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.
Second Amended and Restated Master Repurchase Agreement (Roll-Up
Facility)
On April 28, 2017, PennyMac Mortgage Investment Trust (the
Company), through four of its wholly-owned subsidiaries, PennyMac
Operating Partnership, L.P. (POP), PennyMac Corp. (PMC), PennyMac
Holdings, LLC (PMH), and PMC REO Financing Trust, LLC (REO
Subsidiary), entered into a Second Amended and Restated Master
Repurchase Agreement with Credit Suisse First Boston Mortgage
Capital LLC, as administrative agent to the buyers (CSFB), Credit
Suisse AG, Cayman Islands Branch, as a buyer (CS Cayman or CS
Buyer), and Alpine Securitization LTD, as a buyer (Alpine or CS
Buyer, and, together with CS Cayman, the CS Buyers)(the Roll-Up
Facility).
The Roll-Up Facility is committed to April 27, 2018 and, together
with the Re-warehouse Facility (as defined below), provides for a
maximum combined purchase price of $1.5 billion, of which the
maximum combined committed purchase price is $650 million, all of
which is committed and available for purchases under the Roll-Up
Facility to the extent not reduced by purchased amounts
outstanding under the Re-warehouse Facility and two other master
repurchase agreements entered into by the Company in the ordinary
course of its business to finance asset-backed securities with CS
Cayman and one ofits affiliates. The obligations of POP, PMC and
PMH under the Roll-Up Facility are fully guaranteed by the
Company, and the obligations of PMC and PMH are fully guaranteed
by POP.
to the terms of the Roll-Up Facility, the Company, through POP,
PMC and/or PMH, as applicable, may sell, and later repurchase,
(i) newly originated mortgage loans that PMC purchases from
correspondent lenders pending sale and/or securitization, and
(ii) distressed mortgage loans and equity interests in REO
Subsidiary owning real estate acquired upon settlement of
mortgage loans (the REO Properties). The mortgage loans are
serviced and the REO Properties are managed by PennyMac Loan
Services, LLC (PLS), a controlled subsidiary of PennyMac
Financial Services, Inc. (NYSE: PFSI).
The principal amount paid by CS Buyer is based on a percentage of
the market value of each mortgage loan or the REO Properties
underlying the REO Subsidiary interest (each, a Facility Asset),
as applicable. Upon the Companys repurchase, or the sale,
securitization or liquidation of a Facility Asset, the Company is
required to repay CS Buyer the principal amount related to such
Facility Asset plus accrued interest (at a rate reflective of the
current market and based on either CS Buyers cost of funds or
LIBOR plus a margin) to the date of such repurchase, sale,
securitization or liquidation.The Company is also required to pay
CS Buyers a commitment fee for the Roll-Up Facility, as well as
certain other administrative costs and expenses in connection
with CSFBs structuring, management and ongoing administration of
the Roll-Up Facility.
The Roll-Up Facility requires that PMC, PMH and POP maintain
various financial and other covenants, which include maintaining
(i) a minimum adjusted tangible net worth of $150 million for
PMC, $250 million for PMH and $700 million for POP; (ii) as of
the end of each calendar month and in each case on a consolidated
basis, a minimum of $25 million in the aggregate in unrestricted
cash and cash equivalents between PMC and PMH, a minimum of $10
million in the aggregate in unrestricted cash and cash
equivalents for each of PMC and PMH, and a minimum of $40 million
in the aggregate in unrestricted cash and cash equivalents for
POP; and (iii) a ratio of total indebtedness to adjusted tangible
net worth for PMC, PMH and POP of not more than 10:1, 10:1, and
5:1, respectively.
The Roll-Up Facility also requires the Company to maintain
various financial and other covenants, which include maintaining
(i) a minimum adjusted tangible net worth of $860 million; (ii) a
minimum of $40 million in unrestricted cash and cash equivalents
in the aggregate at the Company, as of the end of each calendar
month and on a consolidated basis; (iii) a ratio of total
indebtedness to adjusted tangible net worth of not more than 5:1;
and (iv) profitability for at least one (1) of the previous two
(2) consecutive fiscal quarters, as of the end of each fiscal
quarter.
