Business Context and Reporting Period
This Form 8-K is filed by AG Mortgage Investment Trust, Inc. (MITT) on March 23, 2020, reporting events occurring as of March 20, 2020. The Company, a mortgage investment trust, is facing significant liquidity stress due to financial market turmoil triggered by the global COVID-19 pandemic.
Key Financial Metrics and Liquidity
- Outstanding Borrowings: Approximately $2.5 billion as of March 20, 2020.
- Margin Call Status: The Company received an unusually high volume of margin calls. While most were met timely, a $17.8 million payment missed its Friday wire deadline and was scheduled for payment on Monday, March 23, 2020.
- Liquidity Outlook: Management notified counterparties that it does not expect to be able to fund anticipated future margin calls in the near term due to market disruptions.
Material Changes and Events
The primary material change is the acceleration of financial obligations due to margin calls. The Company has entered a state of potential default risk where failure to meet future margin calls could trigger immediate repayment of aggregate outstanding financing obligations or the seizure of collateral securities by counterparties.
Outlook, Risks, and Management Commentary
- Forbearance Discussions: The Company is actively negotiating forbearance agreements with financing counterparties to prevent the exercise of default remedies for an agreed-upon period. The outcome, timing, and terms of these agreements remain uncertain.
- Professional Advisors: The Company has engaged Hunton Andrews Kurth LLP as legal counsel and FTI LLC as a financial advisor to manage these financing matters.
- Risk Factors: Significant risks include the inability to secure forbearance, changes in the market value of assets, and the ongoing economic effects of the COVID-19 pandemic. The filing contains forward-looking statements regarding the status of indebtedness and negotiations.
Investor Verification Checklist
- Confirm the successful execution of the $17.8 million margin call payment scheduled for March 23, 2020.
- Monitor the status of forbearance agreement negotiations with financing counterparties.
- Assess the Company's ability to meet future margin calls given the stated inability to fund anticipated volumes.
- Review the potential for immediate acceleration of the $2.5 billion in outstanding borrowings if forbearance is not granted.