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): June ~~April 28~~14, 2022

AFC BDC INC.

(Exact name of Registrant as Specified in Its Charter)

Maryland		~~812~~814-~~15280~~01525		87-3220232
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

525 Okeechobee Blvd., Suite 1770

West Palm Beach, FL

33401

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (516) 510-2390

(Former Name or Former Address, if Changed Since Last Report)

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 Instructions 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))

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ ☐

Item 17.01 ~~Entry~~Regulation ~~into~~FD ~~a Material Definitive Agreement~~Disclosure

On ~~April~~ 28June 14, 2022, AFC BDC Inc., ~~a Maryland corporation~~ (~~“AFC BDC”), entered into an Agreement and Plan of Merger (~~the ~~“Merger~~ ~~Agreement”) with AFC BDC Warehouse LLC, a Delaware limited liability company (~~“~~BDC Warehouse~~Company”)~~. The~~ ~~Merger~~disclosed ~~Agreement provides that, subject to~~ the ~~conditions~~below set forth therein, at the effective time of the Merger, BDC Warehouse will merge with and into AFC BDC, with AFC BDC continuing as the surviving company (the “Merger”). The closing of the Merger occurred immediately following the execution and delivery of the Merger Agreement and became effective at 12information:01 p.m. on April 28, 2022 (the “Effective Time”) in accordance with articles of merger filed with the State of Maryland and a certificate of merger filed with the State of Delaware on the date of closing.

~~Item~~As 2of June 1, 2022, the Company held five loans in which it had committed approximately $12.018 ~~Completion~~million, of$10.8 ~~Acquisition~~million, or$10.0 ~~Disposition~~million, $10.0 million, and $5.6 million, respectively, with an additional $168.0 million of ~~Assets~~commitments across eight investments currently being evaluated.

The information included in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.

Company Name	Type of Company	Initial Funding Date	Loan Maturity	Commitment		Principal Balance as of 6/1/22		Fixed/Floating	Cash Interest Rate			Amortization During Term	Estimated IRR (4)
Evermore Cannabis	Cannabis Operator	7/14/2021	8/1/2026	$	5,616,231	$	5,740,622	Floating		13.00	%⁽¹⁾	Yes		20.93	%
Justice Cannabis	Cannabis Operator	9/30/2021	5/1/2026		10,000,000		7,527,666	Floating		12.25	%⁽²⁾	Yes		22.78	%
AYR Wellness	Cannabis Operator	10/1/2021	10/1/2024		10,750,000		10,320,000	Fixed		8.00	%	Yes		15.87	%
Acreage Holdings	Cannabis Operator	12/16/2021	1/1/2026		10,000,000		10,000,000	Fixed		10.75	%⁽³⁾	No		13.03	%
AYR Wellness	Cannabis Operator	3/25/2022	3/1/2025		12,843,275		12,413,275	Fixed		8.00	%	Yes		17.09	%

~~In accordance~~(1) ~~with~~Cash ~~the~~Interest ~~terms~~Rate ofpresented ~~the~~represents ~~Merger~~a ~~Agreement,~~floating ~~at the Effective Time, each limited liability company membership~~ interest rate of ~~BDC~~12.00% ~~Warehouse issued~~+ ~~and~~LIBOR ~~outstanding~~with ~~immediately prior to the Effective Time automatically converted into~~ a ~~pro~~floor ~~rata~~of ~~share~~1.00%. ~~(based~~An onalternate ~~such~~benchmark ~~member’s percentage~~rate, ~~interest~~which inmay ~~BDC~~include ~~Warehouse~~SOFR, ~~adjusted~~may ~~downward~~be ~~for~~utilized ~~fractional~~in ~~shares)~~replacement of anLIBOR ~~aggregate~~as ~~5,500,000~~elected ~~shares~~by ofthe ~~AFC~~Agent ~~BDC~~and ~~common stock issued in the Merger~~borrower.

