PennyMac Mortgage Investment Trust (NYSE:PMT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
Citi Loan Agreement
On March 24, 2017, PennyMac Mortgage Investment Trust (the
Company), through its wholly-owned subsidiaries, PennyMac Corp.
(PMC) and PennyMac Holdings, LLC (PMH), entered into a Second
Amended and Restated Loan and Security Agreement with Citibank,
N.A. (Citibank), as lender (the Citi Loan Agreement). to the Citi
Loan Agreement, PMC and PMH finance certain mortgage servicing
rights (inclusive of any related excess servicing spread and/or
junior excess strips arising therefrom and that may be
transferred from PMC to PMH from time to time) relating to
mortgage loans pooled into Fannie Mae securities (collectively,
the Fannie MSRs) in an aggregate loan amount not to exceed $400
million, all of which is committed.The Citi Loan Agreement is
committed to March 2, 2018. The obligations of PMC and PMH are
joint and several and are fully guaranteed by the Company. The
mortgage loans relating to the Fannie MSRs are subserviced by
PennyMac Loan Services, LLC (PLS), an indirect controlled
subsidiary of PennyMac Financial Services, Inc. (NYSE: PFSI), to
the terms of the Citi Loan Agreement. The Fannie MSRs were
previously financed by the Company under an amended and restated
loan and security agreement, dated as of January 22, 2016 (the
Original Barclays LSA), by and among PMC, PMH, the Company and
Barclays Bank PLC (Barclays).
The principal amount of the borrowings under the Citi Loan
Agreement is based upon a percentage of the market value (the
collateral value) of the Fannie MSRs, subject to the maximum loan
amount described above. Under the Citi Loan Agreement, each of
PMC and PMH granted to Citibank a security interest in all of its
right, title and interest in, to and under the Fannie MSRs. The
pledge of the Fannie MSRs and the related security interest are
subject to a separate acknowledgement agreement by and among
Citibank, PMC, PMH and Fannie Mae, to which Citibank, PMC and PMH
acknowledge and reaffirm that such security interest is
subordinated to all rights, powers and prerogatives of Fannie Mae
under its various agreements with PMC and PMH.
On a monthly basis, or upon the loan repayment date, PMC or PMH,
as applicable, is required to pay Citibank accrued interest (at a
rate reflective of the current market and based on LIBOR plus a
margin) to the date of such payment. PMC and PMH are also
required to pay Citibank, on a pro rata basis, a commitment fee
and certain other administrative fees, costs and expenses in
connection with Citibanks structuring, management and ongoing
administration of the Citi Loan Agreement.
The Citi Loan Agreement requires the Company, PMC and PMH to
maintain various financial and other covenants, which include
maintaining (i) a minimum adjusted tangible net worth at all
times greater than or equal to $830 million for the Company, $140
million for PMC and $220 million for PMH; (ii) a minimum in
unrestricted cash at all times greater than or equal to $40
million among the Company and its subsidiaries and a minimum in
unrestricted cash and cash equivalents at all times greater than
$10 million at PMC and $25 million at PMC and PMH combined; (iii)
a ratio of total indebtedness to adjusted tangible net worth at
all times not to exceed 7:1 for the Company, 12:1 for PMC and
10:1 for PMH; and (iv) profitability at the Company for at least
one (1) of the previous two (2) consecutive fiscal quarters, as
of the end of the last fiscal quarter.
The Citi Loan Agreement also contains margin call provisions that
provide Citibank with certain rights where there has been a
decline in the market value of the Fannie MSRs. Under these
circumstances, Citibank may require PMC and/or PMH, as
applicable, to transfer cash in an amount sufficient to eliminate
any margin deficit resulting from such a decline.
In addition, the Citi Loan Agreement contains events of default
(subject to certain materiality thresholds and grace periods),
including payment defaults, breaches of covenants and/or certain
representations and warranties, cross-defaults, guarantor
defaults, subservicer credit or termination events, bankruptcy or
insolvency proceedings and other events of default customary for
this type of transaction. The remedies for such events of default
include the acceleration of the principal amount outstanding
under the Citi Loan Agreement and the liquidation by Citibank of
the pledged Fannie MSRs then securing the borrowings.
The Citi Loan Agreement amends and restates that certain Amended
and Restated Loan and Security Agreement originally entered into
by and between PMC and Citibank on September 15, 2016 (the
Original Citi LSA). The primary purposes of the amendment and
restatement were to (i) allow PMC and PMH to finance Fannie MSRs,
(ii)
increase the aggregate loan amount from $125 million to $400
million, and (iii) otherwise incorporate the terms of previously
executed amendments. All other terms and conditions of the
related guaranty remain the same in all material respects.
The foregoing descriptions of the Citi Loan Agreement and the
related guaranty do not purport to be complete and are qualified
in their entirety by reference to (i) the full text of the Second
Amended and Restated Loan and Security Agreement which has been
filed with this Current Report on Form 8-K as Exhibit 10.1; and
(ii) the full text of the Amended and Restated Guaranty
Agreement, which was filed as Exhibit 10.3 to the Companys
Current Report on Form 8-K filed on September 21, 2016.
