisse Facility, subject to customary borrowing conditions,
in addition to its other funding sources.
The following table summarizes certain aspects of the Credit Suisse
Facility Size
$200 million
Borrowing Base Advance Rate
83% (Class A)
Interest Rate
Specified base rate
2.25% (Class A)
Commitment Termination Date
December 8, 2018
The Class A loans were rated by DBRS, Inc. on the
closing date
Class A Lenders obligation consists of a commitment to make
Class A loans to PORT II in amount of up to $125 million on a
revolving basis. Class A Lenders may also, in their sole
discretion and on an uncommitted basis, make additional Class
A loans to PORT II in amount of up to $75 million on a
revolving basis.
2 Generally, the daily CP Rate. In certain circumstances, an
alternative base rate.
Under the Credit Suisse Facility, the Lenders party thereto make
loans to PORT II, the proceeds of which are used to finance PORT
IIs purchase of small business loans from the Company in a
transaction structured to be bankruptcy remote. The revolving pool
of small business loans purchased by PORT II serves as collateral
for the loans made to PORT II under the Credit Suisse Facility.
PORT II is required to repay the borrowings from collections
received on the loans.
Under the Credit Suisse Facility, PORT II can voluntarily repay
(without any penalty) and re-borrow principal amounts up to the
aggregate committed amount (or, at Class A Lenders discretion, up
to the sum of the committed and uncommitted amount) subject to
satisfaction of borrowing conditions, including borrowing base
requirements. In order for the Companys loans to be eligible for
purchase by PORT II under this facility, they must meet all
applicable eligibility criteria. Eligibility criteria include,
among others, that the applicable loan is denominated in U.S.
dollars, that the customer under such loan had a certain minimum
OnDeck Score at the time of underwriting, that such loan was
originated in accordance with the Companys underwriting policies
and that such loan is a legal, valid and binding obligation of the
obligor under such loan. PORT IIs collateral pool is subject to
certain concentration limits that restrict the collateral pool from
being overly concentrated with certain loans sharing common
characteristics and that, if exceeded, would require PORT II to add
or maintain additional collateral and, if not cured, an event of
default would occur. Concentration limitations include, among
others, geography, industry, minimum credit scores, time in
business and outstanding principal balance.
The loans and other assets to be transferred by the Company to PORT
II in connection with the Credit Suisse Facility will be owned by
PORT II, will be pledged to secure the payment of the obligations
incurred by PORT II, will be assets of PORT II and will not be
available to satisfy any of the Companys obligations. Lenders under
the Credit Suisse Facility do not have direct recourse to On Deck
Capital, Inc.
The Companys ability to utilize the Credit Suisse Facility is
subject to PORT IIs compliance with various covenants and other
requirements of the CS Credit Agreement. The failure to comply with
such requirements may result in events of default, the accelerated
repayment of amounts owed under the Credit Suisse Facility, often
referred to as an early amortization event, and/or the termination
of the Credit Suisse Facility.
Such covenants and other requirements include:
Financial Covenants. Financial covenants include, among
others, requirements with respect to minimum tangible net
worth, maximum leverage ratio, minimum consolidated liquidity
and minimum unrestricted cash.
Portfolio Performance Covenants. Portfolio performance
covenants include, among others, requirements that the pool
not exceed certain delinquency rates and that the excess
spread on the pool not be less than stated minimum levels.
Excess spread is generally the amount by which collections
received by PORT II during a collection period (primarily
interest and fees) exceed its fees and expenses during such
collection period (including interest expense, servicing fees
and charged-off receivables).
Other Requirements.Other requirements may include or relate
to, among other things, change of control events, certain
insolvency-related events, events constituting a servicer
default, an inability to engage a replacement backup servicer
following termination of the current backup servicer, the
occurrence of certain events of default or acceleration under
other facilities, the inability or failure of the Company to
transfer loans to PORT II as required, failure to make
required payments or deposits, ERISA-related events, events
related to the entry of an order decreeing dissolution that remains
undischarged, events related to the entry or filing of judgments,
