Item 1.01. Entry into a Material Definitive Agreement.
Second Amended and Restated Credit Agreement
On September 21, 2020, Jernigan Capital Operating Company, LLC (the "Borrower"
or the "Operating Company"), the operating company of Jernigan Capital, Inc.
(the "Company"), entered into a First Amendment to Second Amended and Restated
Credit Agreement (the "Amendment to the Credit Agreement") by and among the
Borrower, the Company, certain subsidiaries of the Company party thereto, the
other lenders party thereto and KeyBank National Association, as administrative
agent for itself and the other lenders party thereto ("KeyBank"). The Amendment
to the Credit Agreement amends that certain Second Amended and Restated Credit
Agreement dated as of March 26, 2020 (as amended, the "Credit Agreement") by and
among the Borrower, KeyBank, KeyBanc Capital Markets Inc. and BMO Capital
Markets Corp., as joint lead arrangers, BMO Capital Markets Corp. as syndication
agent, Raymond James Bank, N.A. as documentation agent and the other lenders
party thereto. The Amendment to the Credit Agreement, among other changes, (1)
provides that, for purposes of certain affirmative covenants contained in the
Loan Documents (as defined in the Credit Agreement), rent payments in respect of
certain non-stabilized and stabilized self-storage properties owned by the
Company or one of its wholly owned subsidiaries (collectively, "Borrowing Base
Properties") may be accepted and collected more than one month in advance of the
due date of such installments, with certain limitations on accepting and
collecting rent payments more than three months and more than twelve months in
advance of the due date of such installments, respectively; (2) allows the
Company to pledge the equity of the owner of the self-storage property located
at 465 W. 150th St., New York, NY (in lieu of providing a mortgage and/or other
real estate collateral documents with respect to the same) in order to allow
such property to qualify as a Borrowing Base Property, and (3) clarifies that
any mortgage, recording, intangible, documentary stamp, or similar tax that are
assessed by any state or municipality must be paid by the Borrower.
Except as provided in the Amendment to the Credit Agreement, the terms of the
Credit Agreement otherwise remain in full force and effect.
The foregoing description of the Amendment to the Credit Agreement in this Item
1.01 does not purport to be complete and is qualified in its entirety by
reference to the full text of the Amendment to the Credit Agreement, which is
filed as Exhibit 10.1 to this Current Report on Form 8K and is incorporated
herein by reference.
The Agreement and Plan of Merger
On September 21, 2020, the Company, the Operating Company, NexPoint RE Merger,
Inc. ("Parent") and NexPoint RE Merger OP, LLC (the "Parent OP"), entered into
an Amendment (the "Amendment to the Merger Agreement") to that certain Agreement
and Plan of Merger (the "Merger Agreement"), dated as of August 3, 2020, by and
among the Company, the Operating Company, Parent and the Parent OP. The
Amendment to the Merger Agreement modified the Merger Agreement to clarify that
upon the Company Merger Effective Time (as defined in the Merger Agreement), as
applicable: (i) each Company Series A Preferred Share issued and outstanding
immediately prior to the Company Merger Effective Time will be automatically
converted into the right to receive one validly issued, fully paid and
non-assessable share of common stock of the surviving company and (ii) each
share of common stock of Parent issued and outstanding immediately prior to the
Company Merger Effective Time will no longer be outstanding and will
automatically be retired and cease to exist. Except as provided in the Amendment
to the Merger Agreement, the terms of the Merger Agreement otherwise remain in
full force and effect.
The foregoing description of the Amendment to the Merger Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Amendment to the Merger Agreement, which is filed as Exhibit 2.1 hereto, and is
incorporated herein by reference.
Additional Information about the Merger and Where to Find It:
This communication relates to the proposed merger transaction involving the
Company. In connection with the proposed merger, the Company will file relevant
materials with the SEC, including a proxy statement on Schedule 14A (the "Proxy
Statement"). This communication is not a substitute for the Proxy Statement or
for any other document that the Company may file with the SEC and send to the
Company's shareholders in connection with the proposed transactions. INVESTORS
AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT AND
OTHER DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders will be able to obtain free copies
of the Proxy Statement and other documents filed by the Company with the SEC
through the website maintained by the SEC at http://www.sec.gov. Copies of the
documents filed by the Company with the SEC will be available free of charge on
the Company's website at www.jernigancapital.com, or by contacting the Company's
Investor Relations Department at 901.567.9580.
