Terra Income Fund 6, LLCTFSA
Terra Income Fund 6, LLC Debt Disclosure
Debt
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Senior Unsecured Notes
On February 10, 2021, Terra BDC issued $34.8 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, and on February 26, 2021, the underwriters exercised the option to purchase an additional $3.6 million of the notes (collectively the “7.00% Senior Notes Due 2026”). The 7.00% Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at our option on or after February 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest. In connection with the Merger, Terra LLC assumed all of Terra BDC’s rights and obligations under the indenture governing the 7.00% Senior Notes Due 2026.
The indenture between Terra LLC (as successor to Terra BDC) and the trustee contains certain debt limitations and asset coverage covenants. As of December 31, 2024, the Company was in compliance with the asset coverage ratio requirements under the indenture.
The following table is a summary of the Company’s unsecured notes payable outstanding as of:
| Coupon Rate | Effective Rate (1) | Maturity Date | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||
7.00% Senior Notes Due 2026 (2) | 7.00 | % | 10.41 | % | 3/31/2026 | 38,375,000 | 38,375,000 | |||||||||||||||||||||||||
Unamortized purchase discount (2) | (1,853,316) | (3,161,457) | ||||||||||||||||||||||||||||||
| Unsecured notes payable, net | $ | 36,521,684 | $ | 35,213,543 | ||||||||||||||||||||||||||||
(1)Includes purchase discount that is amortized to interest expense over the remaining life of the notes.
(2)In connection with the Merger, Terra LLC assumed all the obligations under the 7.00% Senior Notes and recorded a purchase discount of $4.6 million, representing the difference between the carrying value and the fair value of the notes on the date of the merger.
Term Loan
In April 2021, Terra BDC entered into a credit agreement (the “Credit Agreement”) with a lender to provide for a delayed draw term loan of $25.0 million (the “Term Loan”). On September 27, 2022, the Credit Agreement was amended to, among other things, remove the make whole premium on voluntary prepayment of the loans as well as to provide consent to the consummation of the Merger and the assumption by Terra LLC of all of the rights and obligations of Terra BDC under the Credit Agreement. On June 30, 2023, Terra LLC amended the Credit Agreement to, among other things, (i) decrease the principal amount to $15.0 million, (ii) extend the scheduled maturity date to March 31, 2024, and (iii) increase the rate on which the loans thereunder bear interest from a fixed rate of 5.625% per annum to a floating rate based on SOFR plus 7.375% with a SOFR floor of 5.0%, and repaid $10.0 million of the principal amount of the Term Loan. The Credit Agreement was secured by a lien on substantially all of Terra BDC's, and, following the Merger, Terra LLC’s owned and thereafter acquired property. In March 2024, the Term Loan was repaid in full.
The following table is a summary of the Company’s obligations under the Credit Agreement as of December 31, 2023. There was no such loan outstanding as of December 31, 2024.
| December 31, 2023 | ||||||||||||||||||||
| Maturity | Coupon Rate | Principal Amount | ||||||||||||||||||
Term loan payable | 3/31/2024 | 12.48 | % | $ | 15,000,000 | |||||||||||||||
| Unamortized deferred financing cost | (51,396) | |||||||||||||||||||
| Unsecured notes payable, net | $ | 14,948,604 | ||||||||||||||||||
Scheduled Debt Principal Payments
Scheduled debt principal payments for each of the five calendar years following December 31, 2024 are as follows:
| Years Ending December 31, | Total | |||||||
| 2025 | $ | — | ||||||
| 2026 | 38,375,000 | |||||||
| 2027 | — | |||||||
| 2028 | — | |||||||
| 2029 | — | |||||||
| Thereafter | — | |||||||
| 38,375,000 | ||||||||
| Unamortized purchase discount | (1,853,316) | |||||||
| Total | $ | 36,521,684 | ||||||
Obligation Under Participation Agreement
As discussed in Note 2, the Company follows the guidance in ASC 860 when accounting for loan participation. Such guidance requires the transferred interests meet certain criteria in order for the transaction to be recorded as a sale. Loan participation from the Company which does not qualify for sale treatment remains on the Company’s consolidated balance sheets and the proceeds are recorded as obligation under participation agreement. As of December 31, 2024, obligation under participation agreement had a carrying value of $18.2 million, and the carrying value of the loan that is associated this obligation under participation agreement was $18.6 million (see “Participation Agreements” in Note 6). The interest rate on the obligation under participation agreement was 19.5%. There was no such obligation under participation agreement as of December 31, 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 14, 2025 | Showing above |
| 2023 | Mar 15, 2024 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.