UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Date
of report (Date of earliest event reported): September 14, 2020
SARATOGA
INVESTMENT CORP.
(Exact
Name of Registrant as Specified in Charter)
Maryland |
|
814-00732 |
|
20-8700615 |
(State
or Other Jurisdiction
of Incorporation) |
|
(Commission
File Number) |
|
(IRS
Employer
Identification No.) |
535 Madison Avenue
New York,
New York |
|
10022 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
Registrant’s
telephone number, including area code (212) 750-3343
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
|
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
symbol(s) |
|
Name
of each exchange
on
which registered |
Common Stock, par value $0.001 per share |
|
SAR |
|
New
York Stock Exchange |
6.25%
Notes due 2025 |
|
SAF |
|
New
York Stock Exchange |
7.25%
Notes due 2025 |
|
SAK |
|
New
York Stock Exchange |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405)
or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. |
Entry
into a Material Definitive Agreement. |
On
September 14, 2020, Saratoga Investment Corp. (the “Company”) entered into Amendment No. 5 to the Credit,
Security and Management Agreement by and among Saratoga Investment Funding LLC as the Borrower, the Company as the Performance
Guarantor, Saratoga Investment Advisors, LLC as the Manager, each financial institution that from time to time becomes
a party thereto as a “Lender” and their respective successors and assigns Madison Capital Funding LLC
as Administrative Agent, and U.S. Bank National Association as the Custodian (the “Amended Credit Facility”)
to, among other things, (1) extend the commitment termination date of the credit facility from September 17, 2020 to September
17, 2021, (2) provide for the transition away from the LIBOR Rate in the market, and (3) expand the definition of Eligible Loan
Asset to allow investments with certain recurring revenue features to qualify as Collateral. There is no change to the final maturity
date of September 17, 2025.
With
respect to the transition away from the LIBOR Rate, the Amended Credit Facility provides that if the Administrative Agent or the
Required Lender determine, that (i) adequate and reasonable means do not exist for ascertaining the LIBOR Rate, or (ii) the administrator
of the LIBOR Rate or a governmental authority having jurisdiction over the Administrative Agent has made a public statement identifying
a specific date after which the LIBOR Rate will no longer be made available or used for determining the interest rate of loans,
then (x) if there exists a comparable successor or alternative interbank rate for deposits in Dollars that is, at such time, broadly
accepted by the loan market in lieu of “LIBOR” and is reasonably acceptable to the Administrative Agent, such rate
will be the “LIBOR Rate”, or (y) solely if no such broadly accepted comparable successor interbank rate exists at
such time, the Administrative Agent will endeavor to establish an alternate rate of interest to the LIBOR Rate; provided that
such amendment entered into by the Administrative Agent and the Borrower will provide that if such alternate rate of interest
is less than 1.00%, such rate will be deemed to be 1.00% for purposes of the Amended Credit Facility.
With
respect to the expansion of the Company’s investments that can qualify as an Eligible Loan Asset, the Amended Credit Facility
allows to qualify as an Eligible Loan Asset a Senior Secured Loan, Last-Out Loan or Unitranche Loan with (i) a certain level of
recurring revenue, (ii) a Loan-to-Value Ratio of forty-five percent (45%) or less, and (iii) no financial covenant based on “debt
to EBITDA” to operating cash flow.
Capitalized
terms under this Item 1.01, unless otherwise defined herein, have the meaning ascribed to them in the Amended Credit Facility.
The foregoing description of the Amended Credit Facility does not purport to be complete and is qualified in its entirety by reference
to the full text of the Amended Credit Facility attached hereto as Exhibit 10.1.
