Current Report Filing (8-k)
February 08 2021 - 8:49AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR
15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 5, 2021
Whole
Earth Brands, Inc.
(Exact name of registrant as specified in
its charter)
Delaware
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001-38880
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38-4101973
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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125 S. Wacker Drive
Suite 3150
Chicago, IL 60606
(Address of principal executive offices,
including zip code)
Registrant’s telephone number, including
area code: (312) 840-6000
Not Applicable
(Former name or former address, if changed
since last report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to
Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section
12(b) of the Act:
Title of each class
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Trading
Symbol(s)
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Name
of each exchange on which
registered
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Common stock, par value $0.0001 per share
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FREE
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The NASDAQ Stock Market LLC
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Warrants to purchase one-half
of one share of common stock
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FREEW
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The NASDAQ Stock Market LLC
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Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule
12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth
company x
If an emerging growth company, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Introductory Note.
As previously
disclosed, on December 17, 2020, Whole Earth Brands, Inc. (“Whole Earth” or the “Company”)
entered into a stock purchase agreement (the “Purchase Agreement”) with WSO Investments, Inc. (the “Target”
and together with its subsidiaries “Wholesome”), WSO Holdings, LP (“WSO Partnership”), Edwards
Billington and Son, Limited (“EBS”), WSO Holdings, LLC (“WSO LLC,” and together with WSO
Partnership and EBS, the “WSO Sellers”), and WSO Partnership, in its capacity as representative for the WSO
Sellers. The Target is the direct parent of its wholly-owned subsidiary Wholesome Sweeteners, Incorporated, which was formed to
import, market, distribute, and sell organic sugars, unrefined specialty sugars, and related products.
On February
5, 2021, pursuant to the terms of the Purchase Agreement, (i) Whole Earth (acting through its direct wholly-owned subsidiary,
Project Taste Intermediate LLC, as its designee) purchased and acquired all of the issued and outstanding shares of capital stock
of the Target from the WSO Sellers, for (x) an initial cash purchase price of $180 million (subject to customary post-closing
adjustments), plus (y) as more thoroughly described below, up to an additional $55 million (the “Earn-Out Amount”)
upon the satisfaction of certain post-closing financial metrics by Wholesome; and (ii) and the Target became an indirect wholly-owned
subsidiary of Whole Earth (collectively, the “Transaction”). Subject to the terms and conditions of the Purchase
Agreement, and as more thoroughly described therein, payment of the Earn-Out Amount, in whole or in part, is subject to Wholesome
achieving certain EBITDA thresholds at or above approximately $30 million during the period beginning August 29, 2020, and
ending December 31, 2021. A portion of the Earn-Out Amount (up to $27.5 million) may be paid, at the Company’s election,
in freely tradeable, registered shares of Whole Earth common stock. Calculation of the achievement of the Earn-Out Amount is subject
to certain adjustments more thoroughly described in the Purchase Agreement. While the Earn-Out Amount, if any, is currently expected
to be payable in the first quarter of 2022, the payment could accelerate upon the breach by Whole Earth of certain covenants more
thoroughly described in the Purchase Agreement.
The foregoing
descriptions of the Transaction, the Purchase Agreement and the other transactions contemplated thereby are not complete and are
subject to and qualified in their entirety by reference to the Purchase Agreement, a copy of which has been filed as Exhibit 2.1
to the Company’s Current Report on Form 8-K filed with the SEC on December 17, 2020, and is incorporated herein by reference.
Item 1.01
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Entry into a Material Definitive Agreement.
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Amended and Restated Credit Agreement
In connection with the closing of the Transaction,
on February 5, 2021, the Company and certain of its subsidiaries entered into an amendment
and restatement agreement (the “Amendment Agreement”) with Toronto Dominion (Texas) LLC, as administrative
agent, and certain lenders signatory thereto, which amended and restated its existing senior secured loan agreement dated as of
June 25, 2020 (as amended on September 4, 2020, the “Existing Credit Agreement,” and as further amended by the
Amendment Agreement, the “Amended and Restated Credit Agreement”),
by and among Toronto Dominion (Texas) LLC, as administrative agent, certain lenders signatory thereto and certain other parties.
The
Amended and Restated Credit Agreement provides for senior secured financing consisting of the following credit facilities: (a)
a senior secured term loan facility in the aggregate principal amount of $375 million (the “Term Loan Facility”);
and (b) a revolving credit facility in an aggregate principal amount of up to $75 million (the “Revolving Facility,”
and together with the Term Loan Facility, the “Credit Facilities”). The Revolving Facility has a $15 million
subfacility for the issuance of letters of credit and a $15 million sublimit for swing line loans. The Company used the proceeds
under the Term Loan Facility to (i) repay and refinance existing indebtedness of the Target; (ii) pay the cash consideration for
the Transaction; (iii) repay and refinance outstanding borrowings under the Existing Credit Agreement; and (iv) pay fees and expenses
incurred in connection with the foregoing. The proceeds of the Revolving Facility can be used to finance working capital needs,
for general corporate purposes, and for working capital adjustments payable under the Purchase Agreement.
