SUTHERLAND ASSET MANAGEMENT CORPORATION (NYSE:SLD) Files An 8-K Entry into a Material Definitive Agreement

ME Staff 8-k

8 years ago

SUTHERLAND ASSET MANAGEMENT CORPORATION (NYSE:SLD) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01. Entry Into a Material Definitive Agreement.

On February 13, 2017, ReadyCap Holdings, LLC (ReadyCap), an
indirect wholly-owned subsidiary of Sutherland Asset Management
Corporation (the Company), issued $75 million in aggregate
principal amount of its 7.50% Senior Secured Notes due 2022 (the
Notes). ReadyCaps obligations under the Notes are fully and
unconditionally guaranteed (the Guarantees) by the Company,
Sutherland Partners, L.P. (the Operating Partnership), Sutherland
Asset I, LLC (the Direct Parent) and ReadyCap Commercial, LLC, a
wholly-owned subsidiary of ReadyCap (RCC, and together with the
Company, the Operating Partnership and the Direct Parent, the
Guarantors, and each a Guarantor).ReadyCaps and the Guarantors
respective obligations under the Notes and the Guarantees are
secured by a perfected first-priority lien on certain capital
stock and assets (collectively, the Collateral) owned by certain
subsidiaries of the Company.

The issuance and sale of the Notes were made to a purchase
agreement, dated February 8, 2017 (the Purchase Agreement), by
and among ReadyCap, the Guarantors and Waterfall Asset
Management, LLC, the Companys external manager, on the one hand,
and Keefe Bruyette Woods, Inc., Incapital LLC and Sandler
O’Neill Partners, L.P. (collectively, the Initial Purchasers),
on the other hand. to the Purchase Agreement, ReadyCap agreed to
sell to the Initial Purchasers $75 million in aggregate principal
amount of the Notes in a private offering exempt from
registration in reliance on Section 4(a)(2) of the Securities Act
of 1933, as amended (the Securities Act), for resale by the
Initial Purchasers to (1) qualified institutional buyers in
reliance on Rule 144A under the Securities Act, (2) institutional
investors that qualify as accredited investors, as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act, and (3)
non-U.S. persons in offshore transactions in accordance with
Regulation S under the Securities Act. The Notes are subject to
restrictions on transfer and may only be offered or sold in
transactions exempt from, or not subject to, the registration
requirements of the Securities Act and other applicable
securities laws.

ReadyCap intends to use the net proceeds from the offering to
acquire and originate new assets and for general business
purposes.

The terms of the Notes are governed by an indenture, dated as of
February 13, 2017 (the Base Indenture), by and among ReadyCap,
the Guarantors and U.S. Bank National Association, as trustee
(the Trustee), as amended and supplemented by the First
Supplemental Indenture, dated as of February 13, 2017 (the
Supplemental Indenture, and together with the Base Indenture, the
Indenture), by and among ReadyCap, the Guarantors and U.S. Bank
National Association, as trustee and as collateral agent (in its
capacity as the collateral agent, the Collateral Agent). See Item
2.03 below for additional information.

This Current Report on Form 8-K does not constitute an offer to
sell, or a solicitation of an offer to buy, any security and
shall not constitute an offer, solicitation or sale in any
jurisdiction in which such offer, solicitation or sale would be
unlawful.

ReadyCap and the Guarantors and their affiliates have engaged in,
and may in the future engage in, various commercial dealings in
the ordinary course of business with the Initial Purchasers and
the Trustee. Such parties have received, or may in the future
receive, customary fees and commissions for these transactions.

Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.

The Notes bear interest at 7.50% per annum, payable semiannually
in arrears on February 15 and August 15, beginning on August 15,
2017. ReadyCaps payment obligations under the Notes are
unconditionally and irrevocably guaranteed, jointly and
severally, by the Guarantors.

