17. DEBT

The Company had the following debt outstanding.



DETAIL OF DEBT
(Dollars in Thousands)

Description		As of March 31, 2020		As of December 31, 2019	Interest Rate Terms	Interest (4)		Maturity
Non-convertible debt:
12.00% senior note (the "2020 Senior Note")	$	4,500	$	-	Fixed	12.00	%	January 2022
12.00% senior note (the "2019 Senior Note")		2,400		6,786	Fixed	12.00	%	September 2020 (1)
Contingent convertible debt:
8.00% convertible senior note (the "2017 Convertible Note")		15,000		15,000	Fixed	8.00	%	March 2022 (2)
Less unamortized debt issuance costs		(631)		(703)
		14,369		14,297
Junior subordinated notes (3):
Alesco Capital Trust I		28,125		28,125	Variable	5.77	%	July 2037
Sunset Financial Statutory Trust I		20,000		20,000	Variable	5.52	%	March 2035
Less unamortized discount		(25,030)		(25,124)
		23,095		23,001
FT Financial Bank, N.A. Credit Facility		17,500		-	Variable	N/A		April 2021
LegacyTexas Credit Facility		-		4,777	Variable	N/A		NA
Total	$	61,864	$	48,861

(1)

On September 25, 2019, the Company amended the previously outstanding 2013 Convertible Notes, which were scheduled to mature on September 25, 2019. The material terms and conditions of the 2013 Convertible Notes remained substantially the same, except that (i) the maturity date changed from September 25, 2019 to September 25, 2020; (ii) the conversion feature in the 2013 Convertible Notes was removed; (iii) the interest rate changed from 8% per annum (9% in the event of certain events of default) to 12% per annum (13% in the event of certain events of default); and (iv) the restrictions regarding the prepayment were removed. The post amendment notes are referred to herein as the “2019 Senior Notes” and the pre-amendment notes are referred to herein as the “2013 Convertible Notes.”

(2)

The holder of the 2017 Convertible Note may convert all or any part of the outstanding principal amount at any time prior to maturity into units of membership interests of the Operating LLC at a conversion price of $1.45 per unit, subject to customary anti-dilution adjustments. Units of membership interests in the Operating LLC not held by Cohen & Company Inc. may, with certain restrictions, be redeemed and exchanged into shares of the Cohen & Company Inc. common stock, par value $0.01 per share (“Common Stock”) on a ten-for-one basis. Therefore, the 2017 Convertible Note can be converted into Operating LLC units of membership interests and then redeemed and exchanged into Common Stock at an effective conversion price of $14.50. See note 20 to our Annual Report on Form 10-K for the year ended December 31, 2019.

(3)

The junior subordinated notes listed represent debt the Company owes to the two trusts noted above. The total par amount owed by the Company to the trusts is $49,614. However, the Company owns the common stock of the trusts in a total par amount of $1,489. The Company pays interest (and at maturity, principal) to the trusts on the entire $49,614 junior notes outstanding. However, the Company receives back from the trusts the pro rata share of interest and principal on the common stock held by the Company. These trusts are VIEs and the Company does not consolidate them even though the Company holds the common stock. The Company carries the common stock on its balance sheet at a value of $0. The junior subordinated notes are recorded at a discount to par. When factoring in the discount, the yield to maturity of the junior subordinated notes as of March 31, 2020 on a combined basis was 15.04% assuming the variable rate in effect on the last day of the reporting period remains in effect until maturity.

(4)

Represents the interest rate in effect as of the last day of the reporting period.

The 2020 Senior Notes

On January 31, 2020, the Operating LLC entered into a Note Purchase Agreement with JKD Capital Partners I LTD, a New York corporation (“JKD Investor”), and RN Capital Solutions LLC, a Delaware limited liability company (“RNCS”). The JKD Investor is owned by Jack DiMaio, the vice chairman of the Company’s board of directors and the Operating LLC’s board of managers, and his spouse.

