Item 1.01. Entry in to a Material Definitive Agreement
On July 1, 2019, JMP Holding LLC (the “Borrower”), a wholly owned subsidiary of JMP Group LLC (the “Company”), entered into an Amendment Number Five (the “Fifth Amendment”) to that certain Second Amended and Restated Credit Agreement dated April 30, 2014 among the Borrower, the lenders from time to time party thereto (the “Lenders”) and City National Bank, a national banking association (“CNB”), as administrative agent for the Lenders (as amended, the “Credit Agreement”).
The Fifth Amendment made various updates, clarifications and conforming changes to the Credit Agreement relating to changes in the business and corporate structure of the Company since the Credit Agreement was originally entered into by the Borrower. In addition, the Fifth Amendment effected the following changes:
Extend
Revolving Line of Credit
Maturity Date
.
The Fifth Amendment extended the revolving period of the Borrower’s $25.0 million revolving line of credit (the “Revolver”) through December 31, 2020. On such date, if the revolving period has not been previously extended, any outstanding amounts under the Revolver would convert to a term loan (the “Converted Term Loan”). The Converted Term Loan must be repaid in 12 quarterly installments commencing on January 1, 2021, with each of the first six installments being equal to 3.75% of the principal amount of the Converted Term Loan and each of the next six installments being equal to 5.0% of the principal amount of the Converted Term Loan. A final payment of all remaining principal and interest due under the Converted Term Loan must be made at the earlier of: (a) December 31, 2023; or (b) if certain liquidity requirements are not satisfied by the Company, the date that is last day of the fiscal quarter ending most recently (but no less than 60 days) prior to the earliest maturity date of any senior unsecured notes issued by JMP Group Inc. then outstanding.
Financial Covenants
. The Fifth Amendment modified the financial covenants in the Credit Agreement to provide for (a) a minimum fixed charge coverage ratio of at least 1.25 to 1.00 for each four-fiscal-quarter period, (b) a maximum senior leverage ratio of 2.25 to 1:00 as of the last day of each fiscal quarter, (c) a minimum liquidity to debt service ratio of at least 1.25 to 1:00 as of the last day of each fiscal quarter, and (d) a minimum net asset value to total funded debt ratio at all times of at least 1.35 to 1.00.
Use of Proceeds.
The Credit Agreement provides that the Revolver may be used, on a revolving basis, to fund specified permitted investments in collateralized loan obligation vehicles. In addition, up to $5,000,000 of the Revolver may be used, on a revolving basis, to fund other types of permitted investments and acquisitions and for working capital.
The descriptions of the documentation relating to this transaction contained in this Current Report on Form 8-K do not purport to be complete and are qualified in their entirety by reference to the underlying agreements, attached hereto as exhibits and incorporated into this Current Report on Form 8-K by reference.