An event of default has occurred with respect to $79.25 million
aggregate principal amount of three series of senior notes of
Anthracite Capital, Inc. (NYSE:AHR) (the "Company" or "Anthracite")
as the Company did not cure within 30 days its previously announced
default on interest payments due October 30, 2009 (approximately
$1.6 million). Under the indentures governing these senior notes,
the failure to make an interest payment within a 30-day cure period
after it is due constitutes an event of default. The senior notes
the Company defaulted on are its outstanding $13.75 million
aggregate principal amount of 7.22% senior notes due 2016, $28
million aggregate principal amount of 7.772%-to-floating rate
senior notes due 2017 and $37.5 million aggregate principal amount
of 8.1275%-to-floating rate senior notes due 2017.
While the events of default are continuing, the trustee or the
holders of at least 25% in aggregate principal amount of any of the
three series of the outstanding senior notes may, by a written
notice to the Company, declare the principal amount of such series
of senior notes to be immediately due and payable. As of the time
of this release, the Company has not received any written notice of
acceleration of the senior notes.
The events of default have triggered cross-default provisions in
the Company’s secured bank facilities and its credit facility with
BlackRock Holdco 2, Inc. and, if any debt were accelerated, would
trigger a cross-acceleration provision in the Company’s convertible
notes indenture. If acceleration were to occur, the Company would
not have sufficient liquid assets available to repay such
indebtedness and, unless the Company were able to obtain additional
capital resources or waivers, the Company would be unable to
continue to fund its operations or continue its business.
One of the Company's secured bank lenders, Deutsche Bank, whose
loans to the Company were made under a repurchase agreement, has
informally indicated to the Company that it intends to exercise its
remedy of taking the collateral under the repurchase agreement.
Under the repurchase agreement, Deutsche Bank must give the Company
at least five business days' written notice before it may exercise
this remedy. As of the time of this release, the Company has not
received any such written notice from Deutsche Bank. Approximately
$58 million principal amount of indebtedness remains outstanding
under the Company’s repurchase facility with Deutsche Bank.
The Company is discussing the events of default and situation
with certain of its creditors, but there can be no assurance that
such discussions will result in the continuing operations of the
Company.
Currently, the cash flows from substantially all of the
Company’s assets are being diverted to a cash management account
for the benefit of the Company’s secured bank lenders due to the
continuation of the Company’s default on amortization payments
required under such secured bank facilities.
Management’s assessment of the Company’s liabilities and the
current market value of the Company’s assets suggests that, in the
event of a reorganization or liquidation of the Company in the near
term, shareholders would not receive any value and the value
received by the Company’s unsecured creditors would be minimal.
Forward-Looking Statements
This release, and other statements that Anthracite may make, may
contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, with respect to
Anthracite's future financial or business performance, strategies
or expectations. Forward-looking statements are typically
identified by words or phrases such as "trend," "potential,"
"opportunity," "pipeline," "believe," "comfortable," "expect,"
"anticipate," "current," "intention," "estimate," "position,"
"assume," "outlook," "continue," "remain," "maintain," "sustain,"
"seek," "achieve," and similar expressions, or future or
conditional verbs such as "will," "would," "should," "could," "may"
or similar expressions.
Anthracite cautions that forward-looking statements are subject
to numerous assumptions, risks and uncertainties, which change over
time. Forward-looking statements speak only as of the date they are
made, and Anthracite assumes no duty to and does not undertake to
update forward-looking statements. Actual results could differ
materially from those anticipated in forward-looking statements and
future results could differ materially from historical
performance.
In addition to factors previously disclosed in Anthracite's SEC
reports and those identified elsewhere in this release, the
following factors, among others, could cause actual results to
differ materially from forward-looking statements or historical
performance: (1) as a result of its liquidity position, current
commercial real estate market conditions and the uncertainty
relating to its ability to meet covenants in restructured
agreements, substantial doubt about the Company's ability to
continue as a going concern; (2)the Company's ability to meet its
liquidity requirements to continue to fund its operations,
including its ability to renew its existing secured credit
facilities or obtain additional sources of financing, to meet
amortization payments under the facilities and to service debt
(including interest payment obligations not paid when originally
due); (3) the Company's ability to obtain amendments and waivers in
the event that a secured bank lender terminates a facility before
the maturity date or events of default occur under the Company's
debt obligations due to a covenant breach or otherwise; (4) the
Company's ability to maintain listing on the NYSE; (5) the
introduction, withdrawal, success and timing of business
initiatives and strategies; (6) changes in political, economic or
industry conditions, the interest rate environment, financial and
capital markets or otherwise, which could result in changes in the
value of the Company's assets and liabilities, including net
realized and unrealized gains or losses, and could adversely affect
the Company's operating results; (7) the relative and absolute
investment performance and operations of BlackRock Financial
Management, Inc. (the ''Manager''), the Company's Manager; (8) the
impact of increased competition; (9) the impact of future
acquisitions or divestitures; (10) the unfavorable resolution of
legal proceedings; (11) the impact of legislative and regulatory
actions and reforms and regulatory, supervisory or enforcement
actions of government agencies relating to the Company or the
Manager; (12) terrorist activities and international hostilities,
which may adversely affect the general economy, domestic and global
financial and capital markets, specific industries, and the
Company; (13) the ability of the Manager to attract and retain
highly talented professionals; (14) fluctuations in foreign
currency exchange rates; and (15) the impact of changes to tax
legislation and, generally, the tax position of the Company.
Anthracite's Annual Report on Form 10-K for the year ended
December 31, 2008 and Anthracite's subsequent filings with the SEC,
including its Quarterly Report on Form 10-Q/A for the quarter ended
June 30, 2009, which are accessible on the SEC's website at
www.sec.gov, identify additional factors that can affect
forward-looking statements.
To learn more about Anthracite, visit our website at
www.anthracitecapital.com. The information contained on the
Company's website is not a part of this release.
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