ASHLAND GLOBAL HOLDINGS INC. (NYSE:ASH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On May 17, 2017 (such date, the Closing Date), Ashland
LLC, a Kentucky limited liability company (the Company)
and an indirect subsidiary of Ashland Global Holdings Inc., a
Delaware corporation (Ashland), entered into a Credit
Agreement (the Credit Agreement) among the Company, as
Borrower, The Bank of Nova Scotia, as Administrative Agent, each
lender and letter of credit issuer party thereto and the other
agents party thereto. The Credit Agreement provides for (i) a
$250 million three-year term loan A facility (the Three-Year
TLA Facility), (ii) a $250 million five-year term loan A
facility (the Five-Year TLA Facility and together with the
Three-Year TLA Facility, the TLA Facilities) and (iii) a
$680 million five-year revolving credit facility (including a
$125 million letter of credit sublimit) (the Revolving
Facility and together with the TLA Facilities, the Credit
Facilities). Proceeds of borrowings under the TLA Facilities
were used on the Closing Date solely to finance the acquisition
of the shares of Pharmachem Laboratories, Inc., a privately-held
New Jersey corporation (Pharmachem), and the proceeds of
the Revolving Facility were used on the Closing Date to finance,
in part, the Acquisition (as defined below) and to refinance the
Companys existing credit agreement dated as of June 23, 2015 (the
Existing Credit Agreement). After the Closing Date,
proceeds of borrowings under the Revolving Facility will be used,
among other things, to provide ongoing working capital and for
other general corporate purposes. The Company expects, within 30
days after the Closing Date, to increase the aggregate
commitments under the Revolving Facility from $680 million to
$800 million to the incremental facility provisions of the Credit
Agreement.
LLC, a Kentucky limited liability company (the Company)
and an indirect subsidiary of Ashland Global Holdings Inc., a
Delaware corporation (Ashland), entered into a Credit
Agreement (the Credit Agreement) among the Company, as
Borrower, The Bank of Nova Scotia, as Administrative Agent, each
lender and letter of credit issuer party thereto and the other
agents party thereto. The Credit Agreement provides for (i) a
$250 million three-year term loan A facility (the Three-Year
TLA Facility), (ii) a $250 million five-year term loan A
facility (the Five-Year TLA Facility and together with the
Three-Year TLA Facility, the TLA Facilities) and (iii) a
$680 million five-year revolving credit facility (including a
$125 million letter of credit sublimit) (the Revolving
Facility and together with the TLA Facilities, the Credit
Facilities). Proceeds of borrowings under the TLA Facilities
were used on the Closing Date solely to finance the acquisition
of the shares of Pharmachem Laboratories, Inc., a privately-held
New Jersey corporation (Pharmachem), and the proceeds of
the Revolving Facility were used on the Closing Date to finance,
in part, the Acquisition (as defined below) and to refinance the
Companys existing credit agreement dated as of June 23, 2015 (the
Existing Credit Agreement). After the Closing Date,
proceeds of borrowings under the Revolving Facility will be used,
among other things, to provide ongoing working capital and for
other general corporate purposes. The Company expects, within 30
days after the Closing Date, to increase the aggregate
commitments under the Revolving Facility from $680 million to
$800 million to the incremental facility provisions of the Credit
Agreement.
On the Closing Date, commitments under the Existing Credit
Agreement were terminated.
Agreement were terminated.
The Credit Agreement permits the assignment of the Companys
obligations under the TLA Facilities to either Ashland
Specialties Holding C.V. or Ash Global Holdings Two B.V., as the
Company may elect (such entity as so elected, Ashland
Netherlands). The Credit Facilities are guaranteed by
Ashland, Ashland Chemco Inc. (a direct subsidiary of Ashland and
a parent of the Company), and the Companys existing and future
subsidiaries (other than certain immaterial subsidiaries, joint
ventures, special purpose financing subsidiaries, regulated
subsidiaries, foreign subsidiaries and certain other
subsidiaries) and, solely with respect to the TLA Facilities
following the assignment thereof to Ashland Netherlands, by the
Company, and are secured by a first-priority security interest in
substantially all the personal property assets of the Company and
the guarantors, including all or a portion of the equity
interests of certain of the Companys domestic subsidiaries and
first-tier foreign subsidiaries and, in certain cases, a portion
of the equity interests of other foreign subsidiaries. The
guarantees of the Credit Facilities by the Companys subsidiaries
and pledge of security interests by such guarantors may, at the
Companys option, be released upon and during the occurrence of a
Collateral Release Event (as defined in the Credit Agreement).
