Form 8K Current Report
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________________________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15 (d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): March 24, 2006
____________
FRANKLIN
CREDIT MANAGEMENT CORPORATION
(Exact
name of registrant as specified in its charter)
Delaware
(State
or
other jurisdiction of incorporation)
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0-17771
(Commission
file number)
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75-2243266
(I.R.S.
employer identification no.)
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Six
Harrison Street
New
York, New York
(Address
of principal executive offices)
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10013
(Zip
Code)
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Registrant’s
telephone number, including area code: (202)
604-4402
______________________________________________________________________________
Check
the
appropriate box below in the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
£
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
£
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.
14a-12)
£
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
£
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement.
On
March
24, 2006, Tribeca Lending Corporation ("Tribeca"), a New York corporation and
wholly-owned subsidiary of Franklin Credit Management Corporation, a Delaware
corporation, and one of Tribeca’s subsidiaries (the “Tribeca Subsidiary
Borrower”) entered into a $100,000,000 Master Credit and Security Agreement (the
“New Loan”) with BOS (USA) Inc., an affiliate of Bank of Scotland (the
“Lender”). The proceeds of the New Loan were used to consolidate and refinance
prior term loans made to certain Tribeca subsidiaries. Interest on the New
Loan is payable monthly at a floating rate equal to the Federal Home Loan Bank
of Cincinnati 30 day advance rate (“FHLBC Rate”) plus the applicable margin as
follows:
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If
the FHLBC Rate is
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The
applicable margin is
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Less
than 2.26%
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300
basis points
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2.26
to 4.50%
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275
basis points
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Greater
than 4.50%
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250
basis points
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Upon
repayment of the New Loan, the Lender is entitled to receive a fee equal to
the
lesser of (a) fifty percent (50%) of the remaining payments which are
subsequently paid under the remaining pledged mortgage loans related to the
New
Loan or (b) one-half of one percent (0.50%) of the original principal amount
of
the New Loan.
The
unpaid principal balance of the New Loan will be amortized over a period of
twenty (20) years, but matures on March 24, 2009. The Tribeca Subsidiary
Borrower is required to make monthly amortization payments and payments of
interest on the New Loan.
The
facility contains affirmative, negative and financial covenants customary for
financings of this type, including, among other things, covenants that require
Tribeca and its subsidiaries, together, to maintain a minimum net worth of
at
least $3,500,000 and rolling four-quarter pretax net income of $750,000. The
facility contains events of default customary for facilities of this
type.
Tribeca’s
and the Tribeca Subsidiary Borrower’s obligations under the facility are secured
by (i) a first priority lien on loans acquired by the Tribeca Subsidiary
Borrower that are refinanced by the proceeds of the New Loan and (ii) a second
priority lien on collateral securing loans made to Tribeca or its
subsidiaries under our Master Credit and Security Agreement referred to in
our
Current Report on Form 8-K filed with the Securities and Exchange Commission
on
March 6, 2006 (the “Existing Loan”). In addition, pursuant to a lock-box
arrangement, the lender is entitled to receive substantially all sums payable
to
Tribeca and the Tribeca Subsidiary Borrower in respect of any of the primary
collateral under the facility. Tribeca’s New Loan and the Existing Loan are
cross-collateralized.
On
April
6, 2006, the Company issued a press release, a copy of which is attached hereto
as Exhibit 99.1, announcing the Company’s entry into the New
Loan.
Item
9.01. Financial Statements and Exhibits.
(c)
Exhibits
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Exhibit
No.
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Description
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99.1
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Press
Release, dated April 6, 2006, entitled “Franklin Credit Subsidiary Enters
into $100 Million Credit Facility with Bank of Scotland
Affiliate.”
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
had
duly cause this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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FRANKLIN
CREDIT
MANAGEMENT CORPORATION |
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| Date: April
6, 2006 |
By: |
/s/ Paul
D.
Colasano |
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Name:
Paul D. Colasano |
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Title:
Chief Financial Officer and Executive Vice
President |