- Refinances SVB Credit Facility with New Term Loan that
Matures in September 2025
- Increases Capacity and Lowers Cost of Existing Warehouse
Facility to Support New Loan Originations
- Extends Maturity of Warehouse Facility from December 2023 to
September 2025
- Completed Headcount Reduction that Will Result in ~$5
Million of Annualized Savings
- Announcing Fourth Quarter and Full Year 2022 Results and
Filing 10-K in First Half of April
Sunlight Financial Holdings Inc. (“Sunlight Financial”,
"Sunlight" or the “Company”) (NYSE: SUNL), a premier,
technology-enabled point-of-sale finance company, today announced
the signing of a commitment and transaction support agreement
(“CTSA”) with Cross River Bank (“Cross River”) to strengthen the
Company’s balance sheet and bolster liquidity.
The agreement includes a commitment for a new $89 million first
lien term loan (the “New Term Loan”) and modifications to the Cross
River loan program agreement (the “Warehouse Facility”) that
increase availability under the facility, extend its maturity and
reduce its cost. Proceeds from the New Term Loan will be used to
repay outstanding borrowings under the Company’s revolving credit
facility with Silicon Valley Bank (the “SVB Facility”) which
matures on April 26, 2023, to fund deferred proceeds, to pay
certain accrued expenses and for general corporate purposes.
Following funding of the New Term Loan and the termination of the
SVB Facility, Sunlight will have no debt maturities in 2023 or
2024.
“We are pleased to build on our long-standing relationship with
Cross River. This transaction underscores their partner-driven
approach and positions Sunlight to return to profitability
following the dramatic increase in interest rates that has impacted
our industry over the past 12 months,” said Matt Potere, Chief
Executive Officer of Sunlight. “By extending our debt maturities
and improving our liquidity, we remain well-positioned to support
the growth of our solar and home improvement contractor
partners.”
Overview of Commitment and Transaction Support
Agreement
Background. Cross River is the Company’s bank partner
that originates solar and home improvement loans (“Indirect Channel
Loans”) through Sunlight’s proprietary technology platform.
First Lien Secured Term Loan. The CTSA provides for a
committed $89 million secured term loan facility which consists of
two tranches that will mature on September 30, 2025. Both tranches
are secured by a first lien perfected security interest in all of
the Company's assets. Tranche 1 will be used to repay all
outstanding borrowings under the SVB Facility, pay fees and accrued
interest due under the Warehouse Facility and for general corporate
purposes. Tranche 2 will be used for deferred proceeds.
When the New Term Loan is funded, Cross River will receive penny
warrants to purchase approximately 13 million shares of the
Company’s Class A common stock. Cross River will also receive
additional penny warrants to purchase an additional approximately
1.3 million shares of the Company’s Class A common stock every
month the New Term Loan remains outstanding for each of the first
ten months following the funding of the New Term Loan.
Warehouse Facility Cap. The CTSA temporarily increases
the previously-set total loan cap on the Warehouse Facility and
structures the revised loan cap to step down over time with an
option to increase it based on certain conditions. This increased
availability under the Warehouse Facility will allow Sunlight to
continue to originate high-quality loans and support its contractor
partners.
Warehouse Facility Pricing Structure. The CTSA also
reduces the interest and fees payable on loan balances held for
sale in the Warehouse Facility, which will improve Sunlight’s
economics on Indirect Channel Loans.
Definitive Documentation. The CTSA remains subject to the
negotiation and execution of definitive documentation, with respect
to the terms described above, which is expected to be completed in
April 2023.
Advisors. Guggenheim Securities, LLC acted as Sunlight’s
exclusive financial advisor in connection with the negotiation of
the CTSA. McGuireWoods LLP and Weil, Gotshal & Manges LLP
served as legal counsel to Sunlight Financial.
Other Developments
Review of Strategic Alternatives. As previously announced
on November 14, 2022, Sunlight's Board of Directors has undertaken
a review of strategic alternatives for the Company. The CTSA aligns
with the goals of the strategic alternatives process and the Board
is continuing to review additional actions to maximize value.
Headcount Reduction. During March 2023, the Company
implemented a headcount reduction plan that will result in
approximately $5 million of savings on an annualized basis.
NYSE Notification. On March 31, 2023, the Company
received notice from the New York Stock Exchange (the “NYSE”) that
it is not in compliance with Section 802.01C of the NYSE Listed
Company Manual because, as of March 28, 2023, the average closing
price of the Company’s common stock was less than $1.00 over a
consecutive 30 trading-day period. The Company expects to regain
compliance within the required six-month period following receipt
of the NYSE notice. The Company’s common stock will continue to be
listed and trade on the NYSE during this period, subject to the
Company’s compliance with other NYSE continued listing
standards.
