Item 1.01 Entry Into a Material Definitive Agreement.
On
On
The respective finance receivables sold and a cash reserve serve as security for the obligations to the Purchasers under the Receivables Purchase Agreement and for the obligations to the Trust under the Canadian Receivables Purchase Agreement. In each case, the amount of the cash reserve depends on circumstances which are set forth in the respective agreements. After the occurrence of a termination event, as defined in the Receivables Purchase Agreement, the Purchasers may, and could, cause the stock of AFC Funding to be transferred to the agent under the Receivables Purchase Agreement for the benefit of the Purchasers, though as a practical matter the Purchasers would look to the liquidation of the receivables under the transaction documents as their primary remedy. Upon the occurrence of a termination event under the Canadian Receivables Purchase Agreement, the Trust has discretion to liquidate the receivables under the applicable transaction documents as its primary remedy. Termination events, as defined in the Receivables Purchase Agreement, include, among other things, breaches of representations and warranties; failures to perform covenants and other obligations as seller or servicer; violations of financial covenants related to AFC, AFC Funding or the Company (including, among others, limits on the amount of debt AFC can incur, minimum levels of tangible net worth of AFC and AFC Funding, and certain financial covenants contained in the Company's senior secured credit agreement); defaults in payment of other indebtedness of the Company, AFC or AFC Funding; violation of certain covenants related to the performance of the receivables portfolio; the occurrence of a material adverse change in the collectability of the receivables owned by AFC Funding or the business, operations, property or financial condition of AFC or AFC Funding; certain changes in control of AFC or AFC Funding; and certain bankruptcy events with respect to AFC, AFC Funding or the Company. The Canadian Receivables Purchase Agreement includes substantially similar termination events pertaining to AFCI, AFC and the Company, as applicable.
The following provides a brief description of the amendments effected by the
Receivables Purchase Agreement and the Canadian Receivables Purchase Agreement
that are material to the Company. The program limit under the Canadian
Receivables Purchase Agreement of
Receivables Purchase Agreement
· The aggregate maximum commitment of the Purchasers was reduced from
billion to$1.60 billion ;
· The Termination Date was extended from
· Provisions designed to provide additional credit enhancement to the Purchasers
upon the occurrence of certain events related to the payment rate and net spread on the receivables portfolio were added;
· Certain portfolio performance metrics that could result in a requirement to
increase the cash reserve or constitute a termination event were amended to the benefit of AFC Funding;
· Certain provisions that had been added by amendment to provide relief for the
economic impact of the COVID-19 pandemic and to permit the implementation of AFC's Customer Relief Plan were removed; and
· Provisions providing for a mechanism for determining an alternative rate of
interest were added.
Canadian Receivables Purchase Agreement
· The Termination Date was extended from
· Provisions designed to provide additional credit enhancement to the Purchasers
upon the occurrence of certain events related to the payment rate and net spread on the receivables portfolio were added;
· Certain portfolio performance metrics that could result in a requirement to
increase the cash reserve or constitute a termination event were amended to the
benefit of AFC Funding;
· Certain provisions that had been added by amendment to provide relief for the
economic impact of the COVID-19 pandemic and to permit the implementation of
AFC's Customer Relief Plan were removed; and
· Provisions providing for a mechanism for determining an alternative rate of
interest were added.
Certain of the Purchasers and agents and their respective affiliates have, from
time to time, performed, and may in the future perform, various financial
advisory and investment banking, commercial banking and other services for the
Company and its affiliates, for which they received or will receive customary
fees and expenses.
In addition,
The above description of the amendments effected by the Receivables Purchase
Agreement and the Canadian Receivables Purchase Agreement is not complete and is
qualified in its entirety by reference to the full text of the Receivables
Purchase Agreement and the Canadian Receivables Purchase Agreement, copies of
which will be filed as exhibits to the Company's Quarterly Report on Form 10-Q
for the quarter ended
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Forward-Looking Statements
Certain statements contained in this report include "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
which are subject to certain risks, trends and uncertainties. In particular,
statements made that are not historical facts may be forward-looking statements.
Words such as "should," "may," "will," "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates," and similar expressions identify
forward-looking statements. Such statements are based on management's current
expectations, are not guarantees of future performance and are subject to risks
and uncertainties that could cause actual results to differ materially from the
results projected, expressed or implied by these forward-looking statements.
Factors that could cause or contribute to such differences include those
uncertainties regarding the impact of the COVID-19 virus on our business and the
economy generally, and those other matters disclosed in the Company's
© Edgar Online, source