Sunlight Financial Announces Comprehensive Financing Plan that Strengthens Balance Sheet and Bolsters Liquidity
Sunlight Financial, a technology-enabled point-of-sale finance company, announced a new commitment and transaction support agreement with Cross River Bank, including an $89 million secured term loan that matures in
- Refinanced SVB credit facility with a new $89 million term loan maturing in September 2025.
- Increased loan capacity and reduced costs under the Warehouse Facility.
- Implemented a headcount reduction plan expected to save ~$5 million annually.
- No debt maturities expected in 2023 or 2024.
- Received notice of non-compliance from NYSE due to stock price falling below $1.00.
- Delayed filing of 10-K report caused NYSE non-compliance notice.
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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
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Extends Maturity of Warehouse Facility from
December 2023 toSeptember 2025 -
Completed Headcount Reduction that Will Result in
~ of Annualized Savings$5 Million - Announcing Fourth Quarter and Full Year 2022 Results and Filing 10-K in First Half of April
The agreement includes a commitment for a new
“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
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
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
Advisors.
Other Developments
Review of Strategic Alternatives. As previously announced on
Headcount Reduction. During
NYSE Notification. On
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
Sunlight is currently finalizing its 10-K to incorporate recent developments, including the CTSA, and expects to file the 10-K with the
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
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FAQ
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