Business Context and Reporting Period
This Form 8-K is filed by AG Mortgage Investment Trust, Inc. (referred to as TPG Mortgage Investment Trust, Inc. in metadata) for the reporting period ending June 12, 2020. The filing primarily addresses the resolution of prior financing defaults and the entry into new definitive agreements with major financial counterparties.
Key Financial Metrics and Agreements
The filing details the termination of a Third Forbearance Agreement and the execution of Reinstatement Agreements with multiple Participating Counterparties (including BofA, Credit Suisse, Barclays, Wells Fargo, and Goldman Sachs) and a separate agreement with JPMorgan Chase. These agreements cover all existing financing arrangements.
- Default Status: All existing and prior events of default were permanently waived as of June 10, 2020.
- Interest Rates: Default interest ceased accruing; rates reverted to non-default pricing.
- Cash Flow: DTC repo tracker coding was reinstated, allowing principal and interest payments on collateral to flow to the Company.
- Collateral: Additional security interests granted under prior forbearance agreements were terminated and released.
- Debt Repayment: The Company repaid a $2.0 million secured promissory note to Royal Bank of Canada in full on June 11, 2020.
Material Changes and New Covenants
The Reinstatement Agreements override previous financial covenants with the following new requirements effective June 10, 2020:
- Liquidity: Minimum liquidity of $10,000,000 must be maintained at all times.
- Leverage: Recourse Indebtedness to Stockholder's Equity ratio must not exceed 3:1 as of the last day of each calendar quarter.
- Minimum Equity: Stockholder's Equity must not be less than $100,000,000 plus 50% of net proceeds from equity capital raised after June 1, 2020.
- Equity Lookback:
- Quarterly: Equity cannot decline by 30% or more from the preceding quarter end (starting Q2 2020).
- Annual: Equity cannot decline by 40% or more from the same quarter in the prior fiscal year (starting Q1 2021).
Guidance, Outlook, and Risks
The filing incorporates by reference a press release regarding financial results for the quarter ended March 31, 2020, but does not provide specific numerical guidance or outlook within the text of this 8-K. The primary risk mitigation described is the removal of default status and the restoration of normal cash flow mechanics from collateral. The Company agreed to pay reasonable fees and out-of-pocket expenses for the counsel and advisors of the Participating Counterparties.
Investor Verification Checklist
- Verify the Company's current liquidity position against the new $10 million minimum covenant.
- Confirm the current Stockholder's Equity balance to ensure compliance with the $100 million minimum and lookback provisions.
- Review the attached Exhibit 99.1 (Press Release) for specific Q1 2020 revenue, profit, and cash flow figures not detailed in this summary.
- Monitor future quarterly filings to ensure the 3:1 leverage ratio and equity decline thresholds are maintained.