Ranking. The 2031 Notes are senior unsecured obligations of the Issuer and rank senior in right of payment to all of the existing and future subordinated indebtedness of the Issuer and equal in right of payment with all other existing and future senior unsecured indebtedness of the Issuer, including indebtedness under the Fifth Amended and Restated Credit Agreement, dated as of September 9, 2019 (as amended, the “Credit Agreement”), by and among the Issuer, Sabra and the other parties thereto, and the Issuer’s outstanding senior unsecured notes. The 2031 Notes are effectively subordinated to all of the Issuer’s and Sabra’s secured indebtedness to the extent of the value of the assets securing such debt, including mortgage indebtedness, and are structurally subordinated to all indebtedness of any of Sabra’s subsidiaries (other than the Issuer). The guarantee by Sabra is a senior unsecured obligation of Sabra and ranks senior in right of payment to all existing and future subordinated indebtedness of Sabra and equal in right of payment with all existing and future senior unsecured indebtedness of Sabra, including the guarantees of obligations under the Credit Agreement and Sabra’s and the Issuer’s outstanding senior unsecured notes. The guarantee by Sabra will be effectively subordinated to any secured indebtedness of Sabra, to the extent of the value of the assets securing such indebtedness, and is structurally subordinated to all indebtedness of any of Sabra’s subsidiaries (other than the Issuer).
Other Covenants. The Indenture contains other restrictive covenants that, among other things, limit the ability of Sabra and its subsidiaries (including the Issuer) to: (i) incur or guarantee unsecured indebtedness; (ii) incur or guarantee secured indebtedness; and (iii) merge or consolidate or sell all or substantially all of their assets. In addition, the Indenture requires Sabra and its subsidiaries to maintain Total Unencumbered Assets (as defined in the First Supplemental Indenture) of not less than 150% of the aggregate outstanding principal amount of the Unsecured Indebtedness (as defined in the First Supplemental Indenture) of Sabra and its subsidiaries on a consolidated basis. All of these covenants are subject to a number of important limitations and exceptions under the Indenture.
Events of Default. The Indenture also provides for customary events of default, including, but not limited to, the failure to make payments of interest or premium, if any, on, or principal of, the 2031 Notes, the failure to comply with certain covenants and agreements specified in the Indenture for a period of time after notice has been provided, the acceleration of other indebtedness resulting from the failure to pay principal on such other indebtedness prior to its maturity, and certain events of insolvency. If any event of default occurs, the principal of, premium, if any, and accrued interest on all the then outstanding 2031 Notes may become due and payable immediately.
Amendment to Underwriting Agreement
On September 30, 2021, in connection with the completion of the underwritten public offering of the 2031 Notes, the Issuer and Sabra entered into Amendment No. 1, dated as of September 30, 2021, to the Underwriting Agreement, dated as of September 21, 2021, (the “Amendment No. 1 to the Underwriting Agreement”) with Wells Fargo Securities, LLC, BofA Securities, Inc., Credit Agricole Securities (USA) Inc. and J.P. Morgan Securities, LLC, as representatives of the several underwriters named therein, to correct certain typographical errors contained in the original underwriting agreement. The foregoing summary of Amendment No. 1 to the Underwriting Agreement, the Indenture and the 2031 Notes is a summary only and is qualified in its entirety by reference to Amendment No. 1 to the Underwriting Agreement, the Base Indenture, the First Supplemental Indenture and the form of the 2031 Notes, which are filed as Exhibits 1.1, 4.1, 4.2 and 4.3, respectively, to this Current Report on Form 8-K and are incorporated by reference into this Item 1.01.
2031 Notes Offering
The public offering of the 2031 Notes was registered under the Securities Act of 1933, as amended, pursuant to an effective Registration Statement on Form S-3 (File No. 333-235449) filed with the Securities and Exchange Commission (the “SEC”) on December 11, 2019, a base prospectus, dated December 11, 2019, included as part of the registration statement, and a prospectus supplement, dated September 21, 2021, filed with the SEC on September 22, 2021 pursuant to Rule 424(b) under the Securities Act of 1933, as amended. In connection with the filing of the prospectus supplement, Sabra is filing as Exhibits 5.1 and 5.2 to this Current Report on Form 8-K the opinions of Venable LLP and O’Melveny & Myers LLP regarding the validity of the 2031 Notes and the related guarantee by Sabra.