attachments or certain tax liens that remain undischarged, and
certain other events or occurrences that may include breaches of
terms, representations, warranties or affirmative and restrictive
covenants. Restrictive covenants, among other things, impose
limitations or restrictions on PORT IIs ability to pay dividends or
make distributions, redeem its stock or similar equity interests,
make payments in order to retire or obtain the surrender of
warrants, options or similar rights, or the ability of PORT II to
incur additional indebtedness, make investments, engage in
transactions with affiliates, sell assets, consolidate or merge,
make changes in the nature of its business and create liens.
Following an event of default or an early amortization event under
the Credit Suisse Facility, collections on the collateral are
applied to repay principal rather than being available to fund the
origination activities of the Company’s business. So long as such
events are continuing, PORT II may not make additional borrowings
under the Credit Suisse Facility.
The Company will act as servicer with respect to the small business
loans held by PORT II. The Company could be replaced by a
designated backup servicer or another replacement servicer upon
certain specified occurrences including, among others, the Company
defaulting in its servicing obligations or failure to meet certain
financial or other covenants.
It is expected that PORT IIs initial purchase of small business
loans from the Company will consist of certain loans that,
immediately prior to such sale, were owned by Prime OnDeck
Receivable Trust, LLC (PORT I), another wholly-owned subsidiary of
the Company. Contemporaneous with the sale of such loans to the
PORT II, the Company intends to utilize the proceeds of the sale,
together with other available funds, to repay the debt previously
secured by such loans (the PORT I Debt), in effect optionally
prepaying in full without penalty or premium, the outstanding
aggregate principal amount of the Port I Debt and in connection
therewith terminating the commitment period under the PORT I
Credit ratings are opinions of the relevant rating agency. They are
not facts and are not opinions of the Company. They are not
recommendations to participate in any transaction and can be
changed or withdrawn at any time.
The foregoing description of the CS Credit Agreement does not
purport to be complete and is qualified in its entirety by
reference to the CS Credit Agreement, which will be filed as an
exhibit to the Companys Annual Report on Form 10-K for the year
ending December 31, 2016.
Item 2.03
Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
The information set forth under Item 1.01 of this Current Report on
Form 8-K is incorporated herein by reference.
Item 7.01
Regulation FD Disclosure.
On December 9, 2016, the Company issued a press release announcing
the closing of the Credit Suisse Facility. A copy of the press
release is furnished herewith as Exhibit 99.1 and is incorporated
herein by reference.
The information set forth under this Item 7.01, including Exhibit
99.1, shall not be deemed filed for purposes of the Securities
Exchange Act of 1934, as amended, or incorporated by reference in
any filing under the Securities Act, regardless of any general
incorporation language in such filing, unless expressly
incorporated by specific reference in such filing. Furthermore,
this report will not be deemed an admission as to the materiality
of any information in the report that is required to be disclosed
solely by Regulation FD.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
Press release, dated December 9, 2016.

About On Deck Capital, Inc. (NYSE:ONDK)

On Deck Capital, Inc. offers an online platform for small business lending. The Company’s platform aggregates and analyzes data points from disparate data sources to assess the creditworthiness of small businesses. Small businesses apply for a term loan or line of credit on the Company’s Website, and using its OnDeck Score, the Company makes a funding decision and transfers the funds. It offers a financing solution for small businesses, including short-term loans of over 10 months and long-term loans of over 40 months, and lines of credit. The Company’s integrated platform includes the Company’s Website, which allows small businesses to apply for a loan, round the clock; data and analytics engine, which analyzes data attributes from disparate sources to assess the real-time creditworthiness of a small business; the technology, which offers funding of loans, and daily and weekly collections, and ongoing servicing system.

On Deck Capital, Inc. (NYSE:ONDK) Recent Trading Information

On Deck Capital, Inc. (NYSE:ONDK) closed its last trading session up +0.25 at 4.30 with 1,070,163 shares trading hands.