Item 1.01. Entry into a Material Definitive Agreement.
On June 21, 2019 (the Closing Date), CM Finance Inc (the Company) amended its existing financing facility (as amended the
Amended Financing Facility) with UBS AG, London Branch (together with its affiliates UBS) to extend the Companys term financing facility (Term Financing) and revolving financing facility (Revolving
Financing) with UBS, and reduce the size of the Revolving Financing while adding an option to further increase the Term Financing and revising the structure of the financing from a total return swap to a repurchase agreement.
In accordance with the Amended Financing Facility, the size of the Term Financing and the Revolving Financing will be amended. The Term Financing will be
divided between a
Class A-1
Notes and
Class A-2
Notes. On the Closing Date, $136,000,000 of
Class A-1
Notes and
$26,666,667 of
Class A-2
Notes were issued, initially reducing the outstanding Term Financing from $200,000,000 to $162,666,667. On September 30, 2019, with the consent of UBS, the Company can opt
(the
Class A-2
Notes Option) to purchase an additional $70,666,667
Class A-2
Notes on October 15, 2019 (the
Class A-2
Option Exercise Date), expanding the Term Financing to $233,333,334. If the
Class A-2
Notes Option is not exercised, the $26,666,667
Class A-2
Notes issued on the Closing Date will be redeemed in full. The Revolving Financing was reduced by $60,000,000 to an aggregate amount of $40,000.000 of
Class A-R
Notes.
Pursuant to the Amended Financing Facility, the Company, its wholly owned subsidiary, CM
SPV Ltd. (CM SPV) and/or its affiliate CM Investment Partners LLC (CMIP), as applicable, entered into the following agreements: (i) a Second Amended and Restated Revolving Credit Note Agreement by and among the Company,
CM SPV, UBS, and U.S. Bank, National Association (U.S. Bank) as Revolving Credit Note Agent and Trustee; (ii) a Sixth Supplemental Indenture with an attached Sixth Amended and Restated Indenture between CM SPV and U.S. Bank;
(iii) an Amendment Agreement by and among CM SPV, CMIP and U.S. Bank, as Collateral Administrator, amending the Collateral Administration Agreement and the Collateral Management Agreement, (iv) a Contribution Agreement between the Company
and CM SPV, (v) a Total Return Swap Transaction Confirmation Letter Agreement between UBS and the Company regarding the
Class A-R
Notes; (vi) a Global Master Repurchase Agreement and Annexes
thereto (the GMRA), dated as of June 11, 2019, between UBS and the Company, (vii) a Confirmation under the GMRA with respect to the
Class A-1
Notes and the
Class A-2
Notes (the Term Confirmation), between the Company and UBS, (viii) a Confirmation under the GMRA with respect to the Revolving Financing (the Revolving Confirmation and
collectively with the Term Confirmation, the GMRA Confirmations, between the Company and UBS, (ix) a Subscription Agreement with respect to the
Class A-2
Notes sale, between the Company
and UBS Securities LLC, as placement agent (the Placement Agent), (x) the Placement Agency Agreement, between CM SPV and the Placement Agent, and (xi) the Second Amended and Restated Account Control Agreement, among CM SPV and U.S.
Bank as Revolving Credit Note Agent and Trustee.
Borrowings under the Revolving Financing will generally bear interest at a rate per annum equal to
one-month
LIBOR plus 3.15%. The Company will pay a fee on any undrawn amounts of 2.25% per annum; provided that if 50% or less of the Revolving Financing is drawn, the fee will be 2.50% per annum. Any amounts
borrowed under the Revolving Financing will mature, and all accrued and unpaid interest will be due and payable, on December 5, 2019. The Amended Financing Facility will enable the Company to decrease aggregate financing costs. The Company
intends to use the proceeds from borrowings under the Revolving Financing for general corporate purposes, including the funding of portfolio investments. In addition, subject to the
Class A-2
Note Option
described above, the Term Financing and the Revolving Financing each was amended to extend the maturity date by 12 months, respectively, to December 5, 2021 (with respect to the Term Financing) and December 7, 2020 (with respect to the
Revolving Financing. Borrowings under the Term Financing will bear interest (a) with respect to the
Class A-1
Notes (i) at a rate per annum equal to
one-month
LIBOR plus 2.55% through December 4, 2019, and (ii) at a rate per annum equal to
one-month
LIBOR plus 3.55% from December 5, 2019 through
December 4, 2020, and (iii) at a rate per annum equal to
one-month
LIBOR plus 3.15% (if the
Class A-2
Option were not exercised and the
Class A-2
Notes were redeemed) or 2.90% (if the
Class A-2
Note Option were exercised and the additional
Class A-2
Notes
were issued) from December 5, 2020 through December 5, 2021, and (b) with respect to the
Class A-2
Notes, (i) at a rate per annum equal to
one-month
LIBOR plus 3.15% through October 14, 2019, which is the date before the
Class A-2
Option Exercise Date, and (ii) at a rate per annum equal to
one-month
LIBOR plus 2.90% from the
Class A-2
Option Exercise Date through December 5, 2021.
The description above is only a summary of the material provisions of the Amended Financing Facility and is
qualified in its entirety by reference to the agreements attached as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10 and 10.11 to this current report on Form
8-K
and is incorporated herein
by reference.