Angel Oak Mortgage, Inc. — Form 8-K Summary
Reporting date: August 16, 2021; filed August 20, 2021. The filing reports a material financing transaction and creation of a direct financial obligation. The registrant is an emerging growth company, and its common stock trades on the NYSE under AOMR.
Material Financing
- Three subsidiaries entered into a $50.0 million non-mark-to-market committed financing facility with Veritex Community Bank.
- Advances are secured by mortgage loans, notes, and related collateral. Advance rates range from 80.00% to 92.50%, based on the eligible loan’s unpaid principal balance, loan-to-value ratio, FICO score, and loan type.
- The facility expires, and outstanding amounts mature, on August 16, 2023, subject to specified exceptions.
- The interest rate is the greater of one-month LIBOR plus 2.30% or 3.13%.
- Angel Oak Mortgage, Inc. guarantees the subsidiaries’ obligations under the facility.
Financial Covenants and Liquidity
- Minimum tangible net worth: $150.0 million as of the last day of each fiscal quarter.
- Minimum quarterly EBITDA-to-debt-service ratio: 1.25 to 1.0.
- Maximum total liabilities-to-total tangible net worth ratio: 5.5 to 1.0.
- Minimum liquidity: $5.0 million.
- The filing does not provide current balances drawn, remaining availability, actual liquidity, covenant compliance, revenue, profit, cash flow, margins, or other operating metrics.
Defaults, Remedies, and Other Terms
Customary events of default include payment defaults, covenant or representation breaches, cross-defaults, bankruptcy or insolvency proceedings, and other specified events, subject to materiality thresholds and grace periods. Remedies may include acceleration of outstanding principal and liquidation of pledged collateral. The borrowers must also pay customary fees and reimburse certain administration-related costs and expenses.
Investor Verification Points
- Verify the facility’s actual outstanding balance, borrowing-base availability, and collateral coverage in subsequent filings.
- Monitor compliance with the tangible net worth, leverage, debt-service coverage, and liquidity covenants.
- Assess exposure to variable interest rates because the rate references one-month LIBOR plus a spread, subject to a 3.13% floor.
- Review the Loan and Security Agreement, Promissory Note, and Guaranty for collateral eligibility, advance-rate adjustments, maturity exceptions, fees, and default provisions.
- Confirm the transition from LIBOR and any resulting changes to the interest-rate calculation.