Item 1.01. Entry into a Material Definitive Agreement.
On September 17, 2020, Craft Brew Alliance, Inc. (the "Company"), and Bank of
America, N.A. ("BofA"), executed a Sixth Amendment (the "Amendment") to the
Amended and Restated Credit Agreement dated as of November 30, 2015 (the "Credit
Agreement"), by and among the Company as borrower, its subsidiaries as
guarantors, and BofA as lender. The primary change effected by the Amendment was
to revise the financial covenants contained in Section 7.11 of the Credit
Agreement.
The Credit Agreement provides for a $45,000,000 reducing revolving facility,
including a $2,500,000 sublimit for the issuance of standby letters of credit,
as well as a term loan facility in the amount of $8,035,465 as of the date of
this report. The maximum amount of the revolving facility is subject to loan
commitment reductions in the amount of $750,000 each quarter beginning March 31,
2021. The Company may use the proceeds of the credit facility for general
corporate purposes, including capital expenditures. The term of the credit
facility expires on September 30, 2023.
As amended, the Credit Agreement requires the Company to satisfy the following
financial covenants: (i) on or after the earliest to occur of October 1, 2020 or
the termination of that certain Agreement and Plan of Merger (the "A-B Merger"),
dated as of November 11, 2019, by and among the Company, Barrel Subsidiary,
Inc., and Anheuser-Busch Companies, LLC ("ABC"), a Consolidated Leverage Ratio
of 3.50 to 1.00; (ii) on or after the earliest to occur of October 1, 2020 or
the termination of the A-B Merger, a Consolidated Fixed Charge Coverage Ratio of
1.20 to 1.00; and (iii) on a trailing four-quarter basis at September 30, 2020,
a minimum Consolidated EBITDA of $3,000,000. Failure to maintain compliance with
these covenants is an event of default and would give BofA the right to declare
the entire outstanding loan balance immediately due and payable. Except as
specifically amended by the Amendment, the Credit Agreement remains in full
force and effect according to its terms.
The foregoing description of the Amendment is qualified in its entirety by
reference to the full text of the Amendment, a copy of which is filed as Exhibit
10.1 to this report and is incorporated herein by reference.
Item 2.03. Creation of a Direct Finance Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this report is by this reference
incorporated in this Item 2.03.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
On September 17, 2020, the Company entered into an amended and restated
employment agreement (the "Employment Agreement") and a retention award
agreement (the "Retention Agreement") with Kenneth C. Kunze, the Company's Vice
President and Chief Marketing Officer.
The Employment Agreement provides for a term ending on June 30, 2021. Under the
agreement, Mr. Kunze is entitled to an annual base salary of $285,000 per year,
annual cash incentive compensation, health and other employee benefits and
stock-based awards as approved by the Compensation Committee under the Company's
executive compensation program. The Employment Agreement also provides for
participation in all of the Company's employee benefit programs for which Mr.
Kunze is eligible, including the Company's 401(k) plan. Under the Employment
Agreement, Mr. Kunze is entitled to severance equal to one year of base salary
following termination of his employment by the Company without cause or by Mr.
Kunze for good reason (each, a "Qualifying Termination"). The severance is
payable in twelve equal monthly installments and is conditioned upon Mr. Kunze
signing a general release in favor of the Company.
The Retention Agreement with Mr. Kunze provides for a retention bonus of
$149,500 payable to Mr. Kunze upon a Qualifying Termination on or after the
closing of the A-B Merger and prior to the first anniversary of the A-B Merger.
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Item 8.01. Other Events.
On September 18, 2020, the Company and ABC issued a joint press release
announcing that the U.S. Department of Justice had agreed to clear the A-B
Merger, subject to conditions outlined in a consent decree. A copy of this press
release is filed pursuant to this Item 8.01 as Exhibit 99.1 to this report and
is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
The following exhibits are filed with this Form 8-K:
10.1 Sixth Amendment to Amended and Restated Credit Agreement, dated
September 17, 2020, by and among Craft Brew Alliance, Inc., its
subsidiaries, and Bank of America, N.A.
99.1 Joint Press Release, dated September 18, 2020.
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded
in the Inline XBRL document).
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