Business Context and Reporting Period
This Form 8-K was filed by Greenlight Capital Re, Ltd. on July 21, 2009. The report details a material definitive agreement entered into by the Company's principal subsidiary, Greenlight Reinsurance, Ltd.
Key Financial Metrics and Liquidity
The filing does not provide specific revenue, profit, cash flow, or margin data. The primary financial metric disclosed relates to liquidity and credit facilities:
- Letter of Credit Facility: Up to $50 million aggregate amount outstanding at any one time.
- Lender: Bank of America, N.A.
- Collateral: The facility is secured by a security agreement and a securities account control agreement.
Material Changes
The material change reported is the establishment of a new credit facility on July 21, 2009. This agreement introduces new covenants and obligations for the Company, including:
- Limitations on liens on collateral.
- Limitations on the incurrence of other debt (subject to exceptions).
- Restrictions on dividend payments and other restricted payments following a default.
- Requirements to maintain minimum pledged collateral levels.
Outlook, Risks, and Unusual Items
Facility Terms: The facility is set to terminate on July 20, 2010. It includes an automatic extension clause for 364 days unless either the Bank or the Company elects to terminate the facility at least 90 days prior to the termination date.
Risks and Contingencies: The Company must comply with various covenants to maintain the facility. Failure to meet minimum collateral requirements or other covenants could trigger restrictions on dividends or debt incurrence. The filing explicitly states that representations and warranties are not to be relied upon by parties other than the contracting entities.
Investor Verification Checklist
- Verify the specific collateral pledged to secure the $50 million facility.
- Review the full text of the letter of credit agreement to understand the specific exceptions to debt incurrence limitations.
- Monitor the Company's ability to maintain the required minimum pledged collateral.
- Check for any subsequent filings regarding the extension or termination of the facility near the July 2010 deadline.