Fourth Quarter and Full-Year 2022 Earnings Announcement and
Form 10-K Filing. As previously reported by the Company in its
Notification of Late Filing on Form 12b-25 (the “12b-25”), filed
with the Securities and Exchange Commission ("SEC") on March 17,
2023, Sunlight was unable to file its Annual Report on Form 10-K
(the “10-K”) for the period ended December 31, 2022 within the
prescribed period. The Company was subsequently unable to file its
10-K by March 31, 2023, the end of the extension period to file the
10K as provided by the 12b-25. As a result, the Company received a
notice from the NYSE on April 3, 2023 indicating that it is not in
compliance with Section 802.01E of the NYSE Listed Company Manual,
which requires that NYSE-listed companies timely file all periodic
reports with the SEC.
Sunlight is currently finalizing its 10-K to incorporate recent
developments, including the CTSA, and expects to file the 10-K with
the SEC in the first half of April 2023, significantly prior to the
end of the six-month cure period as provided by Section 802.01E of
the NYSE Listed Company Manual. The Company also intends to
announce its fourth quarter and full-year 2022 financial and
operational results in connection with the filing of its Form
10-K.
Forward-Looking Statements
The information included herein and in any oral statements made
in connection herewith may include “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements may generally be identified by
the use of words such as “could,” “should,” “would,” “will,” “may,”
“believe,” “anticipate,” "outlook," "2022 guidance," “intend,”
“estimate,” “expect,” “project,” “plan,” “continue,” or the
negative of such terms and other similar expressions are intended
to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. These
forward-looking statements are based on management’s current
expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of
future events. Except as otherwise required by applicable law,
Sunlight disclaims any duty to update any forward-looking
statements, all of which are expressly qualified by the statements
in this section, to reflect events or circumstances after the date
hereof. Sunlight cautions you that these forward-looking statements
are subject to numerous risks and uncertainties, most of which are
difficult to predict and many of which are beyond the control of
Sunlight. Such risks and uncertainties include, among others: the
ability to consummate a strategic alternative in the timeframe and
on terms and conditions favorable to the Company and its
stakeholders, material adverse impacts from macro-economic
conditions including unprecedented interest rate increases on
business, profitability and cash-flow, risks relating to our
ability to secure relief from our current bank covenants, risks
relating to the uncertainty of the projected operating and
financial information with respect to Sunlight; risks related to
Sunlight’s business and the timing of expected business milestones
or results; global supply chain shortages, competition for skilled
labor, and permitting delays; the effects of competition and
regulatory risks, and the impacts of changes in legislation or
regulations on Sunlight’s future business; the expiration, renewal,
modification or replacement of the federal solar investment tax
credit, rebates and other incentives; the effects of the COVID-19
pandemic on Sunlight’s business or future results; Sunlight’s
ability to sustain profitability and to attract and retain its
relationships with third parties, including Sunlight’s capital
providers and solar contractors; the financial performance of
Sunlight’s capital providers and contractors; the willingness of
Sunlight’s capital providers to fund loans on terms desired by
relevant markets and economically favorable to Sunlight; the impact
of inflation and increased interest rates on Sunlight’s capital
providers and the cost and availability of credit from our capital
providers as well as on the demand for solar panel installation and
home improvement; changes in the retail prices of traditional
utility generated electricity; the availability of solar panels,
batteries and other components and raw materials; and such other
risks and uncertainties discussed in the “Risk Factors” section of
Sunlight’s Form 10-Q as filed with the Securities and Exchange
Commission (“SEC”) on November 14, 2022, which amends and restates
the risk factors set forth in the Company’s Form 10-K as filed with
the SEC on March 29, 2022 and Forms 10-Q as filed with the SEC on
May 16, 2022 and on August 15, 2022, and other documents of
Sunlight filed, or to be filed, with the SEC. Should one or more of
the risks or uncertainties described herein occur, or should
underlying assumptions prove incorrect, actual results and plans
could differ materially from those expressed in any forward-looking
statements. Sunlight’s SEC filings are available publicly on the
SEC’s website at www.sec.gov.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230403005551/en/
Media:
Investor Relations Lucia Dempsey investors@sunlightfinancial.com
888.315.0822
Public Relations media@sunlightfinancial.com
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