UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 9, 2008
MICROFINANCIAL INCORPORATED
(Exact name of registrant as specified in its charter)
MASSACHUSETTS
(State or other jurisdiction of incorporation)
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1-14771
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04-2962824 |
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(Commission file number)
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(IRS Employer Identification Number) |
10-M Commerce Way, Woburn, MA 01801
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: 781-994-4800
N/A
(Former name or former address, if changed since last report)
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 (see General Instruction
A.2):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
On July 9, 2008, the Registrants wholly-owned subsidiary, TimePayment Corp. (the Borrower)
entered into an amended $60 million secured revolving line of credit (the Facility) with
Sovereign Bank, as agent (the Agent) for the lenders thereunder (the Lenders). The Facility
was originally entered into on August 2, 2007, and its material terms and conditions were described
in the Registrants Current Report on Form 8-K filed on August 8, 2007. The Registrant was in
compliance with the covenants of the original Facility at the time of the July 9 amendment.
The material changes to the original Facility made by the July 9 amendment are as follows: (i) the
commitment of the Lenders was increased from $30 million to $60 million outstanding at any time,
subject to a borrowing base that is calculated with respect to eligible receivables; (ii) the
Borrower is required to maintain a ratio of consolidated earnings before interest and taxes (EBIT)
of not less than 2 to 1 at the end of any quarter (compared to a ratio between 1.75 and 1.9 to one
in the original agreement for fiscal quarters in 2008 and later); and (iii) the Borrower may not
permit its consolidated tangible capital base (the sum of consolidated tangible net worth plus
subordinated debt) to be less than approximately $56.3 million as of March 31, 2008, which level
will be adjusted upward for subsequent periods by amounts calculated primarily by reference to the
Registrants consolidated net income (compared to a lower base at September 30, 2007 in the
original agreement, as similarly adjusted upwards for subsequent periods).
The other material terms of the original Facility remain the same, including the borrowing base
calculation, the maturity date of August 2, 2010, the interest rate applicable to loans under the
Facility, and the other affirmative and negative covenants applicable to the Registrant and the
Borrower (including the financial covenants relating to leverage ratios and asset quality). The
Facility is guaranteed by the Registrant and by Leasecomm Corporation (Leasecomm), also a
wholly-owned subsidiary of the Registrant. The Facility and related guarantees are secured by a
first priority security interest in the assets of the Borrower, the Registrant and Leasecomm,
including the equity interest of the Registrant in both the Borrower and Leasecomm. The borrowing
base under the amended Facility would be reduced by a specified reserve amount in the event that
the Borrower obtains certain forms of alternative, subordinated financing permitted by the
Facility. The amended Facility would permit further increases in the total commitment with the
agreement of the Agent and, as applicable, a new or existing Lender, under certain conditions.
The foregoing description of the Facility is a summary only, and is qualified in its entirety by
reference to the Amended and Restated Credit Agreement between the parties attached as an exhibit
to this report.
On July 14, 2008, the Registrant issued a press release announcing the amendment to the Facility.
A copy of that press release is attached to this report as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
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Exhibit |
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Exhibit Title |
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Exhibit 10.1
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Amended and Restated Credit Agreement dated July 9, 2008 |
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Exhibit 99.1
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Press Release dated July 14, 2008 |
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