Angel Oak Mortgage REIT Inc.
03/28/2024 | Press release | Distributed by Public on 03/28/2024 14:17
New Financial Obligation - Form 8-K
Item 1.01 Entry into a Material Definitive Agreement.
On Mach 28, 2024, Angel Oak Mortgage REIT, Inc. (the "Company") and two of its subsidiaries (the "Subsidiaries"), entered into a $250.0 million repurchase facility agreement with a Lender, "Global Investment Bank 2" through the execution of a Master Repurchase Agreement (the "Master Repurchase Agreement") between the Subsidiaries as sellers, Global Investment Bank 2 as buyer and the Company as Guarantor. Pursuant to the Master Repurchase Agreement and corresponding Pricing Side Letter, the termination date of the loan financing facility is March 27, 2026, unless such term is extended or terminated earlier pursuant to the terms of the Master Repurchase Agreement.
The amount expected to be advanced by Global Investment Bank 2 is generally in line with other similar agreements that the Company or one or more of its subsidiaries has entered into, which is a percentage of the unpaid principal balance or market value of the whole loan asset depending on the delinquency of the underlying whole loan asset. Similarly, the interest rate on any outstanding balance under the Master Repurchase Agreement that the applicable Subsidiary is required to pay Global Investment Bank 2 is generally in line with other similar agreements that the Company or one or more of its subsidiaries has entered into, where the interest rate is equal to the sum of (1) a pricing spread and (2) the Term SOFR Reference Rate. Additionally, Global Investment Bank 2 is under no obligation to purchase the whole loan assets we offer to sell to them.
The obligations of the Subsidiaries under the Master Repurchase Agreement are guaranteed by the Company pursuant to a Guaranty (the "Guaranty") executed contemporaneously with the master Repurchase Agreement. In addition, and similar to other repurchase agreements the Company has entered into, the Company is subject to various financial and other covenants, including those related to (1) net asset value; (2) a maximum ratio of indebtedness to the net asset value; and (3) minimum liquidity.
In addition, the Master Repurchase Agreement and Guaranty contain events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross-defaults, insolvency and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include the acceleration of the amounts outstanding under the Master Repurchase Agreement and Global Investment Bank 2's right to liquidate the purchased whole loan assets then subject to the Master Repurchase Agreement.
The Subsidiaries are also required to pay certain customary fees to Global Investment Bank 2 to reimburse Global Investment Bank 2 for certain costs and expenses incurred in connection with Global Investment Bank 2's management and ongoing administration of the Master Repurchase Agreement and its review of the whole loan assets subject to the Master Repurchase Agreement and certain costs associated with early repurchases.
Further, the interest rate pricing margin will range from 2.10% to 3.35%, based on loan status, dwell time and other factors.
A copy of the Form of Master Repurchase Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference. A copy of the Form of Pricing Side Letter is attached hereto as Exhibit 10.2 and incorporated herein by reference. A copy of the Form of Guaranty is attached hereto as Exhibit 10.3 and incorporated herein by reference.