NewStar Enters Into $125 Million Facility With Wells Fargo to Fund New Origination
Completed a $125 million multi-year, non-recourse credit facility with Wells Fargo Bank to amend the existing credit facility which had an outstanding balance of $13 million
Improved advance rates and added flexibility to fund a wider range of lending activity
Attractive pricing reflective of improvement in funding markets
Three and one-half year term structured with an 18 month ramp-up and revolving period followed by a 24 month amortization period
Flexibility to refinance through securitization or amortize through contractual maturity
Represents another step in our strategy to fund loan growth by re-levering the balance sheet
BOSTON, July 14, 2011 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS), a specialized commercial finance company, today announced that it has entered into an amended credit facility with Wells Fargo Bank to expand, extend and re-price its existing facility with Wells Fargo and support future loan growth. The financing provides nearly $200 million of lending capacity and flexibility to fund a wider range of lending activity. Advance rates under the credit facility range from 65% to 70% based on the type of loans pledged as collateral. It has a three and one-half year contractual term structured with an 18 month revolving, ramp-up period to support new lending activity, which is followed by a 24 month amortization period. The term structure provides the flexibility to refinance through securitization of the loan pool, extend the revolving period with the mutual consent of both
parties, or amortize the facility through its contractual maturity, which reduces potential mis-matches in duration. In addition to favorable changes in those key terms, pricing for the new deal was reduced, reflecting improvement in the funding markets and the purpose of the financing.
"This deal represents another important step in our strategy to fund loan growth and re-lever the balance sheet," said Tim Conway, Chairman and Chief Executive Officer. "We are excited to be doing another deal with Wells Fargo and value their relationship with us as a lead bank," he added.
Commenting on the credit facility, NewStar Treasurer John Frishkopf added, "This deal clearly validates our funding strategy. It not only adds new lending capacity to support loan growth, but also positions NewStar to return to the securitization markets as a programmatic issuer. The CLO market continues to improve for issuers such as NewStar. The Wells Fargo team continues to provide us exceptional value through a powerful combination of capital, market perspective and a relationship approach that brings it all together."About NewStar Financial
NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle market. The Company specializes in providing senior secured debt financing options to mid-sized companies to fund working capital, growth strategies, acquisition and recapitalization, as well as, equipment purchases. NewStar originates loans and leases directly through a team of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $35 million and selectively underwrites or arranges larger transactions for syndication to other lenders.
NewStar is headquartered in Boston MA and has regional offices in Darien CT, Chicago IL, Dallas TX, Los Angeles CA, and Philadelphia PA. For more detailed transaction and contact information, please visit our website at www.newstarfin.com.
The NewStar Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4044Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financing plans, strategic plans, objectives and business including: expected growth in future origination volume; ability to re-lever our balance sheet and fund loan growth; and our ability to return to the securitization markets as a programmatic issuer. As such, they are subject to material risks and uncertainties, including the state of the economy in general and the financial services industry in particular; our limited operating history; our ability to compete effectively in an increasingly competitive industry; and the impact of federal, state and local
laws and regulations that govern non-depository commercial lenders and businesses generally.
More detailed information about these risk factors can be found in NewStar's filings with the Securities and Exchange Commission, including Item 1A ("Risk Factors") of our 2010 Annual Report on Form 10-K, as they may be supplemented by the Risk Factors contained in our Quarterly Reports on Form 10-Q. NewStar is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.CONTACT: Robert K. Brown
500 Boylston St., Suite 1250
Boston, MA 02116