Item 1.01 Entry into a Material Definitive Agreement.
On December 16, 2021, Ducommun Aerostructures, Inc. (the "Seller"), a
wholly-owned subsidiary of Ducommun Incorporated (the "Company") entered into an
Agreement of Purchase and Sale and Agreement to Enter into Lease (the "Purchase
Agreement") by and among the Seller and an affiliate of CenterPoint Properties
(the "Buyer") for the sale and leaseback (the "Sale-Leaseback Transaction") of
its industrial property located in Carson, California, which is redistricted and
included as part of the city of Gardena, California (the "Property"). Concurrent
with the entry into, and pursuant to the terms of, the Purchase Agreement, on
December 16, 2021, the Seller sold the Property to the Buyer for an aggregate
cash purchase price of approximately $143 million. The Sale-Leaseback
Transaction generated approximately $110 million in net after-tax cash proceeds,
which the Company intends to use for strategic acquisitions, debt repayment and
general corporate purposes.
Item 8.01 Other Events.
In connection with the closing of the Sale-Leaseback Transaction, on
December 16, 2021, the Seller entered into an Industrial Building Lease
Agreement (the "Lease Agreement") with the Buyer, pursuant to which, among other
things, the Seller agreed to lease the Property from the Buyer, on a triple-net
basis, for a five-year term commencing on December 16, 2021, unless earlier
terminated. The initial lease term may be extended at Seller's option for up to
three (3) five-year renewal terms in accordance with the terms of the Lease
Agreement. Under the terms of the Lease Agreement, the Seller's financial
obligations include an aggregate base monthly rent for the Property beginning at
approximately $307 thousand per month, which rent will increase by three percent
(3%) each year of the initial term. Rent during any renewal term is 95% of fair
market value subject to three percent (3%) annual increases. The Seller is also
responsible for all costs and expenses related to the operation, use, occupancy
and management of the leased Property, including but not limited to taxes,
insurance, maintenance, repairs and replacements, and other expenses, such as
utilities. The Lease Agreement contains certain representations, warranties,
covenants, obligations, conditions, indemnification obligations and termination
provisions which are customary for leases made on a commercial triple-net basis.
Forward-Looking Statements
This Current Report on Form 8-K, including Exhibit 99.1 hereto, includes
"forward-looking statements," within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, which are intended to qualify for the "safe harbor"
from liability under the Private Securities Litigation Reform Act.
Forward-looking statements may be preceded by, followed by or include the words
"could," "may," "will," "believe," "expect," "anticipate," "plan," "estimate,"
"intend," or similar expressions. All statements other than statements of
historical fact, including, without limitation, statements with respect to the
anticipated use of the net proceeds of the Sale-Leaseback Transaction and the
anticipated effects of the Sale-Leaseback Transaction are forward-looking
statements. The Company bases these forward-looking statements on its current
views with respect to future events and its financial performance. Actual
results could differ materially from those projected in the forward-looking
statements. These forward-looking statements are subject to risks, uncertainties
and assumptions, including the occurrence of any event, change, or other
circumstances that could give rise to those detailed from time to time in the
Company's periodic reports filed with the Securities and Exchange Commission.
You should not place undue reliance on any forward-looking statements. You
should understand that many important factors, including those discussed herein,
could cause the Company's results to differ materially from those expressed or
suggested in any forward-looking statement. Except as required by law, the
Company does not undertake any obligation to update or revise these
forward-looking statements to reflect new information or events or circumstances
that occur after the date of this Current Report, December 16, 2021, or to
reflect the occurrence of unanticipated events or otherwise. Readers are advised
to review the Company's filings with the Securities and Exchange Commission
(which are available from the SEC's EDGAR database at www.sec.gov).
On December 20, 2021, the Company issued a press release announcing the
completion of the Sale-Leaseback Transaction, a copy of which is attached hereto
as Exhibit 99.1.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
2.1 Agreement of Purchase and Sale and Agreement to Enter into Lease dated
as of December 16, 2021 by and among Ducommun Aerostructures, Inc. and
Centerpoint 268 Gardena LLC.
99.1 Ducommun Incorporated press release issued on December 20, 2021.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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