Barclays Loan Agreement
On March 24, 2017, the Company, as guarantor, and PMC and PMH, as
borrowers, also entered into a Loan and Security Agreement with
Barclays, as lender (the Barclays Loan Agreement). to the
Barclays Loan Agreement, PMC and PMH finance certain mortgage
servicing rights (inclusive of any related excess servicing
spread arising therefrom and that may transferred from PMC to PMH
from time to time) relating to mortgage loans pooled into Freddie
Mac securities (collectively, the Freddie MSRs), in an aggregate
loan amount not to exceed $220 million, reduced by any amounts
borrowed by PMC and/or PMH from Barclays to finance Fannie MSRs,
including any amounts borrowed under the Original Barclays LSA,
which is currently not being utilized. The Barclays Loan
Agreement is committed to December 1, 2017. The obligations of
PMC and PMH are joint and several and are fully guaranteed by the
Company. The mortgage loans relating to the Freddie MSRs are
subserviced by PLS to the terms of the Barclays Loan Agreement.
The Freddie MSRs were originally financed by the Company under
the Original Citi LSA.
The principal amount of the borrowings under the Barclays Loan
Agreement is based upon a percentage of the market value of the
Freddie MSRs (the collateral value), subject to the maximum loan
amount described above. Under the Barclays Loan Agreement, each
of PMC and PMH granted to Barclays a security interest in all of
its right, title and interest in, to and under the Freddie MSRs.
The pledge of the Freddie MSRs and the related security interest
are subject to a separate acknowledgement agreement by and among
Barclays, PMC, PMH and Freddie Mac, to which Barclays, PMC and
PMH acknowledge and reaffirm that such security interest is
subordinated to all rights, powers and prerogatives of Freddie
Mac under its various agreements with PMC and PMH.
On a monthly basis, or upon the loan repayment date, PMC or PMH,
as applicable, will be required to pay Barclays accrued interest
(at a rate reflective of the current market and based on LIBOR
plus a margin) to the date of such payment. PMC and PMH are also
required to pay Barclays, on a pro rata basis, a fee for the
structuring of the Barclays Loan Agreement, as well as certain
other administrative fees, costs and expenses in connection with
Barclays management and ongoing administration of the Barclays
Loan Agreement.
The Barclays Loan Agreement requires the Company, PMC and PMH to
maintain various financial and other covenants, which include
maintaining (i) a minimum adjusted tangible net worth greater
than or equal to $860 million for the Company, $150 million for
PMC and $250 million for PMH, in each case as of the last day of
each calendar month, (ii) a minimum in unrestricted cash and cash
equivalents greater than or equal to $40 million among the
Company and its subsidiaries and $10 million at each of PMC and
PMH, in each case as of the last day of each calendar month,
(iii) a ratio of total indebtedness to adjusted tangible net
worth not to exceed 5:1 for the Company and 10:1 for each of PMC
and PMH, in each case as of the last day of each calendar month;
and (iv) profitability at the Company for at least one (1) of the
prior two (2) fiscal quarters, as of the end of each fiscal
quarter.
The Barclays Loan Agreement contains margin call provisions that
provide Barclays with certain rights where there has been a
decline in the market value of the Freddie MSRs. Under these
circumstances, Barclays may require PMC and/or PMH, as
applicable, to transfer cash in an amount sufficient to eliminate
any margin deficit resulting from such a decline.
The Barclays Loan Agreement also contains events of default
(subject to certain materiality thresholds and grace periods),
including payment defaults, breaches of covenants and/or certain
representations and warranties, cross-defaults, guarantor
defaults, subservicer termination events, bankruptcy or
insolvency proceedings and other events
of default customary for this type of transaction. The remedies
for such events of default include the acceleration of the
principal amount outstanding under the Barclays Loan Agreement
and the liquidation by Barclays of the pledged Freddie MSRs then
securing the borrowings.
The foregoing description of the Barclays Loan Agreement and the
Original Barclays LSA do not purport to be complete and are
qualified in their entirety by reference to (i) the full text of
the Loan and Security Agreement, which has been filed with this
Current Report on Form 8-K as Exhibit 10.2; and (ii) the full
text of the Amended and Restated Loan and Security Agreement,
which was filed as Exhibit 10.2 to the Companys Current Report on
Form 8-K filed on January 28, 2016 and the full text of all other
amendments to the Amended and Restated Loan And Security
Agreement previously filed with the Securities and Exchange
Commission.
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 under Item 1.01 of this Current Report
on Form 8-K is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits.
|
Exhibit No. |
Description |
|
10.1 |
Second Amended and Restated Loan and Security Agreement, |
|
10.2 |
Loan and Security Agreement, dated as of March 24, 2017, |
About PennyMac Mortgage Investment Trust (NYSE:PMT)
PennyMac Mortgage Investment Trust is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company conducts all of its operations, and makes all of its investments, through PennyMac Operating Partnership, L.P. and its subsidiaries. It operates through two segments: correspondent production and investment activities. The correspondent production segment represents its operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of mortgage-backed securities (MBS), using the services of PNMAC Capital Management and PennyMac Loan Services, LLC. The investment activities segment represents its investments in mortgage-related assets, which include distressed mortgage loans, real estate acquired in settlement of loans, MBS, mortgage servicing rights and excess servicing spread. PennyMac Mortgage Investment Trust (NYSE:PMT) Recent Trading Information
PennyMac Mortgage Investment Trust (NYSE:PMT) closed its last trading session 00.00 at 17.68 with 481,784 shares trading hands.