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Item 1.01
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Entry into a Material Definitive Agreement.
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On September 18, 2019, American Axle & Manufacturing
Holdings, Inc., a Delaware corporation (“AAM”), Grede AcquisitionCo, Inc., a Delaware corporation (the “Purchaser”),
and, for certain limited purposes, Grede TopCo, Inc., a Delaware corporation (“TopCo”), entered into a Unit
Purchase Agreement (the “Purchase Agreement”) pursuant to which the Purchaser agreed to purchase the entities
that operate AAM’s U.S. iron casting operations (the “Grede Business”) for an aggregate purchase price
of $245,000,000 (the “Sale”). The purchase price is subject to customary adjustments and includes a $60,000,000
deferred payment obligation. Except in the case of certain acceleration events, TopCo will have twelve years after the closing
of the Sale to pay (or cause to be paid) the deferred payment of $60,000,000, which will accrue interest at the rate of 6% per
annum from January 1, 2020. The Sale does not include the entities that conduct AAM’s iron casting operations in El Carmen,
Mexico. The Purchaser and TopCo are newly formed entities affiliated with Gamut Capital Management, L.P. (the “Sponsor”).
The Purchase Agreement contains customary representations
and warranties and covenants. Under the Purchase Agreement, AAM has agreed to indemnify the Purchaser for certain losses, including
losses arising out of pre-closing environmental liabilities, liabilities related to certain discontinued operations and liabilities
related to the retained Mexican operations. The representations and warranties set forth in the Purchase Agreement will expire
at the closing of the Sale.
The consummation of the Sale is subject to the satisfaction
of certain closing conditions, which include, among others, (i) the expiration or termination of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (ii) the completion of the transfer of certain entities conducting
the retained Mexican operations, and (iii) material compliance by each party with its covenants and, subject to certain materiality
qualifiers, the absence of breaches of its representations and warranties.
In connection with the execution of the Purchase Agreement,
the Purchaser has received a debt financing commitment from Wells Fargo Bank, National Association and equity commitments from
funds affiliated with the Sponsor. If the Purchase Agreement is terminated by AAM because the Purchaser has failed to consummate
the Sale within three days of the date on which the closing should have occurred (including as a result of the Purchaser’s
failure to obtain the debt financing), the Purchaser will have to pay a $10,000,000 termination fee to AAM. AAM has received a
limited guarantee from funds affiliated with the Sponsor guaranteeing certain potential payment obligations of the Purchaser under
the Purchase Agreement, including the termination fee.
The foregoing description of the Purchase Agreement and the
transactions contemplated thereby is not complete and is subject to and qualified in its entirety by reference to the Purchase
Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and the terms of which are incorporated
herein by reference.
The Purchase Agreement has been included to provide investors
and security holders with information regarding its terms. It is not intended to provide any financial or other information about
AAM, the Purchaser or their respective subsidiaries and affiliates. The representations, warranties and covenants contained in
the Purchase Agreement were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the
parties to the Purchase Agreement, may be subject to important qualifications and limitations agreed upon by the parties thereto,
including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties
to the Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable
to the contracting parties that differ from those applicable to investors and security holders. AAM’s investors and security
holders should not rely on the representations, warranties and covenants or any description thereof as characterizations of the
actual state of facts or condition of AAM, the Purchaser or any of their respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations, warranties and covenants may change after the date of the Purchase Agreement,
which subsequent information may or may not be fully reflected in public disclosures by AAM.