Business Context and Reporting Period
Company: Saratoga Investment Corp.
Filing Type: Form 8-K (Current Report)
Date of Report: November 6, 2025
Context: The Company entered into a new material definitive financing agreement and terminated a prior credit facility on the same date.
Key Financial Metrics and Debt Structure
This filing details a new credit facility rather than reporting period-end financial performance metrics (revenue, profit, cash flow). Key debt terms include:
- Facility Name: Valley Credit Facility (via subsidiary Saratoga Investment Funding II LLC).
- Aggregate Commitment: Up to $85.0 million, with an option to increase to $100.0 million within the first two years.
- Maturity Date: November 6, 2028.
- Minimum Draw Requirement: Greater of $25.0 million or 38% of the facility amount.
- Interest Rate: Term SOFR + 2.85% (with a 1.00% SOFR Floor).
- Unused Fee: 0.75% if unused amount exceeds 62% of commitment; otherwise 0.50%.
- Advance Rates: 25% to 75% on eligible loans based on borrowing base calculations.
Material Changes Versus Prior Period
Termination of Prior Facility: On November 6, 2025, the Company fully terminated the "Encina Credit Agreement" (dated October 4, 2021, as amended). All obligations, including principal, interest, and fees, were satisfied.
New Financing Structure: The Company replaced the Encina facility with the Valley Credit Facility, introducing new covenants (interest coverage and overcollateralization tests) and a new administrative agent (Valley National Bank).
Guidance, Risks, and Contingencies
Guarantees and Collateral:
- Security Interest: SIF II's obligations are secured by a first priority security interest in substantially all of its assets.
- Equity Pledge: The Company pledged its equity interests in SIF II.
- Limited Guaranty: The Company provided a guaranty to reimburse lenders for losses from certain recourse events.
- Springing Guaranty: A springing guaranty becomes effective 10 business days following a "Rating Event" unless cured.
Risks and Covenants:
- Events of Default: Include nonpayment, material misrepresentation, breach of covenant, bankruptcy, and change of control.
- Consequences of Default: Lenders may terminate commitments and declare all obligations immediately due and payable.
- Financial Covenants: Borrower must maintain specific interest coverage and overcollateralization ratios.
Management Commentary: The filing text does not provide specific management commentary on future outlook or strategic rationale beyond the execution of the financing.
Investor Verification Checklist
- Verify the specific loans contributed to SIF II under the "Valley Sale Agreement" to assess asset quality supporting the borrowing base.
- Review the full text of the "Valley Credit Agreement" (Exhibit 10.1) for detailed definitions of "Rating Event" and recourse triggers.
- Confirm the current drawn amount against the minimum draw requirement ($25.0 million or 38%).
- Monitor the Company's ability to meet the new interest coverage and overcollateralization covenants.
- Check for any subsequent filings regarding the exercise of the option to increase the facility to $100.0 million.