Item 1.01. Entry into a Material Definitive Agreement
On December 23, 2024 (the "Closing Date"), Binah Capital Group, Inc., a Delaware corporation (the "Borrower" or the "Company"), entered into a Credit Agreement (the "Credit Agreement") with Byline Bank, as lender (the "Lender"), pursuant to which the Lender agreed, at the Borrower's request, to (i) make to the Borrower a term loan in the original principal amount of $20,300,000 (the "Term Loan"), which was funded on the Closing Date; (ii) make to the Borrower, from time to time, certain non-revolving loans (the "Non-Revolving Loans") in an aggregate principal amount of up to $1,000,000 (the "Non-Revolving Loan Commitment"), to be funded through, but excluding, the Maturity Date (as defined below); and (iii) issue to the Borrower, from time to time, letters of credit (the "Letters of Credit" and together with the Term Loan and Non-Revolving Loans, the "Loans") until the earliest to occur of (x) the one year from the Closing Date and (b) the date on which the Non-Revolving Loans are fully drawn.
Under the terms of the Credit Agreement, tothe extent that the Borrower requests a Letter of Credit, the Non-Revolving Loan Commitment shall be permanently reduced in an amount equal to the amount of such Letter of Credit. The Non-Revolving Loans may not be requested by the Borrower and may only be advanced in connection with a repayment of a Letter of Credit ("LC Payment").
The Loans (both principal and interest) made by the Lender to the Borrower is scheduled to mature and become immediately due and payable in full on December 23, 2029. The obligations under the Credit Agreement shall bear interest (i) as to the Term Loan, a per annum variable interest rate equal to the Applicable Margin (as defined in the Credit Agreement) plus the greater of (x) the Term SOFR (as defined in the Credit Agreement) and (y) one percent (1.00%) (the "Term Loan Interest Rate"); (ii) as to the Non-Revolving Loans or any reimbursement obligations relating to a Letter of Credit, at an interest rate equal to the Term SOFR plus four percent (4.00%) per annum; and (iii) if any other obligations is created under the Loan Documents (as defined in the Credit Agreement), at the Term Loan Interest Rate.
The Term Loan must be used by the Borrower to refinance Existing Credit Facilities (as defined in the Credit Agreement) and the Non-Revolving Loans must be used solely to reimburse the Lender with respect to any Letters of Credit issued to the Borrower.
The Credit Agreement also includes customary covenants for a transaction of this type, including covenants limiting the indebtedness that can be incurred by the Borrower and restricting the Borrower's ability to make certain loans and investments. Additionally, the Borrower is subject to financial covenants whereby the Borrower and its subsidiaries on a consolidated basis may not have, as of the last day of each fiscal quarter, commencing with fiscal quarter ending on March 31, 2025, (1) a fixed charge coverage ratio as of the last day of the fiscal quarter for the twelve (12) month period then ended of not less than 1.20 to 1.00; (ii) a senior net leverage ratio as of the last day of such Fiscal Quarter for the twelve (12) month period then ended, of (A) for the fiscal quarter ended March 31, 2025 and each fiscal quarter through and including September 30, 2025, not more than 3.00 to 1.00; and (B) for the fiscal quarter ended December 31, 2025 and each fiscal quarter ending thereafter, not more than 2.75 to 1.00; or (iii) an annualized revenue received from custodians of at least $18,000,000.00.
This summary is qualified in its entirety by reference to the text of the Credit Agreement, which is included as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.