Catherine,
I hope this note finds you well. I am writing to coordinate outstanding deliverables and logistics in connection with the closing of the Driftwood CLO 2023-I, Ltd. (as Issuer) and Driftwood CLO 2023-I, LLC (as Co-Issuer) transaction (the "Transaction"), which is scheduled for this Tuesday, September 12, 2023. I have organized the outstanding items by category below. I would appreciate your confirmation on each point at your earliest convenience so that we can ensure a smooth closing day.
**A. Executed Trustee Documents — Status and Outstanding Items**
Could you please confirm that the following documents have been (or will be) executed by Ironclad Trust Company, N.A. in time for the September 12 closing:
1. **Indenture and First Supplemental Indenture.** We have in hand Ironclad Trust's execution counterpart of the base Indenture (dated August 22, 2023). However, we still need Ironclad's executed counterpart of the **First Supplemental Indenture** (dated September 8, 2023), which reflects the final pricing spreads (Compounded SOFR, Actual/360 day count convention). The Indenture is governed by New York law. Could you confirm when we can expect to receive the executed counterpart?
2. **Collateral Administration Agreement** (dated August 22, 2023), with Ironclad Trust acting as Collateral Administrator. Please confirm execution status.
3. **Trustee's Counsel Opinion.** This opinion will be delivered by Ashworth & Pratt LLP (Lillian Marchetti, copied here, is coordinating on the A&P side). Could you confirm that the opinion will be dated September 12, 2023 and delivered at closing? We will review for completeness and conformity with the closing conditions set forth in the Indenture and the Note Purchase Agreement.
4. **Officer's Certificate / Incumbency Certificate of the Trustee.** We will need Ironclad to provide a certificate confirming the names and titles of the authorized signatories who executed the Indenture and related Transaction documents. Please let us know if this is in process.
**B. DTC Eligibility and Settlement**
Please confirm that the notes have been made DTC-eligible through Ironclad Trust's DTC Participant No. 2176. For reference, the CUSIPs and ISINs for each tranche to be cleared through DTC are as follows:
| Tranche
The notes are being offered under Rule 144A and Regulation S under the Securities Act of 1933, as amended. Final settlement is targeted for **September 20, 2023** via DTC. Could you please confirm that DTC processing is on track and whether any issues have arisen with CUSIP or ISIN activation?
Additionally, please confirm that the minimum denomination settings are in place: **$250,000 minimum with $1,000 increments** for the rated notes (Class A-1 through Class D), and **$250,000 minimum with $1 increments** for the Subordinated Notes.
**C. Wire Transfers and Funds Flow**
We are finalizing the Closing Funds Flow Memorandum (dated September 12, 2023), which will be circulated in final form on the morning of closing. For your reference, the key flows relevant to Ironclad Trust in its capacity as Trustee are as follows:
- **Total note proceeds:** $400,000,000, flowing into the CLO transaction accounts held at Havenwood Bank, N.A. (as Account Bank). - **Warehouse payoff:** $212,500,000 to Havenwood Bank, N.A. to repay the warehouse facility in full. - **Placement fee:** $1,820,000 to Meridian Atlantic Securities LLC. - **Co-placement fee:** $90,000 to Northbridge Capital Markets Inc. - **Remaining proceeds:** to fund new collateral purchases and transaction accounts.
Three requests on this front:
1. Please provide Ironclad Trust's wire instructions for the trustee fee and any closing-day trustee expenses. 2. Please confirm that the annual trustee fee of **$25,000** will be funded from the transaction accounts in accordance with the priority of payments waterfall set forth in the Indenture. 3. Please confirm Ironclad's readiness to receive the collateral portfolio being assigned from the Havenwood Bank warehouse pursuant to the Assignment of Collateral agreement and to act as custodian of the collateral going forward.
**D. Timing / Call Schedule for Closing Day**
I would like to propose a **closing-day conference call at 9:00 AM ET on Tuesday, September 12** with all parties to confirm satisfaction of closing conditions and authorize the release of funds. I will circulate a dial-in separately.
For your awareness:
- The Officer's Certificate and Secretary's Certificate of the Issuer will be delivered at closing, certifying satisfaction of all conditions precedent (including compliance with the collateral quality tests as of the closing date). - Rating confirmation letters from both **Brindoval Analytical Services Inc.** and **Ridgeline Credit Ratings LLC** (each dated September 8, 2023) have been received, confirming the following final ratings:
| Tranche
These satisfy the applicable closing conditions under both the Indenture and the Note Purchase Agreement.
**E. Post-Closing Matters**
A few items to flag for the period immediately following closing:
- **Final Closing Checklist.** We will circulate the final closing checklist on or about **September 20, 2023**, coinciding with final DTC settlement. A working draft of the checklist is being updated through closing and will follow separately. - **Effective Date.** The Effective Date deadline is **December 12, 2023** (90 days post-pricing), by which date certain collateral quality tests and coverage tests must be satisfied and reported to the Trustee pursuant to the Indenture. - **First Payment Date.** The first Payment Date is **January 15, 2024**, with payments thereafter on a quarterly basis (the 15th of January, April, July, and October). Please confirm that Ironclad Trust, in its capacity as Paying Agent, is prepared for that payment cycle.
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Catherine, could you please confirm receipt of this email and let me know if there are any outstanding items or concerns from Ironclad's side? I am also happy to schedule a separate call with Lillian Marchetti at Ashworth & Pratt to walk through the trustee counsel opinion in advance of closing, if that would be helpful.
Thank you to you and your team for all of your work on this transaction — we appreciate the responsiveness, particularly over the weekend as we push toward Tuesday.
Best regards,
Hannah Brinkley Associate Calderwood & Harkness LLP 450 Park Avenue New York, NY 10022 Tel: (212) 554-3918 Email: hbrinkley@calderwoodharkness.com