obligations under the TLA Facilities to either Ashland
Specialties Holding C.V. or Ash Global Holdings Two B.V., as the
Company may elect (such entity as so elected, Ashland
Netherlands). The Credit Facilities are guaranteed by
Ashland, Ashland Chemco Inc. (a direct subsidiary of Ashland and
a parent of the Company), and the Companys existing and future
subsidiaries (other than certain immaterial subsidiaries, joint
ventures, special purpose financing subsidiaries, regulated
subsidiaries, foreign subsidiaries and certain other
subsidiaries) and, solely with respect to the TLA Facilities
following the assignment thereof to Ashland Netherlands, by the
Company, and are secured by a first-priority security interest in
substantially all the personal property assets of the Company and
the guarantors, including all or a portion of the equity
interests of certain of the Companys domestic subsidiaries and
first-tier foreign subsidiaries and, in certain cases, a portion
of the equity interests of other foreign subsidiaries. The
guarantees of the Credit Facilities by the Companys subsidiaries
and pledge of security interests by such guarantors may, at the
Companys option, be released upon and during the occurrence of a
Collateral Release Event (as defined in the Credit Agreement).
At the Companys option, loans issued under the Credit Agreement
will bear interest at either LIBOR or an alternate base rate, in
each case plus the applicable interest rate margin. Loans will
initially bear interest at LIBOR plus 1.75% per annum, in the
case of LIBOR borrowings, or at the alternate base rate plus
0.75%, in the alternative, through and including the date of
delivery of a quarterly compliance certificate and thereafter the
interest rate will fluctuate between LIBOR plus 1.375% per annum
and LIBOR plus 2.500% per annum (or between the alternate base
rate plus 0.375% per annum and the alternate base rate plus
1.500% annum), based upon the Companys secured facilities ratings
or the Consolidated Net Leverage Ratio (as defined in the Credit
Agreement) (whichever yields a lower applicable interest rate
margin) at such time. In addition, the Company will initially be
required to pay fees of 0.25% per annum on the daily unused
amount of the Revolving Facility through and including the date
of delivery of a compliance certificate, and thereafter the fee
rate will fluctuate between 0.175% and 0.40% per annum, based
upon the Companys secured facilities rating or the Consolidated
Net Leverage Ratio (whichever yields a lower applicable rate).
will bear interest at either LIBOR or an alternate base rate, in
each case plus the applicable interest rate margin. Loans will
initially bear interest at LIBOR plus 1.75% per annum, in the
case of LIBOR borrowings, or at the alternate base rate plus
0.75%, in the alternative, through and including the date of
delivery of a quarterly compliance certificate and thereafter the
interest rate will fluctuate between LIBOR plus 1.375% per annum
and LIBOR plus 2.500% per annum (or between the alternate base
rate plus 0.375% per annum and the alternate base rate plus
1.500% annum), based upon the Companys secured facilities ratings
or the Consolidated Net Leverage Ratio (as defined in the Credit
Agreement) (whichever yields a lower applicable interest rate
margin) at such time. In addition, the Company will initially be
required to pay fees of 0.25% per annum on the daily unused
amount of the Revolving Facility through and including the date
of delivery of a compliance certificate, and thereafter the fee
rate will fluctuate between 0.175% and 0.40% per annum, based
upon the Companys secured facilities rating or the Consolidated
Net Leverage Ratio (whichever yields a lower applicable rate).
The Credit Facilities may be prepaid at any time without premium.
The Three-Year TLA Facility will not amortize and will be due on
the date that is three years after the Closing Date. The
Five-Year TLA Facility will not amortize in each of the first,
second and third years after the Closing Date and will amortize
at a rate of 20% per annum in each of the fourth and fifth years
after the Closing Date (payable in equal quarterly installments),
with the outstanding balance of the Five-Year TLA Facility to be
paid on the date that is five years after the Closing Date.
The Three-Year TLA Facility will not amortize and will be due on
the date that is three years after the Closing Date. The
Five-Year TLA Facility will not amortize in each of the first,
second and third years after the Closing Date and will amortize
at a rate of 20% per annum in each of the fourth and fifth years
after the Closing Date (payable in equal quarterly installments),
with the outstanding balance of the Five-Year TLA Facility to be
paid on the date that is five years after the Closing Date.
