GREENSKY, INC. Item 1.01 Entry into a Material Definitive Agreement.
On
The SPV Facility provides a revolving committed financing of
The Company currently expects that the SPV Facility will provide financing for approximately 70% of the purchase price for such participations (on average), and the Company will fund the remainder. The participations will serve as collateral for the loans made to the SPV under the SPV Facility. The assets of the SPV will not be available to satisfy any obligation of the Company, and no lender will have direct recourse to the Company for any loans made under the SPV Facility. The SPV is required to repay the borrowings from collections received on the participations.
Under the SPV Facility, the SPV may voluntarily repay (subject to certain minimum utilization requirements) and re-borrow principal amounts up to the aggregate commitment amount subject to satisfaction of certain borrowing conditions, including borrowing base requirements and other requirements. These requirements include, among others, that the participations satisfy certain eligibility criteria and that the pool of participations satisfy certain limits that restrict the pool from being overly concentrated based on specified characteristics.
The Company's ability to utilize the SPV Facility is subject to the SPV's compliance with various covenants and other requirements of the Credit Agreement. The failure to comply with such requirements may result in events of default, the accelerated repayment of amounts owed under the SPV Facility (often referred to as an early amortization event), a decrease in the borrowing base advance rate, an increase in the interest rate payable on the loans and/or the termination of the SPV Facility.
Following an event of default or an early amortization event under the SPV Facility, collections on the collateral would be applied to repay principal rather than being available on a revolving basis to facilitate GreenSky program loan volume. So long as such events are continuing, the SPV may not make additional borrowings under the SPV Facility.
The Company is in the final stages of finalizing an agreement governing the
participation sales with an existing bank partner necessary to access funding
under the SPV Facility. The Company expects the SPV Facility to be operational
in
The Company expects the SPV to conduct periodic sales of the purchased participations or issue asset-backed securities to third parties, which sales or issuances would allow additional purchases of participations to be financed through the SPV Facility. To the extent that such sales occur, the SPV Facility could facilitate substantial incremental GreenSky program loan volume.
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One or more of the Company's subsidiaries will act as servicer with respect to the loans underlying the participations owned by the SPV. This subsidiary could be replaced by a designated backup servicer or another replacement servicer upon certain specified occurrences, including, among others, this subsidiary defaulting in its servicing obligations. Any such default could, under certain circumstances, result in an event of default under the Credit Agreement.
The Company has engaged in, and may, in the future, engage in, other commercial
dealings with JPMorgan and its affiliates in the ordinary course of business.
JPMorgan or its affiliates served as a joint lead book running manager for the
Company's initial public offering; served as exclusive agent in connection with
the Company's 10b5-1 repurchase program; serve as an administrative agent,
collateral agent, issuing bank, joint lead arranger and joint lead bookrunner
for the Company's Credit Agreement dated
The foregoing description of the Credit Agreement is qualified in its entirety
by reference to the Credit Agreement, which will be filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ending
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements that reflect
the Company's current views with respect to, among other things, the impact of
the SPV Facility on the GreenSky program, the completion of an agreement
governing the participation sales with an existing bank partner necessary to
access funding under the SPV Facility and the timing of the availability of the
SPV Facility. You generally can identify these statements by the use of words
such as "outlook," "potential," "continue," "may," "seek," "approximately,"
"predict," "believe," "expect," "plan," "intend," "estimate" or "anticipate" and
similar expressions or the negative versions of these words or comparable words,
as well as future or conditional verbs such as "will," "should," "would,"
"likely" and "could." These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
included in the forward-looking statements. These risks and uncertainties
include those risks described in GreenSky's filings with the
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