Business Context and Reporting Period
This Form 8-K was filed by Evercore Partners Inc. on January 15, 2016, reporting a material definitive agreement entered into on the same date. The filing concerns a modification to an existing line of credit held by Evercore Partners Services East L.L.C., a wholly-owned subsidiary, with First Republic Bank (FRB).
Key Financial Metrics and Debt Structure
- Line of Credit Commitment: Reduced to $50 million.
- Related Facility: The amendment was executed in connection with the Company's $120 million senior credit facility with Mizuho Bank, Ltd., entered into on November 2, 2015.
- Interest Rate: Drawings bear interest at the prime rate as published in The Wall Street Journal.
- Collateral: Secured by cash and cash equivalents, intercompany receivables, and third-party accounts receivable of the broker-dealer subsidiary.
- Guarantors: Guaranteed by Evercore LP and Evercore Group Holdings L.P.
Material Changes Versus Prior Period
The primary material change is the reduction of the principal amount of commitments available under the FRB line of credit to $50 million. This reduction was agreed upon in exchange for FRB's consent to the Borrower acting as a guarantor under the new $120 million Mizuho facility. Additionally, the Loan Agreement was modified to impose financial covenants similar to those in the Mizuho facility.
Financial Covenants and Management Commentary
The Amendment Agreement establishes the following financial covenants:
- Minimum Consolidated Tangible Net Worth: At least 60% of the Target Net Worth Amount for the first and second fiscal quarters, or 70% for the third and fourth fiscal quarters.
- Minimum Unencumbered Liquid Asset Ratio: 1.40 to 1.0.
- Maximum Consolidated Leverage Ratio: 1.0 to 1.0.
Proceeds from the facility may be used for working capital and general corporate purposes, including the repurchase of the Company's stock. The filing text does not provide specific revenue, profit, or cash flow figures for the period.
Investor Verification Checklist
- Verify the current outstanding balance on the $50 million FRB line of credit.
- Confirm compliance with the new Minimum Unencumbered Liquid Asset Ratio (1.40 to 1.0) and Maximum Consolidated Leverage Ratio (1.0 to 1.0).
- Review the full text of the Modification Agreement (Exhibit 10.1) and Promissory Note (Exhibit 10.2) for detailed definitions of "Target Net Worth Amount" and eligible collateral.
- Assess the impact of the Mizuho facility guarantee on the subsidiary's balance sheet.