CION Investment Corp 8-K Summary
Business Context and Reporting Period
This Form 8-K was filed on September 1, 2016, reporting events occurring on August 26, 2016. CION Investment Corporation (CION) established a new wholly-owned special purpose financing subsidiary, 34th Street Funding, LLC, to enter into a senior secured credit facility.
Key Financial Metrics and Debt Structure
- Total Facility Size: $150,000,000 aggregate principal amount.
- Initial Drawdown: $57,000,000 funded on August 26, 2016.
- Revolving Component: Up to $25,000,000 available as a revolving credit facility.
- Interest Rate: Three-month LIBOR plus 3.5% per annum.
- Maturity Date: August 23, 2020.
- Non-Usage Fees: 0.50% per year during the "Ramp-Up Period" (through May 23, 2017) and 1.0% per year thereafter until August 23, 2019.
- Prepayment Penalty: 1% premium in certain circumstances.
Material Changes and Transaction Details
The primary material change is the creation of a direct financial obligation via the JPM Credit Facility with JPMorgan Chase Bank, National Association. CION sold and contributed loans and corporate debt securities to the subsidiary in exchange for 100% of its membership interests. The facility is secured by a first-priority security interest in all assets of the subsidiary. The obligations are non-recourse to CION, limiting the parent company's exposure to the value of its investment in the subsidiary.
Management Commentary, Risks, and Contingencies
CION Investment Management, LLC serves as the portfolio manager for the subsidiary's assets, with CION guaranteeing the performance obligations of the manager. The filing outlines several events of default that could trigger immediate repayment, including:
- Failure to make payments when due.
- Insolvency or bankruptcy of the subsidiary, CION, or key management entities.
- Change of control of the subsidiary.
- Resignation or termination of the portfolio manager.
- Failure to satisfy the minimum net asset value of the secured assets (uncured within two business days).
The filing does not provide specific revenue, profit, or cash flow figures for the reporting period, as this is a current report regarding a specific financing event rather than a periodic financial statement.
Key Facts for Investor Verification
- Verify the specific composition of the assets pledged as collateral to secure the $150 million facility.
- Confirm the current utilization rate of the facility beyond the initial $57 million drawdown.
- Monitor compliance with the borrowing base and minimum net asset value covenants to avoid default.
- Assess the impact of the 3.5% spread over LIBOR and non-usage fees on the company's overall cost of capital.
- Review the attached exhibits (10.1 through 10.5) for detailed terms regarding the sale and contribution agreements.