Business Context and Reporting Period
Company: MSC Income Fund, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 3, 2021
Event: Entry into a new senior secured revolving credit facility and termination of a prior credit agreement.
Key Financial Metrics and Transaction Details
- New Facility Amount: Initial commitment of $300 million with an accordion feature to increase up to $450 million.
- Interest Rate: Three-month LIBOR plus 2.90% per annum.
- Commitment Fee: 0.75% per annum on the average daily unused amount.
- Maturity Date: February 3, 2025.
- Lenders: JPMorgan Chase Bank, N.A. (Administrative Agent/Lender) and U.S. Bank, N.A. (Collateral Agent).
- Collateral: First priority security interest in the SPV's portfolio of investments and cash.
- Recourse: Non-recourse to the Company; exposure limited to the Company's investment in the SPV.
Material Changes Versus Prior Period
The Company is replacing its existing "DB Facility" (held by subsidiary HMS Funding I, LLC) with the new Revolving Credit Facility held by subsidiary MSIF Funding LLC (the "SPV").
- Termination of Prior Debt: Proceeds from the new facility are used to purchase investments from HMS Funding, which will use those proceeds to fully repay the DB Facility.
- Portfolio Transfer: Certain portfolio investments previously held by HMS Funding are being transferred to the SPV.
- Amortization Status: The terminated DB Facility had been in an amortization period since April 2020, requiring monthly principal and interest proceeds to be applied against outstanding advances. The new facility replaces this structure.
Guidance, Risks, and Covenants
Covenants and Events of Default: The agreement includes customary covenants and events of default, including a change of control of the SPV or if the Company ceases to be the portfolio manager. Upon default, JPM may declare all obligations immediately due and payable.
Market Value Events: A market value event triggers a requirement for JPM consent prior to asset sales and grants JPM the right to direct the SPV to sell assets at its sole discretion.
Management Commentary: The filing does not provide specific forward-looking guidance on revenue or earnings, focusing solely on the structural refinancing of debt.
Key Facts for Investor Verification
- Verify the exact amount drawn under the new $300 million facility versus the total outstanding balance of the terminated DB Facility.
- Confirm the impact of the 2.90% margin plus LIBOR on the Company's overall cost of capital compared to the previous DB Facility terms.
- Review the specific definition of a "market value event" in the full Loan and Security Agreement (Exhibit 10.1) to understand the threshold for lender-directed asset sales.
- Assess the liquidity implications of the new commitment fee (0.75%) on unused funds.