Business Context and Reporting Period
This Form 8-K Current Report was filed by HMS Income Fund, Inc. on February 9, 2015, covering events occurring on February 3 and February 4, 2015. The Company is a Maryland corporation focused on income-generating investments.
Key Financial Metrics and Agreements
The filing details a material amendment to the Company's credit facility rather than reporting periodic financial performance metrics such as revenue or net income.
- Debt Facility: HMS Funding I LLC, a wholly-owned structured subsidiary, entered into Amendment No. 3 to its credit agreement (the "HMS Funding Facility").
- Borrowing Capacity: The amendment increased the borrowing capacity to $200 million.
- Expansion Option: Subject to lender approval and certain limitations, the maximum borrowings can be increased by an additional $50 million, bringing the total potential capacity to $250 million.
- Lenders: Deutsche Bank AG, New York Branch serves as the administrative agent and lender, with U.S. Bank National Association as the collateral agent.
Material Changes
The primary material change reported is the expansion of the Company's debt capacity through the Third Amendment to the HMS Funding Facility, originally entered into on June 2, 2014. Additionally, the Company reported a change in senior management with the appointment of a new Chief Accounting Officer and Treasurer.
Management Commentary and Corporate Governance
Effective February 3, 2015, the Board of Directors elected David M. Covington to the newly created position of Chief Accounting Officer and Treasurer of the Company and general partner of the Adviser.
- Responsibilities: Oversight of treasury, accounting, financial reporting, and SEC reporting functions; establishment of accounting policies; and ensuring compliance.
- Background: Mr. Covington joined Hines in May 2006 and previously served as Senior Controller and Controller for the Hines US Core Office Fund. He holds a CPA and degrees from the University of Texas at Austin.
The filing does not provide specific guidance, outlook, or discussion of risks beyond the standard incorporation by reference of the amendment terms.
Investor Verification Checklist
- Verify the specific terms and limitations of the $50 million expansion option in the full text of Amendment No. 3 (Exhibit 10.1).
- Confirm the current utilization rate of the HMS Funding Facility to assess immediate liquidity needs.
- Review the Company's subsequent filings to determine if the additional $50 million capacity was exercised.
- Monitor the impact of the new Chief Accounting Officer on the Company's financial reporting processes and internal controls.