8-K: American Rebel Holdings Secures Short-Term Debt Forbearance Amidst Bank of America Litigation and Converts OID Note

American Rebel Holdings, Inc. announced a forbearance agreement with Bank of America regarding its defaulted term loan, alongside the conversion of a significant OID Note into common stock.

Summary

• Champion Safe Company, Inc. (the Borrower), a wholly-owned subsidiary of American Rebel Holdings, Inc. (the Company), entered into a Forbearance Agreement with Bank of America, N.A. on May 30, 2025, due to a default on its term loan.
• The default stemmed from the Borrower's failure to make payment on the outstanding principal amount of the Term Loan on its Expiration Date.
• As a result of the uncured default, Bank of America filed a complaint against the Borrower and Guarantors on March 21, 2025, in Utah, seeking no less than $1,906,742.88, plus outstanding and accruing attorneys' fees, and interest.
• Under the Forbearance Agreement, Bank of America agreed to temporarily abstain from exercising certain remedies and pursuing its claims in the litigation through June 30, 2025 (the Forbearance Period), provided the Borrower and Guarantors do not breach the agreement.
• The Borrower made an initial principal payment of $100,000.00 upon the execution of the Forbearance Agreement.
• All remaining unpaid principal, accrued interest, fees, attorneys' fees, and expenses under the Credit Agreement are due in full by the close of business on June 30, 2025.
• The Forbearance Period can be extended for an additional 30 days, through July 31, 2025, upon an additional payment of $100,000.00 to Bank of America by July 1, 2025.
• The Borrower and Guarantors executed a Confession of Judgment and Verified Statement in connection with the Forbearance Agreement.
• Separately, on May 30, 2025, a lender converted $131,910 of an OID Note (dated November 11, 2024) into 100,000 shares of the Company's common stock.
• On June 3, 2025, the same lender converted the remaining $214,487.26 balance of the OID Note, including interest, into 184,934 shares of the Company's common stock.
• These share issuances, totaling 284,934 shares, were exempt from registration under Section 4(a)(2) and/or Regulation D of the Securities Act and are considered restricted securities.

Sentiment

Score: 3

Explanation: The document reveals significant financial distress, including a loan default, ongoing litigation, and the need for a very short-term forbearance agreement. While debt conversion provides some relief, it comes at the cost of shareholder dilution and highlights underlying liquidity issues. The company faces immediate and substantial challenges in resolving its debt.

Positives

• Secured a short-term forbearance agreement with Bank of America, temporarily halting active litigation and providing a window to address the defaulted debt.
• Successfully converted approximately $346,397.26 of an OID Note into common stock, reducing a debt obligation.

Negatives

• The company's subsidiary defaulted on a term loan, leading to a lawsuit from Bank of America seeking over $1.9 million.
• The forbearance period is very short (initially until June 30, 2025), indicating immediate and significant financial pressure.
• The company was required to make an initial $100,000 payment and potentially another $100,000 for a brief extension, suggesting liquidity strain.
• The execution of a Confession of Judgment significantly strengthens Bank of America's legal position and allows for rapid judgment if the agreement is breached.
• The conversion of the OID Note into common stock resulted in shareholder dilution, with 284,934 new shares issued.

Risks

• Failure to repay the full outstanding amount to Bank of America by June 30, 2025 (or July 31, 2025, if extended) will result in the Bank exercising its full remedies and resuming litigation.
• The Confession of Judgment allows Bank of America to obtain a judgment quickly against the Borrower and Guarantors upon any breach of the forbearance terms.
• Ongoing litigation with Bank of America for no less than $1,906,742.88, plus attorneys' fees and interest, poses a significant financial liability.
• Potential for further shareholder dilution if additional debt needs to be converted or new capital raised under unfavorable terms to resolve the debt situation.
• Inability to secure long-term refinancing for the Bank of America debt within the forbearance period.

Future Outlook

The company is actively pursuing a refinancing of its debt with Bank of America. The forbearance agreement provides a very short window, until June 30, 2025 (with a potential extension to July 31, 2025), to finalize this refinancing and avoid further legal action and the exercise of remedies by Bank of America. The successful resolution of the defaulted debt is critical for the company's financial stability.

Management Comments

• "The Borrower continues to pursue a refinancing of its debt with Bank of America."

Industry Context

This filing underscores the financial pressures faced by companies, particularly smaller entities, when managing significant debt obligations. The necessity of a forbearance agreement and the conversion of debt into equity are common indicators of liquidity challenges and difficulties in securing traditional financing under favorable terms. The company's subsidiary, Champion Safe Company, operates in a specific manufacturing sector, which may be subject to unique market dynamics affecting its financial performance and access to capital.

Comparison to Industry Standards

• NA

Legal Proceedings

• Bank of America, N.A. filed a complaint against Champion Safe Company, Inc. and its guarantors on March 21, 2025, in the Fourth Judicial District Court, in and for Utah County, Utah (Case No. 250401345), seeking no less than $1,906,742.88, plus outstanding and accruing attorneys' fees, all pre and post-judgment interest, equitable relief, and any other relief the Court deems just and proper.
• The Forbearance Agreement temporarily abstains Bank of America from pursuing its claims in this litigation through the Forbearance Period.
• The Borrower and Guarantors executed a Confession of Judgment and Verified Statement in connection with the Forbearance Agreement.

Stakeholder Impact

• Shareholders: Will experience dilution due to the issuance of 284,934 new common shares from the OID Note conversion. Face significant uncertainty regarding the company's ability to resolve its defaulted debt and avoid further legal action, which could negatively impact share price.
• Creditors (Bank of America): Have secured a Confession of Judgment, strengthening their position in case of further default, and received an initial $100,000 payment.
• Employees: May face increased uncertainty regarding the company's long-term financial stability, although not directly addressed in the filing.

Next Steps

• Repay all remaining unpaid principal, accrued interest, fees, attorneys' fees, and expenses to Bank of America by June 30, 2025.
• Potentially make an additional $100,000 payment by July 1, 2025, to extend the forbearance period to July 31, 2025.
• Continue actively pursuing a refinancing of the debt with Bank of America.

Key Dates

Recommendation

Keywords

American Rebel Holdings, AREB, Bank of America, Forbearance Agreement, Debt Default, OID Note Conversion, SEC 8-K, Corporate Finance, Litigation, Share Dilution, Champion Safe Company, Restricted Securities