Item 1.01. Entry into a Material Definitive Agreement.
Notes Offering
On April 1, 2022, Logan Ridge Finance Corporation (the "Company") entered into a
Note Purchase Agreement (the "Purchase Agreement") governing the issuance of
$15.0 million in aggregate principal amount of 5.25% Convertible Notes due 2032
(the "Convertible Notes") in a transaction exempt from registration pursuant to
Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities
Act"). 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
Convertible Notes were delivered and paid for on April 1, 2022. The Convertible
Notes will mature on April 1, 2032 (the "Maturity Date"). The net proceeds to
the Company were $13,650,000, after deducting estimated offering expenses.
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Purchase Agreement.
The Company obtained an Investment Grade rating from a Nationally Recognized
Statistical Rating Organization ("NRSRO") with respect to the Convertible Notes.
The Convertible Notes have a fixed interest rate of 5.25% per annum payable
semi-annually on March 31 and September 30 of each year, commencing on
September 30, 2022, subject to a step up of 0.75% per annum to the extent that
the Convertible Notes are downgraded below Investment Grade by an NRSRO or the
Convertible Notes no longer maintain a rating from an NRSRO. The Company will
also be required to pay an additional interest rate of 2.0% per annum (x) on any
overdue payment of interest and (y) during the continuance of an Event of
Default. The Company intends to use the net proceeds from the offering of the
Convertible Notes for general corporate purposes, which may include repaying
outstanding indebtedness, making opportunistic investments and paying corporate
expenses. In addition, on the occurrence of a Change in Control Repurchase Event
or Delisting Event, the Company will generally be required to make an offer to
purchase the outstanding Convertible Notes at a price equal to 100% of the
principal amount of such Convertible Notes plus accrued and unpaid interest to
the repurchase date.
Subject to and upon compliance with the provisions of the Purchase Agreement,
each holder of a Convertible Note will have the right, at such holder's option,
to convert all or any portion of such Convertible Note, at any time on or after
April 1, 2023 and prior to the close of business on the Business Day immediately
preceding the Maturity Date, into such number of shares of the Company's common
stock, par value $0.01 per share (the "Common Stock") equal to the principal
balance of the Convertible Note being converted on such date divided by the
Conversion Price. The Company will not issue more than 539,503 shares of Common
Stock in the aggregate under the Purchase Agreement, as such number of shares
may be adjusted from time to time to give effect to any forward or reverse stock
splits with respect to the Common Stock and subject to further adjustments
described in the Purchase Agreement. The "Conversion Price" will be equal to the
average Closing Sale Price for the five Trading Days immediately prior to the
relevant Conversion Date, subject to certain anti-dilutive provisions as further
described in the Purchase Agreement. No holder of a Convertible Note will be
entitled to convert any Convertible Note or portion thereof if such conversion
would result in more than $7,500,000 in principal amount of Convertible Notes
being converted in any such calendar quarter.
The Convertible 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
Convertible 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 Purchase Agreement contains certain covenants, including covenants requiring
the Company to comply with the asset coverage requirements 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
Convertible Notes if the Company is no longer subject to the reporting
requirements under the Securities Exchange Act of 1934, as amended. These
covenants are subject to important limitations and exceptions that are described
in the Purchase Agreement.
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The foregoing description of the Purchase Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Purchase 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 3.02. Unregistered Sales of Equity Securities.
The information required by Item 3.02 contained 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
EXHIBIT
NUMBER DESCRIPTION
4.1 Note Purchase Agreement, dated as of April 1, 2022, by and among
the Company and the Purchasers (as defined therein).
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