The Credit Agreement contains usual and customary representations
and warranties, and usual and customary affirmative and negative
covenants, including limitations on liens, additional
indebtedness, investments, restricted payments, asset sales,
mergers, affiliate transactions and other customary limitations,
as well as financial covenants (including maintenance of a
maximum Consolidated Net Leverage Ratio and a minimum
Consolidated Interest Coverage Ratio (as defined in the Credit
Agreement)). The Credit Agreement also contains usual and
customary events of default, including non-payment of principal,
interest, fees and other amounts, material breach of a
representation or warranty, non-performance of covenants and
obligations, default on other material debt, bankruptcy or
insolvency, material judgments, incurrence of certain material
ERISA liabilities, impairment of loan documentation or security
and change of control.
and warranties, and usual and customary affirmative and negative
covenants, including limitations on liens, additional
indebtedness, investments, restricted payments, asset sales,
mergers, affiliate transactions and other customary limitations,
as well as financial covenants (including maintenance of a
maximum Consolidated Net Leverage Ratio and a minimum
Consolidated Interest Coverage Ratio (as defined in the Credit
Agreement)). The Credit Agreement also contains usual and
customary events of default, including non-payment of principal,
interest, fees and other amounts, material breach of a
representation or warranty, non-performance of covenants and
obligations, default on other material debt, bankruptcy or
insolvency, material judgments, incurrence of certain material
ERISA liabilities, impairment of loan documentation or security
and change of control.
A copy of the Credit Agreement is attached as Exhibit 10.1 to
this Current Report on Form 8-K and is incorporated herein by
reference. The above description of the Credit Agreement does not
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Credit Agreement filed with
this Current Report on Form 8-K.
this Current Report on Form 8-K and is incorporated herein by
reference. The above description of the Credit Agreement does not
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Credit Agreement filed with
this Current Report on Form 8-K.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On May 17, 2017, the Company completed its previously announced
acquisition of Pharmachem to the terms of the Stock Purchase
Agreement, dated April 14, 2017, as amended (the
Agreement), by and among (i) the Company, (ii) Pharmachem,
(iii) the shareholders of Pharmachem and Dr. David Peele, a
shareholder of Avoca, Inc. (Avoca), a subsidiary of
Pharmachem (collectively, the Sellers) and (iv) Photon SH
Representative LLC, as the shareholders representative.
acquisition of Pharmachem to the terms of the Stock Purchase
Agreement, dated April 14, 2017, as amended (the
Agreement), by and among (i) the Company, (ii) Pharmachem,
(iii) the shareholders of Pharmachem and Dr. David Peele, a
shareholder of Avoca, Inc. (Avoca), a subsidiary of
Pharmachem (collectively, the Sellers) and (iv) Photon SH
Representative LLC, as the shareholders representative.
to the terms of the Agreement, the Company acquired all of the
outstanding equity interests of Pharmachem (the Pharmachem
Stock Purchase) for $660 million in cash (the Purchase
Price). Immediately following the Pharmachem Stock Purchase,
Pharmachem acquired all of the shares of common stock of Avoca
owned by Dr. David Peele (the Avoca Stock Purchase and,
together with the Pharmachem Stock Purchase, the
Acquisition). Avoca is now a wholly owned subsidiary of
Pharmachem. The Purchase Price is subject to post-closing
adjustments for net working capital, cash, indebtedness and
transaction expenses.
outstanding equity interests of Pharmachem (the Pharmachem
Stock Purchase) for $660 million in cash (the Purchase
Price). Immediately following the Pharmachem Stock Purchase,
Pharmachem acquired all of the shares of common stock of Avoca
owned by Dr. David Peele (the Avoca Stock Purchase and,
together with the Pharmachem Stock Purchase, the
Acquisition). Avoca is now a wholly owned subsidiary of
Pharmachem. The Purchase Price is subject to post-closing
adjustments for net working capital, cash, indebtedness and
transaction expenses.
A copy of the Agreement, as amended, is attached as Exhibits 2.1
and 2.2 to this Current Report on Form 8-K and is incorporated
herein by reference. The above description of the Agreement does
not purport to be complete and is subject to, and qualified in
its entirety by, the full text of the Agreement filed with this
Current Report on Form 8-K.
and 2.2 to this Current Report on Form 8-K and is incorporated
herein by reference. The above description of the Agreement does
not purport to be complete and is subject to, and qualified in
its entirety by, the full text of the Agreement filed with this
Current Report on Form 8-K.
The Agreement has been included to provide investors with
information regarding the terms of the Acquisition contemplated
thereby. The Agreement is not intended to provide any other
factual information about the Company or Pharmachem or its
respective subsidiaries or affiliates. The Agreement contains
representations and warranties of the Company, Pharmachem and the
Sellers. The assertions embodied in those representations and
warranties were made for purposes of the Agreement and are
qualified by information in disclosure schedules that the parties
have exchanged in connection with the execution of the Agreement.
