News Column

FIVE OAKS INVESTMENT CORP. FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Financial Statements and Exhibits

August 7, 2014



Item 1.01. Entry into a Material Definitive Agreement

1. The Bank of America Loan Facility:

On July 18, 2014, Five Oaks Acquisition Corp. ("FOAC"), a wholly owned subsidiary of Five Oaks Investment Corp. (the "Company"), entered into that certain Loan and Security Agreement (the "Loan Agreement") between Bank of America, N.A. ("Bank of America") as lender, FOAC as borrower, for the purpose of financing the acquisition of prime jumbo residential mortgage loans, in furtherance of the Company's previously announced strategy to aggregate and securitize such loans.

The Loan Agreement will be used by FOAC from time to time to finance the purchase of certain eligible residential mortgage loans, to be acquired by FOAC from one or more originators. The Loan Agreement provides for a short-term facility with an aggregate maximum capacity of $100,000,000 which is scheduled to mature on January 14, 2015, unless extended pursuant to its terms. FOAC's obligations under the Loan Agreement will be secured by the mortgage loans purchased with advances made pursuant to the Loan Agreement. The Loan Agreement contains borrowing base provisions that provide Bank of America with certain rights if there has been a decline in the market value of the mortgage loans, such that Bank of America may require FOAC to repay any advance under the Loan Agreement to eliminate any borrowing base deficiency resulting from such decline. Wells Fargo Bank N.A. will act as mortgage loan custodian.

The Company also entered into a guaranty, in favor of Bank of America (the "Guaranty"), pursuant to which it guaranteed FOAC's obligations under the Loan Agreement. The Company, as guarantor, is subject to certain financial covenants in respect of the Loan Agreement.

In addition, the Loan Agreement contains certain events of default (subject to certain materiality thresholds and cure periods), including payment defaults, breaches of covenants and/or any representations and warranties, cross-defaults, bankruptcy or insolvency proceedings 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, among others, repayment of any advances and the liquidation by Bank of America of the mortgage loans held as collateral securing FOAC's obligations under the Loan Agreement.

The Company has outstanding master repurchase agreements with Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of Bank of America.

The foregoing descriptions of the Repurchase Agreement and Guaranty do not purport to be complete and are qualified in their entirety by reference to the full text of the Loan Agreement and Guaranty, respectively, which have been filed with this Current Report on Form 8-K as Exhibits 10.1 and 10.2, respectively.

2. The Barclays Repurchase Agreement:

On July 29, 2014, Five Oaks Acquisition Corp. ("FOAC"), a wholly owned subsidiary of Five Oaks Investment Corp. (the "Company"), entered into that certain Master Repurchase Agreement (the "Repurchase Agreement") by and among Barclays Bank PLC ("Barclays") as purchaser and agent, FOAC as seller, and the Company as guarantor, for the purpose of financing the acquisition of eligible residential mortgage loans, in furtherance of the Company's previously announced strategy to aggregate and securitize such loans.

The Repurchase Agreement will be used by FOAC from time to time to sell certain eligible residential mortgage loans, to be acquired by FOAC from one or more originators, to Barclays. The Repurchase Agreement provides for a 364-day facility term with an aggregate maximum capacity of $100,000,000 which is scheduled to mature on July 28, 2015, unless extended pursuant to its terms. The Repurchase Agreement contains margin call provisions that provide Barclays with certain rights if there has been a decline in the market value of the purchased mortgage loans, such that Barclays may require FOAC to transfer cash or eligible mortgage loans to eliminate any margin deficit resulting from such decline. Wells Fargo Bank N.A. will act as mortgage loan custodian.

The Company also entered into a guaranty, in favor of Barclays (the "Guaranty"), pursuant to which it guaranteed FOAC's obligations under the Repurchase Agreement. The Company, as guarantor, is subject to certain financial covenants in respect of the Repurchase Agreement.

In addition, the Repurchase Agreement contains certain events of default (subject to certain materiality thresholds and cure periods), including payment defaults, breaches of covenants and/or any representations and warranties, cross-defaults, bankruptcy or insolvency proceedings 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, among others, repurchase of a purchased mortgage loan and the liquidation by Barclays of the mortgage loans under the Repurchase Agreement.

2



The Company has outstanding master repurchase agreements with Barclays Capital Inc., an affiliate of Barclays.

The foregoing descriptions of the Repurchase Agreement and Guaranty do not purport to be complete and are qualified in their entirety by reference to the full text of the Repurchase Agreement and Guaranty, respectively, which have been filed with this Current Report on Form 8-K as Exhibits 10.3 and 10.4, respectively.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

See Item 1.01 above, the provisions of which are incorporated by reference into this Item 2.03.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits. Exhibit No. Description 10.1 Loan and Security Agreement dated as of July 18, 2014, between Bank of America, N.A. as lender, Five Oaks Acquisition Corp. as borrower. 10.2 Guaranty, dated as of July 18, 2014, by Five Oaks Investment Corp. in favor of Bank of America, N.A. 10.3 Master Repurchase Agreement dated as of July 29, 2014, by and among Barclays Bank PLC as purchaser and agent, Five Oaks Acquisition Corp. as seller and Five Oaks Investment Corp. as guarantor. 10.4 Guaranty, dated as of July 29, 2014, by Five Oaks Investment Corp. in favor of Barclays Bank PLC. 3


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Edgar Glimpses


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters