Item 1.01. Entry into a Material Definitive Agreement.
On May 17, 2022, Clearfield, Inc. (the "Company") and its newly formed,
wholly-owned subsidiary Clearfield Finland Oy ("Buyer") entered into a Share
Sale and Purchase Agreement (the "Purchase Agreement") pursuant to which the
sellers party to the Purchase Agreement have agreed to sell to Buyer all of the
issued and outstanding shares of Nestor Cables Ltd ("Nestor Cables"), a Finnish
company engaged in the development and manufacturing of fiber optic cable
solutions in Northern Europe. Upon closing of the transactions contemplated by
the Purchase Agreement, Nestor Cables will become a wholly-owned subsidiary of
Buyer. The closing is subject to customary closing conditions, as well as
approval from the Ministry of Economic Affairs and Employment of Finland under
the Finnish Act on the Screening of Foreign Corporate Acquisitions.
As consideration for the transactions contemplated by the Purchase Agreement,
Buyer will pay at closing an aggregate of approximately EUR €7,947,500 in cash
to the sellers for their Nestor Cables shares (plus a 2% per annum interest
amount from the period June 1, 2022 to the closing date), an aggregate of
approximately EUR €5,380,000 in principal and any then-accrued interest on
capital loans made to Nestor Cables by certain creditors, and pay or assume an
additional approximately EUR €7,418,000 in principal amount of interest-bearing
indebtedness. The Company expects total cash required at closing will be
approximately USD $17 million, which is expected to be funded from draw from the
Company's Loan Agreement with Bremer Bank, National Association entered into on
April 27, 2022. The Company has guaranteed the liabilities and obligations of
Buyer related to the transaction consideration.
Buyer and the sellers each have made certain representations, warranties and
covenants in the Purchase Agreement. Sellers' covenants include covenants
relating to the conduct of Nestor Cables' business during the period between the
execution of the Purchase Agreement and closing, and a 24-month non-competition
covenant and a 36-month non-solicitation covenant commencing upon the closing of
the transaction. The Purchase Agreement representations, warranties and
covenants were made solely for the purposes of the Purchase Agreement and of
specific dates, were solely for the benefits of the parties thereto, and may be
subject to important qualifications and limitations agreed to by the parties in
connection with the negotiated terms of the Purchase Agreement. Moreover, some
of those representations and warranties may not be accurate or complete as of
any specified date, may be subject to certain disclosures between the parties
and a contractual standard of materiality different from those generally
applicable to the Company's SEC filings. In addition, the representations and
warranties were made for purposes of allocating risk among the parties to the
Purchase Agreement and should not be relied upon as establishing factual
matters.
If the closing of the transactions contemplated by the Purchase Agreement has
not taken place by September 30, 2022, either of the parties may terminate the
Purchase Agreement upon written notice to the other party; provided, however, a
party will not be entitled to terminate the Purchase Agreement if the failure
for the closing to take place by such date is due to a breach of the Purchase
Agreement by such party.
The foregoing summary of the Purchase Agreement does not purport to be complete
and is subject to and qualified in its entirety by reference to the Purchase
Agreement, which will be filed as an exhibit to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 2022.
On May 17, 2022, the Company issued a press release announcing the execution of
the Purchase Agreement. A copy of the press release is filed as Exhibit 99.1
hereto and is incorporated herein by reference. Also furnished hereto as Exhibit
99.2 is the slide presentation to be used by Cheryl Beranek, the Company's
President and Chief Executive Officer, and Daniel Herzog, the Company's Chief
Financial Officer, during the live webcast and telephone conference relating to
the execution of the Purchase Agreement.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
99.1 Press release of Clearfield, Inc. issued on May 17, 2022.
99.1 Presentation of Clearfield, Inc. for May 17, 2022 live webcast
and telephone conference.
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