Regional Management Corp. (NYSE:RM) Files An 8-K Entry into a Material Definitive Agreement

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Regional Management Corp. (NYSE:RM) Files An 8-K Entry into a Material Definitive Agreement

Item1.01.

Entry into a Material Definitive Agreement.

Warehouse Facility

On June20, 2017, Regional Management Corp. (the Company)
and its wholly-owned subsidiary, Regional Management Receivables
II, LLC (the Borrower), entered into a Credit Agreement,
by and among the Company, as servicer (the Servicer), the
Borrower, the lenders from time to time parties thereto (the
Lenders), Wells Fargo Bank, National Association (Wells
Fargo
), as account bank (the Account Bank), image file
custodian, and backup servicer (the Backup Servicer),
Wells Fargo Bank, National Association, as administrative agent
(the Administrative Agent), and Credit Suisse AG, New York
Branch (Credit Suisse), as structuring and syndication
agent (the Credit Agreement). The Credit Agreement
provides for a revolving $125million warehouse facility, which is
expandable to $150million (the Warehouse Facility) and is
secured by certain consumer loan receivables (the
Receivables) that were directly originated by the Companys
subsidiaries, Regional Finance Corporation of Alabama, Regional
Finance Company of Georgia, LLC, Regional Finance Company of New
Mexico, LLC, Regional Finance Corporation of North Carolina,
Regional Finance Company of Oklahoma, LLC, Regional Finance
Corporation of South Carolina, Regional Finance Corporation of
Tennessee, Regional Finance Corporation of Texas, and Regional
Finance Company of Virginia, LLC (each a Seller and
Subservicer, and collectively the Sellers and
Subservicers).

The following table summarizes material terms of the Warehouse
Facility:

Facility Size


$75million (Credit Suisse Lender Group)


$50million (Wells Fargo Lender Group)


$125million (Total)

Total Advance Rate 80%
Interest Rate


3-month LIBOR 3.35% per annum (Class A Loans)


3-month LIBOR 4.35% per
annum (Class B Loans)

Step-Up Margin


1.00% per annum after termination of the Revolving Period


3.50% per annum on or after an Event of Default

Unused Commitment Fee Rate


0.85% per annum if utilization is 33.33%


0.60% per annum if utilization is 33.33% but 66.67%


0.35% per annum if utilization is 66.67%

Revolving Period 18 months from June20, 2017 (the Closing Date)
Amortization Period 12 months after the termination of the Revolving Period
Maturity Date Upon termination of the Amortization Period


1.
The Commitment of the Credit Suisse Lender Group may, at the
request of the Borrower, be increased by an aggregate amount
of up to $25million during the Revolving Period, with the
consent of the Lenders in the Credit Suisse Lender Group.

2.
Upon the occurrence and during the continuation of certain
reporting or trigger events, the Total Advance Rate will
decrease to 75%.

3.
Upon the satisfaction of certain milestones associated with
the Companys conversion to a new loan origination and
servicing system, the ClassA margin decreases to 3.10% or
2.85%, as applicable.

4.
Upon the satisfaction of certain milestones associated with
the Companys conversion to a new loan origination and
servicing system, the ClassB margin decreases to 4.10% or
3.85%, as applicable.

5.
For any interest period during which a securitization occurs
and for the first interest period thereafter, the Unused
Commitment Fee Rate shall be 0.35% per annum.

In connection with the transactions contemplated by the Credit
Agreement, on the Closing Date and on each subsequent funding
date (the Funding Date), each Seller will sell and
transfer Receivables and related assets (Transferred
Assets
) originated by it to the Company to a first tier
purchase agreement, and in turn the Company will sell and
transfer Transferred Assets to the Borrower to a second tier
purchase agreement. Recourse to each Seller and the Company is
limited to an obligation of the applicable transferor to
repurchase a Receivable if it is determined after the applicable
Funding Date that such Receivable was ineligible as of such
Funding Date. A Receivable is deemed to be ineligible if, as of
the applicable Funding Date, certain receivable eligibility
criteria set forth in the Credit Agreement are not met. The
Borrower granted a lien on and security interest in all of its
right, title, and interest in, to, and under the Transferred
Assets and related collateral to the Administrative Agent, as
agent for the Lenders.

