Business Context and Reporting Period
This Form 8-K is filed by Resource Capital Corp. (the "Company") on August 10, 2016, reporting events that occurred on August 4, 2016. The filing details the completion of a major asset disposition and the termination of a related material definitive agreement.
Key Financial Metrics and Transaction Details
- Transaction Type: Sale of 100% of membership interests in Northport TRS, LLC ("Northport"), the Company's middle market loan business.
- Purchaser: CVC Credit Partners U.S. Lending I, L.P., an investment vehicle managed by CVC Credit Partners, LLC.
- Aggregate Consideration: Approximately $247 million, subject to post-closing adjustments.
- Consideration Calculation: Based on the unpaid principal balance of loans held by Northport (excluding participation interests), multiplied by negotiated "UPB" and "Adjustment" factors, plus accrued interest/fees, less accrued payables.
- Closing Payment: Net of intercompany loan repayments, amounts due under the Original Credit Agreement, and transaction fees.
- Related Party Interest: Resource America, Inc. (the Company's manager) owns a 24% interest in CVC Credit Partners, L.P., an affiliate of the Purchaser's general partner.
Material Changes and Agreements
- Termination of Agreement: In connection with the sale, Northport amended and restated its senior secured revolving credit agreement with JPMorgan Chase Bank, N.A. to remove Resource Capital Corp. as a guarantor of Northport's obligations.
- Asset Disposition: The Company divested its entire middle market loan business segment (Northport).
Guidance, Outlook, and Pro Forma Information
The filing does not provide specific forward-looking guidance or management commentary regarding future operations beyond the transaction details. However, it incorporates by reference Unaudited Pro Forma Condensed Consolidated Financial Statements (Exhibit 99.1) to reflect the impact of the disposition. These statements include:
- Balance sheet as of June 30, 2016.
- Statement of Operations for the six months ended June 30, 2016.
- Statement of Operations for the year ended December 31, 2015.
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity within the body of the report; these figures are contained in the referenced exhibits.
Key Facts for Investor Verification
- Verify the final post-closing adjustment amount to confirm the total consideration received exceeds or meets the approximate $247 million figure.
- Review Exhibit 99.1 to assess the pro forma impact of the Northport divestiture on the Company's remaining balance sheet and earnings capacity.
- Confirm the status of the amended credit agreement to ensure all guaranty obligations have been legally released.
- Examine the related party transaction disclosures regarding Resource America, Inc.'s 24% interest in the Purchaser's affiliate to evaluate potential conflicts of interest or valuation implications.