StateHouse revises debt obligations

StateHouse Holdings has entered into an agreement with Pelorus Equity Group as Administrative Agent and Collateral Agent to the Credit and Guaranty Agreement, dated as of December 21, 2020, as amended, to extend the repayment date of the Series A Loan Agreement to February 10, 2027 and increase the amount of the Series A Loan. Pursuant to the terms of the Debt Modification Agreement, Pelorus is providing an incremental term loan of $7.521 million, to bring the total principal amount of the Series A Loan Agreement to $15.0 million. The Company will use the funds for repayment of the Series A indebtedness, servicing the Company’s other debts to Pelorus, including any interest owing thereon, and payment of property taxes. Pursuant to the terms of the Debt Modification Agreement, the Pelorus Loan will bear an interest rate of one month Secured Overnight Financing Rate. plus 12.5%, with a SOFR floor of 4.5%. The Pelorus Loan remains subject to certain debt service ratio requirements, interest reserves, certain cross-corporate guarantees and defaults, subordination agreements and intercreditor agreements, along with a general corporate guaranty from the Company. In accordance with the terms of the Debt Modification Agreement the debt service coverage ratio measurement date will be extended to July 2024. As consideration for providing the Pelorus Loan, the Company has agreed to grant to Pelorus 136,258,279 warrants of the Company, amounting to 40% of the Pelorus Loan. The Pelorus Warrants are exercisable, for a period of three years, into common shares of the Company. Pelorus will have the right to a cashless exercise of the Pelorus Warrants. The exercise price of the Pelorus Warrants is adjustable on a weighted-average dilution basis. The distribution of assets or dividends will only be provided to Pelorus upon exercise of the Pelorus Warrants. Pelorus will be prohibited from exercising the Pelorus Warrants if, upon exercise, Pelorus would beneficially own greater than 9.99% of the outstanding common shares of the Company. The Pelorus Warrants cannot be transferred to another party without the consent of the Company, unless the transfer is to an affiliate of Pelorus or the Company is found to be in default of the Pelorus Loan. The holder of the Pelorus Warrants has also been granted a put option, so long as the Pelorus Warrants have not been exercised, to sell the Pelorus Warrants to the Company at a thirty percent discount to their then current exercise price, exercisable via written notice to the Company at least fifteen days prior to the prepayment or maturity date of the Pelorus Loan. If the holder of the Pelorus Warrants fails to exercise this put option during such time period, the put option is deemed void ab initio.