Item 2.03. |
Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The
information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item
9.01. | Financial
Statements and Exhibits. |
(d) Exhibits
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
|
SARATOGA
INVESTMENT CORP. |
|
|
|
Date: September
17, 2020 |
By: |
/s/
Henri J. Steenkamp |
|
Name: |
Henri
J. Steenkamp |
|
Title: |
Chief
Financial Officer, Chief Compliance Officer and Secretary |
2
Exhibit
10.1
EXECUTION VERSION
AMENDMENT
NO. 5 TO CREDIT, SECURITY AND MANAGEMENT AGREEMENT
This
AMENDMENT NO. 5 TO CREDIT, SECURITY AND MANAGEMENT AGREEMENT (this “Amendment”) is made as of September 14,
2020, by and among SARATOGA INVESTMENT FUNDING LLC, a Delaware limited liability company, as borrower (the “Borrower”),
SARATOGA INVESTMENT CORP., a Maryland corporation, as Performance Guarantor (the “Performance Guarantor”),
SARATOGA INVESTMENT ADVISORS, LLC, a Delaware limited liability company, as Manager (the “Manager”), each Lender
party hereto, MADISON CAPITAL FUNDING LLC, as administrative agent (the “Administrative Agent”), and U.S. BANK
NATIONAL ASSOCIATION, a national banking association (“U.S. Bank”), not in its individual capacity, but solely
as the custodian (together with its successors and assigns in such capacity, the “Custodian”). Capitalized
terms used and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement (as defined below).
RECITALS
WHEREAS,
the Borrower, the Performance Guarantor, the Manager, the financial institutions signatory thereto as Lenders, the Administrative
Agent and the Custodian, each entered into that certain Credit, Security and Management Agreement, dated as of July 30, 2010,
as restated by that certain Amendment No. 1 to Credit, Security and Management Agreement dated as of February 24, 2012, as amended
by that certain Amendment No. 2 to Credit, Security and Management Agreement dated as of September 17, 2014, as amended by that
certain Amendment No. 3 to Credit, Security and Management Agreement dated as of May 18, 2017 and as further amended by that certain
Amendment No. 4 to Credit, Security and Management Agreement dated as of April 24, 2020 (as further amended, restated or otherwise
modified, the “Credit Agreement”);
WHEREAS,
Borrower has requested that Administrative Agent and Lenders make certain amendments with respect to the Credit Agreement
as set forth herein; and
WHEREAS,
Borrower, Performance Guarantor, Manager, Administrative Agent, Custodian, and Lenders are willing to enter into this Amendment
upon the terms and conditions set forth below.
NOW,
THEREFORE, in consideration of the matters set forth in the recitals and the covenants and provisions herein set forth, and
other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.
2. Amendments
to the Credit Agreement. As of the Fifth Amendment Effective Date (hereinafter defined), the Credit Agreement is hereby amended
to delete the bold, stricken text (indicated textually in the same manner as the following example: stricken text)
and to add the bold, double-underlined text (indicated textually in the same manner as the following example: double-underlined
text) as set forth in the pages of the Credit Agreement attached as Exhibit A hereto.
3. Representations
and Warranties. Each of the Borrower, the Performance Guarantor and the Manager represents and warrants as of the date of
this Amendment as follows (provided that, with respect to the representations and warranties in clause (g) below, the Borrower
shall make such representations and warranties solely with respect to Section 4.1 of the Credit Agreement, the Performance Guarantor
shall make such representations and warranties solely with respect to Section 4.2 of the Credit Agreement, and the Manager shall
make such representations and warranties solely with respect to Section 7.5 of the Credit Agreement):
(a) it
is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, and has full power,
authority and legal right to own or lease its properties and conduct its business as such business is presently conducted;
(b) the
execution and delivery of this Amendment and the consummation of the transactions provided for herein have been duly authorized
by it by all necessary action on the part of such Person;
(c) The
execution and delivery of this Amendment, the performance by it of the transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with or result in any breach of any of the terms and provisions of, and will not constitute
(with or without notice or lapse of time or both) a default under, its organizational documents or any material Contractual Obligation
of such Person;
(d) this
Amendment has been duly executed and delivered by it;
(e) this
Amendment constitute the legal, valid and binding obligation of it enforceable against it in accordance with its terms, except
as such enforceability may be limited by Insolvency Laws and except as such enforceability may be limited by general principles
of equity (whether considered in a suit at law or in equity);
(f) all
material approvals, authorizations, consents, orders or other actions of any Person or of any Governmental Authority (if any)
required in connection with the due execution, delivery and performance by it of this Amendment have been obtained;
(g) the
representations and warranties set forth in Sections 4.1, 4.2 and 7.5 of the Credit Agreement are true and correct on and as of
the date hereof (except to the extent such representations and warranties expressly relate to a specific earlier date, in which
case such representations and warranties shall be true and correct as of such earlier date); and
(h) no
event has occurred, or would result from this Amendment, that constitutes an Event of Default or a Default or a Manager Event.
