SEC Filings
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| 10-Q | |
| HRG GROUP, INC. filed this Form 10-Q on 08/09/2016 | |
| Entire Document | |
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contributed by HRG as an equity contribution, and will be required to make a further prepayment of $12.5 on or prior to December 30, 2016. The December 30 prepayment will coincide with an automatic reduction in the commitments of the lenders under the Compass Credit Agreement on a dollar-for-dollar basis. The amendment added requirements that Compass increase mortgage coverage on properties calculated in the borrowing base from 80.0% to 90.0% of the then-current borrowing base value and place control agreements on non-excluded deposit accounts of Compass. Finally, the amendment included a limited waiver of the event of default which occurred due to the late delivery of the audited consolidated financial statements of Compass for the fiscal year ended September 30, 2015. As of June 30, 2016, $125.0 was drawn under the Compass Credit Agreement. The Compass Credit Agreement matures on February 14, 2018. In connection with the amendment detailed in the foregoing paragraph, HGI Funding entered into an amendment of its Guarantee of a portion of the debt under the Compass Credit Agreement and agreed to extend the Guarantee. The expiration date of the Guarantee occurs on the first day, on or following the December 2016 borrowing base redetermination, on which no borrowing base deficiency exists. Following such amendment, HGI Funding is required to maintain secured amounts in its collateral account equal to two times the amount of the Guarantee and the maximum aggregate obligations of HGI Funding increased to $40.0. The amendment also removed the ability of HGI Funding to make Optional Guarantees in order to cure defaults with respect to the Consolidated Leverage Ratio since the Consolidated Leverage Ratio has been suspended until September 30, 2017. As of June 30, 2016, Compass was in good standing under the covenants specified in the Compass Credit Agreement, as amended. Compass is presently current on all obligations related to the Compass Credit Agreement. HGI Energy In February 2013, in connection with the Company’s acquisition of an interest in Compass, HGI Energy entered into note purchase agreements, one of which was with FGL for $50.0 notional aggregate principal amount due February 14, 2021 (the “HGI Energy Note to FGL”). The HGI Energy Note to FGL earns interest at 9.0% per annum, payable semi-annually in arrears on January 1 and July 1. The HGI Energy Note to FGL is subordinated in seniority to the Compass Credit Agreement. Salus Salus acts as co-lender under some of the asset-based loans that it originates, and such loans are structured to meet the definition of a “participating interest” as defined under ASC 860-10, Transfers and Servicing. For loans originated with co-lenders that have terms that result in such a co-lender not having a qualifying “participating interest,” Salus recognizes the whole, undivided loan. Salus also reflects a secured borrowing owing to the co-lender representing their share in the undivided whole loan. As of June 30, 2016 and September 30, 2015, Salus had $2.2 and $8.8, respectively, of such secured borrowings to unaffiliated co-lenders outstanding related to non-qualifying “participating interests.” As of June 30, 2016, Salus had no secured borrowings under non-qualifying loan participation with FGL and as of September 30, 2015, the balance was $4.2. In February 2013, September 2013 and February 2015, Salus completed a collateralized loan obligation (“CLO”) securitization of up to $578.5 notional aggregate principal amount. At June 30, 2016 and September 30, 2015, the outstanding notional aggregate principal amount was $232.5 and $357.7, respectively, of which $40.4 was taken up by unaffiliated entities and consisted entirely of subordinated debt, and $148.9 and $274.0, respectively, was taken up by FGL and included in “Assets of business held for sale” in the accompanying Condensed Consolidated Balance Sheets. The obligations of the securitization is secured by the assets of the Variable Interest Entity (“VIE”), primarily asset-based loan receivables, and at June 30, 2016 carried a variable interest rate ranging from LIBOR plus 2.4% to LIBOR plus 11.5% for the senior tranches. The subordinated tranches carry residual interest subject to maintenance of certain covenants. Due to losses incurred in the CLO, at June 30, 2016 and September 30, 2015, the CLO was not accruing interest on the subordinated debt. In February 2015, Salus signed a $2.5 senior secured promissory note with FGL originally due on May 29, 2015 with fixed interest of 5.3% to be paid semi-annually. The note was repaid in full during the nine months ended June 30, 2016. (10) Stock-Based Compensation The Company recognized consolidated stock-based compensation expense of $18.4 and $22.6 during the three months ended June 30, 2016 and 2015, respectively, and $58.4 and $56.6 during the nine months ended June 30, 2016 and 2015, respectively. Stock-based compensation expense is principally included in “Selling, acquisition, operating and general expenses” in the accompanying Condensed Consolidated Statements of Operations. 30 | |
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