LSC COMMUNICATIONS, INC. Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on
On
The Debtors will present the Successful Bid and the Purchase Agreement (as
defined below) to the
Stock and Asset Purchase Agreement
On
The Final Cash Consideration will be applied by the Sellers as follows:
• First, to repay or cause to be repaid all indebtedness, liabilities
and other obligations outstanding under the Company's Secured
Superpriority Debtor-in-Possession Credit Agreement, dated as of
April 15, 2020 (the "DIP Facility");
• Second, to repay or cause to be repaid all indebtedness, liabilities
and other obligations outstanding under the senior secured revolving
credit facility under the Prepetition Credit Agreement;
• Third, to pay certain allowed and unpaid expenses of the Debtors, in
amounts determined by the Debtors in their reasonable discretion
subject to the consent of the professional advisors to the ad hoc
group of the holders of the senior secured term loan B facility under
the Prepetition Credit Agreement and holders of senior notes under the
Prepetition Indenture (the "Junior Creditors"), relating to
administering and winding down the Bankruptcy Proceeding (as defined
in the Purchase Agreement) after the closing, including the
professional fee carve-out provided for in the DIP Order (as defined
below) and such other amounts as are set forth in the Debtors'
wind-down budget, after taking into account application of the
available cash of the Sellers; and
• Fourth, to satisfy the UCC Settlement Amount (as defined in the
Purchase Agreement) (if any).
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At the closing of the Transactions, Buyer may hold back from the amount
available to distribute from Buyer to the Junior Creditors under that certain
Credit Bid Support Agreement, dated as of
In accordance with the Bid Procedures Order, the Company designated Buyer as the
"stalking horse" bidder and granted the following bid protections to Buyer under
Section 363 of the Bankruptcy Code: (a) a break-up fee in an amount equal to
3.0% of the Estimated Cash Consideration, payable if Sellers enter into a
Competing Transaction (as defined in the Purchase Agreement); and (b) an expense
reimbursement of up to 1.0% of the Estimated Cash Consideration (subject to a
maximum reimbursement amount of
Buyer will assume the Company's qualified pension plan unless (i) the Debtors,
the
Buyer and the Sellers have made customary representations, warranties and
covenants in the Purchase Agreement. Buyer's and the Sellers' obligations to
consummate the Transactions under the Purchase Agreement are subject to certain
conditions contained therein, including, among other conditions, (a) conditions
relating to the accuracy of the parties' respective representations and
warranties made in the Purchase Agreement and the performance of the parties'
respective pre-closing covenants, including Sellers' performance of certain
covenants related to Sellers' real property interests, (b) the expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act applicable to the Transactions and the receipt of certain other
regulatory approvals, including approval from the
The Purchase Agreement will automatically terminate (i) by mutual written
consent of Buyer and the Sellers or (ii) upon the entry by the Sellers into a
definitive agreement with respect to a Competing Transaction, subject to certain
rights of Buyer as described more fully in the Purchase Agreement. The Purchase
Agreement also provides for certain termination rights, including, among other
rights, the right of: (a) the Sellers or Buyer to terminate if (i) the closing
has not occurred by
Item 7.01 Regulation FD. Disclosure Information
To facilitate discussions concerning the sale process, the Company provided certain financial and other information to certain Junior Creditors of the Company pursuant to non-disclosure agreements with such Junior Creditors (the "NDAs"). Pursuant to the NDAs, the Company agreed to disclose publicly any material non-public information disclosed to such Junior Creditors after a specified period or upon the occurrence of certain events set forth in the NDAs. The information included in this Form 8-K as Exhibit 99.1, including a business overview and certain forecasts regarding the Business (the "Disclosure Information"), is being furnished to satisfy the Company's public disclosure obligations under the NDAs.
Management of the Company prepared the forecasts contained therein from certain internal financial projections based on expectations, beliefs, opinions, and assumptions of the Company's management that the Company's management believed were reasonable at the time they were made. Such expectations, beliefs, opinions, and assumptions may not be appropriate as of the date hereof in light of developments in the Company's business and the broader market for the publishing industry. The forecasts were not prepared with a view towards public disclosure and were not prepared in accordance with generally accepted accounting principles or any published
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guidelines for preparation and presentation of "prospective financial information." The inclusion of the forecasts in this Form 8-K should not be regarded as an indication that the Company or any other person considered, or now considers, this information to be predictive of actual future results, and does not constitute an admission or representation by any person that such information is material, or that the expectations, beliefs, opinions, and assumptions that underlie such forecasts remain the same as of the date of this Form 8-K, and readers are cautioned not to place undue reliance on the prospective financial information.
Neither the independent auditor of the Company nor any other independent accountant has examined, compiled, or performed any procedures with respect to the prospective financial information contained in this Form 8-K. Accordingly, none has expressed any opinion or any other form of assurance on such information or its achievability and none assumes any responsibility for the prospective financial information. Except as required by law, the Company does not currently intend to update or revise publicly any of the information contained or incorporated herein to reflect circumstances or other events occurring after the date the financial projections were prepared or to reflect the occurrence of future events. These considerations should be taken into account in reviewing the financial projections, which were prepared as of an earlier date. For additional information on factors that may cause actual future financial results to vary materially from the information presented herein, see the section entitled "Cautionary Note Regarding Forward-Looking Statements" below.
Press Release
On
The information contained in this Item 7.01 and Exhibit 99.1 and Exhibit 99.2 shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such section, nor will such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
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Cautionary Note Regarding Forward-Looking Statements
This Form 8-K contains certain forward-looking statements. These statements may
be identified by the use of forward looking terminology such as "anticipate,"
"believe," "continue," "could," "estimate," "expect," "intend," "may," "might,"
"our vision," "plan," "potential," "preliminary," "predict," "should," "will,"
or "would" or the negative thereof or other variations thereof or other
comparable terminology and include, but are not limited to, statements regarding
the Purchase Agreement, the Transactions, the outcome and timing of the Chapter
11 process, and other statements regarding the Company's strategy and future
operations, performance and prospects. We have based these forward-looking
statements on our current expectations, assumptions, estimates and projections.
While we believe these expectations, assumptions, estimates and projections are
reasonable, such forward-looking statements are only predictions and involve
known and unknown risks and uncertainties, many of which are beyond our control,
including, but not limited to: the actions and decisions of our creditors and
other third parties with interests in the Chapter 11 Cases; our ability to
address the going concern considerations described in the footnotes to our
audited consolidated financial statements and maintain liquidity to fund our
operations during the Chapter 11 Cases; our ability to obtain
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Exhibit 2.1* Stock and Asset Purchase Agreement, dated as ofSeptember 15, 2020 , by and amongLSC Communications, Inc. and certain of its subsidiaries party thereto,ACR III Libra Holdings LLC and, solely with respect to Section 9.13 of the Purchase Agreement,Atlas Capital Resources III LP andAtlas Capital Resources (P) III LP . 99.1 Disclosure Information provided in connection with discussions with certain Junior Creditors. 99.2 Press Release, dated as ofSeptember 15, 2020 , issued byLSC Communications, Inc. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Certain schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K.The Company agrees to furnish a supplemental copy of any omitted schedule or exhibit to theU.S. Securities and Exchange Commission upon request. -6-
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