Business Context and Reporting Period
This Form 8-K was filed by Benefit Street Partners Realty Trust, Inc. (Franklin BSP Realty Trust, Inc.) on March 15, 2021. The filing reports the entry into a Material Definitive Agreement with Security Benefit Life Insurance Company (SBL) regarding the exchange and purchase of preferred stock.
Key Financial Metrics and Transaction Details
- Transaction Type: Exchange of existing Series A Convertible Preferred Stock and purchase of new Series D Convertible Preferred Stock.
- Shares Exchanged: 14,949 shares of Series A Preferred Stock exchanged for an equal amount of Series D Preferred Stock.
- Shares Purchased: 3,000 newly issued shares of Series D Preferred Stock.
- Total Series D Outstanding: Approximately 17,949 shares as of March 19, 2021.
- Purchase Price: $13,961,330.19 for the 3,000 Purchased Shares.
- Pricing Calculation: Based on a $15,000,000 aggregate liquidation preference less accrued and unpaid dividends on surrendered Series A shares through March 17, 2021.
- Use of Proceeds: Origination and acquisition of commercial real estate debt investments, working capital, and general corporate purposes.
Material Changes and Agreements
The Company entered into a Purchase and Exchange Agreement with SBL, settling on March 18, 2021. Key terms include:
- Liquidity Event Requirement: The Company agreed to enter into a liquidity event, such as a listing of its Common Stock, within one year of the agreement date (by March 15, 2022).
- Director Appointment: If a liquidity event has not occurred by June 1, 2021, and the delay is not due to market conditions, the Company must appoint a director designated by SBL.
- Lock-Up Provisions: SBL agreed not to sell or transfer the Shares or any Common Stock received upon optional conversion for 30 days after such conversion without the Advisor's consent.
- Ownership Exemptions: The Board granted SBL exemptions from ownership limitations in the Company's Charter.
Terms of Series D Convertible Preferred Stock
- Conversion Rate: 299.2 shares of Common Stock per share of Series D Preferred Stock, subject to anti-dilution adjustments.
- Mandatory Conversion: Occurs on the one-year anniversary of a Liquidity Event.
- Acceleration: Holders may accelerate conversion to a date no earlier than five months after a Liquidity Event.
- Final Conversion Right: If no Liquidity Event occurs by June 25, 2024, holders have the right to convert all shares into Common Stock.
- Redemption: Neither the Company nor holders may redeem shares until June 25, 2024, except in cases of a Change in Control.
Investor Verification Checklist
- Verify the status of the liquidity event (Common Stock listing) relative to the March 15, 2022 deadline.
- Confirm whether the June 1, 2021 deadline for the liquidity event was met to determine if SBL exercised its right to appoint a director.
- Review the accrued and unpaid dividends on Series A Preferred Stock to validate the purchase price calculation of $13,961,330.19.
- Monitor the Company's ability to originate commercial real estate debt investments using the net proceeds.
- Check for any subsequent filings regarding the registration of the Shares under the Securities Act of 1933.