NEW YORK--(BUSINESS WIRE)--AG Mortgage Investment Trust, Inc. (NYSE: MITT) announced today that the Company and certain of its affiliates have entered into a Forbearance Agreement with each of the following financing counterparties: Bank of America, N.A., BofA Securities, Inc., Credit Suisse Securities (USA) LLC, Credit Suisse AG, Credit Suisse International, Barclays Capital Inc., Barclays Bank PLC, Société Général S.A., Wells Fargo Bank, National Association, Wells Fargo Securities, LLC, Goldman Sachs Bank USA and Goldman, Sachs & Co.. As initially announced on March 23, 2020, due to the turmoil in the financial markets resulting from the COVID-19 pandemic, the Company has been engaged in ongoing discussions with its financing counterparties regarding forbearance with respect to the Company's obligations under its financing arrangements.
The Company’s aggregate outstanding financing arrangements with the Participating Counterparties included under the Forbearance Agreement are approximately $750 million as of April 9, 2020, representing approximately 82% of the Company’s recourse financing arrangements outstanding as of the date of the Forbearance Agreement, exclusive of recourse financing arrangements relating to unsettled security sales, which are scheduled to settle Monday, April 13. The Company believes that it has good working relationships with certain other counterparties that are not participating in the Forbearance Agreement and is engaged in continuing discussions with those counterparties.
Under the terms of the Forbearance Agreement, the Participating Counterparties have agreed to forbear from exercising any rights or remedies for 15 days (unless terminated sooner upon the occurrence of certain events) under their respective financing agreements, including selling collateral to enforce margin calls.
In connection with the Forbearance Agreement, the Company also granted the Participating Counterparties a security interest in all assets of the Company, including the proceeds of the Note (as defined below).
During the period covered by the Forbearance Agreement, the Company intends to continue to consider asset sales and explore other potential transactions to reduce its obligations under its financing arrangements and raise cash to bolster its liquidity.
In connection with the Forbearance Agreement, on April, 10, 2020, the Company issued a secured promissory note (the “Note”) to AG REIT Management, LLC, the Company’s external manager (the “Manager”), evidencing a $10 million loan made by the Manager to the Company. The obligations under the Note are guaranteed by certain subsidiaries of the Company. The Note is payable on the earlier to occur of (i) the full and indefeasible payment of the obligations of the Company arising under the repurchase agreements of the Participating Counterparties, and (ii) March 31, 2021. The unpaid principal balance of the Note will accrue interest at a rate of 6.0% per annum. Interest on the Note shall be payable monthly in kind through the addition of such accrued monthly interest to the outstanding principal balance of the Note.
The Manager has agreed to subordinate the obligations of the Company with respect to the Note and liens held by the Manager for the security of the performance of the Company’s obligations under the Note to the Company’s obligations to the Participating Counterparties pursuant to the Forbearance Agreement and related documents.
The terms of the Note were unanimously approved by the independent members of the Board of Directors of the Company.
As previously reported, the Company has engaged Hunton Andrews Kurth LLP as legal counsel and FTI LLC as financial advisor in connection with its financings and related matters.
Evercore has been engaged by the independent members of the Board to advise them in connection with a review of capital raising and strategic options for the Company. Fried Frank Harris Shriver & Jacobson LLP is serving as legal advisor to the independent members of the Board.
ABOUT AG MORTGAGE INVESTMENT TRUST, INC.
AG Mortgage Investment Trust, Inc. is a hybrid mortgage REIT that opportunistically invests in and manages a diversified risk-adjusted portfolio of Agency RMBS and Credit Investments, which include Residential Investments and Commercial Investments. AG Mortgage Investment Trust, Inc. is externally managed and advised by AG REIT Management, LLC, a subsidiary of Angelo, Gordon & Co., L.P., an SEC-registered investment adviser that specializes in alternative investment activities.
