Article 1.01 Entry into an essential closing settlement.

First lien credit score settlement and first lien time period mortgage

Certain March 10, 2021 (the “time limit”), Franchise Group, Inc., a Delaware
firm (the “Firm”), Newco PSP Franchise Group, LLC (“Purchaser”), a
Delaware restricted legal responsibility firm and subsidiary of the Firm, Worth Acquisition, LLC, a Delaware restricted legal responsibility firm and oblique subsidiary of the Firm (“Valor”), and Newco Intermediate AF Franchise Group, LLC, a Delaware restricted legal responsibility firm and an oblique subsidiary of the Firm (“FG Newco Intermediate AF” and, along with the Firm, the Purchaser and Valor, the “Debtors”), have entered right into a Senior Credit score Settlement (the “ senior credit score ”)) with the assorted lenders who’re events to it now and again (the“ first Most popular lenders”) and JPMorgan Chase Financial institution, NA., as administrative agent and collateral agent (“First Privilege Agent”). The primary lien credit score settlement offers for a $ 1,000.0 million Senior Secured Time period Mortgage (the “Senior Time period Mortgage”) made by the Senior Most popular lenders to a number of debtors.

The obligations of the debtors beneath the senior credit score settlement are assured by the debtors (besides with respect to that borrower’s personal obligations) and every of the opposite direct and oblique subsidiaries of the corporate (aside from sure excluded subsidiaries, together with inclusive, so long as these entities are offered throughout a specified post-closing interval, Franchise Group Intermediate L 1, LLC, has
Delaware restricted legal responsibility firm and an oblique subsidiary of the Firm, and its direct and oblique subsidiaries) (collectively with the Debtors, the “Mortgage Events”) pursuant to a First Hyperlink Assure Settlement (the “First Hyperlink Assure Settlement “), By and between the lenders and the primary Privilege Agentand should be assured by every of the direct and oblique subsidiaries of the corporate (aside from sure excluded subsidiaries) which can be fashioned or acquired after the time limit. The obligations of the debtors beneath the senior credit score settlement are secured in precedence by considerably all the property (aside from the ABL precedence assure (as outlined beneath)) of the events to the mortgage (the “precedence assure at time period ‘) and are secured in second precedence by bank card receivables, accounts receivable, deposit accounts, securities accounts, merchandise accounts, inventories and property (aside from gear) of the Events to the mortgage, in every case, topic to sure exceptions (the “ABL Precedence Assure”), pursuant to a primary lien assure settlement (the “First lien assure settlement”), by and between the events to the mortgage and the primary Privilege Agent, and should be assured by the property of every of the direct and oblique subsidiaries of the Firm (aside from sure excluded subsidiaries) which can be fashioned or acquired after the time limit. The proceeds of the Senior Time period Mortgage, along with the proceeds of the Second Lien Time period Mortgage (as outlined beneath) and sure money of the Firm and its subsidiaries, have been or will likely be used to finish the transaction (as outlined beneath.), to prepay sure current money owed of the Mortgage Events and their subsidiaries, and to pay charges and bills incurred in reference to them and sure associated transactions, together with the conclusion of the ABL Settlement (as outlined beneath).

The primary time period mortgage with privilege will mature on March 10, 2026, until the maturity is accelerated topic to the situations set out within the Senior Credit score Settlement. The senior lien time period mortgage will, on the choice of the debtors, bear curiosity at both (i) a fee each year primarily based on LIBOR for an curiosity interval of 1, two, three or six months (or inside sure circumstances, twelve months or lower than one month), plus an rate of interest margin of 4.75% (every, a “senior LIBOR mortgage”), with a LIBOR ground of 0.75%, or (ii) an alternate base fee decided as supplied for within the Senior Credit score Settlement, plus an rate of interest margin of three.75% (every, a “Senior ABR Mortgage”), with a efficient different base ground of 1.75%. Curiosity on senior LIBOR loans is payable in arrears on the finish of every relevant curiosity interval (and, for an curiosity interval of greater than three months, at three month intervals throughout that curiosity interval. ), and curiosity on ABR senior loans. is payable in arrears on the final enterprise day of every calendar quarter.

Debtors are required to repay the senior time period mortgage in equal quarterly installments of 2,500,000 USD the final day of every calendar quarter, ranging from June 30, 2021. Debtors are required to prepay the senior time period mortgage with 50% of consolidated extra money move on an annual foundation, topic to sure exceptions and reductions primarily based on leverage to 25% and 0% , and with 100% of the web quantity. money proceeds from sure different customary occasions, together with sure asset gross sales (however excluding gross sales of ABL precedence ensures), together with customary reinvestment rights and drawdowns primarily based on leverage to 25 % and 0%, in every case, topic to sure exceptions. Topic to sure exceptions, repayments of the senior time period mortgage inside six months of the time limit as a part of a refinancing to scale back the value of the senior time period mortgage are topic to a reimbursement premium. anticipated by 1.00%. Debtors might also be required to pay LIBOR breach and redeployment charges in sure restricted circumstances.

