Item 1.01. Entry Into a Material Definitive Agreement.
On March 31, 2022 Newtek Business Services Corp. (the “Company”) completed an exempt offering of $15 million aggregate principal amount of its 5.00% notes due 2025 (the “Notes”). The offering was consummated pursuant to the terms of a purchase agreement (the “Purchase Agreement”) dated March 31, 2022 among the Company and an accredited investor (the “Purchaser”). The Purchase Agreement provided for the Notes to be issued to the Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company relied upon this exemption from registration based in part on representations made by the Purchaser. The Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The net proceeds from the sale of the Notes were approximately $14.5 million, after deducting structuring fees and estimated offering expenses, each payable by the Company. The Company intends to use the net proceeds from the sale of the Notes to fund investments in debt and equity in accordance with its investment objectives and strategies. Under the Purchase Agreement, the Company also will issue additional Notes in aggregate principal amount of $15 million to the Purchaser on May 2, 2022.
The Notes were issued under the Indenture dated as of September 23, 2015 (the “Base Indenture”), between the Company and U.S. Bank Trust Company, National Association, as successor in interest to U.S. Bank National Association (the “Trustee”), and a Tenth Supplemental Indenture, dated as of March 31, 2022 (the “Tenth Supplemental Indenture” and together with the Base Indenture, the “Indenture”). The Notes will mature on March 31, 2025. The Notes bear interest at a rate of 5.00% per year payable quarterly on March 31, June 30, September 30 and December 31 each year, commencing on June 30, 2022. Under the terms of the Indenture, the Notes are redeemable at any time, at the option of the Company, at a redemption price of 100% of the outstanding principal amount thereof.
The Notes will be the Company’s direct unsecured obligations and rank pari passu, or equal, with all outstanding and future unsecured unsubordinated indebtedness issued by the Company. The Notes will be effectively subordinated to the Company’s existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.
The Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements of the Investment Company Act of 1940, as amended (the “1940 Act”) as long as the Company remains subject to the provisions of sections 80a–54 through 80a–64 of 1940 Act, and (ii) provide financial information to the holders of the Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the Indenture.
A copy of the Base Indenture and Tenth Supplemental Indenture are attached hereto as Exhibits 4.1 and 4.2, respectively and are incorporated herein by reference. The description of the Notes contained in this Form 8-K is qualified in its entirety by reference to the foregoing.