UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Item 1.01 Entry into a Material Definitive Agreement.
Indenture and 3.750% Senior Secured Notes due 2027
On October 5, 2021, Blackstone Mortgage Trust, Inc. (the “Company”) completed its previously announced offering of $400 million aggregate principal amount of its 3.750% Senior Secured Notes due 2027 (the “Notes”) under an indenture, dated as of October 5, 2021 (the “Indenture”), among the Company, certain of its wholly owned subsidiaries, as guarantors (the “Guarantors”), and The Bank of New York Mellon Trust Company, N.A., as trustee and notes collateral agent (the “Trustee”). The Notes were issued in a private offering to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act. The Notes and related guarantees are subject to restrictions on transfer and may only be offered or sold in transactions exempt from or not subject to the registration requirements of the Securities Act and other applicable securities laws.
The Company intends to use the net proceeds of the offering to pay down a portion of its existing secured debt.
The Notes bear interest at a rate of 3.750% per year, payable semi-annually in arrears on January 15 and July 15 of each year, commencing on July 15, 2022. The Notes will mature on January 15, 2027, unless earlier redeemed.
The following is a brief description of the terms of the Notes and the Indenture.
Optional Redemption
The Company may redeem the Notes at any time, in whole or in part, prior to their maturity. The redemption price for the Notes that are redeemed before October 15, 2026 will be equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of, and accrued and unpaid interest, if any, to but not including, the applicable date of redemption. The redemption price for the Notes that are redeemed on or after October 15, 2026 is equal to 100% of the principal amount thereof, plus accrued and unpaid interest on the Notes redeemed, if any, to but not including the applicable date of redemption.
In addition, the Company may redeem the Notes in an aggregate principal amount not to exceed 40% of the aggregate principal amount of the Notes originally issued at its option using the proceeds of certain equity offerings completed before October 15, 2023 at a redemption price of 103.750%, plus accrued and unpaid interest, if any, to, but excluding, the applicable date of redemption.
Change of Control
If a Change of Control Triggering Event (as defined in the Indenture) occurs, the Company will be required (unless the Company has exercised its right to redeem all of the Notes by sending a notice of redemption) to offer to repurchase all of the outstanding Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest to, but excluding, the applicable Change of Control Payment Date (as defined in the Indenture).
Guarantees
The Notes will be fully and unconditionally guaranteed on an unsubordinated secured basis by each wholly owned subsidiary of the Company that is a domestic subsidiary or that guarantees or becomes a borrower under any other First Lien Obligations (as defined in the Indenture) and after a Collateral Fall-Away Event (as defined in the Indenture), certain capital markets indebtedness and other indebtedness of the Company and its subsidiaries, subject to certain customary exceptions.
Ranking
The Notes and the guarantees are senior secured obligations of the Company and the Guarantors and rank:
| • | pari passu in right of payment with all of the Company’s and Guarantors’ existing and future unsubordinated indebtedness including indebtedness under the Company’s Term Loan Credit Agreement (as defined in the Indenture); |
| • | senior in right of payment to any of the Company’s and Guarantors’ future subordinated indebtedness and subordinated guarantees; |
| • | effectively senior to all of the Company’s and Guarantors’ existing and future indebtedness that is unsecured or that is secured by a junior lien, in each case to the extent of the value of the Collateral (as defined in the Indenture); and |
| • | effectively subordinated in right of payment to all of the Company’s and Guarantors’ existing and future indebtedness, guarantees and other liabilities (including trade payables) that is secured by Liens (as defined in the Indenture) on assets that do not constitute a part of the Collateral to the extent of the value of such assets securing such indebtedness. |
In addition, the Notes rank structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s existing and future subsidiaries that do not guarantee the Notes.
Security
Pursuant to a pledge and security agreement, dated as of October 5, 2021 (the “Pledge and Security Agreement”), among the Company, the Guarantors and the Trustee, in its capacity as notes collateral agent, the Notes are secured on a first-priority basis by substantially all of the assets of the Company and the Guarantors to the extent such assets are subject to a lien securing the obligations under the Company’s Term Loan Credit Agreement or any other First Lien Obligations, subject to liens not prohibited under the Indenture or the agreement governing the Term Loan Credit Agreement. Upon the occurrence of a Collateral Fall-Away Event, the Notes and the guarantees will become unsecured. The assets securing the Notes and the Company’s obligations under the Term Loan Credit Agreement are also subject to a first lien intercreditor agreement, dated as of October 5, 2021 (the “Intercreditor Agreement”), among the Company, JPMorgan Chase Bank, N.A., as agent under the Term Loan Credit Agreement, and the Trustee, in its capacity as trustee and notes collateral agent.
Covenants
The Indenture contains covenants that, subject to a number of exceptions and adjustments, among other things:
| • | limit the ability of the Company and its subsidiaries to incur additional indebtedness and secured indebtedness; |
| • | require that the Company maintains (i) prior to a Collateral Fall-Away Event, a Total Debt to Total Assets Ratio (as defined in the Indenture) of not greater than 83.333% and (ii) from and after a Collateral Fall-Away Event, a Total Unencumbered Assets to Total Unsecured Indebtedness Ratio (as defined in the Indenture) of not less than 1.20 to 1.00; and |
| • | impose certain requirements in order for the Company or any of the Guarantors to merge or consolidate with or transfer all or substantially all of their respective assets to another person. |
Events of Default
The Indenture also provides for Events of Default (as defined in the Indenture) which, if any of them occurs, would permit or require the principal of and accrued and unpaid interest on all the outstanding Notes to become or to be declared due and payable.
The foregoing summary description of certain terms of the Indenture is qualified in its entirety by reference to the Indenture, a copy of which is attached hereto as Exhibit 4.1 (which includes the form of 3.750% Senior Secured Notes due 2027 filed as Exhibit 4.2), each of which is incorporated herein by reference. In addition, copies of the Pledge and Security Agreement and Intercreditor Agreement are attached hereto as Exhibits 4.3 and 4.4, respectively, each of which is also incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 is incorporated by reference into this Item 2.03.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BLACKSTONE MORTGAGE TRUST, INC. | ||||||
| Date: October 5, 2021 | ||||||
| By: | /s/ Anthony F. Marone, Jr. | |||||
| Name: | Anthony F. Marone, Jr. | |||||
| Title: | Chief Financial Officer | |||||