KBRA assigns a BBB- preliminary long term credit rating (LTCR) for $50 million of five-year, 8.05% fixed rate senior unsecured notes to be issued by Converge Holdings LLC. The Outlook for the preliminary rating is Stable.

The proceeds from the issuance will be used to support the continued growth of its subsidiary, Converge RE II. At closing, six months of interest payments will be held in cash at the holding company. The key subsidiaries, including Converge RE II, will be guarantors of the notes. The notes allow for optional redemption. Covenants include maintenance of financial leverage at or below 40% at the end of each quarter; no dividend payments to the ultimate shareholder until the notes are repaid; maintenance of an NRSRO rating on the notes; not incurring or permitting to exist any mortgage, pledge, encumbrance, lien or charge on any property if the interest coverage ratio as of the end of each quarter is less than 1.50x, on a trailing twelve-month basis.

KBRA believes that pro-forma financial leverage is manageable and supported by adequate debt service coverage, partially offset by the potential for increased promissory note leverage if such borrowings are used as a liquidity backstop for debt service or note repayment.

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Methodologies

• Insurance: Insurer & Insurance Holding Company Global Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1014529

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