CION Investment Corp. Form 8-K Summary
Business Context and Reporting Period
CION Investment Corporation (CIC) filed this Current Report on Form 8-K on May 5, 2015, regarding events occurring on April 30, 2015. The filing discloses the entry into a material definitive agreement to establish a new revolving credit facility.
Key Financial Metrics and Debt Structure
The filing details the creation of a new debt instrument rather than reporting period-end financial performance metrics such as revenue or net income.
- Facility Name: EWB Credit Facility
- Lender: East West Bank (EWB)
- Aggregate Principal Amount: Up to $40,000,000
- Interest Rate: Floating rate equal to the greater of 3.25% per year or EWB's prime rate, plus a 0.75% spread.
- Non-Usage Fee: 0.50% per year on the unborrowed portion of the facility.
- Maturity: Advances are due 90 days from the date of the advance or April 29, 2016, whichever is earlier.
- Collateral: Secured by a first priority security interest in certain eligible loans in which CIC has a beneficial interest.
- Custodian: U.S. Bank National Association.
Material Changes
The primary material change is the establishment of the $40 million revolving credit facility. This provides CIC with new liquidity capacity subject to a borrowing base. The filing does not provide comparative financial data against prior periods as it is a transactional report rather than a periodic financial statement.
Outlook, Risks, and Covenants
The agreement includes standard covenants and reporting requirements. Key events of default that could accelerate repayment include:
- Failure to make payments within 10 days of the due date.
- Dissolution, insolvency, or bankruptcy of CIC.
- Failure to maintain the minimum fair market value of the collateral (with a 10-business-day cure period).
- Failure to comply with the Investment Sub-Advisory Agreement among CIC, CION Investment Management, LLC, and Apollo Investment Management, L.P. (with a 10-business-day cure period).
- Failure to observe other material terms of the facility agreements.
Upon an event of default, EWB may declare all obligations immediately due and payable, and CIC will be subject to a default interest rate.
Investor Verification Checklist
- Verify the specific "borrowing base" formula limiting the $40 million availability.
- Review the Investment Sub-Advisory Agreement to understand the covenants tied to Apollo Investment Management, L.P.
- Confirm the current prime rate of East West Bank to calculate the effective interest cost.
- Examine the eligible loan portfolio to assess the sufficiency of collateral coverage.