AMREP CORP. Form 8-K Summary
Business Context and Reporting Period
This Current Report (Form 8-K) was filed by AMREP Corporation on May 18, 2010, regarding events occurring on May 13, 2010. The report details a material definitive agreement and the creation of a direct financial obligation by Kable Media Services, Inc., a subsidiary of AMREP Corporation.
Key Financial Metrics and Obligations
- Facility Type: Revolving Credit and Security Agreement.
- Total Facility Size: Up to $20,000,000.
- Lender: PNC Bank, National Association (sole lender at inception).
- Maturity Date: May 12, 2013.
- Interest Rates:
- Fluctuating rate: LIBOR + 3% or Base Rate + 2% (minimum 3% base).
- Eurodollar fixed rate: Eurodollar rate + 3% (reducible to 2.75% based on financial condition).
- Collateral: Substantially all assets of the borrowers, excluding real property.
- Specific Allocation: Up to $3,000,000 designated for accounts payable related to the Newsstand Distribution Services business.
Material Changes and Use of Proceeds
The new Credit Agreement replaces a facility with Bank of America, N.A., which matured on May 1, 2010. Proceeds from the new agreement were utilized to:
- Pay off obligations due to Bank of America, N.A.
- Repay a portion of indebtedness owed by a subsidiary to Kable Media's parent company.
- Fund working capital and general business purposes, including costs associated with consolidating the Subscription Fulfillment Services business in Florida.
- Make further payments on indebtedness due to the parent company, subject to fixed charge coverage ratio requirements.
Covenants, Risks, and Restrictions
The agreement includes customary covenants and restrictions, the most significant of which are:
- Distribution Limits: Restrictions on the ability of borrowers to declare or pay dividends or make other distributions to the Company.
- Capital Expenditures: Limits on the annual amount of capital expenditures borrowers may incur.
- Financial Maintenance: Requirement to maintain a minimum fixed charge coverage ratio.
Investor Verification Checklist
- Verify the specific terms of the "fixed charge coverage ratio" defined in the Credit Agreement (Exhibit 10.1) to assess compliance risks.
- Confirm the exact amount of indebtedness repaid to the parent company and the remaining balance.
- Review the consolidation costs for the Florida Subscription Fulfillment Services business to evaluate impact on working capital.
- Monitor the company's ability to maintain the required financial ratios to avoid covenant breaches.