Business Context and Reporting Period
Company: GREENLIGHT CAPITAL RE, LTD.
Filing Type: Form 8-K (Current Report)
Date of Report: June 16, 2023
Event: Entry into a Material Definitive Agreement (Credit Agreement).
Key Financial Metrics and Debt Structure
This filing details a new financing arrangement rather than reporting periodic operating results. Key financial terms include:
- Facility Amount: $75.0 million delayed draw term loan.
- Maturity Date: August 1, 2026.
- Interest Rate: Adjusted Term SOFR plus 3.50% per annum.
- Amortization: Equal quarterly installments totaling 5.0% of outstanding loans annually.
- Collateral: First-priority lien on a collateral account with a minimum cash balance of $10.0 million.
- Guarantors: Substantially all subsidiaries, excluding regulated insurance subsidiaries and Greenlight Re Corporate Member Ltd.
Material Changes and Use of Proceeds
The primary material change is the establishment of the new credit facility to refinance existing debt.
- Debt Repayment: Proceeds will be used to fully repay outstanding convertible notes due on August 1, 2023.
- General Corporate Purposes: Any remaining balance of the proceeds may be used for general corporate purposes.
Covenants, Risks, and Management Commentary
The Credit Agreement includes customary representations, warranties, and covenants. Specific financial covenants require the Company to maintain:
- Net Debt to Capital and Surplus Ratio: Maximum of 17.5% on a quarterly basis.
- Capital and Surplus to Prescribed Capital Requirement Ratio:
- Greenlight Reinsurance, Ltd.: Minimum 137% annually.
- Greenlight Reinsurance Ireland, dac: Minimum 105% annually.
Risks: Failure to meet these covenants could result in an event of default. The filing notes no material relationship with the administrative agent (CIBC Bank USA) outside of ordinary course banking relationships.
Investor Verification Checklist
- Verify the exact outstanding balance of the convertible notes due August 1, 2023, to confirm the portion of the $75.0 million facility allocated to repayment versus general corporate use.
- Review the full text of Exhibit 10.1 (Credit Agreement) for specific definitions of "Net Debt," "Capital and Surplus," and "Prescribed Capital Requirement."
- Monitor the Company's quarterly financial statements to ensure compliance with the 17.5% net debt to capital and surplus ratio covenant.
- Confirm the status of the $10.0 million minimum cash balance in the collateral account.