Patriot National, Inc. (NYSE:PN) Files An 8-K Entry into a Material Definitive AgreementItem 1.01.
On November17, 2017, Patriot National, Inc. (the “Company”) obtained and entered into a Forbearance Agreement (the “Forbearance Agreement”) with the lenders party to that certain Financing Agreement, dated as of November9, 2016, with Cerberus Business Finance, LLC (“Cerberus”), as collateral agent and administrative agent, and the lenders party thereto (the “Credit Agreement”). The Company is currently in default of the Credit Agreement due to its failure to deliver timely financial statements, its non-payment of interest due November1, 2017 and its failure to comply with financial covenants.
to the Forbearance Agreement, Cerberus and the lenders party thereto have agreed not to accelerate the maturity of the loans nor exercise their related rights and remedies in relation to the defaults under the Credit Agreement until December3, 2017, subject to certain limitations and conditions (the “Forbearance Period”). The Forbearance Agreement also contemplates that Cerberus may make, in its sole and absolute discretion, advances of up to $4.0million to the Company. There can be no assurance that the foregoing advance will be sufficient for the Company to sustain operations during or beyond the Forbearance Period. In addition, effective July15, 2017, the outstanding obligations and other amounts payable under the Credit Agreement and related loan documents (together with the Credit Agreement, the “Loan Documents”) accrue interest at the contract rate otherwise applicable to such debt plus two (2.0) percent per annum. As required by the Forbearance Agreement, the Company has engaged a chief restructuring officer, and will engage an executive vice president of finance. As long as the Forbearance Agreement is in effect, the Company will be required to comply with certain restrictive and affirmative obligations set forth in the Credit Agreement.
Upon termination or expiration of the Forbearance Period, Cerberus and/or the lenders party thereto shall be entitled to exercise any of their respective rights and remedies under the Forbearance Agreement and/or the Loan Documents, or applicable law, including, without limitation, the right to enforce any and all of the liens on, and security interests in, the collateral described in the Loan Documents and to accelerate the maturity of the loans under the Credit Agreement.
| Item 1.01: | Costs Associated with Exit or Disposal Activities. |
The information set forth below is incorporated by reference into this Item 1.01.
The Company’s largest customer, Guarantee Insurance Company (“GIC”), which has historically accounted for approximately 60-70percent of the Company’s business, consented to be placed into receivership on November13, 2017. The Company has met with the Florida Office of Insurance Regulation (the “OIR”) on various occasions, including most recently on November20, 2017, seeking to obtain both payment for past services rendered to GIC and an agreement that would allow the Company to provide and receive payment for future services while GIC is in receivership. However, based on the most recent meeting with the OIR and other authorities now engaged in respect of GIC, the Company does not believe these efforts will be successful. Accordingly, a major portion of the Company’s revenue and cash flow going forward will cease.
Based on the Company’s deteriorating financial condition, and in compliance with the Worker Adjustment and Retraining Notification Act, the Company has notified approximately 250 employees, representing approximately one-third of its workforce, of the immediate termination of their employment. The Company is currently unable in good faith to make a determination of an estimate of the costs associated with the termination. The Company will file an amended Current Report upon determination of the estimate or range of estimate of costs.
About Patriot National, Inc. (NYSE:PN)
Patriot National, Inc. is an independent national provider of technology-enabled outsourcing solutions that help insurance carriers, employers and other clients mitigate risk and comply with complex regulations. It offers a range of end-to-end insurance related and specialty services. The Company principally offers approximately two types of services: front-end services, such as brokerage, underwriting and policyholder services, and back-end services, such as claims adjudication and administration. It also offers specialty services, including technology outsourcing and other information technology (IT) services, as well as employment pre-screening and background checks. The Company’s brokerage and policyholder services include general agency services and specialty underwriting and policyholder services provided to its insurance carrier clients. The Company’s claims administration services relate to the administration and resolution of workers’ compensation claims.