In connection with the closing of the Warehouse Facility, the
Borrower and the Company paid the Lenders an upfront fee. In
addition, the Borrower is required to pay interest at the
applicable Interest Rate on the applicable loan balance from the
Closing Date until the date such loan balance has been paid in
full. The principal of the applicable loan is payable in
installments on each payment date, unless the Borrower exercises
its right to prepay such loan. The Borrower has the right to
prepay all or any portion of the loans without penalty, upon
delivery of a prepayment notice to the Administrative Agent, the
agents, the Account Bank, and each hedge counterparty at least
five business days prior to such prepayment. In connection with
prepayment, the Borrower is required to pay to the secured
parties certain breakage costs that are attributable to any
administrative loss, cost, or expense (but excluding lost
profits) incurred by the secured parties.

On each Funding Date, the Borrower will make certain
representations and warranties as to the eligibility of each
Receivable. The Company is required to repurchase from the
Borrower any Receivable that was not an eligible Receivable as of
the applicable Funding Date.Separately, the Servicer is required
to repurchase any Receivable that has been modified by the
Servicer other than as permitted under the Credit Agreement. The
Credit Agreement permits the Servicer to delegate in the ordinary
course of business any or all of its duties and obligations
thereunder to one or more Subservicers, provided that (i)each
Subservicer is responsible for servicing the Receivables in the
state in which such Subservicer is located, and (ii)the Servicer
remains at all times responsible for the performance of each
Subservicers duties and obligations. Each Subservicer will enter
into a subservicing agreement with the Servicer. The Credit
Agreement contains covenants that require the Servicer with
respect to any collection period to maintain certain delinquency
ratios, extension ratios, and annualized charge-off ratios. A
failure to maintain such ratios may result in a Level I Trigger
Event, Level II Trigger Event, or Level III Trigger Event. Upon
the occurrence of a Level I Trigger Event followed by the
delivery of written notice from the Administrative Agent (acting
at the direction of the required Lenders), the Servicer and the
Backup Servicer must work with the Administrative Agent and the
Lenders to take certain actions to centralize servicing,
including establishing a lockbox and directing the obligors to
remit all future payments to such lockbox.

The Credit Agreement contains customary servicer termination
events (subject to certain materiality thresholds and cure
periods), including among others, (a)failure by the Servicer to
deliver any collections or make any payment, transfer, or
deposit, (b)a merger or consolidation of the Servicer in breach
of the Credit Agreement, (c)failure to deliver a monthly report
or monthly loan tape, (d)non-compliance with covenants, (e)breach
of a representation or warranty, and (f)an insolvency event
involving the Servicer, in each case if the Company is the
Servicer. The remedies for such servicer termination events are
also customary for this type of transaction and include
termination and replacement of the Servicer as servicer under the
Credit Agreement.

The Credit Agreement also contains customary termination events
(subject to certain materiality thresholds and cure periods),
including among others, (a)non-payment, (b)non-compliance with
covenants, (c)failure of the Administrative Agent to maintain a
first prior perfected security interest in any material portion
of the collateral, (d)a servicer termination event, (e)a breach
of a representation or warranty, (f)an insolvency event involving
the Company, the Borrower, or the Sellers, (g)a change in control
of the Company or the Borrower, (h)an event of default under a
material financing agreement of the Company, the Borrower, or the
Sellers, (i)failure of the Company, as Servicer, to maintain a
minimum tangible net worth of $125million, minimum liquidity of
$10million, and a maximum debt to tangible net worth ratio of 4.0
to 1.0, and (j)the Company, the Borrower, or the Sellers have one
or more final non-appealable judgments entered against it by a
court of competent jurisdiction in excess of the specified
monetary thresholds. The remedies for such termination events are
also customary for this type of transaction and include
acceleration of the Borrowers outstanding obligations under the
Credit Agreement.

The Lenders under the Credit Agreement (and their respective
affiliates) have in the past provided and/or may in the future
provide investment banking, underwriting, lending, commercial
banking, trust, and other advisory services to the Company and
its subsidiaries and affiliates. These parties have received, and
may in the future receive, customary compensation from the
Company and its subsidiaries and affiliates for such services.

