CHS INC. Item 1.01. Entry into a Material Definitive Agreement. OnAugust 14, 2020 ,CHS Inc. (the "Company") entered into a Note Purchase Agreement (the "Note Purchase Agreement") with the accredited investors signatory thereto (collectively, the "Purchasers"), pursuant to which the Company will issue and sell, in a private placement, senior notes in the aggregate principal amount of$375,000,000 . The Company will issue these notes in four series, in the following designations and aggregate principal amounts: (i)$95,000,000 aggregate principal amount of its Series Y Senior Notes dueNovember 2, 2027 (the "Series Y Notes"); (ii)$100,000,000 aggregate principal amount of its Series Z Senior Notes dueNovember 2, 2030 (the "Series Z Notes"); (iii)$65,000,000 aggregate principal amount of its Series AA Senior Notes dueNovember 2, 2032 (the "Series AA Notes"); and (iv)$115,000,000 aggregate principal amount of its Series BB Senior Notes dueNovember 2, 2035 (the "Series BB Notes" and, together with the Series Y Notes, the Series Z Notes and the Series AA Notes, the "Notes"). The Note Purchase Agreement provides that the Company will issue the Notes to the Purchasers, and that the Purchasers will pay the aggregate purchase price for the Notes to the Company, onNovember 2, 2020 (the "Closing Date"), subject to the satisfaction of certain customary closing conditions set forth in the Note Purchase Agreement, including, among other things, closing conditions relating the accuracy of the representations and warranties of the Company contained in the Note Purchase Agreement, the absence of any default or event of default under the Note Purchase Agreement, the performance and compliance by the Company with all agreements and conditions contained in the Note Purchase Agreement required to be performed or complied with by it prior to or as of the Closing Date and the delivery of certain legal opinions and closing certificates. The Note Purchase Agreement requires the Company to offer to prepay all of the outstanding Notes in full, together with unpaid accrued interest to the date of prepayment, in the event of a "change in control" of the Company. For purposes of the Note Purchase Agreement, a "change in control" of the Company means any person or entity, or any group thereof acting in concert, together with their respective affiliates, directly or indirectly controlling or owning (beneficially or otherwise) in the aggregate more than 50% of the aggregate voting power of the issued and outstanding voting interests of the Company. The Note Purchase Agreement also provides that the Company may, at its option and at any time, prepay all or part of the Notes, in integral multiples of$1,000,000 and in a minimum amount of$5,000,000 , at 100% of the principal amount prepaid, plus interest thereon to the date of prepayment and a "make-whole amount" equal to the excess, if any, of the discounted value of the remaining scheduled payments with respect to the Notes being prepaid over the aggregate principal amount of those Notes (as more particularly described in the Note Purchase Agreement). The Note Purchase Agreement contains customary representations, warranties and covenants, including financial covenants (1) not to permit the ratio of consolidated funded debt, determined as of the end of each fiscal quarter, to consolidated cash flow, as measured on the previous consecutive four fiscal quarters (the "Leverage Ratio"), to exceed 3.50 to 1.00 and (2) not to permit the ratio of adjusted consolidated funded debt, determined as of the end of each fiscal quarter, to consolidated net worth, determined as of that date, to exceed 0.80 to 1.00. The Note Purchase Agreement also restricts the Company and its subsidiaries from creating, issuing, incurring, assuming or permitting to exist any Priority Debt (as defined in the Note Purchase Agreement), if after giving effect thereto, the aggregate outstanding principal amount of all Priority Debt would exceed 20.0% of the Company's consolidated net worth. The Note Purchase Agreement includes a "most favored lender" provision generally requiring that, in the event any agreement or series of agreements of the Company or any of its subsidiaries creating or evidencing indebtedness for borrowed money, or any renewal, extension, amendment, supplement, restatement, replacement or refinancing thereof, in each case, in a principal amount outstanding or available for borrowing equal to or greater than$100,000,000 , at any time includes any financial covenant, event of default or prepayment right not included in the Note Purchase Agreement, or that would be more beneficial to the holders of the Notes than any analogous provision contained in the Note Purchase Agreement (an "Additional Provision"), then unless waived by the holders of a majority in aggregate principal amount of the Notes then outstanding, the Additional Provision will be deemed to be incorporated by reference into the Note Purchase Agreement. The Note Purchase Agreement also provides for the amendment, modification or deletion of an Additional Provision if such Additional Provision is amended or modified under, or deleted from, the underlying agreement, provided that no default or event of default has occurred and is continuing under the Note Purchase Agreement. The Note Purchase Agreement contains customary events of default, including cross-defaults relating to other indebtedness. If certain events of default occur and are continuing, holders of a majority in aggregate principal amount of the Notes then outstanding may, upon notice to the Company, declare all the Notes then outstanding to be immediately due and payable. The occurrence of certain other events of default involving insolvency or bankruptcy of the Company or any of its subsidiaries will result in all the Notes then outstanding becoming immediately due and payable without any action by or on behalf of any holder of Notes. In addition, in the case of certain non-payment defaults that have occurred and are continuing, any holder of Notes affected by the default may, upon notice to the Company, declare all such holder's Notes to be immediately due and payable. --------------------------------------------------------------------------------
The Notes are unsecured and rank at least pari passu with all of the Company's other unsecured senior debt.
Interest on the Series Y Notes will accrue at a rate of 3.24% per annum,
interest on the Series Z Notes will accrue at a rate of 3.48% per annum,
interest on the Series AA Notes will accrue at a rate of 3.58% per annum and
interest on the Series BB Notes will accrue at a rate of 3.73% per annum, in
each case, computed on the basis of a 360-day year of 12 30-day months;
provided, that: (1) if during any fiscal quarter the Leverage Ratio (rounded to
the second decimal place, with .005 being rounded upward) for the immediately
preceding period is greater than 3.00 to 1.00, but the Notes had an investment
grade rating from any nationally recognized statistical rating organization
during that fiscal period, then the interest rate on each of the Notes will be
0.25% greater than it otherwise would have been; (2) if during any fiscal
quarter the Leverage Ratio (rounded to the second decimal place, with .005 being
rounded upward) for the immediately preceding period is greater than 3.00 to
1.00 but less than or equal to 3.25 to 1.00, and the Notes did not have an
investment grade rating from any nationally recognized statistical rating
organization during that fiscal period, then the interest rate on each of the
Notes will be 0.50% greater than it otherwise would have been; and (3) if during
any fiscal quarter the Leverage Ratio (rounded to the second decimal place, with
.005 being rounded upward) for the immediately preceding period is greater than
3.25 to 1.00, and the Notes did not have an investment grade rating from any
nationally recognized statistical rating organization during that fiscal period,
then the interest rate on each of the Notes will be 1.00% greater than it
otherwise would have been; provided, further, that, to the extent permitted by
law, interest on any overdue payment of interest and, during the continuance of
an event of default, on any unpaid balance and on any overdue payment of any
"make-whole amount" will accrue at a rate equal to the greater of (x) 2.00% per
annum greater than it otherwise would have been or (y) 2.00% over the rate of
interest publicly announced by
Certain Purchasers are also holders of notes previously issued by the Company in
private placement offerings.
The foregoing description of the Note Purchase Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Note Purchase Agreement, a copy of which is attached hereto as Exhibit 10.1
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.
Reference is made to the information set forth in Item 1.01 of this Current Report on Form 8-K, which is incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. Exhibit No. Description
10.1 Note Purchase Agreement, dated as ofAugust 14, 2020 , amongCHS Inc. and each of the Purchasers signatory thereto
--------------------------------------------------------------------------------
© Edgar Online, source
