KMG Chemicals, Inc. (NYSE:KMG) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement. |
Purchase Agreement
On April 23, 2017, KMG Chemicals, Inc. (the Company) entered into
a Purchase Agreement and Plan of Merger (the Purchase Agreement)
among the Company, KMG FC, LLC, a wholly owned subsidiary of the
Company (Merger Sub), Flowchem Holdings LLC (Flowchem), Arsenal
Capital Partners III-B, LP (Blocker Seller) and ACP Flowchem LLC
(the Representative), to which the Company will acquire Flowchem,
the parent company of Flowchem LLC, a global provider of drag
reducing agents, related support services and equipment to
midstream crude oil and refined fuel pipeline operators. Under
the terms of the Purchase Agreement, Merger Sub will merge into
Flowchem, with Flowchem surviving as a wholly owned subsidiary of
the Company. The Company will also acquire all of the outstanding
shares of capital stock of ACP-Flowchem Blocker Inc. from Blocker
Seller.
Consideration for the acquisition will be $495 million in cash,
including net working capital of approximately $17 million. The
purchase price is subject to adjustment following the closing for
reconciliation of net working capital. The Purchase Agreement
includes customary representations, warranties and covenants. The
acquisition is expected to close in mid-June 2017 and is subject
to certain customary closing conditions, including expiration or
early termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
The foregoing descriptions of the Purchase Agreement are
qualified in their entirety by the full text of such agreement, a
copy of which is attached as Exhibit 2.1 to this Current Report
on Form 8-K and is incorporated herein by reference.
To ensure funding to finance the acquisition, the Company entered
into a commitment letter (the Commitment Letter), dated April 23,
2017, with KeyBank National Association, KeyBanc Capital Markets
Inc., and HSBC Bank USA, N.A. (together, the Commitment Parties),
to which the Commitment Parties have agreed to provide the
Company with financing consisting of (i) a seven-year senior
secured term loan facility of $550.0 million and (ii) a senior
secured revolving facility of $50.0 million. The obligations of
the Commitment Parties under the Commitment Letter are subject to
customary closing conditions.
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Item 7.01 |
Regulation FD Disclosure. |
On April 24, 2017, the Company issued a press release announcing
its entry into the Purchase Agreement. A copy of the press
release is furnished as Exhibit 99.1 to this Current Report on
Form 8-K.
Forward-Looking Statements
This report includes 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. These forward-looking statements include information
about possible or assumed future results of our operations. All
statements, other than statements of historical facts, included
or incorporated by reference in this report that address
activities, events or developments that we expect or anticipate
may occur in the future, including such things as future capital
expenditures, business strategy, competitive strengths, goals,
growth of our business and operations, plans and references to
future successes may be considered forward-looking statements.
Also, when we use words such as anticipate, believe, estimate,
intend, plan, project, forecast, may, should, budget, goal,
expect, probably or similar expressions, we are making
forward-looking statements. Many risks and uncertainties may
impact the matters addressed in these forward-looking statements.
Our forward-looking statements speak only as of the date made and
we will not update forward-looking statements unless the
securities laws require us to do so. Although we believe that the
assumptions underlying our forward-looking statements are
reasonable, any of these assumptions and, therefore, the
forward-looking statements based on these assumptions, could
themselves prove to be inaccurate. In light of the significant
uncertainties inherent in the forward-looking statements which
are included in this report and the exhibits and other documents
incorporated herein by reference, our inclusion of this
information is not a representation by us or any other person
that our objectives and plans will be achieved.
Item 9.01Financial Statements and Exhibits.
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(d) |
Exhibits |
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2.1 |
Purchase Agreement and Plan of Merger dated as of April |
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99.1 |
Press Release, dated April 24, 2017. |
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* |
Schedules and Exhibits have been omitted to Item |
About KMG Chemicals, Inc. (NYSE:KMG)
KMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals. The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business. The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals. KMG Chemicals, Inc. (NYSE:KMG) Recent Trading Information
KMG Chemicals, Inc. (NYSE:KMG) closed its last trading session up +3.34 at 48.43 with 43,719 shares trading hands.