BOSTON, July 15, 2009 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS) announced today that it has amended its warehouse line of credit with Wachovia Bank NA, a Wells Fargo company, to convert it into a $145.7 million, three-year, secured term debt facility that better matches the maturity profile of the assets it funds. The credit facility has been structured to finance a static pool of existing loans totaling approximately $228.4 million, which is expected to generate sufficient cash flow from interest and principal collections to repay the loan over its term.
Key terms of the credit facility have been amended to, among other things:
* Extend the final maturity for three years to July 15, 2012 * Revise the advance rate to approximately 65% for most assets * Increase the management fee payable to NewStar to 62.5 bps * Provide the lender certain discretion to adjust the effective advance rate on credit impaired loans * Begin the amortization of the term debt facility using the proceeds of principal and a portion of interest collections from the loan collateral securing it * Revise the priority of payments so that all cash collections from the loan collateral related to principal repayments are directed to be used to repay the term debt facility * Revise the priority of payments so that half of cash collections from the loan collateral related to excess spread are directed to be used to repay the term debt facility * Add a performance test that measures the amount of over-collateralization commonly referred to as an OC Test * Remove certain termination events including those related to charge-off and delinquency ratios as well as concentration limits such as those related to CCC assets and commercial real estate * Allow the loan to be prepaid without penalty after April 15, 2010 and with a call premium if prepaid prior to that date
"We are pleased to announce the amendment of this credit facility which substantially reduces perceived financing risk by extending the term and better matching the maturity profile of the assets it finances," said John Bray, Chief Financial Officer of NewStar Financial. "It provides us the flexibility needed to retire the debt and monetize our investment in this loan portfolio. Approximately 87% of our loan portfolio is now funded with long term debt and equity capital."
"This amendment demonstrates the strong relationship we have had with Wachovia, and now Wells Fargo, since NewStar was established. It is a partnership that we highly value and have continued to expand," added John Frishkopf, Treasurer of NewStar Financial.
About NewStar Financial, Inc.:
NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company specializes in providing senior secured debt financing for the acquisition or recapitalization of mid-sized companies and commercial real estate. NewStar originates loans directly through a team of experienced, senior bankers organized around key industry and market segments. The Company targets 'hold' positions of up to $20 million and selectively underwrites or arranges larger transactions for syndication to other lenders. NewStar is headquartered in Boston, MA and has regional offices in Darien, CT, Chicago, IL, and Charleston, SC. For more detailed transaction and contact information, please visit our website at www.newstarfin.com.
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