Ritchie Bros. Auctioneers Incorporated (NASDAQ:RBA) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On December 21, 2016, Ritchie Bros. Auctioneers Incorporated
(Ritchie Bros.) completed its previously announced offering of an
aggregate principal amount of $500.0 million of its 5.375% Senior
Notes due 2025 (the Notes). In connection with the closing of the
offering of the Notes, Ritchie Bros. and certain of its
subsidiaries that will guarantee the Notes (the Initial
Subsidiary Guarantors) entered into an Indenture (the Indenture)
with US Bank National Association, as trustee (the Trustee),
providing for the issuance of the Notes. Ritchie Bros. intends to
use the net proceeds from the offering of the Notes, together
with proceeds from its delayed-draw term loan and cash on hand or
available under its revolving facilities (together with Ritchie
Bros. delayed-draw term loan, the New Credit Facilities), to fund
the consideration payable in the previously announced acquisition
(the Acquisition) of IronPlanet Holdings, Inc. (IronPlanet) and
its subsidiaries and related fees and expenses. The gross
proceeds from the offering, together with additional amounts to
prefund accrued interest, were placed into an escrow account
pending the consummation of the Acquisition. The escrow account
is governed by an escrow and security agreement, dated as of
December 21, 2016 (the Escrow and Security Agreement), among the
Company, US Bank National Association, as escrow agent, and the
Trustee.
The Notes have been offered and sold only to qualified
institutional buyers in reliance on Rule 144A of the Securities
Act of 1933, as amended (the Securities Act), and outside the
U.S. to non-U.S. persons in reliance on Regulation S of the
Securities Act. The Notes have not been and will not be
registered under the Securities Act or any state securities laws
and, unless so registered, may not be offered or sold in the
United States except to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities
Act and applicable state securities laws. The Notes have not been
and will not be qualified for sale to the public by prospectus
under applicable Canadian securities laws and accordingly, any
offer and sale of the securities in Canada will be made on a
basis which is exempt from the prospectus requirements of such
securities laws.
Certain terms and conditions of the Indenture and the Notes are
as follows:
Maturity. The Notes mature on January
15, 2025.
Interest. The Notes accrue interest at
a rate of 5.375% per year. Interest on the Notes is payable
semi-annually on each January 15 and July 15, commencing July 15,
2017.
Issue Price. The Notes were issued at
par.
Guarantees. The Notes are, jointly and
severally, fully and unconditionally guaranteed, on a senior
unsecured basis, by each of the Initial Subsidiary Guarantors and
will be, jointly and severally, fully and unconditionally
guaranteed, on a senior unsecured basis, by each additional
subsidiary of Ritchie Bros. that is a borrower, or guarantees
indebtedness, under the New Credit Facilities or certain capital
markets indebtedness. Additionally, each of IronPlanet and its
subsidiaries are expected to be guarantors following the
consummation of the Acquisition, subject to certain conditions.
Priority following the consummation of the
Acquisition. Upon the consummation of the
Acquisition, the Notes and the related guarantees will constitute
senior unsecured obligations of Ritchie Bros. and the guarantors,
respectively. The Notes and the related guarantees, respectively,
will be: equal in right of payment with all of the Ritchie Bros.
and the guarantors senior debt (including borrowings under the
New Credit Facilities), without giving effect to collateral
arrangements; senior in right of payment to all of the Ritchie
Bros and the guarantors future subordinated debt, if any;
effectively subordinated in right of payment to all of the
Ritchie Bros. and the guarantors debt and obligations that are
secured, including borrowings under the New Credit Facilities for
so long as the New Credit Facilities are secured, to the extent
of the value of the assets securing such liens; and structurally
subordinated in right of payment to all liabilities (including
trade payables) of the subsidiaries that do not guarantee the
Notes.
Special Mandatory Redemption. If the
Acquisition is not consummated on or before October 31, 2017 or
the Merger Agreement is terminated prior to such date, Ritchie
Bros.will be required to redeem all of the outstanding Notes at a
redemption price equal to 100% of the original offering price of
the Notes, plus accrued and unpaid interest to, but excluding,
the date of such mandatory redemption. In such event, the
escrowed proceeds will be applied to fund a portion of such
redemption price.
