Item 1.02 Termination of a Material Definitive Agreement.
On June 26, 2014, the NewStar Arlington Senior Loan Program LLC (the "Program"),
formerly known as NewStar Arlington Funding LLC ("NAF") completed a $409.4
million term debt securitization with respect to a portfolio of middle market
commercial loans. NewStar Financial, Inc. (the "Company") acts as collateral
manager for the Program to fund future loan originations. A portion of the
proceeds from the securitization were used to repay all outstanding advances
under a $175 million warehouse facility provided to NAF. Additional proceeds
from such securitization are available to the Program to fund future loan
originations and acquisitions. As a result of this transaction, the Loan and
Security Agreement, dated as of April 4, 2013, by and among the Company, as
Servicer, NAF, as Borrower, Wells Fargo Bank, National Association as the Class
A Lender, NewStar Financial, Inc. as the Class B Lender, Wells Fargo Securities,
LLC as Administrative Agent, and U.S. Bank National Association as Trustee was
terminated, except for certain provisions thereof which expressly survive
termination. NAF also changed its name to NewStar Arlington Senior Loan Program
LLC, and contemporaneously with the closing of the transaction, the membership
interests in NAF owned by the Fund were redeemed, its Limited Liability Company
Agreement was amended and restated, and new membership interests in NAF were
issued to the equity investors in the Program. The Fund subsequently distributed
the net proceeds received for the redemption of its interests in NAF to its
members, which included the Company.
As a result of the repayment of the Company's advances as the Class B lender
under the warehouse facility and the redemption of membership interests in the
Fund, the Company has no ownership or financial interests in the Fund or its
successors except to the extent that it receives management fees as Manager of
The Loan and Security Agreement had required the Company to comply with various
financial and other covenants. The Company and certain of its subsidiaries have
three credit facilities with Wells Fargo Bank, National Association, including a
$75 million credit facility to fund asset-based loans, a $75 million credit
facility to fund new equipment lease origination, and a $275 million credit
facility to fund leveraged finance loans.
Item 8.01 Other Events.
On July 1, 2014, the Company issued a press release announcing that it has
expanded a managed credit fund to co-invest in middle market commercial loans
originated by the Company, which is incorporated by reference herein and
attached as Exhibit 99.1 to this Form 8-K.
Following completion of the term debt securitization, the Company expects that
the financial results of the Program will not be consolidated with its financial
results. The assets, liabilities and related operating results of the Arlington
Fund had previously been included in the Company's consolidated financial
results as a variable interest entity ("VIE").
This Form 8-K contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact included in this Form 8-K are forward-looking
statements. Forward-looking statements give the Company's current expectations
and projections relating to our financial condition, results of operations,
strategic plans, objectives, future performance, financing plans and business.
As such, they are subject to material risks and uncertainties, including the
Company's limited operating history; the general state of the economy; the
Company's ability to compete effectively in a highly competitive industry; and
the impact of federal, state and local laws and regulations that govern
non-depository commercial lenders and businesses generally.
More detailed information about these risk factors can be found in the Company's
filings with the Securities and Exchange Commission (the "SEC"), including Item
1A ("Risk Factors") of its 2013 Annual Report on Form 10-K, as supplemented by
the Risk Factors contained in its Quarterly Reports on Form 10-Q. The Company is
under no obligation to (and expressly disclaims any such obligation to) update
or alter its forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
99.1 Press release of the Company, dated July 1, 2014.