Performance Food Group Company (NYSE:PFGC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On July 1, 2019, Performance Food Group Company, a Delaware corporation (the Company), entered into a Membership Interest Purchase Agreement (the Purchase Agreement) with Ram Acquisition Company, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (Buyer), Ram Holdings I, L.L.C., a Delaware limited liability company (Seller 1), Ram Holdings II, L.L.C., a Delaware limited liability company (Seller 2), Ram Holdings III, L.L.C., a Delaware limited liability company (Seller 3 and, together with Seller 1 and Seller 2, Sellers), Reyes Holdings, L.L.C., a Delaware limited liability company (Holdings), and Lone Oak Realty LLC, a Delaware limited liability company (Real Estate Seller and, together with Sellers and Holdings, the Seller Parties). to, and subject to the terms and conditions of, the Purchase Agreement, Buyer will purchase all of the outstanding limited liability company interests of Reinhart Foodservice, L.L.C., a Delaware limited liability company, and certain related subsidiaries (collectively, the Acquired Companies) for $2 billion in cash, subject to customary adjustments set forth in the Purchase Agreement for the Acquired Companies combined debt, cash and net working capital (the Transaction).
The Purchase Agreement includes customary representations, warranties and covenants of the parties.
The Transaction is subject to various closing conditions, including (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act (the HSR Act Clearance) and the absence of a burdensome condition (as defined in the Purchase Agreement) being a condition to the receipt of the HSR Act Clearance, (ii) the absence of any legal restraint preventing the consummation of the Transaction, (iii) the continuing accuracy of each partys representations and warranties and compliance by the parties with their respective covenants (subject to materiality qualifiers) and (iv) the satisfaction of other conditions customary for a transaction of this type.
The Purchase Agreement contains certain termination rights for the Company and Holdings (on behalf of the Seller Parties), including if (i) the closing does not occur by April 1, 2020 (which date may be extended to July 1, 2020 under certain circumstances) (the Outside Date), (ii) if the other party breaches any of its representations, warranties or covenants (subject to materiality thresholds and cure periods) or (iii) a legal restraint on the Transaction has become final and nonappealable. In addition, the Company is permitted to terminate the Purchase Agreement if 2018 Adjusted EBITDA (as defined in the Purchase Agreement) of the Acquired Companies is below a certain level.
The Company must pay Holdings a termination fee of $100 million in cash if Holdings terminates the Purchase Agreement due to the Companys material breach of the Purchase Agreement (including if the Company fails to consummate the Transaction when required to do so under the Purchase Agreement). In addition, the Company must pay Holdings a termination fee of $80 million in cash under certain circumstances if the Purchase Agreement is terminated due to (i) the failure of the Transaction to be consummated by April 1, 2020 (which date may be extended to July 1, 2020 under certain circumstances) as a result of the HSR Act Clearance not being obtained by such date or (ii) a legal restraint related to the HSR Act Clearance becoming final and nonappealable.
In connection with the entry into the Purchase Agreement, the Company bound a customary representations and warranties insurance policy as additional recourse for certain losses arising out of any breach of the representations and warranties in the Agreement related to the Acquired Companies and certain pre-closing taxes of the Acquired Companies.
In connection with the entry into the Purchase Agreement, the Company has obtained debt financing commitments on the terms and conditions set forth in the commitment letter, dated July 1, 2019 (the Commitment Letter), from Credit Suisse Loan Funding LLC, Credit Suisse AG, Cayman Islands