The primary lien credit score settlement, the primary lien safety settlement and the primary lien safety settlement collectively embody the customary monetary and restrictive covenants binding the events to the mortgage, together with the supply of economic statements and different reviews. . Covenants restrict the flexibility of events to the mortgage to, amongst different issues, incur money owed, contract liens, make investments, promote property, pay dividends, and enter into transactions with associates. The monetary covenants set out within the senior credit score settlement embody a most complete leverage ratio (web of sure money) and a minimal mounted price protection ratio, in every case with respect to the corporate and its subsidiaries, decided on a consolidated foundation, as being examined on the finish of every fiscal quarter starting with the primary full fiscal quarter ending after the steadiness sheet date. As well as, the senior credit score settlement consists of customary occasions of default, the incidence of which can require debtors to pay a further 2.00% curiosity on the primary lien time period mortgage and / or might lead to, amongst different issues penalties, an acceleration of fee. Senior Time period Mortgage Obligations, Calling on Collateral or Exercising Collateral Recourse.

The above descriptions are topic and certified of their entirety by the Full Textual content of every of the First Lien Credit score Agreements, the First Lien Assure Settlement, and the First Lien Assure Settlement, every of them. being integrated herein by reference in Displays 10.1 – 10.3 to this report on Type 8-Ok, respectively.

Second lien credit score settlement and second lien time period mortgage

As of the Closing Date, the Debtors have entered right into a secondary credit score settlement (the “Second Lien Credit score Settlement”) with varied lenders now and again. . .

Merchandise 2.01 Completion of Acquisition or Disposition of Property.

Acquisition of PSP


On the time limit, the client accomplished its acquisition (the “transaction”, which had beforehand been introduced within the present report on Type 8-Ok filed by the corporate with the Safety and Commerce Fee (the “SEC”) on January 28, 2021) of all excellent holdings of PSP Midco, LLC, a Delaware
restricted legal responsibility firm (“PSP Midco” and, along with its direct and oblique subsidiaries, collectively, “PSP”), pursuant to the phrases of this amended and restated share buy settlement, dated March 3, 2021 (the “A&R Share Buy Settlement”), entered into by the Purchaser with every of the (i) PSP Holdings, LLC, a Delaware restricted legal responsibility firm (“PSP Holdings”), (ii)
Sentinel Capital Companions VI-A, LP, a Delaware restricted partnership, (iii)
Sentinel PSP Blocker, Inc., a Delaware firm, (iv) PSP Midco, (v) Middleman PSP, LLC, a Delaware restricted legal responsibility firm (“PSP Intermediate”), (vi) Sentinel Capital Companions, LLC, a Delaware restricted legal responsibility firm, solely for the aim of accepting the restrictive covenants set out in Sections 6.8 and 6.9 of the A&R Share Buy Settlement, (vii) PSP Midco Holdings, LLC, a Delaware restricted legal responsibility firm (“Midco participations”, and topic to the provisions of the A&R share buy settlement, every of the PSP Holdings, PSP Intermediate and Midco participations, a “Vendor”), and (viii) the Firm, solely for the aim of accepting the restrictive covenants set forth in Part 10.19 of the A&R Share Buy Settlement.

The foregoing abstract of the A&R Share Buy Settlement and the transactions contemplated thereby doesn’t purport to be full and is topic to and certified in its entirety by the total textual content of the A&R Share Buy Settlement, which was filed as Exhibit 2.1 of the Present Report on Type 8-Ok filed by the corporate with the SECOND certain March 8, 2021 and integrated herein by reference.

To the extent required, the data set out in part 1.01 of the present reviews on Type 8-Ok filed by the corporate with the SECOND on every of January 28, 2021 and March 8, 2021 and the data introduced in Exhibit 99.1 of the present report on Type 8-Ok filed by the corporate with the SECOND certain March 10, 2021
are integrated herein by reference.

Merchandise 2.03 Creation of a Direct Monetary Obligation or an Obligation beneath a

           Off-Steadiness Sheet Association of a Registrant.



To the extent required, the data set out in part 1.01 of this present report on Type 8-Ok is integrated herein by reference.

Level 9.01 Monetary statements and supporting paperwork.

(a) Monetary statements of acquired companies

The monetary statements required by this level in relation to the transaction will likely be filed as quickly as doable, and in any occasion no later than 71 days after the date on which this present report on Type 8-Ok is to be filed in accordance with level 2.01 .

(b) Professional forma monetary data

The professional forma monetary data required by this level in relation to the transaction will likely be filed as quickly as doable and, in any occasion, no later than 71 days after the date on which this present report on Type 8-Ok is to be filed in accordance with in level 2.01.

