Item 1.01
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Entry Into a Material Definitive Agreement.
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On December 29, 2016, White Eagle
Asset Portfolio, LP (White Eagle), a wholly-owned indirect subsidiary of Emergent Capital, Inc. (the Company), entered into the Second Amendment (the White Eagle Amendment) to its Amended and Restated Loan And
Security Agreement dated May 16, 2014, (the Loan Agreement) among White Eagle, as borrower, Imperial Finance And Trading, LLC, Lamington Road Bermuda Ltd., as portfolio manager, CLMG Corp., as administrative agent, and LNV
Corporation (the Lender).
In connection with the entry into the White Eagle Amendment, the White Eagle credit facility (the
White Eagle Facility) was increased from $250,000,000 to $370,000,000 and the additional proceeds under the White Eagle Facility were used to purchase the policies in the Red Falcon Trust, a Delaware statutory trust and an affiliate of
White Eagle (Red Falcon), which paid off and terminated the Red Falcon credit facility (the Red Falcon Facility). Pursuant to the White Eagle Amendment, certain
non-financed
life
insurance policies previously held by the Company and its subsidiaries were contributed to White Eagle as collateral.
An additional
$6 million of proceeds were advanced by the Lender to pay transaction closing costs and to pay future debt services and ongoing maintenance costs of the White Eagle Facility. Furthermore, in connection with the entry into the White Eagle
Amendment, Events of Default were changed to, among other things, a failure in Cash Interest Coverage Ratio at the Company level of 1.75:1 after June 30, 2019 for 60 consecutive days.
The waterfall for distribution of proceeds from the policies pledged as collateral under the White Eagle Facility was changed to as follows.
Absent an event of default, after fees to service providers and payments of interest, a percentage of the collections from policy proceeds are to be paid to the lenders, which will vary depending on the then loan to value ratio (LTV) as
follows:
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LTV
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Principal and Interest
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Distribution to Emergent
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Lender Participation
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>65%
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100
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%
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0
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%
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0
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%
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50-65%
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70
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%
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16.5
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%
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13.5
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%
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35-50%
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55
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%
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24.8
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%
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20.3
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%
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0-35%
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45
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%
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30.3
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%
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24.8
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%
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Provided that if (a) the Company failed to maintain a Cash Interest Coverage Ratio of at least 2.0:1 at any time during
the immediately preceding calendar quarter or (b) the Company fails to take steps to improve its solvency in a manner acceptable to the Required Lenders (as determined in their sole and absolute discretion), then the Cash Flow Sweep Percentage
shall equal
one-hundred
percent (100%) and (ii) if such Distribution Date occurs on or after December 29, 2025,
one-hundred
percent (100%).
The foregoing summary of the White Eagle Amendment contained herein does not purport to be complete and is qualified in its entirety by
reference to the White Eagle Amendment, which is expected to be filed as an exhibit to the Companys Annual Report on Form
10-K
for the fiscal year ended December 31, 2016.
Item 1.02
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Termination of a Material Definitive Agreement.
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On December 29, 2016, Red Falcon
entered into a Master Termination Agreement (the Termination Agreement) among Red Falcon, CLMG Corp., LNV Corporation, Imperial Finance & Trading LLC, Blue Heron Designated Activity Company, Harbordale, LLC, Red Reef Alternative
Investments, LLC, MLF LexServ, L.P., Wilmington Trust, National Association, Wilmington Savings Fund Society, FSB, D/B/A Christiana Trust, Michelle A. Dreyer, and Corporation Service Company. In connection with the Termination Agreement and
pursuant to the White Eagle Amendment, the Red Falcon Facility was paid off and terminated as described under Item 1.01 above.
The
foregoing summary of the Termination Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to Item 1.01 above and the Termination Agreement, which is expected to be filed as an exhibit to the
Companys Annual Report on Form
10-K
for the fiscal year ended December 31, 2016.