Business Context and Reporting Period
Registrant: AFC Gamma, Inc. (Nasdaq: AFCG), a Maryland corporation. The filing reports an acquisition or disposition-related transaction completed on December 16, 2021, and was signed on December 22, 2021.
The filing concerns a credit agreement with Acreage Holdings Inc. as parent and High Street Capital Partners, LLC and related entities as borrowers. The agreement establishes a senior secured credit facility for the borrowers.
Transaction and Key Financial Terms
- Total credit facility: $100 million.
- Commitments: AFC Gamma, approximately $60 million; A BDC Warehouse II, LLC, $10 million; and Viridescent Realty Trust, Inc., $30 million, with additional lenders potentially participating.
- Initial funding at closing: $75 million collectively, including approximately $42.5 million funded by AFC Gamma.
- Remaining committed availability: $25 million, subject to the credit agreement, available upon borrower request on or before December 16, 2022.
- Expansion option: borrowers may request an increase of up to $50 million on or around December 16, 2022, subject to predetermined milestones and other agreement conditions.
- Security: the facility is secured by liens on substantially all borrower assets, including owned real estate in several states.
The filing does not provide interest rates, maturity dates, fees, covenant levels, expected income, cash-flow effects, leverage metrics, or liquidity information for AFC Gamma.
Material Changes Versus the Prior Comparable Period
The filing does not present comparative financial statements or prior-period operating results. The material event is AFC Gamma’s commitment and initial funding of approximately $42.5 million under the new senior secured credit facility.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Future funding of the remaining $25 million is subject to the borrowers’ request and the terms and conditions of the Credit Agreement.
- The potential $50 million facility increase is conditional on achievement of predetermined milestones and other agreement requirements; the filing does not specify those milestones.
- Collateral includes substantially all borrower assets, creating potential credit and recovery risk if the borrowers default or collateral values decline.
- A BDC Warehouse II, LLC is beneficially owned in part by AFC Gamma’s CEO, a director, senior executives, and members of the Tannenbaum family, creating a related-party consideration relevant to the transaction.
- No specific management guidance or outlook is provided.
Investor Verification Points
- Verify the Credit Agreement’s interest rate, maturity, repayment terms, covenants, events of default, and collateral valuation.
- Confirm AFC Gamma’s total funded exposure, unfunded commitment, and accounting treatment for the facility.
- Review the related-party ownership and approval disclosures concerning A BDC Warehouse II, LLC.
- Determine whether the remaining $25 million was subsequently funded and whether the additional $50 million expansion option was exercised.
- Note that no financial statements were filed with this Form 8-K. The company stated that any required transaction-related financial statements would be filed by amendment within 71 calendar days, while no pro forma financial information was applicable because the statements would not be consolidated.