Current Report Filing (8-k)
December 20 2016 - 6:04AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported):
December 15, 2016
FS
Investment Corporation
(Exact
name of Registrant as specified in its charter)
Maryland
(State
or other jurisdiction
of incorporation)
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814-00757
(Commission
File Number)
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26-1630040
(I.R.S.
Employer
Identification No.)
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201
Rouse Boulevard
Philadelphia, Pennsylvania
(Address of principal executive
offices)
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19112
(Zip Code)
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Registrant’s
telephone number, including area code:
(215) 495-1150
None
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item
1.01.
Entry into a Material Definitive Agreement.
On
December 15, 2016, Hamilton Street Funding LLC (“Hamilton Street”), a wholly owned, special purpose financing subsidiary
of FS Investment Corporation (the “Company”), entered into a revolving credit facility (the “Hamilton Street
Credit Facility”), pursuant to (a) a Loan and Security Agreement, dated as of December 15, 2016, by and among Hamilton Street,
as borrower, each of the lenders from time to time party thereto, each of the lender agents from time to time party thereto, HSBC
Bank USA, National Association, as administrative agent (in such capacity, the “Administrative Agent”), and U.S. Bank
National Association, as collateral agent, account bank and custodian, and (b) certain other related transaction documents.
The
Hamilton Street Credit Facility provides for a five-year credit facility with a four-year revolving period, during which Hamilton
Street is permitted to borrow, repay and reborrow advances up to $150,000,000, subject to its compliance with the terms of the
Hamilton Street Credit Facility (including maintenance of the required borrowing base). The Hamilton Street Credit Facility has
an accordion option that would permit the parties to increase the commitments by an additional $50,000,000 to $200,000,000. After
the revolving period, outstanding advances under the Hamilton Street Credit Facility must be repaid by 5% each month until the
maturity date at which time all remaining outstanding advances must be repaid. Hamilton Street will use the proceeds of the advances
to distribute cash to the Company, and the Company, thereupon, will use such cash, in whole or in part, to retire other outstanding
indebtedness of the Company and its wholly owned subsidiaries.
Hamilton
Street has appointed the Company to manage its portfolio of assets pursuant to the terms of a collateral management agreement.
Hamilton Street’s obligations to the lenders and other secured parties under the Hamilton Street Credit Facility are secured
by a first priority security interest in substantially all of Hamilton Street’s assets. The obligations of Hamilton Street
under the Hamilton Street Credit Facility are non-recourse to the Company, and, accordingly, the Company’s exposure under
the Hamilton Street Credit Facility is limited to the value of the Company’s investment in Hamilton Street.
Hamilton
Street will pay interest quarterly in arrears on the advances under the Hamilton Street Credit Facility at a rate per annum equal
to (a) the London Interbank Offered Rate for a three-month interest period (subject to a 0% floor) plus (b) a spread
of 2.50%. Hamilton Street will pay an undrawn fee during the revolving period in an amount equal to (a) 0.50% per annum on any
unborrowed amounts up to 35% of the commitments
plus
(b) 1.65% per annum on any unborrowed amounts above that threshold.
In
connection with the Hamilton Street Credit Facility, Hamilton Street has made certain representations and warranties and is required
to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The Hamilton
Street Credit Facility contains customary events of default for similar financing transactions, including: (a) Hamilton Street’s
failure to make principal, interest or other payments when due; (b) any uncured deficiency in the required borrowing base
or excess foreign currency exposure; (c) the failure of Hamilton Street or the Company to observe or perform their respective
covenants under the transaction documents, subject to applicable cure periods; (d) Hamilton Street’s representation and
warranties being false; (e) any cross-default to other material indebtedness of Hamilton Street or the Company after giving effect
to applicable cure periods; (f) the insolvency or bankruptcy of Hamilton Street or the Company; (g) the failure of the
Company to own 100% of the outstanding interests of Hamilton Street; (h) the failure of the Company to be regulated as a
“business development company” under the Investment Company Act of 1940, as amended (the “1940 Act”);
(i) the failure of the Company to maintain an asset coverage ratio of at least 2 to 1; and (j) the failure of the Company
to maintain a net asset value of at least $400,000,000. Upon the occurrence and during the continuance of an event of default,
the Administrative Agent may declare the outstanding advances and all other obligations under the Hamilton Street Credit Facility
immediately due and payable.
Borrowings
of Hamilton Street will be considered borrowings by the Company for purposes of complying with the asset coverage requirements
under the 1940 Act applicable to business development companies.
Hamilton
Street incurred certain customary costs and expenses and paid certain fees to HSBC Bank in connection with the Hamilton Street
Credit Facility.
The foregoing descriptions of the Hamilton Street Credit Facility as set forth in this Item 1.01 are a summary
only and are qualified in all respects by the provisions of the Loan Agreement, a copy of which is attached hereto as Exhibit
10.1 and incorporated by reference herein.
Item
2.03.
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
information in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Forward-Looking
Statements
This
Current Report on Form 8-K may contain certain forward-looking statements, including statements with regard to the future performance
and operation of the Company. Words such as “believes,” “expects,” “projects” and “future”
or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the
inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially
from those projected in these forward-looking statements, and some of these factors are enumerated in the filings the Company
makes with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Item
9.01.
Financial Statements and Exhibits.
(d)
Exhibits
EXHIBIT
NUMBER
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DESCRIPTION
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10.1
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Loan
and Security Agreement, dated as of December 15, 2016, by and among Hamilton Street Funding LLC, as borrower, each of the
lenders from time to time party thereto, each of the lender agents from time to time party thereto, HSBC Bank USA, National
Association, as administrative agent, and U.S. Bank National Association, as collateral agent, account bank and custodian.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
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FS
Investment Corporation
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Date:
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December
19, 2016
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By:
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/s/ Stephen S. Sypherd
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Stephen
S. Sypherd
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Vice
President
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EXHIBIT
INDEX
EXHIBIT
NUMBER
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DESCRIPTION
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10.1
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Loan and Security Agreement, dated as of December 15, 2016, by and among Hamilton Street Funding LLC, as borrower, each of the lenders from time to time party thereto, each of the lender agents from time to time party thereto, HSBC Bank USA, National Association, as administrative agent, and U.S. Bank National Association, as collateral agent, account bank and custodian.
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