kl03002.htm
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 27,
2008
FRANKLIN
CREDIT MANAGEMENT CORPORATION
(Exact
name of registrant as specified in its charter)
|
Delaware
|
0-17771
|
75-2243266
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File
Number)
|
(I.R.S.
Employer
Identification
No.)
|
|
101
Hudson Street
Jersey
City, New Jersey
(Address
of Principal Executive Offices)
|
|
07302
(Zip
Code)
|
Registrant’s
telephone number, including area code: (201) 604-4402
__________________________________________________________
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):
£ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
£ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
£
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
£
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item
8.01. Other
Events.
Effective
February 27, 2008, Franklin Credit Management Corporation (the “Company”)
entered into $725 million (notional amount) of fixed-rate interest rate swaps in
order to effectively stabilize the future interest payments on a portion of its
interest-sensitive borrowings.
The swaps
are for periods ranging from one to four years, are non-amortizing, are in
effect for the respective full terms of each swap agreement and are at fixed
rates. These swaps will reduce the Company’s exposure to future increases in
interest costs on a portion of its borrowings due to increases in the 30-day
London Interbank Offered Rate (“Libor”). The interest rate swaps were executed
with the Company’s lead lending bank, and are for the following terms: $220
million notional amount for one year at a fixed rate of 2.62%; $390 million
notional amount for two years at a fixed rate of 2.79%; $70 million notional
amount for three years at a fixed rate of 3.11%; and $45 million notional amount
for four years at a fixed rate of 3.43%.
Under
these swap agreements, the Company will make interest payments to its lead
lending bank at fixed rates and will receive interest payments from its lead
lending bank on the same notional amounts at variable rates based on Libor. The
Company pays interest on its interest-sensitive borrowings based on one month
Libor plus applicable margins. Accordingly, the Company has established a fixed
rate plus applicable margins on $725 million of its borrowings for the next
year, $505 million for two years, $115 million for three years and $45 million
for four years. The one-month Libor rate was 3.12% at the time the swaps were
executed.
On March
4, 2008, the Company issued a press release announcing, among other things, its
entry into these agreements. A copy of the press release is attached
hereto as Exhibit 99.1 and is incorporated in this Item 8.01 by
reference.
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits
| Exhibit No. |
Description |
| |
|
|
99.1
|
Press
Release, dated March 4, 2008, entitled “Franklin Credit Announces Hedge
Agreements.”
|
SIGNATURE
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.
FRANKLIN CREDIT
MANAGEMENT CORPORATION
By: /s/ Paul
D.
Colasono
Name: Paul D.
Colasono
Title: Chief
Financial Officer and
Executive Vice
President
Date: March
4, 2008