MFA Financial entered into a $500 million senior secured term loan facility, with Wilmington Trust serving as as administrative agent and collateral agent.

The loans under the Term Loan Facility are expected to be funded on or about June 26, 2020 (the “Funding Date”). Proceeds from the Term Loan Facility are expected to be used to (a) repay a portion of the outstanding repurchase agreement financing obligations of the Company’s subsidiaries, (b) pay accumulated but unpaid dividends in respect of the Company’s outstanding 7.50% Series B Cumulative Redeemable Preferred Stock and 6.50% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, (c) provide the Borrower with working capital and (d) pay the fees and expenses related to the transactions contemplated thereby. The maturity date for the term loans is the sixth anniversary of the Funding Date.

Guarantees and Collateral

The Borrower’s obligations under the Term Loan Facility will be guaranteed by the Company and certain of its subsidiaries (such subsidiaries, collectively, the “Subsidiary Guarantors”). The obligations of the Company, the Borrower and the Subsidiary Guarantors under the Term Loan Facility will be secured by pledges of certain equity interests held by the Company, the Borrower and the Subsidiary Guarantors.

Interest and Fees

The term loans will be issued with original issue discount of 1%. Interest on the outstanding principal amount of the term loans will accrue at a rate of 11% per annum until the third anniversary of the Funding Date. Prior to the third anniversary of the Funding Date, a portion of such interest, in an amount equal to up to 3% per annum, may be capitalized, compounded and added to the unpaid principal amount of the term loans. The interest rate on the term loans will increase by 1% per annum on the third anniversary of the Funding Date and by an additional 1% per annum on each subsequent anniversary of the Funding Date. Upon the occurrence and during the continuance of an event of default under the Term Loan Facility, the principal amount of all term loans outstanding and, to the extent permitted by applicable law, any interest payments on such term loans or any fees or other amounts owing under the Term Loan Facility that, in either case, are then overdue, would thereafter bear interest at a rate that is 2% per annum in excess of the interest rate otherwise payable on the term loans.