Attached files

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EX-10.1 - INDENTURE AGREEMENT - Garrison Capital Inc.v356013_ex10-1.htm
EX-10.2 - CLASS A-1R NOTE PURCHASE AGREEMENT - Garrison Capital Inc.v356013_ex10-2.htm
EX-10.4 - COLLATERAL MANAGEMENT AGREEMENT - Garrison Capital Inc.v356013_ex10-4.htm
EX-10.3 - CLASS A-1T NOTE PURCHASE AGREEMENT - Garrison Capital Inc.v356013_ex10-3.htm
EX-10.5 - SUB-COLLATERAL MANAGEMENT AGREEMENT - Garrison Capital Inc.v356013_ex10-5.htm

  

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report: September 25, 2013

(Date of earliest event reported)

 

 

 

 

Garrison Capital Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

 

 

Delaware   814-00878   90-0900145

(State or Other Jurisdiction

of Incorporation)

  (Commission File Number)  

(IRS Employer

Identification No.)

             
             

 

1350 Avenue of the Americas

New York, New York

 

 

10019

(Address of Principal Executive Offices)    (Zip Code)

(212) 372-9590

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former Name or Former Address, if changed since last report)

 

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 
 

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On September 25, 2013, Garrison Capital Inc. (the “Company”) completed a $350.0 million collateralized loan obligation securitization. The notes offered in the collateralized loan obligation (the “Notes”) were issued by Garrison Funding 2013-2 Ltd., a recently formed exempted company incorporated with limited liability under the laws of the Cayman Islands and indirect wholly-owned subsidiary of the Company (the “Issuer”), and Garrison Funding 2013-2 LLC, a recently formed Delaware limited liability company (the “Co-Issuer” and together with the Issuer, the “Co-Issuers”), and are backed by a diversified portfolio of primarily senior secured loans.  The transaction was executed through a private placement of: (i) $50.0 million of AAA(sf) Class A-1R Notes, which bear interest at the CP Rate, as defined in the indenture governing the Notes, plus 1.90% or the London Interbank Offered Rate, or LIBOR, plus 1.90%; (ii) approximately $111.2 million of AAA(sf) Class A-1T Notes, which bear interest at LIBOR plus 1.80%; (iii) approximately $24.2 million of AA(sf) Class A-2 Notes, which bear interest at LIBOR plus 3.40%; (iv) approximately $25.0 million of A(sf) Class B Notes, which bear interest at LIBOR plus 4.65%; (v) approximately $13.7 million of Class C Notes, which bear interest at LIBOR plus 5.50%; and (vi) $126.0 million of subordinated notes, which do not have a stated interest rate. The Class C Notes and the subordinated notes are not rated. The Company retained approximately $22.0 million of the Class A-1T Notes and all of the Class C Notes, and Garrison Funding Manager 2013-2 LLC (formerly Garrison Funding 2012-1 Manager LLC), a Delaware limited liability company and direct wholly-owned subsidiary of the Company (the “Collateral Manager”), retained all of the subordinated notes. The Notes are scheduled to mature on September 25, 2023.

 

The indenture governing the Notes provides that, to the extent funds are available, the holders of the Notes (other than the subordinated notes) are to receive quarterly interest payments on the 20th business day of February, May, August and November of each year (each, a “Payment Date”), commencing in February 2014, until the stated maturity. To the extent interest is not paid on the Class B Notes or the Class C Notes on any Payment Date, such amounts will be deferred and added to the principal balance of the applicable Notes. The subordinated notes do not bear a stated interest rate but they are entitled to receive distributions on each Payment Date if and to the extent funds are available for such purpose.

 

A portion of the proceeds of the private placement of the Notes was used to refinance the Company’s existing credit facility, as described below. As part of the transaction, Garrison Funding 2012-1 LLC, the borrower under the existing credit facility, merged with and into the Issuer with the Issuer remaining as the surviving entity. The remaining proceeds of the private placement of the Notes will be used by the Issuer to purchase additional collateral obligations.