~~The aggregate number of shares of AFC BDC common stock to be issued in the Merger was determined based on~~ (a2)~~(i)~~ ~~the~~Cash ~~aggregate~~Interest ~~net~~Rate ~~asset value~~presented ofrepresents ~~BDC~~a ~~Warehouse~~blended ~~determined~~rate as of ~~March 31, 2022, plus (ii) capital contributions (if any) received by BDC Warehouse during~~ the ~~period~~ ~~from~~three ~~but~~tranches ~~excluding~~with ~~March~~differing 31rates, ~~2022~~with ~~through~~ the ~~close~~Cash ofInterest ~~business~~Rate onrepresenting ~~the~~two ~~business~~tranches ~~day~~of ~~immediately~~a ~~prior~~floating tointerest ~~the~~rate ~~Effective~~of ~~Time~~12.00% ~~(the “Adjustment~~+ ~~Period”),~~LIBOR ~~plus~~with ~~(iii)~~a ~~accrued~~floor ~~but~~of ~~unpaid interest and normally recurring fees accrued but not paid~~1.00%, and ~~accretion~~ ofa ~~original~~third ~~issue~~tranche ~~discount,~~fixed ~~during~~at ~~the~~a ~~Adjustment~~9.00% ~~Period,~~rate. ~~minus~~An ~~(iv)~~alternate ~~cash~~benchmark ~~distributions~~rate, ifwhich ~~any,~~may ~~made~~include ~~by BDC Warehouse during the Adjustment Period~~SOFR, ~~plus~~may ~~or minus (v) such adjustment as the parties mutually agree to~~ be ~~reasonable~~utilized ~~or appropriate~~ in ~~view~~replacement of ~~any material~~LIBOR ~~change during the Adjustment Period to a portfolio company in which BDC Warehouse has invested; and plus or minus (vi) such other adjustment~~ as ~~the~~elected ~~parties~~by ~~mutually agree to be reasonable or appropriate in in~~ the ~~circumstances,~~Agent ~~divided~~and ~~by (b) a per share price of $20~~borrower.~~00.~~

~~Also at~~(3) ~~the~~Cash ~~Effective~~Interest ~~Time,~~Rate bypresented ~~virtue~~represents of9.75% ~~the Merger and without any further action on the part~~ of ~~BDC~~stated ~~Warehouse,~~interest ~~AFC~~plus BDC, or their respective equity holders, officers, directors or managers, the shares of common stock owned by the sole stockholder of AFC BDC immediately prior to the Effective Time were automatically redeemed and cancelled in exchange for a cash payment from AFC BDC equal to $201.00% ~~per share for an aggregate payment~~ of ~~$1,000~~contingent interest.

~~The foregoing~~(4) ~~description~~Estimated IRR calculated as a yield-to-maturity internal rate of return from the ~~Merger~~Initial ~~Agreement~~Funding Date. Estimated IRR is inclusive of a ~~summary~~variety ~~only~~of fees and isfeatures ~~qualified~~that inaffect ~~its~~the ~~entirety~~total byyield, ~~reference~~which may include, but not limited to, interest payments, OID, amortization, exit fees and contingent features. OID is recognized as a discount to the ~~full~~funded ~~text~~loan principal and is accreted to income over the term of the ~~Merger~~ ~~Agreement,~~loan. aEstimated ~~copy~~IRR ofalso ~~which~~includes isfees ~~included~~earned asfrom ~~Exhibit~~the 2Initial Funding Date through March 16, 2022.1 The Estimated IRR calculations require management to ~~this~~make ~~Current~~estimates ~~Report~~and assumptions, including, but not limited to, the timing and amounts of loan draws on ~~Form~~delayed ~~8-K~~draw loans, the probability and timing of prepayments and the probability of contingent features occurring. To be conservative, we have not assumed any prepayment penalties or early payoffs in our Estimated IRR calculation. Estimated IRR is ~~incorporated~~based ~~herein~~on bycurrent ~~reference~~management estimates and assumptions, which may change. Actual results could differ from those estimates and assumptions.

The information disclosed under this Item 97.01 ~~Financial~~is ~~Statements~~being “furnished” and ~~Exhibits~~shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

(a) The information required by Item 9.01(a) of Form 8-K, including the financial statements required pursuant to Rule 6-11 of Regulation S-X, was previously included or incorporated by reference in AFC BDC’s amended Registration Statement on Form 10, filed under the Securities Act with the SEC on dated April 5, 2022 (File No. 000-56393) and, pursuant to General Instruction B.3 of Form 8-K, is not included herein.

(b) The pro forma financial information required by Item 9.01(b) will be filed by amendment no later than 71 calendar days after the date this Current Report on Form 8-K must be filed.

(d) Exhibits.

Exhibit No.		Description
2.1#		Agreement and Plan of Merger, dated as of April 28, 2022, by and between AFC BDC Warehouse LLC and AFC BDC Inc.

# Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The registrant agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request.

SIGNATURES

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 thereunto duly authorized.

	AFC BDC Inc.
Dated: May 3, 2022	By:	/s/ Bernard D. Berman
Dated: June 15, 2022	By:	/s/ Bernard D. Berman
		Name:	Bernard D. Berman
		Title:	President

Filing Compare · AFC BDC Inc.