Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation under an Off-Balance Sheet Arrangement.
As previously disclosed, on May 5, 2017, Excel Corporation (the “Company”) received a written notice (the “Notice”) from GACP Finance Co, LLC (“GACP”) that the Company was in default under the terms of that certain Loan and Security Agreement dated November 2, 2016, among GACP, as agent, the lenders party thereto, the Company, as borrower, and certain subsidiaries of the Company as guarantors (the “Original Loan Agreement”) and the First Amendment and Waiver to Loan and Security Agreement, entered into as of January 26, 2017 (the “Amendment” and, together with the Original Loan Agreement, the “Loan Agreement”). GACP stated in the Notice that the Company was in default under the Loan Agreement for failure to perform certain covenants and conditions under the Loan Agreement, including, without limitation, (i) the Company’s obligations to file a proxy statement providing for the appointment of an independent member to the Company’s Board of Directors (the “Board”), (ii) the Company’s failure to meet the minimum liquidity requirements set forth in the Loan Agreement as of March 31, 2017 and (iii) the Company’s failure to maintain certain EBITDA levels required under the Loan Agreement. Pursuant to the Notice, GACP terminated its commitment to lend or extend credit under the Loan Agreement and, as a result of the default, GACP may declare all amounts under the Loan Agreement due and payable.
On September 27, 2017, the Company received a supplemental notice from GACP, pursuant to which GACP demanded immediate payment from the Company of all obligations owing to the lenders under the Loan Agreement and served notification on the Company of GACP’s intended disposition of collateral pursuant to the terms of the Loan Agreement, such collateral consisting of equity interests in each of the Company’s wholly-owned subsidiaries.
As of the date of this Current Report on Form 8-K, the principal due under the Loan Agreement is $13,534,713.51.
The foregoing description of the Original Loan Agreement is not complete and is qualified in its entirety by reference to the full text of the Original Loan Agreement, a copy of which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 2, 2016 and incorporated by reference herein. The foregoing description of the Amendment is not complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.2 hereto and incorporated by reference herein.
The Company is currently in discussions with GACP regarding a forbearance agreement. There can be no assurances that the Company will be able to enter into a forbearance agreement with GACP.
