Cohen & Co Inc. 8-K Summary
Business Context and Reporting Period
Cohen & Company Inc. (COHN) filed this Current Report on Form 8-K on October 27, 2020, regarding events occurring on October 27 and 28, 2020. The filing details the entry into a new material definitive credit facility and the termination of a prior credit facility.
Key Financial Metrics and Debt
- New Credit Facility: A total commitment of $25 million with Byline Bank, consisting of a $7.5 million term loan and a $17.5 million revolving note.
- Interest Rate: LIBOR plus 6.0%, with a floor of 7.0% per annum.
- Fees: An undrawn commitment fee of 0.50% per annum and an annual commitment fee of 0.50% per annum. A one-time commitment fee of $250,000 was paid on the effective date.
- Maturity: The term loan matures on October 28, 2022. The revolving note availability ends on October 28, 2021, with all loans due in full on October 28, 2022.
- Collateral: Secured by a lien on all property of Holdings LP, including its 100% ownership interest in the Borrower.
- Financial Covenants: Tangible net worth must remain above $80 million (through Dec 31, 2021) and $85 million thereafter. Excess net capital must remain above $40 million.
Material Changes
The Company terminated its previous credit facility with Fifth Third Financial Bank, N.A. (successor to MB Financial Bank, N.A.), which had a total commitment of up to $25 million. All outstanding amounts under the original facility were paid in full on October 27, 2020, coinciding with the execution of the new agreement with Byline Bank.
Outlook, Risks, and Contingencies
The new loans are designated for working capital purposes and general liquidity. The agreement includes customary covenants limiting additional indebtedness and restricting certain loans and investments. The Borrower and Guarantors are limited in their ability to repay certain existing outstanding indebtedness. An event of default would allow the Lender to declare all loans immediately due and payable.
Investor Verification Checklist
- Verify the current outstanding balance drawn against the new $25 million facility.
- Confirm the Company's current tangible net worth and excess net capital against the $80 million and $40 million covenants, respectively.
- Review the specific restrictions on repaying existing indebtedness to assess liquidity flexibility.
- Monitor the LIBOR rate to calculate the actual interest expense, noting the 7.0% floor.