Item 2.03. Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant.
The disclosure set forth in Item 8.01 of this Current Report on Form8-K is incorporated herein by reference.
Item 8.01. Other Events.
On September 5, 2018 (the “Redemption Date”), the parent company of Newmark Group, Inc. (“Newmark”), BGC Partners, Inc. (“BGC Partners” or “BGC”), redeemed all of the $112.5 million outstanding aggregate principal amount of its 8.125% Senior Notes due 2042 (the “8.125% Notes”) as described in more detail below. In connection therewith, on September 4, 2018, Newmark Partners, L.P. (“Newmark OpCo”) borrowed $112.5 million from BGC Partners, L.P. (“BGC U.S. OpCo”) pursuant to the existing Amended and Restated Credit Agreement, dated as of March 19, 2018, between Newmark and BGC, which loan bears interest at an annual rate equal to 6.5% (such loan, the “Intercompany Loan”). Newmark OpCo used the proceeds of the Intercompany Loan to repay the $112.5 million BGC Note (defined and described further below). The Board of Directors and Audit Committee of each of Newmark and BGC approved the Intercompany Loan.
The transactions described above will result in an interest rate savings to Newmark of 1.625% per annum. Newmark expects to refinance this debt as a condition of pursuing atax-freespin-off from BGC. As a result of such refinancing, Newmark would repay this borrowing from BGC and may be able to generate further interest rate savings.
As previously disclosed, on December 13, 2017, prior to the closing of the initial public offering of Newmark, BGC Partners, BGC Holdings, L.P., BGC U.S. OpCo and their respective subsidiaries (other than the Newmark group (defined below), the “BGC group”) transferred to Newmark, Newmark Holdings, L.P. and Newmark OpCo and their respective subsidiaries (the “Newmark group”) the assets and liabilities of the BGC group relating to BGC’s Real Estate Services business (the “Separation”). In connection with the Separation, BGC Partners retained the right to receive payments in respect of certain note obligations owed to BGC Partners by BGC U.S. OpCo that were assumed by Newmark OpCo, including a note issued by BGC U.S. OpCo to BGC Partners in connection with the issuance by BGC of the 8.125% Notes, in the aggregate principal amount of $112.5 million, referred to as the “BGC Note.”
BGC’s 8.125% Notes were issued pursuant to an Indenture, dated as of June 26, 2012, as supplemented by the First Supplemental Indenture, dated as of June 26, 2012, between BGC and U.S. Bank National Association, as trustee. BGC redeemed the 8.125% Notes at a redemption price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest to, but excluding, the Redemption Date. In connection with the redemption, under the terms of the BGC Note, Newmark OpCo was required to repay to BGC Partners the $112.5 million aggregate principal amount of the BGC Note, plus accrued and unpaid interest to, but excluding, the Redemption Date. As noted above, the Intercompany Loan was used to fund Newmark OpCo’s repayment of the BGC Note.
A copy of Newmark’s and BGC’s joint press release announcing the completion of the Redemption is filed as Exhibit 99.1 to this Current Report on Form8-K and incorporated by reference herein.
Discussion of Forward-Looking Statements about Newmark and BGC Partners, Inc.
Statements in this document regarding Newmark and BGC that are not historical facts are “forward-looking statements” that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. Except as required by law, Newmark and BGC undertake no obligation to update any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Newmark’s and BGC’s Securities and Exchange Commission filings, including, but not limited to, the risk factors set forth in these filings and any updates to such risk factors contained in subsequent Forms10-K, Forms10-Q or Forms8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The exhibit index set forth below is incorporated by reference in response to this Item 9.01.