Ranking

The Notes (including any additional Notes) and the Guarantees
are:

senior obligations of ReadyCap and the Guarantors and
secured by a perfected first-priority lien on the
Collateral of ReadyCap and the applicable Guarantors
(subject to permitted liens) discussed in greater
detail below;

pari passu in right of payment with ReadyCap’s and the
Guarantors existing and future senior indebtedness and
senior guarantees without regard to any of ReadyCap’s
and the Guarantors assets securing the Notes or such
Guarantees or such senior indebtedness or senior
guarantees, as the case may be;

effectively senior in right of payment to ReadyCap’s
and the Guarantors existing and future unsecured
indebtedness and unsecured guarantees, to the extent of
the value of ReadyCap’s and the Guarantors Collateral;

senior in right of payment to ReadyCap’s and the
Guarantors future subordinated indebtedness and
subordinated guarantees;

effectively subordinated in right of payment to
ReadyCap’s and the Guarantors existing and future
indebtedness and guarantees secured by liens on
ReadyCap’s or the Guarantors assets that do not
constitute a part of the Collateral, to the extent of
the value of the assets securing such indebtedness and
guarantees; and

structurally subordinated in right of payment to all
existing and future indebtedness, guarantees and other
liabilities (including trade payables) and any
preferred equity of the subsidiaries of ReadyCap and
subsidiaries of the Guarantors (other than ReadyCap)
that are not Guarantors of the Notes.

Security

Subject to certain limited exclusions, ReadyCap’s and the
Guarantors’ respective obligations under the Notes and the
Guarantees are secured by a perfected first priority lien
(subject to permitted liens) on the following assets:

the capital stock of ReadyCap and RCC;

the capital stock of any Depositors (as defined in the
Indenture) in respect of which the Collateral Agent has
a perfected first-priority lien (subject to permitted
liens) securing the Notes and the Guarantees (the
Depositor Stock Collateral);

any Securitization Instruments (as defined in the
Indenture), loans, mortgage servicing rights, U.S.
Government Obligations (as defined in the Indenture),
cash and Cash Equivalents (as defined in the
Indenture), in each case in which the Collateral Agent
has a perfected first-priority lien (subject to
permitted liens) securing the Notes and the Guarantees
(collectively, the Financial Assets Collateral, and
together with the Depositor Stock Collateral, the
Replaceable Collateral); and

certain other assets.

We refer to the sum of (a) the net asset value of the
Depositors and (b) the total fair market value of the Financial
Assets Collateral (each as determined by the Company in good
faith) as the Replaceable Collateral Value.

The Indenture provides that the Company will not, subject to
the Cure Right (as defined in the Indenture), permit the
Replaceable Collateral Value, as of the last day of each of the
Companys fiscal quarters, to be less than the aggregate
principal amount of the Notes outstanding as of such date.

At any time after the closing of the offering, (i) ReadyCap may
add additional capital stock or assets constituting Replaceable
Collateral to secure the Notes and the Guarantees and (ii)
either initial Depositor or any subsequent Depositor may
acquire additional assets or repay indebtedness. In addition,
at any time after the closing of this offering, (i) ReadyCap
may cause a Third Party Release or a Parent Group Release (each
as defined in the Indenture) of the liens on any Replaceable
Collateraland (ii) any Depositor may dispose of or otherwise
transfer any of its assets or increase the amount of its
indebtedness, provided that, (a) immediately after giving
effect to such release, disposition or other transfer or
increase in indebtedness and any concurrent addition to
Replaceable Collateral or acquisition of assets or repayment of
indebtedness by such Depositor, as applicable, the Replaceable
Collateral Value will not be less than the aggregate principal
amount of the Notes then outstanding and (b) in any fiscal year
of the Company the total fair market value of the initial
Replaceable Collateral that may be released to a Parent Group
Release shall not exceed $17,450,000.

Certain Covenants

The Indenture contains covenants that, among other things:

limit the ability of the Company and its subsidiaries
(including ReadyCap and the other Guarantors) to incur
additional indebtedness;

require that the Company maintain, on a consolidated
basis, quarterly compliance with the applicable
consolidated recourse indebtedness to equity ratio of
the Company and consolidated indebtedness to equity
ratio of the Company and specified ratios of the
Companys stockholders equity to aggregate principal
amount of the outstanding Notes and the Company’s
consolidated unencumbered assets to aggregate principal
amount of the outstanding Notes;

limit the ability of ReadyCap and RCC to pay dividends
or distributions on, or redeem or repurchase, the
capital stock of ReadyCap or RCC;

limit (i) ReadyCap’s ability to create or incur any
lien on the Collateral and (ii) unless the Notes are
equally and ratably secured, (a) ReadyCap’s ability to
create or incur any lien on the capital stock of its
wholly-owned subsidiary, ReadyCap Lending, LLC and (b)
ReadyCap’s ability to permit ReadyCap Lending, LLC to
create or incur any lien on its assets to secure
indebtedness of its affiliates other than its
subsidiaries or any securitization entity; and

limit ReadyCap’s and the Guarantors’ ability to
consolidate, merge or transfer all or substantially all
of ReadyCap’s and the Guarantors respective properties
and assets.