(d) Displays


The next displays are filed with this report on Type 8-Ok:

  10.1     First Lien Credit score Settlement, dated March 10, 2021, amongst Franchise
         Group, Inc., a Delaware company, as a Borrower and as Lead Borrower,
         Franchise Group Newco PSP, LLC, a Delaware restricted legal responsibility firm,
         Valor Acquisition, LLC, a Delaware restricted legal responsibility firm, and
         Franchise Group Newco Intermediate AF, LLC, a Delaware restricted legal responsibility
         firm, every as a Borrower, the Lenders now and again social gathering thereto
         and JPMorgan Chase Financial institution, N.A., as Administrative Agent and as Collateral
         Agent.*

  10.2     First Lien Assure Settlement, dated March 10, 2021, amongst Franchise
         Group, Inc., a Delaware company, Franchise Group Newco PSP, LLC, a
         Delaware restricted legal responsibility firm, Valor Acquisition, LLC, a Delaware
         restricted legal responsibility firm, Franchise Group Newco Intermediate AF, LLC, a
         Delaware restricted legal responsibility firm, the opposite Guarantors social gathering thereto and
         JPMorgan Chase Financial institution, N.A., as Administrative Agent.*








  10.3     First Lien Collateral Settlement, dated March 10, 2021, amongst Franchise
         Group, Inc.,  a Delaware company, Franchise Group Newco PSP, LLC, a
         Delaware restricted legal responsibility firm,  Valor Acquisition, LLC, a Delaware
         restricted legal responsibility firm, Franchise Group Newco Intermediate AF, LLC, a
         Delaware restricted legal responsibility firm, the opposite Grantors social gathering thereto and
         JPMorgan Chase Financial institution, N.A., as Collateral Agent.*

  10.4     Second Lien Credit score Settlement, dated March 10, 2021, amongst Franchise
         Group, Inc., a Delaware company, as a Borrower and as Lead Borrower,
         Franchise Group Newco PSP, LLC, a Delaware restricted legal responsibility firm,
         Valor Acquisition, LLC, a Delaware restricted legal responsibility firm, and
         Franchise Group Newco Intermediate AF, LLC, a Delaware restricted legal responsibility
         firm, every as a Borrower, the Lenders now and again social gathering thereto
         and Alter Domus (US) LLC, as Administrative Agent and as Collateral
         Agent.*

  10.5     Second Lien Assure Settlement, dated March 10, 2021, amongst Franchise
         Group, Inc., a Delaware company, Franchise Group Newco PSP, LLC, a
         Delaware restricted legal responsibility firm, Valor Acquisition, LLC, a Delaware
         restricted legal responsibility firm, Franchise Group Newco Intermediate AF, LLC, a
         Delaware restricted legal responsibility firm, the opposite Guarantors social gathering thereto and
         Alter Domus (US) LLC, as Administrative Agent.*

  10.6     Second Lien Collateral Settlement, dated March 10, 2021, amongst Franchise
         Group, Inc., a Delaware company, Franchise Group Newco PSP, LLC, a
         Delaware restricted legal responsibility firm, Valor Acquisition, LLC, a Delaware
         restricted legal responsibility firm, Franchise Group Newco Intermediate AF, LLC, a
         Delaware restricted legal responsibility firm, the opposite Grantors social gathering thereto and
         Alter Domus (US) LLC, as Collateral Agent.*

  10.7     Third Amended and Restated Mortgage and Safety Settlement, dated March 10,
         2021 (as the identical could also be amended, restated, amended and restated,
         supplemented or in any other case modified now and again), amongst Franchise
         Group, Inc., a Delaware company, as Administrative Borrower and a
         Borrower, American Freight Outlet Shops, LLC, a Delaware restricted
         legal responsibility firm, American Freight, LLC, a Delaware restricted legal responsibility
         firm, Franchise Group Newco PSP, LLC, a Delaware restricted legal responsibility
         firm, Pet Provides "Plus", LLC, a Delaware restricted legal responsibility firm,
         Valor Acquisition, LLC, a Delaware restricted legal responsibility firm, Vitamin
         Shoppe Industries LLC, a New York restricted legal responsibility firm, Franchise
         Group Newco Intermediate AF, LLC, a Delaware restricted legal responsibility firm,
         every as a Borrower, the Guarantors now and again social gathering thereto, the
         Lenders and different entities now and again events thereto and JPMorgan
         Chase Financial institution, N.A., as Agent.*

  10.8     Second Amended and Restated Warranty Settlement, dated March 10, 2021 (as
         it could be amended, restated, amended and restated, supplemented or
         in any other case modified now and again), amongst Franchise Group, Inc., a
         Delaware company, as a Guarantor, the opposite Guarantors from time to
         time social gathering thereto and JPMorgan Chase Financial institution, N.A., as Agent.

  10.9     Third Amended and Restated Pledge Settlement, dated March 10, 2021 (as
         the identical could also be amended, restated, amended and restated, supplemented or
         in any other case modified now and again), amongst Franchise Group, Inc., a
         Delaware company, as Administrative Borrower and a Pledgor, the opposite
         Pledgors now and again social gathering thereto and JPMorgan Chase Financial institution, N.A., as
         Agent.*

104      Cowl Web page Interactive Knowledge File (embedded inside the Inline XBRL
         doc).



* In accordance with level 601 (b) (2) of the SK Regulation, the annexes to the settlement have been omitted from this report on kind 8-Ok and will likely be supplied along with the Safety and Commerce Fee on request from
Safety and Commerce Fee.

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