4. Conditions
to Effectiveness. This Amendment shall become effective (the “Fifth Amendment Effective Date”) on the date
on which:
(a) each
party hereto shall have delivered an executed signature page to the Administrative Agent;
(b) the
Administrative Agent shall have received the fees set forth in the Fee Letter dated as of the date hereof by and between the Administrative
Agent and the Borrower; and
(c) the
Administrative Agent shall have received such other documents, instruments, agreements and legal opinions as the Administrative
Agent shall reasonably request in connection with the transactions contemplated by this Amendment.
5. Costs
and Expenses. The Borrower hereby affirms its obligation under Section 12.8 of the Credit Agreement to reimburse the Administrative
Agent for all reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, negotiation,
execution and delivery of this Amendment, including but not limited to the reasonable fees, charges and disbursements of attorneys
for the Administrative Agent with respect thereto.
6. Post-Closing
Delivery of Secretary’s Certificate. The Administrative Agent shall have received a Secretary’s Certificate (i)
within 10 Business Days of the date hereof with respect to the Borrower and the Manager, and (ii) within 15 Business Days of the
date hereof with respect to the Performance Guarantor, each in form and substance reasonably satisfactory to the Administrative
Agent.
7. Miscellaneous.
(a) The
descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.
(b) This
Amendment shall constitute a Transaction Document.
(c) This
Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by e-mail in portable document format (.pdf) or facsimile
shall be effective as delivery of a manually executed counterpart of this Amendment.
(d) In
case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
(e) This
Amendment contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, superseding
all prior oral or written understandings.
(f) THIS
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER: |
SARATOGA
INVESTMENT FUNDING LLC |
|
|
By: |
/s/
Christian Oberbeck |
|
Name: |
Christian
Oberbeck |
|
Title: |
CEO |
|
MANAGER: |
SARATOGA
INVESTMENT ADVISORS, LLC |
|
|
By:
|
/s/
Henri Steenkamp |
|
Name: |
Henri
Steenkamp |
|
Title: |
Chief
Compliance Officer |
|
PERFORMANCE
GUARANTOR: |
SARATOGA
INVESTMENT CORP. |
|
|
By:
|
/s/
Christian Oberbeck |
|
Name: |
Christian
Oberbeck |
|
Title: |
CEO |
|
ADMINISTRATIVE
AGENT |
AND
LENDER: |
MADISON
CAPITAL FUNDING LLC, as Administrative Agent and Lender |
|
|
|
By:
|
/s/
David Kelly |
|
Name: |
David
Kelly |
|
Title: |
Director |
|
CUSTODIAN: |
U.S.
BANK NATIONAL ASSOCIATION, not in its individual capacity, but solely as Custodian |
|
|
By:
|
/s/
Biko Burt |
|
Name: |
Biko
Burt |
|
Title: |
Vice
President |
Amendment
No. 5 to Credit, Security and Management Agreement
Exhibit
A
Amended
Credit Agreement
(attached)
This regulatory filing also includes additional resources:
exhibit_a.pdf
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