Item 1.01 Entry into a Material Definitive Agreement.
On June 16, 2017, Capitala Finance Corp. (the "Company") entered into Amendment
No. 2 (the "Amendment") to its Senior Secured Revolving Credit Agreement with
ING Capital LLC, as administrative agent, arranger and bookrunner, and the
lenders party thereto (the "Credit Facility").
The Amendment amended the Credit Facility to, among other things, (a) modify the
size of the current revolver commitments under the Credit Facility to $114.5
million, (b) expand the accordion feature of the Credit Facility to $200
million, (c) provide for the ability to step-down the pricing of the Credit
Facility from LIBOR plus 3.00% to LIBOR plus 2.75% when certain conditions are
met, (d) extend the expiration of the revolving period to June 16, 2020, during
which period the Company, subject to certain conditions, may make borrowings
under the Credit Facility, and (e) extend the stated maturity date of the Credit
Facility to June 16, 2021.
Borrowings under the Credit Facility continue to bear interest, at the Company's
election, at a rate per annum equal to (i) the one, two, three or six month
LIBOR, as applicable, plus 3.00% (in the case of eurocurrency loans) or (ii)
2.00% plus the highest of (A) a prime rate, (B) the Federal Funds rate plus
0.5%, (C) three month LIBOR plus 1.0% and (D) zero (in the case of alternate
base rate loans). The Company will continue to pay an unused commitment fee at a
rate of 2.50% per annum on the amount (if positive) by which 40% of the
aggregate commitments under the Credit Facility exceeds the outstanding amount
of loans under the Credit Facility and 0.50% per annum on any remaining unused
portion of the Credit Facility.
The Credit Facility will continue to be secured by a first priority security
interest in all of the Company's portfolio investments (other than those held by
the Company's existing Small Business Investment Company ("SBIC") subsidiaries),
equity interests in certain of the Company's direct and indirect subsidiaries
(other than the Company's existing SBIC subsidiaries) and substantially all of
the Company's other assets. Any future subsidiaries formed by the Company (other
than SBIC subsidiaries or certain special purpose financing subsidiaries) will
be required to guarantee the Credit Facility and pledge all of their assets in
support of such guarantee. The Credit Facility continues to contain certain
customary affirmative and negative covenants and events of default. In
particular, the Credit Facility contains certain financial covenants that, among
other things, require the Company to maintain a minimum amount of equity
supporting the Credit Facility and to maintain compliance with certain
collateral concentration limits, quality and coverage tests.
The description above is only a summary of the material provisions of the
Amendment to the Credit Facility and the related Amendment No. 1 to the
Guarantee, Pledge and Security Agreement and both are qualified in their
entirety by reference to the copies of the Form of Amendment No. 2 to the Senior
Secured Revolving Credit Agreement and the Form of Amendment No. 1 to the
Guarantee, Pledge and Security Agreement, which are filed as Exhibits 10.1 and
10.2, respectively, to this current report on Form 8-K and are incorporated
herein by reference thereto.
On June 20, 2017, the Company issued a press release regarding the matters
described herein, a copy of which is attached hereto as Exhibit 99.1 and
incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth above under Item 1.01 is incorporated by reference
Item 9.01 Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
Exhibit No. Description
10.1 Form of Amendment No. 2, dated as of June 16, 2017, to the Senior
Secured Revolving Credit Agreement, dated as of October 17, 2014,
among Capitala Finance Corp., as borrower, the lenders from time to
time party thereto, and ING Capital LLC, as administrative agent,
arranger and bookrunner, and First National Bank of Pennsylvania, as
10.2 Form of Amendment No. 1, dated as of June 16, 2017, to the
Guarantee, Pledge and Security Agreement dated October 17, 2014,
among Capitala Finance Corp., as borrower, the subsidiary guarantors
party thereto, ING Capital LLC, as revolving administrative agent
for the revolving lenders and as collateral agent, and each
financing agent and designated indebtedness holder party thereto.
99.1 Press release dated June 20, 2017.
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