ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
New Revolving Facility
On December 26, 2023, Salem Media Group, Inc. (the “Company”) and its subsidiaries entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Siena Lending Group LLC, as lender (the “New Revolving Lender”), pursuant to which the Company obtained $26,000,000 of senior secured revolving credit commitments (the “New Revolving Facility”).
The commitments under the New Revolving Facility are scheduled to terminate on December 26, 2026. Loans under the New Revolving Facility bear interest at a rate equal to 1-month term SOFR plus 4.50%, subject to a SOFR floor of 4.30%. Unused commitments under the New Revolving Facility are subject to a fee equal to 0.35% per annum. Early termination of the commitments under the New Revolving Facility within the first 30 months after the closing date is subject to an early termination premium.
Extensions of credit under the New Revolving Facility are subject to a borrowing base calculated from the Company’s and its subsidiaries’ eligible accounts receivable and certain mortgaged real estate. The available commitments under the New Revolving Facility are subject to an initial availability block of $3,000,000, which may be reduced to $2,000,000 or $0 depending on achievement of certain EBITDA targets.
Obligations under the New Revolving Facility are secured by a first-priority lien on the Company’s and its subsidiaries’ accounts receivable, inventory, deposit and securities accounts, certain real estate and related assets, and a second-priority lien on substantially all other assets of the Company and its subsidiaries, in accordance with the Intercreditor Agreement referred to below.
The Loan and Security Agreement includes customary affirmative and negative covenants (including reporting requirements), representations and warranties and events of default.
Intercreditor Agreement Amendment
On December 26, 2023, in connection with the New Revolving Facility, the New Revolving Lender and U.S. Bank National Association, as collateral agent with respect to the Company’s 7.125% Senior Secured Notes due 2028, entered into a First Amendment to Intercreditor Agreement (the “Intercreditor Agreement Amendment”), acknowledged by the Company and its subsidiaries, which amends the Intercreditor Agreement, dated as of May 19, 2017, originally entered into by the Prior Revolving Agent and U.S. Bank National Association, as notes collateral agent (as amended, supplemented or otherwise modified, including pursuant to the Intercreditor Agreement Amendment, the “Intercreditor Agreement”).
Copies of the Loan and Security Agreement and the Intercreditor Agreement Amendment are filed with this current report on Form 8-K as Exhibits 10.1 and 10.2, respectively, and incorporated by reference herein. The foregoing descriptions of the Loan and Security Agreement and the Intercreditor Agreement Amendment are qualified in their entirety by reference to the full text of the Loan and Security Agreement and the Intercreditor Agreement Amendment, respectively.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
On December 26, 2023, the Company terminated its existing credit facility (the “Prior Revolving Facility”) with Wells Fargo Bank, National Association, as administrative agent (the “Prior Revolving Agent”), using the proceeds from borrowings under the Loan and Security Agreement to repay all amounts outstanding under the Prior Revolving Facility.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
As described above in Item 1.01, on December 26, 2023, the Company entered into the Loan and Security Agreement. The information included in Item 1.01 of this current report on Form 8-K under the heading “New Revolving Facility” is incorporated herein by reference into this Item 2.03.
ITEM 8.01 OTHER EVENTS
On December 27, 2023, the Company issued a press release announcing entry into the New Revolving Facility by the Company and its subsidiaries. A copy of the press release is being filed as Exhibit 99.1 to this current report on Form 8-K and is incorporated herein by reference.
