Wednesday, July 16, 2014
LIBOR Plus ?!?!
When United Development Funding IV (UDF) listed on NASDAQ in early June it offered to repurchase up to $35 million of shares at a price of $20.50 per share. The tender offer was oversubscribed by about three times, which was not unexpected. UDF, in a filing last week, disclosed that it is financing the entire share repurchase with a $35 million loan from an entity called Waterfall Finance 4, LLC. The loan has a one-year term and is due July 2, 2015. UDF is paying LIBOR plus 9.0%, and interest is due monthly. LIBOR is currently around .25%, so UDF is paying about 9.25% for the money. I am snarkless.