Item 1.01 Entry into a Material Definitive Agreement.
The information set forth in Item 2.01 below is incorporated by reference into
this Item 1.01.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 22, 2020, Renin Holdings, LLC ("Renin"), a wholly-owned subsidiary
of BBX Capital, Inc. (the "Company") which manufactures and distributes sliding
doors, door systems and hardware, and home décor products, acquired
substantially all of the assets and assumed certain of the liabilities (the
"Acquisition") of Colonial Elegance Inc. ("Colonial Elegance"). Headquartered in
Montreal, Canada, Colonial Elegance is a supplier and distributor of building
products, including barn doors, closet doors, and stair parts, and its customers
include various big box retailers in the United States and Canada.
The base purchase price for the Acquisition was CAD $51.0 million (approximately
USD $39.0 million), substantially all of which was paid in cash by Renin at
closing. In addition to the base purchase price, Renin acquired estimated excess
working capital held by Colonial Elegance above an agreed upon target working
capital amount of CAD $13.0 million (approximately USD $9.9 million) for CAD
$6.7 million (approximately USD $5.1 million), of which CAD $1.3 million
(approximately USD $1.0 million) was held back by Renin at closing. Pursuant to
the terms of the Asset Purchase Agreement, as further described below, the final
working capital adjustment amount will be determined by Renin and Colonial
Elegance during the 90 day period following closing and may result in the
payment of additional amounts to Colonial Elegance, including the release of all
or a portion of the working capital adjustment holdback, or a refund to Renin
(if the estimated working capital adjustment at closing exceeds the actual
working capital adjustment by an amount in excess of the working capital
adjustment holdback).
The Company made a $5.0 million capital contribution to Renin to partially fund
the Acquisition, while the remainder of Acquisition was funded by Renin using
borrowings under the 2020 TD Bank Credit Facility (as defined and described
under Item 2.03 below).
The Acquisition was consummated pursuant to an Asset Purchase Agreement, dated
October 22, 2020, between Renin Canada Corp., a wholly-owned subsidiary of
Renin, and Colonial Elegance (the "Asset Purchase Agreement"). The Asset
Purchase Agreement contains representations, warranties, and covenants believed
to be customary for a transaction of this nature, including covenants as to
indemnification for breaches of certain representations, warranties and
covenants, subject to certain exclusions and caps. Renin has obtained a
representations and warranties insurance policy under which Renin may seek
coverage for breaches of certain of Colonial Elegance's representations,
warranties, and covenants in the Asset Purchase Agreement, subject to certain
exclusions, retention amounts, policy limits, and other terms and conditions.
The foregoing description of the Asset Purchase Agreement is a summary only,
does not purport to be complete, and is qualified in its entirety by reference
to the Asset Purchase Agreement, a copy of which is attached as Exhibit 2.1
hereto and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
In connection with the Acquisition, on October 22, 2020, Renin Canada Corp. and
Renin US LLC, each of which is a wholly-owned subsidiary of Renin, entered into
a credit agreement (the "2020 TD Bank Credit Facility") with The
Toronto-Dominion Bank ("TD Bank"), which amended and restated their existing
facility with TD Bank initially entered into in May 2017. The 2020 TD Bank
Credit Facility includes a $30.0 million term loan (the "Term Loan") and an
operating loan of up to $20.0 million (the "Operating Loan"). $30.0 million of
proceeds from the Term Loan and approximately $8.0 million of borrowings under
the Operating Loan were used to fund most of the purchase price and working
capital adjustment related to the Acquisition, as described above. Amounts
outstanding under the Term Loan and Operating Loan bear interest at (i) the
Canadian Prime Rate plus a spread between 1.375% to 1.875% per annum, (ii) the
United States Base Rate plus a spread between 1.00% to 1.50% per annum, or (iii)
LIBOR or Canadian Bankers Acceptance Rate, in each case plus a spread between
2.875% to 3.375% per annum, with the spreads applicable to each rate depending
on the Renin's total leverage. In addition to ongoing payments of interest under
the Term Loan and Operating Loan, the Term Loan requires quarterly payments of
principal based on a stated percentage of the original principal amount of $30.0
million, with approximately 37.5% of the original principal amount due at
maturity. As of October 22, 2020, approximately $11.6 million was outstanding
under the Operating Loan following the Acquistion.
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Pursuant to the terms and conditions of the 2020 TD Bank Credit Facility, Renin
is required to comply with certain financial covenants, including a total
leverage ratio and a total fixed charge coverage ratio determined quarterly. The
2020 TD Bank Credit Facility also contains other affirmative and negative
covenants believed to be customary, including those that may, among other
things, limit Renin's ability to make distributions to the Company and engage in
certain transactions, including asset acquisitions or dispositions, mergers,
consolidations, and similar transactions.
Renin has guaranteed the obligations of the borrowers under the 2020 TD Bank
Credit Facility, and the 2020 TD Bank Credit Facility is collateralized by all
of Renin's assets. In addition, the Company entered into a Pledge Agreement
pursuant to which it pledged all of its membership interests in Renin as
security for the borrower's obligations under the 2020 TD Bank Credit Facility.
The foregoing description of the 2020 TD Bank Credit Facility is a summary only,
does not purport to be complete, and is qualified in its entirety by reference
to the 2020 TD Bank Credit Facility, a copy of which is attached as Exhibit 10.1
hereto and is incorporated herein by reference.
Item 8.01 Other Events.
On October 22, 2020, the Company issued a press release announcing the
Acquisition. A copy of the press release is attached as Exhibit 99.1 hereto.
Item 9.01 Financial Statements and Exhibits
(a) Financial statements of businesses acquired. To the extent required by
applicable Securities and Exchange Commission ("SEC") rules and regulations, the
financial statements of Colonial Elegance will be filed by amendment to this
Current Report on Form 8-K not later than 71 calendar days after the date that
this initial Current Report on Form 8-K is required to be filed (as permitted by
Item 9.01(a)(4) of Form 8-K).
(b) Pro forma financial information. To the extent required by applicable SEC
rules and regulations, pro forma financial information will be filed by
amendment to this Current Report on Form 8-K not later than 71 calendar days
after the date that this initial Current Report on Form 8-K is required to be
filed (as permitted by Item 9.01(a)(4) and Item 9.01(b)(2) of Form 8-K).
(d) Exhibits.
Exhibit No. Description
2.1 Asset Purchase Agreement, dated as of October 22, 2020, by and between
Renin Canada Corp. and Colonial Elegance Inc.*
10.1 Credit Facility Agreement, dated as of October 22, 2020, by and among
Renin Canada Corp., Renin US LLC, and The Toronto-Dominion Bank
99.1 Press release dated October 22, 2020
* The schedules and exhibits to this exhibit have been excluded pursuant to Item
601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the
SEC, upon request, a copy of any excluded schedule or exhibit.
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