Municipal Mortgage & Equity agrees to credit agreement maturity, interest rate changes

By Caroline Salls

Pittsburgh, Feb. 22 -Municipal Mortgage & Equity, LLC and some of its subsidiaries entered into the 14th amendment to their revolving loan and letter-of-credit agreement with Bank of America, NA that includes changes to the credit agreement's maturity, interest rate and maximum loan amount, according to an 8-K filed with the Securities and Exchange Commission.

This amendment deletes specified financial reporting requirements and specified financial covenants and moves the maturity date of the loan agreement up to March 5 from May 1.

The amendment also provides for an extension of the maturity date to June 30 at the borrower's option if it arranges for a $14 million additional third-party irrevocable standby letter of credit.

The maturity date can also be extended to Sept. 30, 2008 if the company permanently reduces its capital contribution obligations to low-income housing tax credit property partnerships financing under the credit agreement to less than $153 million by June 30.

Also, the amendment provides, subject to the maturity date extensions, for revised maximum amounts of loans and letters of credit to be outstanding under the loan agreement.

Specifically, the maximum loan amount would be $70 million through March 30; $60 million through April 29; $50 million through May 30; $40 million through June 29; and $35 million through Sept. 29, 2008.

No additional revolving loans can be made in excess of $5 million unless the maturity date is extended to June 30.

The amendment also increases the Libor interest rate by 115 basis points and the Prime interest rate by 300 bps and requires the delivery of $5 million of additional cash collateral, which must be returned upon delivery of the additional letter of credit.

The borrowers will also be required to grant a security interest in direct and indirect equity interests in additional low-income housing tax credit property partnerships, and the amendment limits the borrowers' ability to finance new low-income housing tax credit property partnerships under the credit agreement.

MuniMae receives waiver

In addition, MuniMae TEI Holdings, LLC, MMA Construction Finance, LLC and MMA Mortgage Investment Corp. have entered into a default waiver and fifth amendment to their credit agreement with Bank of America.

Municipal Mortgage & Equity is the guarantor of this credit agreement.

The amendment waives compliance with all credit agreement covenants, as well as any default arising from non-compliance with those covenants, provided that the borrowers repay the outstanding balance of the credit agreement before Feb. 29.

MuniMae, MMA Construction and MMA Mortgage already met a condition requiring them to repay $7.2 million of the outstanding credit agreement obligations before Feb. 22.

The amendment and waiver also terminates the credit agreement lenders' obligations to loan additional amounts.

Municipal Mortgage & Equity is a Baltimore-based provider of debt and equity financing to developers of multifamily and commercial properties.

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