RCS Capital amends leverage ratio covenant and increases pricing

By Angela McDaniels

Tacoma, Wash., June 30 – RCS Capital Corp.’s first- and second-lien lenders agreed to amend the leverage ratio covenant under its credit agreements and make other modifications, according to an 8-K filing with the Securities and Exchange Commission.

First-lien agreement

Following the changes, the maximum secured leverage ratio for the first-lien agreement is 3.25 times for the quarter ended June 30 and the quarter ending Sept. 30. It then decreases in steps, finishing at 0.75 times for the quarters ending March 31, 2019 and thereafter.

Prior to the amendment, the maximum secured leverage ratio for the first-lien agreement was 2.5 times for the quarter ended June 30, was 2.25 times for the quarter ending Sept. 30 and stepped down to 0.75 times for the quarters ending June 30, 2017 and thereafter.

The interest rate was increased to Libor plus 650 basis points from Libor plus 550 bps.

The premium payable in connection with a repricing transaction was changed to a 2% premium for the year ending June 30, 2016 and a 1% premium for the year ending June 30, 2017 from a 2% premium for the year ended April 29 and a 1% premium for the year ending April 29, 2016.

Second-lien agreement

Following the changes, the maximum secured leverage ratio for the second-lien agreement is 3.5 times for the quarter ended June 30 and the quarter ending Sept. 30 and steps down to finish at 0.75 times for the quarters ending March 31, 2019 and thereafter.

Prior to the amendment, the maximum secured leverage ratio for the first-lien agreement was 2.75 times for the quarter ended June 30, was 2.5 times for the quarter ending Sept. 30 and stepped down to 0.75 times for the quarters ending March 31, 2019 and thereafter.

The interest rate was increased to Libor plus 1,050 bps from Libor plus 950 bps.

The premium payable on optional prepayments of the second-lien term loan to 5% from 3% for the period from April 29, 2016 to April 29, 2017, to 3% from 1% for the period from April 29, 2017 to April 29, 2018 and to 1% from no premium for the period from April 29, 2018 to April 29, 2019.

“These credit agreement modifications provide RCS Capital with enhanced covenant flexibility and will allow us to continue our commitment to invest in our businesses, execute our short-term and long-term business plans and to build on the success of our ongoing integration efforts,” Michael Weil, chief executive officer of RCS Capital, said in a company news release.

Barclays Bank plc is the administrative agent for the first-lien credit agreement, and Bank of America, NA is the administrative agent for the second-lien credit agreement.

RCS Capital is a New York-based investment firm focused on the individual retail investor.

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