This Amendment No. 3 (the "Amendment No. 3") to Schedule 13D relates to the Schedule 13D filed on August 4, 2017 (the "Original Schedule 13D", as amended by that Amendment No. 1 to the Schedule 13D filed on August 24, 2017, and as further amended by that Amendment No. 2 to the Schedule 13D filed on January 2, 2018, the "Amended Schedule 13D") by
Ironsides Partners LLC ("Ironsides"), Robert C. Knapp, Ironsides P Fund L.P. ("P Fund"), Ironsides Partners Special Situations Master Fund II L.P. ("Master Fund") and Ironsides Partners Special Situations Master Fund III L.P. ("Fund III") relating to the common stock, $0.01 par value (the "Common Stock") of Emergent Capital, Inc. (the "Issuer").
Capitalized terms used but not defined in this Amendment No. 3 shall have the meanings set forth in the Amended Schedule 13D.
Except as specifically amended by this Amendment No. 3, the Amended Schedule 13D is unchanged.
Item 4. Purpose of Transaction.
Item 4 of the Amended Schedule 13D is hereby amended and restated to read in full as follows:
"The 5.00% Convertible Notes held as of August 4, 2017 and Common Stock Purchase Warrants held as of August 4, 2017 were acquired by the Reporting Persons in connection with the consummation of the Recapitalization Transactions. The 5.00% Convertible Notes acquired by the Reporting Persons on August 17, 2017, August 18, 2017, August 25, 2017, September 5, 2017 and December 28, 2017 were acquired in open market transactions. The Reporting Persons still continue to hold $500 in aggregate principal amount of 8.50% Convertible Notes that were not accepted for exchange in the Exchange Offer. As part of the Recapitalization Transactions, pursuant to the Designation Agreement (as defined below), Mr. Knapp was appointed to the board of directors of the Issuer (the "Board"), effective as of July 28, 2017.
On December 28, 2018, Ironsides entered into a Letter Agreement (the "Commitment Letter") with the Issuer. Subject to the terms and conditions in the Commitment Letter, Ironsides, on behalf of the funds and/or clients managed by it, has agreed, upon receipt of a written demand by the Issuer, to purchase from the Issuer, on or before January 31, 2019, up to $2.0 million in principal amount of the Issuer's 8.5% Senior Secured Notes due 2021 (the "8.5% Senior Notes") for a purchase price of $750 per each $1,000 in principal amount of 8.5% Senior Notes. Subject to the terms and conditions in the Commitment Letter, including compliance with all applicable laws, including securities laws, and internal investment guidelines applicable to Ironsides and the funds and/or clients managed by it, Ironsides, on behalf of the funds and/or clients managed by it, has also agreed to attempt to purchase 8.5% Convertible Notes on the open market or in privately negotiated transactions on terms acceptable to Ironsides in its sole and absolute discretion. If Ironsides and/or the funds and/or clients managed by it does purchase any 8.5% Convertible Notes, Ironsides, on behalf of the funds and/or clients managed by it, has agreed that such fund and/or client holding any such 8.5% Convertible Notes will consent to amendments to the indenture governing the 8.5% Convertible Notes that would (a) extend the maturity date of the 8.5% Convertible Notes to match the maturity date of the 5.0% Convertible Notes and (b) permit interest on the 8.5% Convertible Notes to be paid in kind.
The foregoing description of the Commitment Letter and the transactions contemplated therein does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the full text of the Commitment Letter, which is incorporated herein by reference. The Commitment Letter is attached as Exhibit IX to this Amendment No. 3.
Subject to Mr. Knapp's duties as a member of the Board, depending on various factors, including the Issuer's financial position and strategic direction, the price levels of the securities of the Issuer, other investment opportunities available to the Reporting Persons, the availability and cost of debt financing, the availability of potential business combination and other strategic transactions, conditions in the capital markets and general economic and industry conditions, the Reporting Persons may, in addition to the transactions contemplated by the Commitment Letter, in the future take such actions with respect to their investments in the Issuer as they deem appropriate, including acquiring or disposing of securities of the Issuer, entering into financial instruments or other agreements which increase or decrease the Reporting Persons' economic exposure with respect to their investments in the Issuer, engaging in any hedging or similar transactions with respect to such holdings and/or otherwise changing their intention with respect to any and all matters referred to in Item 4 of Schedule 13D."
Item 5. Interest in Securities of the Issuer.
Item 5 of the Amended Schedule 13D is hereby amended and restated to read in full as follows:
"a. As of January 2, 2019, the Reporting Persons are not beneficial owners of the Issuer's Common Stock. Notwithstanding, as of January 2, 2019, the Reporting Persons held (a) $46,420,665 in aggregate principal amount of 5.00% Convertible Notes, (b) $500 in aggregate principal amount of 8.50% Convertible Notes and (c) Common Stock Purchase Warrants to purchase up to 2,000,000 shares of Common Stock. If fully convertible or exercisable, the Reporting Persons would own (i) 23,210,333 shares of Common Stock in respect of the conversion of the 5.00% Convertible Notes (representing 12.80% of the outstanding shares of Common Stock), (ii) 75 shares of Common Stock in respect of the conversion of the 8.50% Convertible Notes (representing less than .01% of the outstanding shares of Common Stock) and (iii) 2,000,000 shares of Common Stock in respect of the exercise of the Common Stock Purchase Warrants (representing 1.25% of the outstanding shares of Common Stock), and if all 8.50% Convertible Notes, 5.00% Convertible Notes and Common Stock Purchase Warrants held by P Fund, Master Fund and Fund III, as applicable, were converted or exercised, the Reporting Persons would own, in the aggregate, 25,210,408 shares of Common Stock representing 13.75% of the outstanding shares of Common Stock.