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The Company and its directors and certain of its executive officers may be
considered participants in the solicitation of proxies with respect to the
proposed Mergers under the rules of the SEC. Information about the directors
and executive officers of the Company is set forth in its Annual Report on Form
10-K for the year ended December 31, 2019, which was filed with the SEC on
February 27, 2020, its proxy statement for its 2020 annual meeting of
shareholders, which was filed with the SEC on March 19, 2020 and other filings
filed with the SEC. Additional information regarding the participants in the
proxy solicitations and a description of their direct and indirect interests, by
security holdings or otherwise, will also be included in the Proxy Statement and
other relevant materials to be filed with the SEC when they become available.
Forward Looking Statements:
Certain statements in this communication regarding the proposed merger
transaction involving the Company, including any statements regarding the
expected timetable for completing the transaction, benefits of the transaction,
future opportunities for the Company, and any other statements regarding the
Company's future expectations, beliefs, plans, objectives, financial conditions,
assumptions or future events or performance that are not historical facts are
"forward-looking" statements made within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These statements are often, but not always, made
through the use of words or phrases such as "believe," "expect," "anticipate,"
"should," "planned," "will," "may," "intend," "estimated," "aim," "on track,"
"target," "opportunity," "tentative," "positioning," "designed," "create,"
"predict," "project," "seek," "would," "could", "potential," "continue,"
"ongoing," "upside," "increases," and "potential," and similar expressions. All
such forward-looking statements involve estimates and assumptions that are
subject to risks, uncertainties and other factors that could cause actual
results to differ materially from the results expressed in the statements.
Although we believe the expectations reflected in any forward-looking statements
are based on reasonable assumptions, we can give no assurance that our
expectations will be attained and therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such forward-looking
statements. Some of the factors that may affect outcomes and results include,
but are not limited to: (i) risks associated with the Company's ability to
obtain the shareholder approval required to consummate the merger and the timing
of the closing of the merger, including the risks that a condition to closing
would not be satisfied within the expected timeframe or at all or that the
closing of the merger will not occur, (ii) the outcome of any legal proceedings
that may be instituted against the parties and others related to the merger
agreement, (iii) unanticipated difficulties or expenditures relating to the
transaction, the response of business partners and competitors to the
announcement of the transaction, and/or potential difficulties in employee
retention as a result of the announcement and pendency of the transaction, (iv)
changes affecting the real estate industry and changes in financial markets,
interest rates and foreign currency exchange rates, (v) increased or
unanticipated competition for the Company's properties, (vi) risks associated
with acquisitions, (vii) maintenance of real estate investment trust ("REIT")
status, (viii) availability of financing and capital, (ix) changes in demand for
developed properties, (x) national, international, regional and local economic
climates, (xi) the negative impact of the ongoing COVID-19 pandemic and the
measures intended to prevent its spread and (xii) those additional risks and
factors discussed in reports filed with the SEC by the Company from time to
time, including those discussed under the heading "Risk Factors" in its most
recently filed reports on Form 10-K and 10-Q. The Company undertakes no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Investors should not
place undue reliance upon forward-looking statements.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
2.1 First Amendment to the Agreement and Plan of Merger, dated as of
September 21, 2020, by and among Jernigan Capital, Inc., Jernigan
Capital Operating Company, LLC, NexPoint RE Merger, Inc. and NexPoint
RE Merger OP, LLC
10.1 First Amendment to Second Amended and Restated Credit Agreement, dated
September 21, 2020, by and among Jernigan Capital Operating Company,
LLC, Jernigan Capital, Inc., certain subsidiaries of Jernigan Capital,
Inc. party thereto, the other lenders party thereto and KeyBank
National Association, as administrative agent for itself and the other
lenders party thereto.
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