Item 1.01. Entry into a Material Definitive Agreement.
On
The PSA contemplates a chapter 11 process that includes the filing of a chapter 11 plan, an auction process for a potential sale of some, all, or substantially all of the Debtors' assets, and provides for the possibility of an equitization restructuring under certain conditions. Pursuant to the PSA, the Consenting Term Lenders have agreed that: (i) should the Debtors receive a qualified bid greater than or equal in value to a Reserve Price, the Consenting Term Lenders will automatically consent to and support the sale of the Debtors' assets (including a release and discharge of liens, encumbrances, and interests, subject to receipt of proceeds) or (ii) if no qualified bid's value exceeds the Reserve Price, then the Consenting Term Lenders will elect to either (a) pursue an equitization restructuring or (b) proceed with an auction at which the Consenting Term Lenders may only credit bid up to the reserve price.
The PSA contains various milestones, including:
• no later than11:59 p.m. (prevailing Eastern time) onFebruary 18, 2020 , the Debtors will have sought first day relief and theBankruptcy Court shall have entered an order (i) providing interim approval of the applicable DIP Documents, (ii) approving the Bidding Procedure and (iii) approving assumption of the PSA; • as soon as reasonably practicable, but in no event later than seven (7) days after the Petition Date, the Company Parties shall have filed the Plan, the Disclosure Statement, and the Disclosure Statement Motion, each in form and substance reasonably acceptable to the Required Consenting Term Lenders; • as soon as reasonably practicable, but in no event later thanMarch 13, 2020 , theBankruptcy Court shall have entered the final order approving the applicable DIP Documents; • as soon as reasonably practicable, but in no event later than three (3) Business Days prior to the first scheduled hearing on the Disclosure Statement Motion, the Company Parties and the Required Consenting Term Lenders shall agree to the Administrative Claims Cap; • as soon as reasonably practicable, but in no event later thanMarch 20, 2020 , theBankruptcy Court shall have entered the Disclosure Statement Order; • the Bid Deadline in the Bidding Procedures shall be no later than5:00 p.m. (prevailing Eastern time) onMarch 23, 2020 ; • in the event that the Company Parties do not receive a Qualified Bid greater than or equal in value to the Reserve Price, then no later than11:59 p.m. (prevailing Eastern time) on the date that is four (4) Business Days following the Bid Deadline, the Consenting Term Lenders shall notify the Company Parties (via electronic mail through applicable counsel) of their Lender Election;
--------------------------------------------------------------------------------
• if applicable, as soon as reasonably practicable, but in no event later thanMarch 31, 2020 , the Auction shall have occurred; • as soon as reasonably practicable, but in no event later than five (5) Business Days following selection of a Successful Bidder, the Company Parties and the Required Consenting Term Lenders shall agree to a budget reasonably acceptable to the Required Consenting Term Lenders; • as soon as reasonably practicable, but in no event later thanApril 23, 2020 , theBankruptcy Court shall have entered the Confirmation Order; and • as soon as reasonably practicable, but in no event later thanMay 30, 2020 , the Plan Effective Date shall have occurred.
The PSA also provides that the Debtors may terminate the PSA and their obligations thereunder in the event that the Debtors determine that proceeding with any transaction contemplated by the PSA would be inconsistent with the exercise of their fiduciary duties, including consideration or pursuit of an alternative proposal. . . .
Item 1.03. Bankruptcy or Receivership.
Chapter 11 Filing
On
The Debtors continue to operate their businesses and manage their properties as
"debtors-in-possession" under the jurisdiction of the
Debtor in Possession Financing
Subject to approval of the
Under the DIP Credit Agreement, the Debtors will be permitted to incur up to
3
--------------------------------------------------------------------------------
The proceeds of the DIP Facilities will be used, in part, to refinance in full the Debtors' prepetition ABL credit facility and provide incremental liquidity for working capital and letters of credit, administrative costs, premiums and fees of the Chapter 11 Cases, for payment of court approved prepetition obligations and other such purposes consistent with the DIP Facilities and the budget or as otherwise approved by the agent and lenders.
The foregoing description of the DIP Facilities and DIP Credit Agreement does
not purport to be complete and is qualified in its entirety by reference to the
final, executed DIP Credit Agreement, as approved by the
Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The commencement of the Chapter 11 Cases constitutes an event of default under the Debtors' debt agreements (the "Debt Agreements") described below:
• Term Loan Credit Agreement, dated
(U.S. ), Inc. , as lead borrower, the other facility guarantors party thereto,Wilmington Savings Fund Society , FSB, as successor administrative agent, and certain financial institutions, as lenders, as amended, supplemented and otherwise modified; and
• Second Amended and Restated Credit Agreement, dated
1Imports (U.S.), Inc. ,Bank of America, N.A ., as administrative agent and collateral agent,Merrill Lynch, Pierce, Fenner & Smith Incorporated andWells Fargo Bank, National Association as joint lead arrangers and joint lead bookrunners, various other agents and the lenders party thereto, as amended, supplemented and otherwise modified.
