GWG gets default waiver under loan, but bankruptcy may be approaching

By Sarah Lizee

Olympia, Wash., April 7 – GWG Holdings, Inc. said that on March 31, subsidiary GWG DLP Funding VI, LLC and lender National Founders LP entered into a waiver and amendment to GWP DLP’s credit agreement to waive an event of default that had resulted from insufficient funds in a reserve account established under the facility.

The amendment also provided for an additional advance by National Founders of $4 million, of which $1 million was used by GWP DLP to pay an amendment fee to National Founders, according to an 8-K filed with the Securities and Exchange Commission.

The amendment also provides that a prepayment premium will be due under the credit agreement upon an acceleration of the loans, but the provision providing for the prepayment premium will not become effective unless National Founders or one of its affiliates makes an initial loan of at least $10 million under a debtor-in-possession credit agreement with the company or its subsidiary, GWG Life, LLC.

That provision will cease to be effective if a final order of an applicable bankruptcy court approving the DIP facility is not entered due to National Founders being unable or unwilling to participate in the DIP facility.

The company also said that on April 4, it received a letter from the listing qualifications department of the Nasdaq Stock Market notifying the company that it was not in compliance with certain requirements as a result of not having filed its annual 10-K for the fiscal year ended Dec. 31 in time.

GWG said the letter has no immediate effect on the listing or trading of its common stock on the Nasdaq Capital Market.

The letter states that the company is required to submit a plan to regain compliance within 60 calendar days from the date of the letter. If the plan is accepted by Nasdaq, then Nasdaq can grant the company up to 180 calendar days from the due date of the 10-K to regain compliance.

GWG is a life insurance company based in Minneapolis.

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