According to an 8K filed with the SEC, JPMorgan Chase Bank served as administrative agent on an amendment to Colony Capital’s revolving credit facility. The amendment improves the terms of Colony Capital’s financial covenants to account for the impact of COVID-19 on its legacy assets and increases the borrowing base capacity for digital infrastructure investments to facilitate the company’s digital transformation.
“The corporate revolver amendment progresses two of the key priorities we have highlighted to investors, demonstrating our commitment to de-lever the balance sheet and building a clear liquidity runway on our ‘Path-to-Digital,’” Marc C. Ganzi, who recently assumed the role of president and CEO of Colony Capital, said. “I want to thank our lending partners for their flexibility and constructive approach to this process and appreciate their continuing commitment to helping Colony achieve its long-term goals.”
Key terms of the amendment include:
- Modifications to certain financial covenants on revised and more favorable terms to Colony Capital for the duration of the revolving credit facility
- Borrowing base adjustments that reflect the growing contribution of digital infrastructure to the company’s asset base and earnings
- Right-sized aggregate commitments to $500 million upon effectiveness of the amendment and $400 million on March 31, 2021
- Addition of certain customary restrictions on common equity dividends (subject to REIT requirements), share repurchases, preferred redemptions, and the voluntary repayment of indebtedness (with the exception of the company’s convertible debt due 2021)
_x000D_
_x000D_
_x000D_
_x000D_
The amended terms of the revolving credit facility were informed by (i) management’s assessment of the potential impacts of the COVID-19 pandemic on its business operations, cash needs and financial results across a variety of scenarios, including the potential for an extended period of economic disruption caused by COVID-19 and (ii) management’s focus on maintaining ample liquidity through periods of economic uncertainty.
Resetting the facility’s covenants creates an 18-month runway to January 2022, the facility’s extended maturity date. This enhances Colony Capital’s financial flexibility by allowing it to make full use of the facility across a variety of economic scenarios, by which time the company expects its business will be substantially rotated to digital.
In connection with the signing of the amendment, Colony Capital paid down $200 million of the outstanding balance on the facility, reducing the amount drawn to $400 million. Subsequent to this paydown, the company has liquidity of approximately $900 million, including corporate cash-on-hand of approximately $800 million and undrawn revolver capacity of $100 million.
Colony Capital is a global investment firm that manages a $50 billion portfolio of real assets on behalf of its shareholders and limited partners, including more than $20 billion in digital real estate investments through Digital Colony, its digital infrastructure platform.
