Kingsway Financial Services Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

 

 

 

Date of report (Date of earliest event reported): May 24, 2024

 

(Exact Name of Registrant as Specified in Its Charter)

 

 

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Registrant’s Telephone Number, Including Area Code: (312) 766-2138

 

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

On May 24, 2024 (the “Third Amendment Effective Date”), certain subsidiaries (the “Loan Parties”) of Kingsway Financial Services Inc. (the “Company”) entered into an amendment (the “Third Amendment”) to the Loan and Security Agreement, dated as of December 1, 2020 (as amended, the “Loan Agreement”), with CIBC Bank USA as lender (“Lender”). As further described on Current Reports filed on Form 8-K by the Company with the Securities and Exchange Commission (the “SEC”) on December 2, 2020 (the “Original 8-K”) and March 1, 2023, the Loan Agreement provides for certain lending facilities including a Term Loan, Delayed Draw Term Loan and Revolving Note (each as defined in the Loan Agreement).

 

The Third Amendment provides for a new term loan in the principal amount of $15,000,000 (the “2024 Term Loan”), the proceeds of which were used in part to repay the outstanding balance of the existing Term Loan, Delayed Draw Term Loan and Revolving Note. The Third Amendment also provides for a new delayed draw term loan in a principal amount of up to $6,000,000 (the “2024 Delayed Draw Term Loan”). All or any portion, subject to a $2,000,000 minimum amount, of the 2024 Delayed Draw Term Loan may be requested by the Loan Parties at any time in up to three advances until the second anniversary of the Third Amendment Effective Date. Until such date, in addition to other fees payable pursuant to the Loan Agreement, the Loan Parties agree to pay Lender a non-use fee based on the average daily undrawn 2024 Delayed Draw Term Loan commitment. In connection with the Third Amendment, the Loan Parties also paid to Lender a commitment fee equal to $96,559.11.

 

The principal amount of the 2024 Term Loan and each 2024 Delayed Draw Term Loan shall be repaid in quarterly installments and, together with the Revolving Note, will mature on May 24, 2029.

 

The Third Amendment also modifies certain financial covenants in the Loan Agreement. Pursuant to the terms of the Third Amendment (i) the maximum permissible Fixed Charge Coverage Ratio (as defined in the Third Amendment) was reduced to 1.20 to 1.00 and (ii) the maximum permissible Senior Cash Flow Leverage Ratio (as defined in the Loan Agreement) was amended for certain periods.

 

The description of the Third Amendment does not purport to be complete, and is qualified in its entirety by reference to (i) the Loan Agreement, which is filed as Exhibit 10.1 to the Company’s Original 8-K, (ii) the Second Amendment, which is filed as Exhibit 10.24 to the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2023, and (iii) the Third Amendment, which is filed as Exhibit 10.1 to this report, all of which are incorporated herein by reference.

 

 

Please see Item 1.01 above, which information is incorporated by reference into this Item 2.03

 

 

(d) Exhibits

 

         

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.