Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed, on October 26, 2021, Logan Ridge Finance Corporation
(the "Company") priced an offering of $50,000,000 in aggregate principal amount
of its 5.25% Notes due 2026 (the "Notes") in a private placement exempt from
registration under the Section 4(a)(2) of the Securities Act of 1933, as amended
(the "Securities Act"). The private offering closed on October 29, 2021. The
Notes have not been registered under the Securities Act or any state securities
laws and may not be reoffered or resold in the United States absent registration
or an applicable exemption from such registration requirements. The net proceeds
to the Company were approximately $48.8 million, after deducting estimated
offering expenses. The Company intends to use the net proceeds of this offering
to repay certain indebtedness, including to redeem a portion of the outstanding
2022 Notes, and for general corporate purposes.
On October 29, 2021, the Company and U.S. Bank National Association (the
"Trustee") entered into a Supplemental Indenture (the "Fourth Supplemental
Indenture"), which supplements that certain Base Indenture, dated as of June 16,
2014 (as may be further amended, supplemented or otherwise modified from time to
time, the "Base Indenture" and, together with the Fourth Supplemental Indenture,
the "Indenture"). The Fourth Supplemental Indenture relates to the Company's
issuance of the Notes.
The Notes will mature on October 30, 2026 and may be redeemed in whole or in
part at the Company's option at any time or from time to time at the redemption
prices set forth in the Indenture. The Notes bear interest at a rate of
5.25% per year payable semi-annually on April 30 and October 30 of each year,
commencing on April 30, 2022. The Notes are general unsecured obligations of the
Company that rank senior in right of payment to all of the Company's existing
and future indebtedness that is expressly subordinated in right of payment to
the Notes, rank pari passu with all existing and future unsecured unsubordinated
indebtedness issued by the Company, rank effectively junior to any of the
Company's secured indebtedness (including unsecured indebtedness that the
Company later secures) to the extent of the value of the assets securing such
indebtedness, and rank structurally junior to all existing and future
indebtedness (including trade payables) incurred by the Company's subsidiaries,
financing vehicles or similar facilities.
The Indenture contains certain covenants, including covenants requiring the
Company to comply with the asset coverage requirements of Sections 18(a)(1)(A)
and 18(a)(1)(B) as modified by Section 61(a)(2) of the Investment Company Act of
1940, as amended, whether or not it is subject to those requirements, and to
provide financial information to the holders of the Notes and the Trustee if the
Company is no longer subject to the reporting requirements under the Securities
Exchange Act of 1934, as amended. Additionally, the Company has agreed to use
its commercially reasonable efforts to maintain a rating of the Notes from a
rating agency, as defined in the Indenture, as long as the Notes are
outstanding. These covenants are subject to important limitations and exceptions
that are described in the Indenture.
In addition, on the occurrence of a "change of control repurchase event," as
defined in the Indenture, the Company will generally be required to make an
offer to purchase the outstanding Notes at a price equal to 100% of the
principal amount of such Notes plus accrued and unpaid interest to the
repurchase date. Further, as of the date of an "interest rate adjustment event",
as defined in the Indenture, to and until such date that an interest rate
adjustment event is no longer continuing, the Notes will bear interest at the
"adjusted interest rate," as defined in the Indenture, which is 0.75% above the
stated rate of the Notes.
The foregoing description of the Indenture does not purport to be complete and
is qualified in its entirety by reference to the full text of the Indenture,
filed as an exhibit hereto and incorporated by reference herein.
Registration Rights Agreement
In connection with the offering, the Company entered into a Registration Rights
Agreement, dated as of October 29, 2021 (the "Registration Rights Agreement"),
with the purchasers of the Notes. Pursuant to the Registration Rights Agreement,
the Company is obligated to file with the Securities and Exchange Commission
(the "Commission") a registration statement relating to an offer to exchange the
Notes for new notes issued by the Company that are registered under the
Securities Act and otherwise have terms substantially identical to those of the
Notes, and to use its commercially reasonable efforts to cause such registration
statement to be declared effective. If the Company is not able to effect the
exchange offer, the Company will be obligated to file a shelf registration
statement covering the resale of the Notes and use its commercially reasonable
efforts to cause such registration statement to be declared effective. If the
Company fails to satisfy its registration obligations by certain dates specified
in the Registration Rights Agreement, it will be required to pay additional
interest to the holders of the Notes.
The foregoing description of the Registration Rights Agreement does not purport
to be complete and is qualified in its entirety by reference to the full text of
the Registration Rights Agreement, filed as an exhibit hereto 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 information required by Item 2.03 contained in Item 1.01 of this Current
Report on Form 8-K is incorporated herein by reference.
Item 8.01.Other Events.
On November 1, 2021, Company notified the Trustee for the Company's 6.00% Notes
due 2022 (the "2022 Notes"), of the Company's election to redeem the $50,000,000
aggregate principal amount of the 2022 Notes outstanding, and instructed the
Trustee to provide notice of such redemption to the holders of the 2022 Notes in
accordance with the terms of the indenture governing the 2022 Notes. The Company
expects the redemption to be completed on December 6, 2021. Following the
redemption, $22,833,200 aggregate principal amount of the 2022 Notes will remain
outstanding. This Current Report on Form 8-K does not constitute a notice of
redemption of the 2022 Notes.
Item 9.01. Financial Statements and Exhibits.
4.1 Fourth Supplemental Indenture, dated as of October 29, 2021,
relating to the 5.25% Notes due 2026, by and between the Company and
U.S. Bank National Association, as trustee.
4.2 Form of 5.25% Notes due 2026. (Incorporated by reference to Exhibit
4.3 Registration Rights Agreement, dated as of October 29, 2021, by and
among the Company and the Purchasers (as defined therein).
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