The foregoing summary of the material terms of the Credit
Agreement is qualified in its entirety by reference to the copy
of the Credit Agreement filed as Exhibit 10.1 to this Current
Report on Form 8-K (the Form 8-K) and incorporated herein by
reference.

Senior
Revolving Credit Facility

On June20, 2017,
the Company and certain of its subsidiaries entered into a Sixth
Amended and Restated Loan and Security Agreement (the Loan
Agreement
) with a syndicate of banks comprised of Bank of
America, N.A., BMO Harris Financing, Inc., First Tennessee Bank
National Association, Texas Capital Bank, N.A., Wells Fargo Bank,
National Association, Capital Bank Corporation, Synovus Bank, and
BankUnited, N.A., and Bank of America, N.A. as Agent. Capital
One, N.A. is no longer a lender under the Loan Agreement. The
Loan Agreement provides for a senior revolving credit
facility

of up to
$638.0million, with a borrowing base of up to 85% of secured
eligible finance receivables and up to 70% of unsecured eligible
finance receivables, in each case, subject to adjustment at
certain credit quality levels. The Loan Agreement has an
accordion provision that allows for the expansion of the senior
revolving credit facility to up to $700.0million. Borrowings
under the facility bear interest, payable monthly, at rates equal
to LIBOR of a maturity the Company elects between one and six
months, with a LIBOR floor of 1.00%, plus a margin of 3.00%,
increasing to 3.25% when the availability percentage is less than
10%. Alternatively, the Company may pay interest at a rate based
on the prime rate plus a margin of 2.00%, increasing to 2.25%
when the availability percentage is less than 10%. The Company
also pays an unused line fee of 0.50% per annum, payable monthly.
This fee decreases to 0.375% when the average outstanding balance
exceeds $413.0million. The senior revolving credit facility
matures on June20, 2020, and is collateralized by certain of the
Companys assets, including certain of its finance receivables and
the equity interests of certain of its subsidiaries.

The Loan Agreement
permits the Company to enter into the Warehouse Facility and,
subject to certain conditions, to enter into one or more
asset-backed securitization transactions using Warehouse Facility
collateral. The Loan Agreement also contains certain restrictive
covenants, including maintenance of specified interest coverage
and debt ratios, restrictions on distributions, limitations on
other indebtedness, maintenance of a minimum allowance for credit
losses, and certain other restrictions. The Loan Agreement
contains customary events of default. If an event of default
occurs and is continuing, the lenders holding more than 66-2/3%
of the outstanding amount of the commitments and advances under
the senior revolving credit facility may accelerate amounts due
under the Loan Agreement (except in the case of a bankruptcy or
insolvency event of default, in which case such amounts shall
automatically become due and payable).

The foregoing
summary of the material terms of the Loan Agreement is qualified
in its entirety by reference to the copy of the Loan Agreement
filed as Exhibit 10.2 to this Form 8-K and incorporated herein by
reference.

The lenders under
the Loan Agreement (and their respective subsidiaries or
affiliates) have in the past provided and/or may in the future
provide investment banking, underwriting, lending, commercial
banking, trust, and other advisory services to the Company and
its subsidiaries and affiliates. These parties have received, and
may in the future receive, customary compensation from the
Company and its subsidiaries and affiliates for such
services.

On June20, 2017,
the Company issued a press release announcing the Credit
Agreement and the Loan Agreement. A copy of this press release is
filed as Exhibit 99.1 hereto and incorporated herein by
reference.


Item2.03.
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 Form 8-K is incorporated herein
by reference.


Item5.02.
Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.

(e)

In connection with
the previously announced resignation of Jody L. Anderson on
May15, 2017 (the Resignation Date) as the President and
Chief Operating Officer of the Company, the Compensation
Committee of the Board of Directors of the Company determined on
June14, 2017 to enter into a separation agreement with
Mr.Anderson (the Separation Agreement), effective June14,
2017.

