The Latest With OnDeck
A Week after OnDeck reported Q1 earnings, the company experienced its first early amortization event brought on by the COVID-19 crisis.
The news was publicized in a May 11th filing with the SEC:
On May 7th, an early amortization event occurred with respect to the Series 2019-1 notes issued by OnDeck Asset Securitization Trust II LLC, or ODAST II as a result of an asset amount deficiency in that Series. Beginning on the next payment date under the ODAST II Agreement, all remaining collections held by ODAST II, after payment of accrued interest and certain expenses, will be applied to repay the principal balance of the Series 2018-1 notes and the Series 2019-1 notes on a pro rata basis.
The company also revealed that it had amended a debt facility “so that no borrowing base deficiency shall occur during the period from April 27, 2020 to July 16,2020.”
On May 15th, OnDeck notified shareholders of additional events and maneuvers through a new filing published after the closing bell. The filing stated that:
On May 12th, a similar event happened with the 2018-1 notes as had happened with the 2019-1 notes.
On May 14th, OnDeck modified the terms of a debt facility so that “from March 11, 2020 to August 31, 2020, receivables granted temporary relief in response to the COVID-19 pandemic will generally not be considered delinquent […] so long as such receivable is paying in accordance with its modified terms.”
Also on May 14th, OnDeck obtained a temporary waiver on another debt facility. “Under the waiver, the lenders temporarily waived the occurrence and existence of reported borrowing base deficiencies and any failure to cure such deficiency amount, in each case, until the close of business on May 19, 2020.” OnDeck accepted the waiver with the understanding it would enter into a broader amendment to remain in compliance with performance and other criteria in light of increased delinquency and other portfolio dynamics that result from COVID-impacted loans. “If such an amendment is not entered into or if the borrowing base deficiency is not otherwise cured, the borrowing base deficiency would constitute an event of default under the ODAF II Facility at close of business on May 19, 2020.”
The 19th is tomorrow.
A similar waiver was obtained for another debt facility. The company has until May 20th to enter into a broader amendment to remain in compliance on that one.
The company is in a fight for its survival. In late April, OnDeck “suspended nearly all new term loan and line of credit originations and previously ceased all equipment finance lending.” The company reported that it is “focused on liquidity and capital preservation and expects there will be a significant portfolio contraction, reflecting an 80% or more reduction in the second quarter origination volume.”
The stock closed at 64 cents on Friday and a market cap of only $37.3M. Shares had traded over $4 earlier in the year.
On May 7th, shareholders voted overwhelmingly in favor of keeping CEO Noah Breslow on the company’s board of directors.Last modified: May 18, 2020
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.