Item 1.01. Entry into a Material Definitive Agreement.
On April 23, 2019, MS Loan
NT-I,
LLC, MS Loan
NT-II,
LLC, CLNC Credit 1,
LLC, CLNC Credit 2, LLC, CLNC Credit 1EU, LLC and CLNC Credit 1UK, LLC (collectively, Seller), each an indirect subsidiary of Colony Credit Real Estate, Inc. (CLNC), entered into a Second Amended and Restated Master
Repurchase and Securities Contract Agreement (the Repurchase Agreement) with Morgan Stanley Bank, N.A. (Morgan Stanley). As described in more detail in the Repurchase Agreement documentation, the Repurchase Agreement provides
up to $600.0 million to finance first mortgage loans, senior loan participations and other commercial mortgage loan debt instruments secured by commercial real estate: $500 million for commercial real estate that may be located in the
United States, and $100 million for commercial real estate that may be located in Belgium, France, Germany, Ireland, Luxembourg, the Netherlands, the United Kingdom, Spain, or any other jurisdiction approved by Morgan Stanley. The transactions
contemplated under the Repurchase Agreement may be denominated in U.S. Dollars, Pounds Sterling, Euro or any other currency approved by Morgan Stanley.
With respect to assets located in the United States, advances under the Repurchase Agreement accrue interest at per annum rates ranging from the
one-month
London Interbank Offered Rate, plus a spread to be determined on a case by case basis between Seller and Morgan Stanley. For assets for which the applicable currency is Pounds Sterling, advances under the
Repurchase Agreement accrue interest at per annum rates ranging from the three-month London Interbank Offered Rate, plus a spread to be determined on a case by case basis between Seller and Morgan Stanley. For assets for which the applicable
currency is Euro, advances under the Repurchase Agreement accrue interest at per annum rates ranging from the three-month Euro Interbank Offered Rate, plus a spread to be determined on a case by case basis between Seller and Morgan Stanley.
The initial maturity date of the Repurchase Agreement is April 20, 2022, with annual one year extensions at Sellers option, which may be approved
or denied in Morgan Stanleys sole discretion as further set forth in the Repurchase Agreement. The Repurchase Agreement will act as a revolving credit facility that can be paid down and subsequently
re-drawn
subject to the satisfaction of customary conditions precedent.
In connection with the Repurchase
Agreement, Credit RE Operating Company, LLC (Guarantor), Seller and Morgan Stanley entered into a Ratification, Reaffirmation and Confirmation of Transaction Documents (the Ratification Agreement), which ratified
Guarantors obligations under an Amended and Restated Guaranty Agreement with Morgan Stanley (the Guaranty), under which the Guarantor agreed to guaranty Sellers payment and performance obligations under the Repurchase
Agreement. Subject to certain exceptions, the maximum liability under the Guaranty will not exceed 25% of the aggregate repurchase price of all purchased assets under the Repurchase Agreement.
The Repurchase Agreement and Guaranty contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that
are customary for agreements of these types. In addition, the Guaranty contains financial covenants that require Guarantor to maintain: (i) minimum liquidity of not less than the lower of (x) $50.0 million and (y) the greater of (A)
$10.0 million and (B) 5% of Guarantors recourse indebtedness; (ii) tangible net worth of not less than $2,105.0 million plus 75% of the net cash proceeds of any equity issuance by CLNC after the date of the Repurchase Agreement;
(iii) indebtedness not to exceed 75% of total assets; and (iv) a ratio of EBITDA to fixed charges of not less than 1.40 to 1.00.
The foregoing
summary does not purport to be a complete description and is qualified in its entirety by reference to the Repurchase Agreement, the Guaranty and the Ratification Agreement, which are filed as exhibits to this Current Report on Form
8-K.