Business Context and Reporting Period
CION Investment Corporation (CION) filed this Form 8-K on December 22, 2017, reporting events occurring on December 19, 2017. The filing details the entry into a material definitive agreement involving a newly formed, wholly-owned special purpose financing subsidiary, 33rd Street Funding, LLC.
Key Financial Metrics and Facility Terms
The filing establishes a senior secured revolving credit facility (the "MS Credit Facility") with the following terms:
- Facility Size: Up to $200,000,000 aggregate principal amount, subject to a borrowing base.
- Drawdown Status: No borrowings were drawn on the closing date.
- Interest Rate: Floating rate equal to three-month LIBOR plus a spread of 3.0% per year through December 19, 2020, and 3.5% per year thereafter through December 19, 2022.
- Maturity: Advances mature no later than December 19, 2022.
- Non-Usage Fee: 0.75% per year on the greater of the unused amount or 75% of the $200,000,000 committed amount, applicable from June 19, 2018, through December 19, 2020.
- Prepayment Premiums: 3% if reduced below $100,000,000 or terminated on or prior to December 19, 2018; 2% if on or prior to December 19, 2019; 1% if on or prior to December 19, 2020.
The filing text does not provide specific values for CION's current revenue, profit, cash flow, or existing debt levels outside of this new facility.
Material Changes and Structure
CION contributed loans and other corporate debt securities to 33rd Street Funding in exchange for 100% of the subsidiary's membership interests. The obligations of the subsidiary under the MS Credit Facility are non-recourse to CION, limiting CION's exposure to the value of its investment in the subsidiary. The facility is secured by a first priority security interest in all assets of 33rd Street Funding.
Outlook, Risks, and Contingencies
The facility contains customary events of default, including failure to make payments, insolvency or bankruptcy of the subsidiary or CION, change of control, and failure to satisfy financial covenants. Upon an event of default, the lender may declare all outstanding advances immediately due and payable. The filing notes that 33rd Street Funding incurred customary costs and expenses in connection with obtaining the facility.
Investor Verification Checklist
- Verify the specific borrowing base formula and collateral requirements detailed in the attached Loan and Servicing Agreement (Exhibit 10.1).
- Confirm the impact of the 0.75% non-usage fee on future earnings if the facility remains undrawn.
- Review the specific financial covenants required to maintain the facility.
- Assess the composition and quality of the assets contributed to 33rd Street Funding.