Item 1.01 Results of Operations and Financial Condition.
Amendments to the Credit Facility
On February 12, 2018 (the “Closing Date”), Medley Capital Corporation (the “Company”) entered into Amendment No. 4 to its existing Amended and Restated Senior Secured Revolving Credit Agreement (the “Amendment”), with certain lenders party thereto, ING Capital LLC, as administrative agent (the “Administrative Agent”), and, solely with respect to Section 2.8 of the Amendment, MCC Investment Holdings LLC, MCC Investment Holdings Sendero LLC, MCC Investment Holdings RT1 LLC, MCC Investment Holdings Omnivere LLC, MCC Investment Holdings Amvestar, LLC, and MCC Investment Holdings AAR, LLC, as subsidiary guarantors. The Amendment amends certain provisions of the Company’s Amended and Restated Senior Secured Revolving Credit Agreement (as amended by Amendment No. 1, Amendment No. 2 and Amendment No. 3, the “Prior Facility” and, as further amended by Amendment No. 4, the “Facility”).
The Prior Facility was amended to, among other things, (i) reduce the size of the commitments and the accordion thereunder in order to decrease long-term interest expense by approximately $0.5 million, annually, (ii) decrease the minimum stockholders’ covenant to $275.0 million and (iii) decrease the minimum net worth covenant to $250.0 million. The proceeds of the Facility drawn on the Closing Date were used in part to prepay in full all Loans as defined in and outstanding on the Closing Date under the Amended and Restated Senior Secured Term Loan Credit Agreement, dated as of July 28, 2015, by and among the Company, certain lenders party thereto, ING Capital LLC, as administrative agent, and certain subsidiary guarantors party thereto (as amended by Amendment No. 1, Amendment No. 2 and Amendment No. 3).
As of February 12, 2018, total commitments under the Facility are $150.0 million.
Borrowings under the Facility are subject to, among other things, a minimum borrowing/collateral base and substantially all of the Company’s assets are pledged as collateral under the Facility. In addition, the Facility requires the Company to, among other things (i) make
representations and warranties regarding the collateral as well the Company’s business and operations, (ii) agree to certain indemnification obligations and (iii) agree to comply with various affirmative and negative covenants. The documentation for the Facility also includes default provisions such as the failure to make timely payments under the Facility, the occurrence of a change in control and the failure by the Company to materially perform under the operative agreements governing the Facility, which, if not complied with, could accelerate repayment under the Facility, thereby materially and adversely affecting the Company’s liquidity, financial condition and results of operations.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment attached hereto as Exhibit 10.1.