American Realty sets cure period for delivering financials under notes

By Marisa Wong

Madison, Wis., Feb. 13 – American Realty Capital Properties, Inc. entered into supplemental indentures to three series of notes on Feb. 9 in connection with failure to deliver its financials on time.

American Realty entered into first supplemental indentures with respect to each of the 2% senior notes due 2017, 3% senior notes due 2019 and 4.6% senior notes due 2024 issued by operating partnership ARC Properties Operating Partnership, LP, according to an 8-K filing with the Securities and Exchange Commission.

The supplemental indenture provides that in the event ARC Properties fails to deliver prior to March 3 a 10-Q for the quarter ended Sept. 30, then any notice of default related to that failure issued on or after March 3 will be deemed to have been given on Jan. 19, for purposes of establishing the period during which the failure to deliver financials may be cured prior to the event becoming an event of default.

The terms of the indenture are consistent with the agreement in principle with an ad hoc group of noteholders that the company had announced on Jan. 22.

Jan. 22 announcement

American Realty said on Jan. 22 that it reached an agreement in principle with an ad hoc group of senior noteholders.

The company also received a notice under its convertible senior notes related to the failure to deliver its financials.

The ad hoc group of holders represent a majority of the 2% notes due 2017, the 3% notes due 2019 and the 4.6% notes due 2024.

Under the agreement in principle, the senior noteholder group agreed not to issue a notice of default, prior to March 3, for the company’s failure to timely deliver its third quarter 2014 financial statements, according to a prior company press release.

In exchange, the company agreed to sign a confidentiality agreement with the senior noteholder group’s counsel and pay fees and expenses of up to $300,000.

The parties also agreed that in the event of a notice of default after March 3, the 60-day cure period will be reduced by one day for each day after Jan. 19 that the notice of default is given, the release noted.

Weil, Gotshal & Manges LLP is the counsel to the independent directors of the board of directors of the company. Davis Polk & Wardwell LLP is counsel to the senior noteholder group.

The default notice for American Realty Capital’s convertibles is from the trustee for its 3% convertible senior notes due 2018 and its 3.75% convertible senior notes due 2020 and relates to the failure to file the third-quarter financial statements.

Under the terms of the convertible indentures, the company has 60 days following receipt of the notice of default to deliver the required statements. If it does not do so, an event of default will occur.

If there is no other default during this 60-day period, the company may choose before the 59th day of the period to remedy the default by paying additional interest. In that case the convertible noteholders are barred from accelerating the convertibles for 180 days.

The additional interest would be at an annual rate of 25 basis points for the first 90 days and 50 bps for the second 90 days.

American Realty Capital said it has not yet decided whether to choose this option.

American Realty Capital is a self-managed New York-based company focused on acquiring and owning single-tenant freestanding commercial properties subject to net leases with high credit quality tenants.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.