Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. LADENBURG THALMANN FINANCIAL SERVICES INC. (1029730) 10-K published on Mar 13, 2020 at 5:29 pm
Reporting Period: Dec 30, 2019
In addition, the terms of the instruments governing the outstanding 6.25% Senior Secured Notes due 2028 and 10.75% Senior Unsecured Notes due 2027 and Advisor Group’s senior secured credit facilities, and our guarantees of the obligations thereunder, may place restrictions under certain circumstances on our ability to pay principal and interest on, or purchase or redeem or make any payments in respect of, the 6.5% Senior Notes, 7% Senior Notes, 7.25% Senior Notes and 7.75% Senior Notes.
As a result of these restrictions, we are limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we or Advisor Group may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we or Advisor Group will be able to obtain waivers from the lenders and/or amend the covenants. Our failure to comply with the restrictive covenants described above and/or the terms of any future indebtedness could result in an event of default, which, if not cured or waived, could result in Advisor Group or us being required to repay these borrowings before their due date. In addition, the obligations under the senior secured credit facilities and 6.25% Senior Secured Notes due 2028 are secured by substantially all of our and Securities America Financial Corporation's assets.
The occurrence of natural disasters, including earthquakes, fires, floods, tornadoes, blackouts and pandemic or other contagious outbreaks, or man-made disasters, such as terrorism and acts of war, could have a significant impact on our ability to conduct business and adversely affect our results of operations and financial condition. Such disasters may damage our facilities and prevent our employees and financial advisors from performing their roles. Although we have established a disaster recovery plan, there is no guarantee that we would be able to operate without disruption in the event any such disaster was to occur. In addition, the emergence of a pandemic or contagious outbreak, such as the recent coronavirus outbreak, could lead to travel restrictions or other operational difficulties that could impair our ability to conduct our business. A pandemic or outbreak may also have a negative impact on our results of operation and financial condition, including due to reduced revenue from conference attendance, reduced commissions resulting from client's lowering their level of trading activity, or reduced advisory fees resulting from a sell-off in the financial markets.
The 2028 Senior Secured Notes bear interest at 6.25% and mature on March 1, 2028. Interest on the 2028 Senior Secured Notes is payable semi-annually on March 1 and September 1 of each year, beginning on September 1, 2020.
Prior to March 1, 2023, the 2028 Senior Secured Notes may be redeemed at any time and from time to time, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2028 Senior Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make-whole.” In addition, at any time prior to March 1, 2023, up to 40% of the aggregate principal amount of the 2028 Senior Secured Notes may be redeemed with an amount not to exceed the net cash proceeds from certain equity offerings at a redemption price of 106.25% of the principal amount of the 2028 Senior Secured Notes to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, until March 1, 2023, up to 10% of the original aggregate principal amount of the 2028 Senior Secured Notes may be redeemed during the period beginning on the issue date and ending on February 28, 2021, and on each subsequent twelve month period beginning March 1, 2021 and March 1, 2022, at a redemption price of 103% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The 2028 Senior Secured Notes and related guarantees are secured on a first lien basis by substantially all assets of Advisor Group, certain of its subsidiaries and the Guarantors (other than certain excluded assets), which assets secure the Guarantors’ obligations under the Senior Secured Credit Facilities (as defined below) on a pari passu basis, subject to permitted liens. The 2028 Senior Secured Notes Indenture contains restrictive covenants that limit, among other things, the ability of the Guarantors to incur or guarantee additional indebtedness or issue disqualified stock or certain preferred stock; pay dividends and make other distributions or repurchase stock; make certain investments; create or incur liens; sell assets; enter into certain transactions with the Guarantors; merge, consolidate or transfer or sell all or substantially all of the Guarantors’ assets; and designate restricted subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important limitations and exceptions. The 2028 Senior Secured Notes Indenture also contains customary events of default which would permit the holders of the 2028 Senior Secured Notes to declare the 2028 Senior Secured Notes to be immediately due and payable if not cured within applicable grace periods.
All obligations of Advisor Group under the Senior Secured Credit Facilities and, at the option of Advisor Group, the obligations of Advisor Group or any of its restricted subsidiaries under certain hedge agreements and cash management arrangements provided by any lender party to the Senior Secured Credit Facilities or any of its affiliates and certain other persons, are unconditionally guaranteed by AG Parent Corp. (“Holdings”) and certain of Advisor Group’s existing and subsequently acquired or organized direct or indirect material wholly owned U.S. restricted subsidiaries with customary exceptions including, among other things, for broker dealer subsidiaries and where providing such guarantees is not permitted by law, regulation or contract or would result in adverse tax consequences (other than de minimis) to Holdings, Advisor Group or any of their subsidiaries or any direct or indirect parent thereof.