Item 1.01. Entry into a Material Definitive Agreement.
On July 15, 2022, Heights Financing I, LLC (the “Borrower”), an indirect wholly owned bankruptcy-remote subsidiary of Southern Co., Inc., entered into an asset-backed warehouse facility (the “Facility”) under a Credit Agreement (the “Credit Agreement”) with SouthernCo, Inc., as Servicer, Credit Suisse AG, New York Branch, as Administrative Agent and as Structuring and Syndication Agent, Credit Suisse AG, Cayman Islands Branch, as Class A Committed Lender and ACM AIF Evergreen P2 DAC SubCo LP, as Class B Committed Lender, certain other lenders party thereto (collectively, the “Lenders”), the agents for the Lender Groups, the subservicers party thereto, Computershare Trust Company, National Association (“Computershare”), as Paying Agent, Image File Custodian, Backup Servicer and Collateral Agent, and Wilmington Trust, National Association (“Wilmington Trust”), as Borrower Loan Trustee.
Pursuant to the Credit Agreement, the aggregate borrowing capacity under the Facility is $425 million, which upon the consummation of the first asset-backed securities offering following the closing date, will be reduced by the greater of $75 million and (B) 50.00% of the total size of the amount borrowed under such offering. The revolving period of the Facility extends to the earlier of July 15, 2024 or a Facility Amortization Event, during which period borrowings under the Facility will bear interest at a rate based on Term SOFR (or a subsequent replacement rate).
During the revolving period, the borrowing capacity under the Facility with respect to each Lender Group is determined by applying an applicable advance rate against the outstanding principal balance of eligible receivables, subject to certain adjustments. The Facility is secured primarily by a pool of non-revolving secured and unsecured fixed-rate personal loans and related assets. The Facility contains affirmative and negative covenants and representations and warranties customary for financings of this type. The Borrower’s ability to borrow under the Facility is subject to the continued satisfaction of certain conditions.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.