Wired News – Patriot National Signs Forbearance Agreement with Lenders as a Stop-gap Financial Arrangement

Stock
Monitor: Willis Towers Watson Post Earnings Reporting

LONDON, UK / ACCESSWIRE / November 27, 2017 / Active-Investors issued a free report on Patriot
National, Inc. (NYSE: PN) (“Patriot”), which is readily accessible upon registration at www.active-investors.com/registration-sg/?symbol=PN as the Company’s latest news hit the wire. On November
17, 2017, the Company announced that it has signed a Forbearance Agreement with
its key lenders led by Cerberus Business Finance, LLC. (“Cerberus”) The Company
made the disclosure via a filing with the US Securities and Exchange Commission
(SEC). The disclosure comes within days of the Company’s largest customer,
Guarantee Insurance Company (GIC) being placed in receivership by the Florida
Office of Insurance Regulation (OIR). Sign
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Active-Investors.com is focused on
giving you timely information and the inside line on companies that matter to
you. This morning, Patriot National most recent news
is on our radar and we have decided to include it on our blog post. Today’s
free coverage is available at: www.active-investors.com/registration-sg/?symbol=PN.

Details of the Forbearance Agreement

Patriot had
borrowed $280 million from Cerberus in November 2016 via a five-year senior
secured credit facility. Out of this nearly $250 million was as a term loan and
$30 million was through revolving credit facility. However, the Company has
defaulted the terms of the credit which included failure to deliver timely
financial statements, non-payment of interest due as on November 01, 2017 and
the failure to comply with financial covenants of the credit agreement with
Cerberus.

Following which,
on November 17, 2017, Patriot signed a Forbearance Agreement with Cerberus. As
per the terms of the Forbearance Agreement, the lenders have agreed not to push
for the foreclosure of the loan nor enforce their rights as per the terms of
the credit facility due to the defaults and infractions by Patriot. The
Forbearance Agreement allows the Company time till December 03, 2017
(Forbearance Period) subject to certain limitations and conditions. Cerberus is
also considering advancing approximately $4 million to the Company, although
this decision is solely at the discretion of Cerberus. The said advance is not
guaranteed to be sufficient for the Company’s operations during the Forbearance
Period.

Additionally, as
per the Forbearance Agreement, Cerberus has stipulated that it would be
charging accrued interest at the contract rate plus 2% p.a. on all outstanding
amount due as per the terms of the credit facility with effect from July 15,
2017. As required by the Forbearance Agreement the Company has appointed a
Chief Restructuring Officer and is in the process of identifying An Executive
Vice President of Finance. During the Forbearance Period, the Company will have
to strictly follow the terms and obligations outlined in the credit facility
agreement.

Once the
Forbearance Period is complete, Cerberus can exercise any of their respective
rights as per the terms of Forbearance Agreement and credit facility, which
includes pushing for foreclosure as well as encashing any and all of the liens
on, and security interests in, the collateral put up under the credit facility
as well as the Forbearance Agreements.

The Cause of the Financial Problems

One of the
primary and most important factor for the Company’s financial problems is its
largest customer GIC, a worker’s compensation insurance provider. GIC agreed to
be placed in receivership on November 13, 2017, after Florida insurance
regulators found that the Company’s assets were insufficient to pay all its
outstanding obligations as of June 30, 2017. GIC accounts for approximately 60%
to 70% of the Company’s business. Patriot has been trying to recover payment
for past services as well as a chance to continue to provide its services to
GIC during the receivership.

Patriot’s
representatives have been meeting up with the Florida insurance regulators
regularly for the same since GIC was placed under administrative supervision on
August 18, 2017. The most recent meeting of the Company representatives was on
November 20, 2017. After this meeting, the Company was not confident of a
positive outcome for its efforts, and it is expecting to lose its major revenue
and cash source.

The Effect

The Company’s
financial problems is set to hit the employees. In the same filing with the
SEC, the Company has disclosed the reduction of its workforce by 250 employees.
This represents a reduction of nearly one-third of its total employee strength.
The Company has already notified affected employees. However, the Company has
not disclosed the details of the costs associated with the layoff although it
plans to file the details of the estimated costs at a later date.

The Company’s
disclosure also led to its share prices plunging nearly 66% to close at $0.36
on November 22, 2017.

About Patriot National, Inc.

Fort Lauderdale,
Florida based Patriot is a national provider of comprehensive technology and
outsourcing solutions. It assists insurance Companies and employers mitigate
risk, comply with complex regulations and save time and money. The solutions
offered by the Company include general agency services, technology outsourcing,
software solutions, specialty underwriting and policyholder services, claims
administration services, and self-funded health plans to its insurance carrier
clients, employers, and other clients.

Stock Performance Snapshot

November
24, 2017 – At Friday’s closing bell, Patriot National’s stock ended
the trading session flat at $0.36.

Volume traded for the
day: 6.55 thousand shares.

After last Friday’s
close, Patriot National’s market cap was at $9.70 million.

The stock is part of the Financial
sector, categorized under the Insurance Brokers industry. This sector was up 0.1%
at the end of the session.

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