Cintas Corporation (NASDAQ:CTAS) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
On March21, 2017, GK Services, Inc. (GK Services), a Minnesota
corporation and wholly owned indirect subsidiary of Cintas
Corporation (Cintas) entered into an Amended and Restated Note
Purchase Agreement (the AR Note Purchase Agreement) among the
Issuer and the Note holders party thereto. to the AR Note
Purchase Agreement, the 3.73% Series A Senior Notes due April15,
2023 and the 3.88% Series B Senior Notes due April15, 2025
(collectively, the Notes) were deemed to be amended and restated.
Interest on each tranche of Notes is payable semiannually.
The obligations of GK Services under the Notes have been
guaranteed by Cintas, GK Services Co. and certain of Cintas
material domestic subsidiaries (collectively, the Guarantors).
Additional subsidiaries of Cintas may become Guarantors of the
Notes in accordance with the terms set forth in the AR Note
Purchase Agreement.
The AR Note Purchase Agreement contains customary covenants,
including, without limitation, covenants applicable to GK
Services, Cintas, the Guarantors and their affiliates limiting
priority indebtedness and liens. In particular, the AR Note
Purchase Agreement contains the following financial covenants:
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GK Services is required to maintain, a leverage ratio of (a)consolidated total indebtedness to (b)consolidated EBITDA of not greater than 3.50 to 1.0, which may be increased to 3.75 to 1.0 for a period of time following certain permitted acquisitions. |
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GK Services is required to maintain, an interest coverage ratio of (a)consolidated EBITDA to (b)consolidated interest expense of at least 3.00 to 1.00. |
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GK Services will not, at any time, permit the aggregate amount of all priority debt to exceed an amount equal to 15% of consolidated total capitalization (as such terms are defined in the AR Note Purchase Agreement). |
The AR Note Purchase Agreement has customary events of default.
Upon an event of default (1)by agreement of holders representing
a majority of the outstanding Notes, the Note holders may
accelerate amounts outstanding thereunder (which occurs
automatically in the event of various bankruptcy and insolvency
proceedings) and (2)any Note holder may accelerate payment of its
Note in the case of a payment default.
GK Services may call all or part (so long as such part exceeds
10% of the outstanding principal amount) of the Notes for
redemption upon payment of principal, accrued interest and a
make-whole amount. In the event of a change of control of GK
Services, GK Services must make an offer to purchase the Notes
for the outstanding principal amount and accrued interest, but
without payment of a make-whole amount. Following certain
significant asset sales and subject to certain exceptions, GK
Services must offer to purchase a ratable portion of the Notes
with the proceeds thereof.
2
The foregoing summary of the material terms and conditions of the
AR Note Purchase Agreement does not purport to be complete and is
qualified in its entirety by reference to the AR Note Purchase
Agreement, which is attached to this Current Report on Form 8-K
as Exhibit 4.1 and incorporated herein by reference.
| Item1.02 |
Termination of a Material Definitive Agreement. |
Effective March21, 2017, the Note Purchase Agreement, dated as of
April15, 2013, among GK Services and the Purchasers, was replaced
by the AR Purchase Agreement.
| Item2.01. |
Completion of Acquisition or Disposition of Assets. |
On March21, 2017, Cintas completed its previously announced
acquisition of GK Services. to the terms of the Agreement and
Plan of Merger (the Merger Agreement), dated as of August15,
2016, by and among Cintas, GK Services and Bravo Merger Sub, Inc.
(Merger Sub), Merger Sub merged with and into GK Services (the
Merger), with GK Services continuing as the surviving corporation
in the Merger and becoming a wholly owned subsidiary of Cintas.
At the effective time of the Merger (the Effective Time), each
share of common stock, par value $0.50, of GK Services issued and
outstanding immediately prior to the Effective Time (other than
(1)dissenting shares and (2)shares held by GK Services, Cintas,
Merger Sub or any of their respective wholly owned subsidiaries)
was converted into the right to receive $97.50 in cash, without
interest (the Per Share Merger Consideration).
In addition, at the Effective Time, subject to certain
exceptions, each option to purchase GK Services common stock
outstanding as of the Effective Time, whether vested or unvested,
was converted into the right to receive a cash payment equal to
the product of (1)the total number of shares of GK Services
common stock subject to such option and (2)the amount by which
the Per Share Merger Consideration exceeded the exercise price
per share, less any applicable taxes. Subject to certain
exceptions, as of the Effective Time, all other GK Services
equity and equity-based awards, subject to time-based or
performance-based vesting conditions, were vested and converted
into the right to receive the Per Share Merger Consideration
provided for under their terms as were in effect immediately
prior to the Effective Time.
A copy of the Merger Agreement was attached as Exhibit 2.1 to the
Current Report on Form 8-K filed by Cintas with the Securities
and Exchange Commission (SEC) on August16, 2016 and is
incorporated herein by reference. The foregoing description of
the effects of the Merger and the Merger Agreement, and the
transactions contemplated thereby, does not purport to be
complete and is qualified in its entirety by reference to the
Merger Agreement.
| Item2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off- Balance Sheet Arrangement of a Registrant. |
The information set forth in Item1.01 above is incorporated by
reference into this Item2.03.
| Item9.01. | Financial Statements and Exhibits. |
(a) Financial Statement of Business Acquired.
Cintas previously provided the financial statements required by
Item9.01(a) of Form 8-K as Exhibits 99.1 and 99.2 to its Current
Report on Form 8-K filed on March6, 2017.
(b) Pro Forma Financial Information.
Cintas previously provided the pro forma financial statements
required by Item9.01(b) as Exhibit 99.3 to its Current Report on
Form 8-K filed on March6, 2017.
(d) Exhibits.
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Exhibit Number |
Description | |
| 2.1* |
Agreement and Plan of Merger, among Cintas Corporation, GK Services, Inc. and Bravo Merger Sub, Inc., dated as of August15, 2016 (incorporated by reference to Exhibit 2.1 of Cintas Current Report on Form 8-K filed with the SEC on August16, 2016). |
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| 4.1 |
Amended and Restated Note Purchase Agreement, dated as of March21, 2017, among GK Services, Inc. and the Note holders. |
|
| 99.1 |
Press Release, dated March21, 2017, issued by Cintas Corporation. |
| * |
Certain exhibits and schedules have been omitted and Cintas agrees to furnish supplementally to the SEC a copy of any omitted exhibits and schedules upon request. |
About Cintas Corporation (NASDAQ:CTAS)
Cintas Corporation is a provider of corporate identity uniforms through rental and sales programs, as well as a provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, first aid and safety services and fire protection products and services. Its segments include uniform rental and facility services, and first aid and safety services. Its uniform rental and facility service segment offers services, which include rental and servicing of uniforms and other garments, including flame resistant clothing, mats, mops and shop towels, and other ancillary items. Its first aid and safety service segment offers services, which include first aid and safety products and services. Rental processing plants, rental branches, first aid and safety facilities, fire protection facilities, direct sales offices, distribution centers and manufacturing facilities are all utilized by the businesses included in All Other. Cintas Corporation (NASDAQ:CTAS) Recent Trading Information
Cintas Corporation (NASDAQ:CTAS) closed its last trading session down -0.53 at 123.78 with 992,282 shares trading hands.