The Roll-Up Facility contains margin call provisions that provide
CS Buyers with certain rights where there has been a decline in
the market value of the Facility Assets.Under these
circumstances, CS Buyers may require PMC, PMH or POP to transfer
cash or additional Facility Assets with an aggregate market value
in an amount sufficient to eliminate any margin deficit resulting
from such a decline.
In addition, the Roll-Up Facility 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, servicer
termination events, guarantor defaults, bankruptcy or insolvency
proceedings and other events of default customary for this type
of transaction.The remedies for such events of default are also
customary for this type of transaction and include the
acceleration of the principal amount outstanding under the
Roll-Up Facility and the liquidation by CS Buyers of the Facility
Assets then subject to the Roll-Up Facility.
The foregoing descriptions of the Roll-Up Facility and the
related guaranty do not purport to be complete and are qualified
in their entirety by reference to the full text of the Second
Amended and Restated Master Repurchase Agreement (Roll-Up
Facility) and the Second Amended and Restated Guaranty, which
have been filed with this Current Report on Form 8-K as Exhibit
10.1 and Exhibit 10.2, respectively.
Second Amended and Restated Master Repurchase Agreement
(Re-warehouse Facility)
On April 28, 2017, the Company, through POP, also entered into a
Second Amended and Restated Master Repurchase Agreement with
CSFB, as administrative agent, and CS Buyers, to which POP may
sell to CS Buyers, and later repurchase, newly originated
mortgage loans for which POP provides financing to third-party
mortgage loan originators (the Re-warehouse Facility).
The Re-warehouse Facility is committed to April 27, 2018 and,
together with the Roll-Up Facility, provides for a maximum
combined purchase price of $1.5 billion, of which the maximum
combined committed purchase price is $650 million. The committed
amount under the Re-warehouse Facility is equal to the lesser of
(a) $300 million and (b) the maximum combined committed purchase
price less all purchased amounts outstanding under the Roll-Up
Facility. The obligations of POP under the Re-warehouse Facility
are fully guaranteed by the Company, and the mortgage loans are
serviced by PLS.
The principal amount paid by CS Buyer for each eligible mortgage
loan is based on a percentage of the lesser of the market value
or the unpaid principal balance of such mortgage loan.Upon POPs
repurchase of a mortgage loan, it is required to repay CS Buyer
the principal amount related to such mortgage loan plus accrued
interest (at a rate reflective of the current market and based on
CS Buyers cost of funds plus a margin) to the date of such
repurchase.POP is also required to pay CSFB certain
administrative costs and expenses in connection with CSFBs
structuring, management and ongoing administration of the
Re-warehouse Facility.
The Re-warehouse Facility contains margin call provisions that
provide CS Buyers with certain rights in the event of a decline
in the market value of the purchased mortgage loans.Under these
circumstances, CS Buyers may require POP to transfer cash or
additional eligible mortgage loans with an aggregate market value
in an amount sufficient to eliminate any margin deficit resulting
from such a decline.
In addition, the Re-warehouse Facility requires POP and the
Company to maintain various financial and other covenants, and it
provides for events of default and remedies, in each case
consistent with those provided in the Roll-Up Facility and as
described above in greater detail under the heading Second
Amended and Restated Master Repurchase Agreement (Roll-Up
Facility).
The foregoing descriptions of the Re-warehouse Facility and the
related guaranty do not purport to be complete and are qualified
in their entirety by reference to the full text of the Second
Amended and Restated Master Repurchase Agreement (Re-warehouse
Facility) and the Amended and Restated Guaranty, which have been
filed with this Current Report on Form 8-K as Exhibits 10.3 and
10.4, respectively.
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 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On April 27, 2017, Clay A. Halvorsen provided the Company with a
notice of resignation, effective immediately, from his position
on the Companys Board of Trustees (the Board) and the Board
committees on which he serves. Mr. Halvorsen resigned from the
Board due to other professional and personal commitments and not
as a result of any dispute or disagreement with the Company. Mr.
Halvorsen has served on the Board since 2009.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits.
|
Exhibit No. |
Description |
|
10.1 |
Second Amended and Restated Master Repurchase Agreement, |
|
10.2 |
Second Amended and Restated Guaranty, dated as of April |
|
10.3 |
Second Amended and Restated Master Repurchase Agreement, |
|
10.4 |
Amended and Restated Guaranty, dated as of April 28, |
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 down -0.22 at 17.68 with 490,536 shares trading hands.