The disclosure schedules contain information that modifies,
qualifies and creates exceptions to the representations and
warranties set forth in the Agreement. In addition, certain
representations and warranties were made as of a specific date,
may be subject to a contractual standard of materiality different
from what an investor might view as material, or may have been
used for purposes of allocating risk between the respective
parties rather than establishing matters as facts. Accordingly,
you should read the representations and warranties in the
Agreement not in isolation but only in conjunction with the other
information about the Company, Pharmachem and their respective
subsidiaries that are included in reports, statements and other
filings made by the Company with the Securities and Exchange
Commission.
information regarding the terms of the Acquisition contemplated
thereby. The Agreement is not intended to provide any other
factual information about the Company or Pharmachem or its
respective subsidiaries or affiliates. The Agreement contains
representations and warranties of the Company, Pharmachem and the
Sellers. The assertions embodied in those representations and
warranties were made for purposes of the Agreement and are
qualified by information in disclosure schedules that the parties
have exchanged in connection with the execution of the Agreement.
The disclosure schedules contain information that modifies,
qualifies and creates exceptions to the representations and
warranties set forth in the Agreement. In addition, certain
representations and warranties were made as of a specific date,
may be subject to a contractual standard of materiality different
from what an investor might view as material, or may have been
used for purposes of allocating risk between the respective
parties rather than establishing matters as facts. Accordingly,
you should read the representations and warranties in the
Agreement not in isolation but only in conjunction with the other
information about the Company, Pharmachem and their respective
subsidiaries that are included in reports, statements and other
filings made by the Company with the Securities and Exchange
Commission.
Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information set forth under Item 1.01. Entry into a Material
Definitive Agreement is incorporated herein by reference.
Definitive Agreement is incorporated herein by reference.
Item 8.01. Other Events.
Issuance of News Release
On May 17, 2017, Ashland issued a news release in connection with
the closing of its previously announced Acquisition. The full
text of the news release is attached hereto as Exhibit 99.1.
the closing of its previously announced Acquisition. The full
text of the news release is attached hereto as Exhibit 99.1.
Forward-Looking Statements
This report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended
and Section 21E of the Securities Exchange Act of 1934, as
amended. Ashland has identified some of these forward-looking
statements with words such as anticipates, believes, expects,
estimates, is likely, predicts, projects, forecasts, objectives,
may, will, should, plans and intends and the negative of these
words or other comparable terminology. These forward-looking
statements include statements relating to our expectation that
the Company will increase the aggregate commitments under the
Revolving Facility to the incremental facility provisions of the
Credit Agreement. In addition, Ashland may from time to time make
forward-looking statements in its annual reports, quarterly
reports and other filings with the SEC, news releases and other
written and oral communications. These forward-looking statements
are based on Ashlands expectations and assumptions, as of the
date such statements are made, regarding Ashlands future
operating performance and financial condition. Ashlands
expectations and assumptions include, without limitation,
internal forecasts and analyses of current and future market
conditions and trends, management plans and strategies, operating
efficiencies and economic conditions (such as prices, supply and
demand, cost of raw materials, and the ability to recover
raw-material cost increases through price increases), and risks
and uncertainties associated with the following: Ashlands
substantial indebtedness (including the indebtedness that Ashland
has incurred to finance the acquisition of Pharmachem and the
possibility that Ashlands substantial indebtedness and related
restrictive covenants may adversely affect Ashlands future cash
flows, results of operations, financial condition and its ability
to repay debt); the impact of acquisitions and/or divestitures
Ashland has made or may make, including the acquisition of
Pharmachem (including the possibility that Ashland may not
realize the anticipated benefits of such transactions, such as
the expected sales and growth opportunities, synergies and cost
savings and the ability of Ashland to integrate the businesses of
Pharmachem successfully and efficiently with Ashlands
businesses); and severe weather, natural disasters, and legal
proceedings and claims (including environmental and asbestos
matters). Various risks and uncertainties may cause actual
results to differ materially from those stated, projected or
implied by any forward-looking statements, including, without
limitation, risks and uncertainties affecting Ashland that are
described in Ashlands most recent Form 10-K (including Item 1A
Risk Factors) filed with the SEC, which is available on Ashlands
website at http://investor.ashland.com or on the SECs website at
http://www.sec.gov. Ashland believes its expectations and
assumptions are reasonable, but there can be no assurance that
the expectations reflected herein will be achieved. Unless
legally required, Ashland undertakes no obligation to update any
forward-looking statements made in this report whether as a
result of new information, future events or otherwise.