The Separation
Agreement provides for benefits to and imposes obligations upon
Mr.Anderson in accordance with that certain employment agreement
entered into between the Company and Mr.Anderson, dated as of
September19, 2014 (the Employment Agreement).
Specifically, subject to his execution and non-revocation of a
release of claims and his compliance with the Employment
Agreement and Separation Agreement (including, but not limited
to, the restrictive covenants contained therein), Mr.Anderson is
entitled to receive the following payments and benefits under the
Separation Agreement:

A payment equal to thirty (30)days of his base salary (as in
effect on the Resignation Date) in lieu of the Employment
Agreement requirement that the Company provide him with
thirty (30)days notice of its decision to terminate his
employment without cause;

Payment of an amount equal to twelve (12)months of his base
salary (as in effect on the Resignation Date), paid in equal
installments over a period of eighteen (18)months (modified
from twelve (12)months in the Employment Agreement) in
accordance with the Companys ordinary payroll practices;

Payment of a pro-rated portion of his annual short-term
incentive program target bonus for 2017, but only to the
extent such bonus is earned based on performance goals
established for 2017 under the Companys Annual Incentive
Plan;

Reimbursement of reasonable attorneys fees incurred in
connection with the negotiation and preparation of the
Separation Agreement, not to exceed $5,000;

Reimbursement of the cost of COBRA continuation premiums for
continued health insurance coverage for Mr.Anderson for a
period of twelve (12)months following the Resignation Date
(or until Mr.Anderson becomes eligible for coverage from a
subsequent employer); and

Executive outplacement services in an aggregate amount not to
exceed $10,000 for a period of six (6)months following the
Resignation Date through a provider to be designated by the
Company.

Mr.Anderson also
reaffirmed his obligations under the restrictive covenants set
forth in his Employment Agreement, with the exception that the
duration of his covenant not to compete has been reduced from two
(2)years to one (1)year.

The foregoing
summary of the material terms of the Separation Agreement is
qualified in its entirety by reference to the copy of the
Separation Agreement filed as Exhibit 10.3 to this Form 8-K and
incorporated herein by reference.


Item7.01.
Regulation FD Disclosure.

Management of the
Company will meet with investors, analysts, and others at the JMP
Securities 2017 Financial Services and Real Estate Conference on
June22, 2017, in New York, NY. A copy of the presentation to be
used during the conference is attached to this Form 8-K as
Exhibit 99.2 and is also available at the Companys website at
www.regionalmanagement.com.

The information
set forth in this Item 7.01 of this Form 8-K, including Exhibit
99.2 hereto, shall not be deemed filed for purposes of Section18
of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of
that section. The information in this Item 7.01 of this Form 8-K
shall not be deemed to be incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange
Act, except as expressly set forth by specific reference in such
filing.


Item9.01.
Financial Statements and Exhibits.

(d)
Exhibits.


Exhibit


No.


Description

10.1 Credit Agreement, dated June20, 2017, by and among Regional
Management Receivables II, LLC, as borrower, Regional
Management Corp., as servicer, the lenders from time to time
parties thereto, Wells Fargo Bank, National Association, as
account bank, image file custodian, and backup servicer,
Wells Fargo Bank, National Association, as administrative
agent, and Credit Suisse AG, New York Branch, as structuring
and syndication agent.
10.2 Sixth Amended and Restated Loan and Security Agreement, dated
June20, 2017, by and among Regional Management Corp. and its
subsidiaries named as borrowers therein, the financial
institutions named as lenders therein, and Bank of America,
N.A., as Agent.
10.3 Separation Agreement, dated June14, 2017, between Jody L.
Anderson and Regional Management Corp.
99.1 Press Release, dated June20, 2017.
99.2 Investor Presentation, dated June 2017.



Regional Management Corp. Exhibit
EX-10.1 2 d397641dex101.htm EX-10.1 EX-10.1 Exhibit 10.1       REGIONAL MANAGEMENT RECEIVABLES II,…
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About Regional Management Corp. (NYSE:RM)

Regional Management Corp. is a diversified specialty consumer finance company. The Company provides a range of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies and other traditional lenders. Its products include small loans, large loans, automobile loans, retail loans and optional credit insurance products. The Company operates offices in over 300 locations in the states of Alabama, Georgia, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee and Texas under the names Regional Finance, RMC Financial Services, Anchor Finance and RMC Retail. The loan products are secured, structured on a fixed rate, fixed term basis with fully amortizing equal monthly installment payments and repayable at any time without penalty. Its loans are sourced through multiple channel platforms, including its branches, direct mail campaigns, independent and franchise automobile dealerships, retailers, and the consumer Website.

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