- Current report filing (8-K)
12 February 2010 - 10:07PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported): February 11, 2010 (February 8, 2010)
JER Investors
Trust Inc.
(Exact Name of Registrant as Specified in Charter)
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Maryland
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001-32564
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75-3152779
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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1650 Tysons Boulevard, Suite 1600, McLean, VA
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22102
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrants telephone number, including area code (703) 714-8000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.04
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Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
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On February 8, 2010, an event of default occurred with respect to the $70.3 million aggregate principal amount of Junior Subordinated
Notes due 2037 (the Notes) issued by JER Investors Trust Inc. (the Company) under the Junior Subordinated Indenture between the Company and The Bank of New York Mellon Trust Company, N.A. (the Trustee), dated as
of May 29, 2009 (the Indenture). The Company failed to make an interest payment on the Notes of $87,892 due on February 1, 2010, and did not cure such default within the permitted grace period. During the continuance of an
event of default, the Trustee or holders of not less than 25% aggregate principal amount of the Notes have the right to accelerate the Companys obligation to pay the principal amount and accrued interest on the Notes. The Company has not
received notice from the Trustee or the holders of the Notes accelerating such obligations. Upon an acceleration of payments, the Company would become obligated to pay to $70.4 million to the holders of the Notes.
JERIT Finance Co JPM, LLC (JERIT Finance), a wholly owned subsidiary of the Company, maintains a Master Repurchase Agreement
with J.P. Morgan Securities Inc. (J.P. Morgan), dated as of September 12, 2008, as amended on December 17, 2008, December 21, 2009 and January 21, 2010 (the Repurchase Agreement). The Company provided
a Guaranty, dated as of September 12, 2008, as amended on September 26, 2008, December 17, 2008 and December 21, 2009 (the Guaranty), to J.P. Morgan in respect of JERIT Finances obligations under the
Repurchase Agreement. JERIT Finances borrowings under the Repurchase Agreement were $6.2 million as of February 10, 2010.
The Repurchase Agreement provides that a default which permits the acceleration of the Companys indebtedness (including the Notes) of at least $1.0 million would also constitute an event of default under the Repurchase Agreement,
thereby permitting an acceleration of JERIT Finances obligations under the Repurchase Agreement. On January 8, 2010, an event of default occurred under the ISDA Master Agreement between the Company and National Australia Bank Limited,
dated as of December 1, 2004, as amended on March 3, 2009, July 9, 2009, October 7, 2009 and December 7, 2009 (the Swap Agreement), thereby permitting J.P. Morgan to accelerate JERIT Finances
obligations under the Repurchase Agreement. J.P. Morgan has not yet accelerated JERIT Finances obligations under the Repurchase Agreement. In the event that J.P. Morgan elects to accelerate due to an event of default on either the Notes or the
Swap Agreement, the collateral that serves as security for the Repurchase Agreement may be liquidated or seized by J.P. Morgan in order to satisfy JERIT Finances outstanding borrowings. To the extent that the proceeds of the liquidation or
credit for the seizure of such collateral are insufficient to satisfy outstanding borrowings, and JERIT Finance is not able to finance or refinance such deficiency, J.P. Morgan could make a further claim against the Company for the difference as the
Repurchase Agreement is fully recourse to the Company.
The Company does not expect that it would have sufficient liquid
assets available to pay its obligations under the Indenture or the Guaranty if such obligations were to be accelerated, and the Company would be unable to fund its operations or to continue its business, in which case the Company could be subject to
reorganization or liquidation. Managements assessment of the Companys liabilities and the current market value of the Companys assets suggests that, in the event of such a reorganization or liquidation of the Company, the
Companys stockholders would not receive any value and the Companys unsecured creditors would receive little if any value.
The Indenture was filed as Exhibit 4.1 to the Companys Current Report on Form 8-K filed on June 4, 2009. The Guaranty, the Second Amendment thereto, and the Repurchase Agreement were filed as Exhibits 10.1, 10.2 and 10.3,
respectively, to the Companys Current Report on Form 8-K filed on December 23, 2008. The Second Amendment to the Repurchase Agreement and the Third Amendment to the Guaranty were filed as Exhibits 10.1 and 10.2, respectively, to the
Companys Current Report on Form 8-K filed on December 22, 2009. The Third Amendment to the Repurchase Agreement was filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on January 25, 2010.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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JER Investors Trust Inc.
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(Registrant)
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Date: February 11, 2010
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By:
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/s/ J. Michael McGillis
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Name:
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J. Michael McGillis
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Title:
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Chief Financial Officer
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