Any efforts to enforce payment obligations under the Debt Agreements are automatically stayed as a result of the filing of the Chapter 11 Cases and the lenders' rights of enforcement in respect of the Debt Agreements are subject to the applicable provisions of the Bankruptcy Code.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Retention Awards
On
Donna N. Colaco , President$ 920,000
$ 625,000
The Retention Awards were paid on
4
--------------------------------------------------------------------------------
a condition to receiving the Retention Award, each Executive agreed that he or she will not, absent assumption of his or her employment agreement as part of the underlying chapter 11 case of Pier 1, file any claims in the underlying chapter 11 case of Pier 1 related to any severance obligations each such Executive may otherwise assert against Pier 1 for a termination of employment that occurs prior to the Retention Date.
The foregoing description of the Retention Agreement is not complete and is qualified in its entirety by reference to the full text of the form of Retention Agreement, a copy of which is filed herewith as Exhibit 10.2 and is incorporated herein by reference.
Amendment to Non-Employee Director Compensation Plan
On
On
The foregoing description of the Plan is not complete and is qualified in its entirety by reference to the full text of the Plan, a copy of which is filed herewith as Exhibit 10.3 and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
Pier 1 cautions that trading in its securities during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for these securities may bear little or no relationship to the actual recovery, if any, by the holders in the Chapter 11 Cases. Pier 1 expects that its stockholders could experience a significant or complete loss on their investment, depending on the outcome of the Chapter 11 Cases.
Court filings and other documents related to the court-supervised process are
available at https://dm.epiq11.com/Pier1, or by calling the Debtors' claims
agent,
A copy of the press release dated
5
--------------------------------------------------------------------------------
The information being furnished in this Item 7.01 and in Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements contained in this report may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Pier 1 and the other Debtors
may also make forward-looking statements in other reports filed with the
Management's expectations and assumptions regarding: risks and uncertainties
relating to the Chapter 11 Cases, including but not limited to, Pier 1's ability
to obtain
Additional risks and uncertainties that may affect the Debtors operations and
performance include, among others: the failure by Pier 1 to identify, develop
and successfully implement immediate action plans and longer-term strategic
initiatives; the inability of Pier 1 to anticipate, identify and respond to
changing customer trends and preferences for home décor and furniture and to
identify, source, ship and deliver items of acceptable quality to its
6
--------------------------------------------------------------------------------
trends or disruption in the global credit and equity markets; the highly
competitive retail environment with companies offering similar specialty home
merchandise; factors affecting consumer spending, including employment levels
and disposable income, interest rates, consumer debt levels, fuel and
transportation costs and other factors; an inability to operate in desirable
locations at reasonable rental rates and to close underperforming stores at or
before the completion of their lease terms; failure to attract, motivate and
retain an effective management team or changes in the cost or availability of a
suitable workforce; failure to successfully manage omni-channel operations;
seasonal variations; increases in costs that are outside Pier 1's control;
adverse weather conditions and natural disasters; risks related to Pier 1's
dependence on technology in the operation of its business; failure to protect
consumer data; failure to successfully implement new information technology
systems and enhance existing systems; risks related to cybersecurity and
e-Commerce related fraud; failure to maintain positive brand perception and
recognition; risks related to imported merchandise including the health of
global, national, regional, and local economies and their impact on vendors,
manufacturers and merchandise; factors beyond Pier 1's control, including
general economic and market conditions, fluctuations in
Pier 1 assumes no obligation to update or otherwise revise its forward-looking
statements even if experience or future changes make it clear that any projected
results expressed or implied will not be realized. Additional information
concerning these risks and uncertainties is contained in
Item 9.01. Financial Statements and Exhibits.
(a) - (c) Not applicable. (d) Exhibits. Exhibit No. Description 10.1 Plan Support Agreement 10.2 Form of Retention Bonus Repayment Agreement betweenPier 1 Imports, Inc. and certain executive officers. 10.3Pier 1 Imports, Inc. Non-Employee Director Compensation Plan, as amended effectiveJanuary 1, 2020 99.1 Press release 7
--------------------------------------------------------------------------------
© Edgar Online, source