In connection with the issuance and sale of the Notes, the Co-Issuers made customary representations, warranties and covenants in the note purchase agreements.  The Notes (other than the subordinated notes) are the secured obligations of the Issuer, and the indenture governing the Notes includes customary covenants and events of default.   The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended, or any state “blue sky” laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from registration.

 

The Collateral Manager will serve as collateral manager to the Issuer under a collateral management agreement and will receive a fee for providing these services pursuant to a collateral management agreement.  The Collateral Manager has retained Garrison Capital Advisers LLC, the Company’s investment adviser, to furnish collateral management sub-advisory services to the Collateral Manager pursuant to a sub-collateral management agreement. Garrison Capital Advisers LLC will not receive a fee for providing such services.

 

Under the investment company rules and regulations pursuant to the American Institute of Certified Public Accountants Audit and Accounting Guide for Investment Companies, codified in Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 946, Financial Services-Investment Companies, the Company is precluded from consolidating any entity other than another investment company. The Company generally consolidates any investment company when it owns 100% of its partners’ or members’ capital or equity units. ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries. The Collateral Manager owns a 100% interest in the Co-Issuers, which are deemed to be investment companies. The Collateral Manager also provides collateral management services solely to the Issuer. As such, the Company will consolidate the accounts of these entities into its financial statements. As a result of this consolidation, the amounts outstanding under the collateralized loan obligation will be treated as the Company’s indebtedness.

 
 

The descriptions of the documentation related to the debt securitization and the collateral management agreements contained in this Current Report on Form 8-K do not purport to be complete and are qualified in their entirety by reference to the underlying agreements, attached hereto as Exhibits 10.1 through 10.5 and incorporated into this Current Report on Form 8-K by reference.

 

Item 1.02. Termination of a Material Definitive Agreement.

In connection with the closing of the sale of the Notes, on September 25, 2013, Garrison Funding 2012-1 LLC, as the borrower, repaid its outstanding obligations under and terminated the $175.0 million credit agreement dated as of May 21, 2012, and as subsequently amended, by and among Garrison Funding 2012-1 LLC, the lenders party thereto from time to time, Natixis, New York Branch and Deutsche Bank Trust Company Americas (the “Existing Credit Facility”).  Obligations under the Existing Credit Facility would have otherwise matured on February 21, 2020.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The disclosures set forth under Item 1.01 above are incorporated into this Item 2.03 by reference.

 

Forward-Looking Statements

 

This Current Report on Form 8-K, including the exhibits furnished herewith, may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this Current Report on Form 8-K may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this Current Report on Form 8-K.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

10.1 Indenture dated as of September 25, 2013, among Garrison Funding 2013-2 Ltd., Garrison Funding 2013-2 LLC and Deutsche Bank Trust Company Americas.
10.2 Class A-1R Note Purchase Agreement dated as of September 25, 2013, among Garrison Funding 2013-2 Ltd., Garrison Funding 2013-2 LLC, each of the Class A-1R Noteholders party thereto and Natixis, New York Branch.
10.3 Class A-1T Note Purchase Agreement dated as of September 25, 2013, among Garrison Funding 2013-2 Ltd., Garrison Funding 2013-2 LLC and Capital One, National Association.
10.4 Collateral Management Agreement dated as of September 25, 2013, by and between Garrison Funding 2013-2 Ltd. and Garrison Funding 2013-2 Manager LLC.
10.5 Sub-Collateral Management Agreement dated as of September 25, 2013, by and between Garrison Funding 2013-2 Manager LLC and Garrison Capital Advisers LLC.

 

 

 
 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, Garrison Capital Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  GARRISON CAPITAL INC.
     
Date:  September 27, 2013 By:   /s/ Brian Chase
  Name: Brian Chase
  Title:    Chief Financial Officer