1
As of January 2, 2019, P Fund held $29,447,283 in aggregate principal amount of 5.00% Convertible Notes, representing 14,723,642 shares of Common Stock issuable upon conversion of such 5.00% Convertible Notes and a Common Stock Purchase Warrant exercisable into 1,413,206 shares of Common Stock. As of January 2, 2019, Master Fund held $8,905,382 in aggregate principal amount of 5.00% Convertible Notes, representing 4,452,691 shares of Common Stock issuable upon conversion of such 5.00% Convertible Notes, $500 in aggregate principal amount of 8.50% Convertible Notes, representing 75 shares of Common Stock issuable upon conversion of such 8.50% Convertible Notes and a Common Stock Purchase Warrant exercisable into 586,794 shares of Common Stock. As of January 2, 2019, Fund III held $8,068,000 in aggregate principal amount of 5.00% Convertible Notes, representing 4,034,000 shares of Common Stock issuable upon conversion of such 5.00% Convertible Notes. By virtue of his relationship with P Fund, Master Fund, Fund III and Ironsides, Mr. Knapp may have been deemed to be the beneficial owner of the 8.50% Convertible Notes held by Master Fund, the 5.00% Convertible Notes held by P Fund, Master Fund and Fund III and the Common Stock Purchase Warrants held by P Fund and Master Fund. The conversion of the 5.00% Convertible Notes and the 8.50% Convertible Notes and the exercise of the Common Stock Purchase Warrants are subject to a limitation imposed by Florida State law that voids any conversion of the 5.00% Convertible Notes and the 8.50% Convertible Notes and the exercise of the Common Stock Purchase Warrants to the extent that, after such conversion or exercise, the holder thereof would, directly or indirectly, own more than 10% of the outstanding shares of Common Stock, unless such holder has first applied for and obtained regulatory approval from the Florida Office of Insurance Regulation. The Reporting Persons have not sought, and have no intention to seek, such approval, and as such, the Reporting Persons may convert the 5.00% Convertible Notes and/or the 8.50% Convertible Notes and exercise the Common Stock Purchase Warrants into no more than approximately 17,374,547
2
shares of Common Stock.
1
Based on 158,125,928 shares of Common Stock outstanding as of November 15, 2018, as reported by the Issuer in its Form 10-Q filed on November 16, 2018.
2
This amount represents approximately 9.90% of the shares of Common Stock on an as converted basis, assuming 158,125,928 shares of Common Stock are outstanding immediately prior to the conversion of the 5.00% Convertible Notes and/or the 8.50% Convertible Notes and/or exercise of the Common Stock Purchase Warrants.
b. By reason of his control of Ironsides and the General Partner of each of Master Fund, Fund III and P Fund as described in Item 2, Mr. Knapp may be deemed to possess the power to vote and dispose of the securities directly owned by Master Fund, Fund III and P Fund.
c.
The Reporting Persons have not effected any transaction in securities of the Issuer in the past 60 days.
d. No Person other than the Reporting Persons has the right to receive or the power to direct the receipt of distributions or dividends from, or the proceeds from the transfer of, the reported securities.
e. Not applicable."
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.
Item 6 of the Amended Schedule 13D is hereby amended and supplemented by adding the information below:
"Commitment Letter
The disclosures set forth in the second and third paragraphs of Item 4 of this Amendment No. 3 are incorporated herein by reference."
Item 7. Material to Be Filed as Exhibits.
Item 7 of the Amended Schedule 13D
is hereby amended and supplemented by adding the information below:
"Exhibit IX: Letter Agreement, dated as of December 28, 2018, by and between Ironsides Partners LLC and Emergent Capital, Inc."
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.
Dated: January 2, 2019
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IRONSIDES PARTNERS LLC
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By:
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/s/ Robert Knapp
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Name:
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Robert Knapp
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Title:
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President
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Robert C. Knapp
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/s/ Robert Knapp
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IRONSIDES P FUND L.P.
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By:
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Ironsides P Fund GP LLC, its General Partner
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By:
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/s/ Robert Knapp
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Name:
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Robert Knapp
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Title:
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Manager
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IRONSIDES PARTNERS SPECIAL SITUATIONS MASTER FUND II L.P.
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By:
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Ironsides Partners Special Situations Fund GP LLC, its General Partner
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By:
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/s/ Robert Knapp
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Name:
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Robert Knapp
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Title:
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Manager
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IRONSIDES PARTNERS SPECIAL SITUATIONS MASTER FUND III L.P.
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By:
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Ironsides Partners Special Situations Fund III GP LLC, its General Partner
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By:
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/s/ Robert Knapp
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Name:
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Robert Knapp
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Title:
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Manager
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