Pursuant to the Note Purchase Agreement, JKD Investor and RNCS each purchased a Senior Promissory Note in the principal amount of $2,250 (for an aggregate investment of $4,500). The Senior Promissory Notes bear interest at a fixed rate of 12% per annum and mature on January 31, 2022. On February 3, 2020, pursuant to the Note Purchase Agreement, the Operating LLC used the proceeds received from the issuance of the Senior Promissory Notes to repay in full all amounts outstanding under the Senior Promissory Note, dated September 25, 2019, issued by the Company to Pensco Trust Company, Custodian fbo Edward E. Cohen IRA in the principal amount of $4,386 (the “Cohen IRA Note”). The Cohen IRA Note is included as a portion of the 2019 Senior Notes outstanding as of December 31, 2019. The Cohen IRA Note was fully paid and extinguished on February 3, 2020. Subsequent to this repayment, $2,400 of the 2019 Senior Notes remain outstanding.

The 2019 Senior Notes

On September 25, 2019, the Company amended and restated the previously outstanding 2013 Convertible Notes, which was scheduled to mature on September 25, 2019. The material terms and conditions of the 2013 Convertible Notes remained substantially the same, except that (i) the maturity date was changed from September 25, 2019 to September 25, 2020; (ii) the conversion feature in the 2013 Convertible Notes was removed; (iii) the interest rate was changed from 8% per annum (9% in the event of certain events of default) to 12% per annum (13% in the event of certain events of default); and (iv) the restrictions regarding prepayment were removed. The post amendment notes are referred to herein as the “2019 Senior Notes” and the pre-amendment notes are referred to herein as the “2013 Convertible Notes”.

LegacyTexas Bank

On November 20, 2018, ViaNova, as borrower, entered into a Warehousing Credit and Security Agreement (the “LegacyTexas Credit Facility”) with LegacyTexas Bank, as the lender, with an effective date of November 16, 2018, and amended on May 4, 2019 and September 25, 2019. The LegacyTexas Credit Facility supported the purchasing, aggregating, and distribution of residential transition loans by ViaNova.

On March 19, 2020, ViaNova received a notice of default from LegacyTexas Bank regarding the LegacyTexas Credit Facility, stating that ViaNova’s unrestricted cash balance was less than the amount required. Also, on March 19, 2020, ViaNova received notice from LegacyTexas Bank that the Bank had suspended funding all “Alternative” loans for all of their clients, including the RTLs that are the subject of the LegacyTexas Credit Facility with LegacyTexas Bank. Since March 19, 2020 ViaNova has repaid all outstanding indebtedness under the Agreement. ViaNova stopped acquiring new RTLs and does not intend to acquire any new RTLs in the future. See note 4.

See note 20 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the Company’s other debt.

FT Financial Bank, N.A. (“FT Bank”) Credit Facility

The credit facility with FT Bank has a total borrowing capacity of $25,000. It is comprised of a revolving credit facility (the “2019 FT Revolver”) which has a total borrowing capacity of $17,500 and a line of credit (the “2018 FT LOC”), which has a total borrowing capacity of $7,500. Both mature on April 10, 2021. However, the 2019 FT Revolver does not allow for additional draws after April 10, 2020. During March 2020, the Company drew the full amount of $17,500 under the 2019 FT Revolver and that amount remains outstanding to date. If the Company were to repay the $17,500 currently outstanding, it would not be able to re-draw that amount again under the 2019 FT Revolver in the future. Furthermore, JVB is subject to financial covenants including a minimum excess net capital covenant, a debt to tangible net worth covenant, and a minimum tangible net worth covenant. See note 20 to Company’s 2019 audited financial statements included in its annual report on Form 10-K. The Company is currently working to extend the draw period and the maturity of the 2019 FT Revolver and the 2018 FT LOC.

Interest Expense, net


INTEREST EXPENSE
(Dollars in Thousands)

	Three Months Ended March 31,
	2020		2019
Junior subordinated notes	$	821	$	880
2020 Senior Notes		89		-
2017 Convertible Note		371		360
2013 Convertible Notes / 2019 Senior Notes		119		133
2018 FT LOC/2019 FT Revolver		152		92
Redeemable Financial Instrument - DGC Trust / CBF		690		148
Redeemable Financial Instrument - JKD Capital Partners I LTD		440		278
Redeemable Financial Instrument - ViaNova Capital Group, LLC		(77)		(37)
	$	2,605	$	1,854

Because the LegacyTexas Credit Facility was used to directly finance the purchase of securities and loans, the interest expense incurred on the Legacy Texas Credit Facility is included as a component of net trading revenue. See note 5.