Information on Ashlands and Pharmachems websites is not
incorporated into or a part of this report.
meaning of Section 27A of the Securities Act of 1933, as amended
and Section 21E of the Securities Exchange Act of 1934, as
amended. Ashland has identified some of these forward-looking
statements with words such as anticipates, believes, expects,
estimates, is likely, predicts, projects, forecasts, objectives,
may, will, should, plans and intends and the negative of these
words or other comparable terminology. These forward-looking
statements include statements relating to our expectation that
the Company will increase the aggregate commitments under the
Revolving Facility to the incremental facility provisions of the
Credit Agreement. In addition, Ashland may from time to time make
forward-looking statements in its annual reports, quarterly
reports and other filings with the SEC, news releases and other
written and oral communications. These forward-looking statements
are based on Ashlands expectations and assumptions, as of the
date such statements are made, regarding Ashlands future
operating performance and financial condition. Ashlands
expectations and assumptions include, without limitation,
internal forecasts and analyses of current and future market
conditions and trends, management plans and strategies, operating
efficiencies and economic conditions (such as prices, supply and
demand, cost of raw materials, and the ability to recover
raw-material cost increases through price increases), and risks
and uncertainties associated with the following: Ashlands
substantial indebtedness (including the indebtedness that Ashland
has incurred to finance the acquisition of Pharmachem and the
possibility that Ashlands substantial indebtedness and related
restrictive covenants may adversely affect Ashlands future cash
flows, results of operations, financial condition and its ability
to repay debt); the impact of acquisitions and/or divestitures
Ashland has made or may make, including the acquisition of
Pharmachem (including the possibility that Ashland may not
realize the anticipated benefits of such transactions, such as
the expected sales and growth opportunities, synergies and cost
savings and the ability of Ashland to integrate the businesses of
Pharmachem successfully and efficiently with Ashlands
businesses); and severe weather, natural disasters, and legal
proceedings and claims (including environmental and asbestos
matters). Various risks and uncertainties may cause actual
results to differ materially from those stated, projected or
implied by any forward-looking statements, including, without
limitation, risks and uncertainties affecting Ashland that are
described in Ashlands most recent Form 10-K (including Item 1A
Risk Factors) filed with the SEC, which is available on Ashlands
website at http://investor.ashland.com or on the SECs website at
http://www.sec.gov. Ashland believes its expectations and
assumptions are reasonable, but there can be no assurance that
the expectations reflected herein will be achieved. Unless
legally required, Ashland undertakes no obligation to update any
forward-looking statements made in this report whether as a
result of new information, future events or otherwise.
Information on Ashlands and Pharmachems websites is not
incorporated into or a part of this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following Exhibits are filed as part of this
Report on Form 8-K.
Report on Form 8-K.
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Exhibit Number
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Description of Exhibit
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2.1
|
Stock Purchase Agreement, dated April 14, 2017, by and
among Ashland LLC, Pharmachem Laboratories, Inc., the holders of common stock of Pharmachem Laboratories, Inc., Dr. David Peele, and Photon SH Representative LLC, solely as the shareholders representative. |
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2.2
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Amendment No. 1 to the Stock Purchase Agreement, dated
May 16, 2017, by and among Ashland LLC, Pharmachem Laboratories, Inc., the holders of common stock of Pharmachem Laboratories, Inc., Dr. David Peele, and Photon SH Representative LLC, solely as the shareholders representative. |
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10.1
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Credit Agreement, dated as of May 17, 2017, among Ashland
LLC, as Borrower, The Bank of Nova Scotia, as Administrative Agent, Swing Line Lender and an L/C Issuer, each Lender and L/C Issuer party thereto and the other agents party thereto. |
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99.1
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News Release issued by Ashland Global Holdings Inc.,
dated May 17, 2017. |
In connection with the disclosures set forth in Item 8.01 above,
the information in such item of this Form 8-K, including the
related exhibits attached hereto, is being 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 the liabilities of such section. The
information in such item of this Form 8-K, including the related
exhibits, shall not be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Exchange
Act, regardless of any incorporation by reference language in any
such filing. This Form 8-K will not be deemed an admission as to
the materiality of any information in this Form 8-K that is
required to be disclosed solely by Regulation FD.
the information in such item of this Form 8-K, including the
related exhibits attached hereto, is being 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 the liabilities of such section. The
information in such item of this Form 8-K, including the related
exhibits, shall not be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Exchange
Act, regardless of any incorporation by reference language in any
such filing. This Form 8-K will not be deemed an admission as to
the materiality of any information in this Form 8-K that is
required to be disclosed solely by Regulation FD.
ASHLAND GLOBAL HOLDINGS INC. (NYSE:ASH) Recent Trading Information
ASHLAND GLOBAL HOLDINGS INC. (NYSE:ASH) closed its last trading session up +0.04 at 63.44 with 2,160,284 shares trading hands.