Optional Redemption

ReadyCap may redeem the Notes prior to November 15, 2021, at
its option, in whole or in part at any time and from time to
time, at a price equal to 50% of the outstanding principal
amount thereof, plus the Applicable Premium (as defined in the
Indenture) as of, and unpaid interest, if any, accrued to, the
redemption date. On and after November 15, 2021, ReadyCap may
redeem the Notes, at its option, in whole or in part at any
time and from time to time, at a price equal to 50% of the
outstanding principal amount thereof plus unpaid interest, if
any accrued to the redemption date.

Change of Control Repurchase

If a Change of Control Triggering Event (as defined in the
Indenture) occurs, ReadyCap will be required to offer to
repurchase all of the outstanding Notes (except with respect to
any Notes in respect of which ReadyCap has exercised its right
of redemption by sending a notice of redemption that is not
subject to any conditions) at a purchase price equal to 101% of
the principal amount thereof plus accrued but unpaid interest,
if any, accrued to the Change of Control Payment Date (as
defined in the Indenture).

Events of Default

The occurrence of an Event of Default (as defined in the
Indenture) may, subject to certain conditions set forth in the
Indenture, lead to the outstanding principal, plus accrued and
unpaid interest, if any, of the Notes being immediately due and
payable.

The description of the Notes, the Guarantees, the Collateral
and the Indenture in this Current Report on Form 8-K is
qualified by reference in its entirety to the Base Indenture
and the Supplemental Indenture, copies of which are filed
herewith as Exhibit 4.1 and 4.2, respectively, and incorporated
into Item 1.01 and this Item 2.03 by reference.

Item7.01.Regulation FD Disclosure.

On February 13, 2017, the Company announced via press release
that ReadyCap has issued and sold $75 million aggregate
principal amount of the Notes, a copy of which is attached as
Exhibit 99.1 hereto.

The information in this Item 7.01 of this Current Report on
Form 8-K, including Exhibit 99.1, is being furnished and shall
not be deemed filed for purposes of Section 18 of the Exchange
Act, or otherwise subject to the liabilities of that Section.
The information in this Item 7.01 of this Current Report on
Form 8-K shall not be incorporated by reference into any
registration statement or other document to the Securities Act,
unless it is specifically incorporated by reference therein.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:

Exhibit
Number		Description
4.1		Indenture, dated February 13, 2017, by and among ReadyCap Holdings, LLC, as issuer, Sutherland Asset Management Corporation, Sutherland Partners, L.P., Sutherland Asset I, LLC and ReadyCap Commercial, LLC, each as guarantors, and U.S. Bank National Association, as trustee.

4.2		First Supplemental Indenture, dated February 13, 2017, by and among ReadyCap Holdings, LLC, as issuer, Sutherland Asset Management Corporation, Sutherland Partners, L.P., Sutherland Asset I, LLC, ReadyCap Commercial, LLC, each as guarantors and U.S. Bank National Association, as trustee and as collateral agent, including the form of 7.5% Senior Secured Notes due 2022 and the related guarantees.

99.1		Press Release issued by Sutherland Asset Management Corporation on February 13, 2017.

About SUTHERLAND ASSET MANAGEMENT CORPORATION (NYSE:SLD)
Sutherland Asset Management Corporation, formerly ZAIS Financial Corp., is a diversified mortgage real estate investment trust (REIT). The Company originates, acquires, finances, services and manages small balance commercial loans (SBC) and Small Business Administration (SBA) loans. The Company focuses on maintaining its existing residential mortgage origination platform, GMFS. The Company originates SBC and SBA loans through its ReadyCap subsidiaries. The Company also invests in asset-backed securities, where the underlying pool of assets consists primarily of SBC loans, and other real estate-related investments. The Company is managed and advised by Waterfall Asset Management, LLC. SUTHERLAND ASSET MANAGEMENT CORPORATION (NYSE:SLD) Recent Trading Information
SUTHERLAND ASSET MANAGEMENT CORPORATION (NYSE:SLD) closed its last trading session up +0.05 at 13.30 with 56,929 shares trading hands.