Loans outstanding under the Credit Facilities
will accrue interest at a rate per annum equal to (i) with respect to the Revolving Facility and letters of credit, (A) 2.75%,
in the case of base rate advances, and (B) 3.75% in the case of LIBOR advances, and (ii) with respect to the Term Loan Facility,
(A) 3.50%, in the case of base rate advances, and (B) 4.50% in the case of LIBOR advances, with a LIBOR floor of 1.00% with respect
to the Term Loan Facility, and 0.00% with respect to Revolving Facility and letters of credit, and base rate based on the highest
of the prime rate, the federal funds rate plus 0.50%, LIBOR for a one-month interest period plus 1.00%, and with respect to the
Revolving Facility and letters of credit, 0.00%, or with respect to the Term Loan Facility, 2.0%, and undrawn amounts under the
Revolving Facility will accrue a commitment fee at a rate per annum equal to 0. 50% on the average daily undrawn portion of the
commitments thereunder.
The obligations under the Credit Facilities
are guaranteed by certain direct or indirect wholly-owned domestic subsidiaries of the Company, other than certain excluded subsidiaries,
including, but not limited to, immaterial subsidiaries and foreign subsidiaries. The Credit Facilities are secured by substantially
all of the personal property of the Company and the guarantor subsidiaries (in each case, subject to certain exclusions and qualifications).
The Credit Facilities require the Company
to make certain mandatory prepayments, with (i) 100% of net cash proceeds of all non-ordinary course asset sales or other dispositions
of property in excess of $5 million in any fiscal year, subject to the ability to reinvest such proceeds and certain other exceptions,
(ii) 100% of the net cash proceeds of any debt incurrence, other than debt permitted under the definitive agreements (but excluding
debt incurred to refinance the Credit Facilities) and (iii) 50% of “Excess Cash Flow,” as defined in the Amended and
Restated Credit Agreement, which is included as an exhibit to this Current Report on Form 8-K, with a reduction to 25% if the total
net leverage ratio for the fiscal year is less than or equal to 3.50 to 1.00 but greater than 3.00:1.00, and a reduction to 0%
if the total net leverage ratio for the fiscal year is less than or equal to 3.00 to 1.00. The Company also is required to make
quarterly amortization payments equal to (i) 0.25% per annum of the original principal amount of the Term Loan Facility (subject
to reductions by optional and mandatory prepayments of the loans). The Company may prepay the Credit Facilities at any time
without premium or penalty, subject to payment of customary breakage costs.
The Credit Facilities contain financial
covenants and a number of traditional negative covenants including negative covenants related to the following subjects: consolidations,
mergers, and sales of assets; limitations on the incurrence of certain liens; limitations on certain indebtedness; limitations
on the ability to pay dividends; and certain affiliate transactions.
The Credit Facilities also contain certain
customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders
under the Credit Facilities are entitled to take various actions, including the acceleration of amounts due under the Credit Facilities
and all actions permitted to be taken by a secured creditor.
The
foregoing summary of the Amendment Agreement, which includes the Amended and Restated Credit Agreement as an exhibit thereto, is
qualified in its entirety by reference to the full text of the Amendment Agreement, which is attached as Exhibit 10.1 and incorporated
by reference herein.
Item 2.01
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Completion of Acquisition or Disposition of Assets.
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The disclosure set forth in the “Introductory
Note” above is incorporated into this Item 2.01 by reference, and does not purport to be complete and is qualified in its
entirety by reference to the full text of the Purchase Agreement, which has been filed as Exhibit 2.1 to the Company’s
Current Report on Form 8-K filed with the SEC on December 17, 2020, and is incorporated herein by reference.
Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant.
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The information
set forth under Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.03 by reference.
Item 7.01
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Regulation FD Disclosure.
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On February 8, 2021, the Company issued
a press release announcing the closing of the Transaction. The press release is attached as Exhibit 99.1 to this Current Report
on Form 8-K.
The
information in this Item 7.01, including Exhibit 99.1, is furnished and shall not be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject
to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of the Company under
the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filings.
This Current Report on Form 8-K will not be deemed an admission as to the materiality of any information contained
in this Item 7.01, including Exhibit 99.1.
Item 9.01.
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Financial Statements and Exhibits.
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(a) Financial
statements of business acquired.
As permitted by Item 9.01(a)(3) of Form
8-K, the Company will, if required, file the financial information required by Item 9.01(a)(1) of Form 8-K pursuant to an amendment
to this Current Report on Form 8-K not later than seventy-one (71) calendar days after the date that this Current Report on Form
8-K must be filed.
(b) Pro
forma financial information.
As
permitted by Item 9.01(b)(2) of Form 8-K, the Company will, if required, file the financial information required by Item 9.01(b)(1)
of Form 8-K pursuant to an amendment to this Current Report on Form 8-K not later than seventy-one (71) calendar days after the
date that this Current Report on Form 8-K must be filed.
(d) Exhibits.
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†
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Certain schedules and exhibits to this Exhibit have been omitted pursuant to Item 601(a)(5) of
Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission
upon request.
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#
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Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant
to Regulation S-K, Item 601(a)(6).
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SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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Whole Earth Brands, Inc.
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Dated: February 8, 2021
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By:
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/s/ Andrew Rusie
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Name:
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Andrew Rusie
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Title:
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Chief Financial Officer
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