Optional Redemption. On or after
January 15, 2020, Ritchie Bros. may redeem the Notes, in whole or
in part, at any time and from time to time at certain fixed
redemption prices expressed as percentages of the principal
amount, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date. In addition, Ritchie Bros. may
redeem up to 35% of the aggregate principal amount of the Notes
at any time and from time to time before January 15, 2020, with
an amount up to the net proceeds of certain equity offerings at a
redemption price of 105.375% of the principal amount plus accrued
and unpaid interest, if any, to, but excluding, the redemption
date. Ritchie Bros. may also redeem the Notes, in whole or in
part, at any time and from time to time before January 15, 2020
at a redemption price of 100% of the principal amount plus
accrued and unpaid interest, if any, to, but excluding, the
redemption date, plus a make-whole premium.
Change of Control. If Ritchie Bros.
experiences certain kinds of changes of control, it may be
required to repurchase the Notes at a price equal to 101% of the
principal amount of the Notes, plus accrued and unpaid interest,
if any, to, but excluding, the date of repurchase.
Additional Amounts and Tax Redemption.
All payments in respect of the Notes and the guarantees will be
made without withholding or deduction for any taxes except to the
extent required by law. If withholding or deduction is required
by law in a relevant tax jurisdiction, subject to certain
exceptions, Ritchie Bros. will pay additional amounts so that the
net amount received by a holder or beneficial holder of Notes is
no less than the amount that such holder or beneficial holder
would have received in the absence of such withholding or
deduction. If certain changes in tax law in a relevant tax
jurisdiction become effective that would require Ritchie Bros. to
pay additional amounts or make certain tax indemnification
payments with respect to the Notes or the guarantees, Ritchie
Bros. may redeem the Notes in whole, but not in part, at any
time, at a redemption price equal to 100% of their principal
amount, plus accrued and unpaid interest, if any, and additional
amounts, if any, to, but excluding, the redemption date.
Certain Covenants. The Indenture
contains covenants that limit, among other things, Ritchie Bros.
and its restricted subsidiaries ability to: incur additional
indebtedness (including guarantees thereof); incur or create
liens on their assets securing indebtedness; make certain
restricted payments; make certain investments; dispose of certain
assets; allow to exist certain restrictions on the ability of the
Ritchie Bros. restricted subsidiaries to pay dividends or make
other payments to the Ritchie Bros.; engage in certain
transactions with affiliates; and consolidate, amalgamate or
merge with or into other companies. These covenants are subject
to a number of important limitations and exceptions.
Events of Default. The Indenture
contains customary events of default which could, subject to
certain conditions, cause the Notes to become immediately due and
payable.
The above descriptions of the Indenture and the Notes are
summaries and are qualified in their entirety by the terms of the
Indentures and the Notes. A copy of the Indenture (including the
form of Notes), is attached as exhibit 4.1 hereto and
incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant
The information set forth in Item 1.01 above with respect to the
Indenture and the Notes is hereby incorporated by reference into
this Item 2.03, insofar as it relates to the creation of a direct
financial obligation.
Item 7.01 Regulation FD
A copy of the Escrow and Security Agreement is attached as
Exhibit 99.1 and is incorporated herein by reference. Ritchie
Bros. is disclosing under Item 7.01 of this Current Report on
Form 8-K the information attached as Exhibit 99.1. The
information set forth in Item 7.01 of this Current Report on Form
8-K, including the Exhibit 99.1 referenced herein, is being
furnished to Item 7.01 of Form 8-K 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 that section, nor shall it be deemed incorporated
by reference into any of Ritchie Bros.’ filings under the
Securities Act, or the Exchange Act, whether made before or after
the date hereof and regardless of any general incorporation
language in such filings, except to the extent expressly set
forth by specific reference in such a filing. The filing of this
Current Report on Form 8-K shall not be deemed an admission as to
the materiality of any information herein that is required to be
disclosed solely by reason of Regulation FD.
Item 9.01 Financial Statements and
Exhibits.
| (d) | Exhibits: | |
| 4.1 |
Indenture, dated as of December 21, 2016, among Ritchie Bros. Auctioneers Incorporated, the guarantors party thereto and US Bank National Association, as trustee, relating to Ritchie Bros. Auctioneers Incorporateds 5.375% Senior Notes due 2025 (includes form of note) |
|
| 99.1 |
Escrow and Security Agreement, dated as of December 21, 2016, among Ritchie Bros. Auctioneers Incorporated, US Bank National Association, as escrow agent, and US Bank National Association, as trustee. |
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