Fri, Dec 19, 2014 10:27
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Bank of Scotland Refinances Waco's FirstCity Financial Corporation's senior credit facilities
Waco's FirstCity Financial Corporation today announced that it has successfully refinanced its existing senior credit facilities with Bank of Scotland and BoS(USA) (collectively, "Bank of Scotland"). In addition, FirstCity separately has entered into an Investment Agreement with Varde Investment Partners, L.P. ("Varde") to jointly pursue investment opportunities in distressed assets, and has also entered into a Securities Purchase Agreement with Varde.

James T. Sartain, President and CEO of FirstCity, said, "With our renewed senior credit facilities, coupled with the Investment Agreement with Varde, FirstCity has the funding and liquidity in place to be able to maximize the value of our primary talents - our investment identification and evaluation processes, and our servicing platform - while at the same time developing a strong 'fees for services and performance' strategy."

FirstCity and Bank of Scotland reached agreement and closed on a $268.6 million Reducing Note Facility Agreement ("Reducing Note Facility") that allows for repayment to Bank of Scotland over time as cash flows from the underlying assets securing the loan facility are realized.  At closing, FirstCity has in excess of $45.0 million in unencumbered cash and portfolio assets, which combined with (1) the unencumbered cash leak-through of up to $25.0 million; (2) the overhead allowance of $38.9 million; and (3) management's estimation of residual cash flows of $70.0 million from the pledged investments after full repayment of the Bank of Scotland debt, will potentially provide the Company in excess of $178.0 million in unencumbered cash and assets to fund future investments and operations. Further details about the structure and terms of the Reducing Note Facility are outlined in the exhibit to this press release ("FirstCity Structure and Business Plan"), and will be included in a Current Report on Form 8-K that FirstCity will subsequently file with the SEC.

FirstCity and Varde entered into an Investment Agreement whereby Varde may invest up to $750 million, at its discretion, alongside FirstCity in distressed loan portfolios and similar investment opportunities, subject to the terms and conditions contained in the agreement. In addition, FirstCity and Varde have entered into a Securities Purchase Agreement wherein Varde has agreed to acquire 150,000 shares of newly-issued FirstCity common stock at a price of $5.93 per share. Upon consummation of this stock purchase, Varde will own approximately 1.5% of FirstCity's outstanding common stock.