Business Context and Reporting Period
This Form 8-K Current Report was filed by Ladder Capital Corp on September 25, 2017. The filing discloses the entry into a material definitive agreement involving the issuance of senior notes by the Company's subsidiaries, Ladder Capital Finance Holdings LLLP and Ladder Capital Finance Corporation.
Key Financial Metrics and Transaction Details
- Debt Issuance: $400 million aggregate principal amount of 5.250% Senior Notes due 2025.
- Interest Payments: Payable semi-annually on April 1 and October 1, commencing April 1, 2018.
- Maturity Date: October 1, 2025.
- Use of Proceeds: Repayment of existing secured debt, payment of offering-related expenses, and general corporate purposes.
- Offering Structure: Offered to qualified institutional buyers under Rule 144A and outside the U.S. under Regulation S; not registered under the Securities Act.
Material Changes and Covenants
The issuance creates new senior unsecured obligations. The Indenture includes specific covenants that materially restrict the Issuers' financial flexibility:
- Debt Limitations: Limits the ability to incur additional indebtedness or issue certain disqualified stock and preferred shares.
- Asset Coverage: Requires maintenance of total unencumbered assets of not less than 120% of the aggregate principal amount of outstanding unsecured indebtedness.
- Restrictions on Transactions: Limits the ability to merge, consolidate, or sell substantially all assets.
- Change of Control: Triggers a mandatory repurchase offer at 101% of principal plus accrued interest if a change of control occurs and the notes are downgraded.
Guidance, Outlook, and Risks
The filing contains forward-looking statements regarding the use of proceeds, which are subject to risks and uncertainties. Management disclaims any obligation to update these statements. Key risks include the inability to predict the impact of known factors and the possibility that actual results will differ materially from expectations. The filing references risk factors detailed in the Company's 2016 Form 10-K.
Redemption Terms: The Issuers may redeem notes prior to maturity. Redemptions before October 1, 2020, require a make-whole premium. Up to 35% of the notes may be redeemed using proceeds from certain equity offerings before October 1, 2020.
Investor Verification Checklist
- Verify the exact amount of existing secured debt being repaid with the net proceeds.
- Review the full text of the Indenture (Exhibit 4.1) for specific exceptions to the debt and asset coverage covenants.
- Confirm the Company's current unencumbered asset ratio to ensure compliance with the 120% requirement post-issuance.
- Assess the impact of the new 5.250% interest rate on the Company's overall cost of capital compared to the debt being retired.