Blueprint
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Current
Report Pursuant to Regulation A
Date
of Report: December 30, 2019
(Date of earliest
event reported)
RED
OAK CAPITAL FUND III, LLC
(Exact
name of issuer as specified in its charter)
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Delaware
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84-2079441
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(State or other
jurisdiction of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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625
Kenmoor Avenue SE, Suite 211
Grand
Rapids, Michigan 49546
(Full
mailing address of principal executive offices)
(616)
734-6099
(Issuer’s
telephone number, including area code)
Title of each class of securities issued
pursuant to Regulation A: Senior Secured Bonds
ITEM 1. FUNDAMENTAL CHANGE
On
December 30, 2019, Red Oak Capital Fund, III, LLC, a Delaware
limited liability company (“we,” “us,”
“our,” or the “Company”), executed a
Commercial Loan Agreement (the “Loan Agreement”)
pursuant to which the Company, as the lender, provided a $5,100,000
senior secured loan (the “Loan”) to Breda, LLC, a Maine
limited liability company (the
“Borrower”).
The
Loan is evidenced by a Commercial Promissory Note executed by the
Borrower in favor of the Company in the principal amount of
$5,100,000 (the “Note”). The Loan carries a fixed
interest rate of eleven percent (11.0%) during the term of the Loan
and will mature, and is payable, on December 30, 2020. The Borrower
may extend the term of the Loan for two six-month periods, subject
to certain conditions, including payment by the Borrower of 1.0% of
the then outstanding and unpaid principal amount under the Loan at
the time of exercise of each extension and an increase of 0.5% in
the interest rate of the Loan for the term of each extension. The
Loan is prepayable in whole or in part, subject to the following
penalties for prepayment: (i) any payment of principal within the
first six (6) months of the Loan term is subject to a penalty of
three percent (3.0%) of the unpaid principal balance; and (ii)
during the remainder of the Loan term, any prepayment of the
principal outstanding balance outside of the six (6) months prior
to the maturity date is subject to a penalty of one percent (1.0%)
of the unpaid principal balance. There is no penalty for
prepayments made within three (3) months of the maturity
date.
The
Loan Agreement includes customary representations, warranties,
covenants and terms and conditions for transactions of this type,
including a minimum debt service coverage ratio, limitations on
incurrence of debt, liens and asset sales and dispositions,
covenants to preserve corporate existence and comply with laws,
covenants on the application of proceeds of the Loan and default
provisions, including defaults for non-payment, breach of
representations and warranties, insolvency, sale or other
disposition of a substantial portion of assets and failure to pay
other outstanding debt. The occurrence of an event of default under
the Loan Agreement could result in the Loan becoming immediately
due and payable.
The
Loan is secured by all property of the Borrower in the possession
of the Company, including the capital reserve account established
pursuant to the terms of the Loan Agreement, all real property held
in the name of the Borrower or in which the Borrower has an
interest, all securities or other property belonging to the
Borrower held by the Company and all deposits and other sums due
from the Company to the Borrower. The Loan may also be secured by
any mortgage, security agreement, pledge, assignment or other
agreement executed by the Borrower for the benefit of the Company
in the future.
The
Loan proceeds will be used by the Borrower to refinance a loan
associated with a hotel located in Camden, ME.
The
foregoing is a summary of the Loan Agreement and the Note and is
qualified in its entirety by reference to the complete text of the
Loan Agreement and the Note, which are filed by the Company as
Exhibits 6.1 and 6.2, respectively, to this Current Report on Form
1-U and are incorporated by reference into this Item
1.
ITEM 9. OTHER EVENTS
Exhibits
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Exhibit No.
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Description of Exhibit
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Commercial Loan
Agreement, dated December 30, 2019, by and between Breda,
LLC and Red Oak Capital Fund III, LLC
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Commercial
Promissory Note, dated December 30, 2019, issued by Breda, LLC in favor of Red Oak Capital Fund
III, LLC
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SIGNATURES
Pursuant to the
requirements of Regulation A, the issuer has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
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Red
Oak Capital Fund, III, LLC,
a
Delaware limited liability company
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Date:
January
6, 2020
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By:
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/s/ Jason
Anderson
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Name: Jason
Anderson
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Title:
Chief
Financial Officer of the Sole Member of the Manager
(Principal
Financial Officer and Principal Accounting Officer)
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