SEARS HOLDINGS CORPORATION (NASDAQ:SHLD) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry Into a Material Definitive Agreement
| • | At the Company’s option and upon written notice to the New Senior Secured Notes Trustee of the amount of interest to be paid in such manner at least five (5)business days prior to the record date relating to the applicable interest payment date, interest on the New Senior Secured Notes may be paid by increasing the principal amount of the New Senior Secured Notes. If the Company elects to pay interest, in whole or in part, on the New Senior Secured Notes by increasing the principal amount of the New Senior Secured Notes, the Company shall thereafter also pay a corresponding pro rata portion of the interest due with respect to the Second Lien Term Loan and all interest due with respect to the New Senior Unsecured Notes in kind, to the fullest extent permitted thereunder, until such time as the Company elects to resume paying interest on the New Senior Secured Notes in cash in full. The first interest payment on the New Senior Secured Notes, which will include interest accrued from the last interest payment date with respect to the Old Senior Secured Notes, will be paid in kind. |
| • | The New Senior Secured Notes are convertible into Common Stock at the option of an eligible holder at a conversion rate of 200 shares of Common Stock per $1,000 in principal amount of the New Senior Secured Notes (subject to adjustment as set forth in the New Senior Secured Notes Indenture) (the “Senior Secured Notes Conversion Price”). |
| • | The New Senior Secured Notes are mandatorily convertible into Common Stock at the option of the Company at the Senior Secured Notes Conversion Price within 30 days following the end of any period of 30 consecutive trading days, ending on or after July2, 2018, during which the volume weighted average trading price of Common Stock on the NASDAQ exceeds $10.00 for a period of 20 trading days. |
| • | Except for any holder who beneficially owned more than 4.9% of the outstanding Common Stock immediately prior to the issue date of the New Senior Secured Notes, to the extent that conversion of New Senior Secured Notes would result in the holder thereof beneficially owning more than 4.9% of the outstanding Common Stock, New Senior Secured Notes will not be convertible at the option of such holder. |
| • | Except for any holder who directly or indirectly owned more than 9.9% of the vote or value of the outstanding Common Stock immediately prior to the issue date of the New Senior Secured Notes, to the extent that conversion of New Senior Secured Notes would result in any non-U.S. person directly or indirectly owning more than 9.9% of the vote or value of the outstanding Common Stock, New Senior Secured Notes will not be convertible at the option of such holder. |
| • | The liens securing the New Senior Secured Notes will be effectively senior to the liens securing the Old Senior Secured Notes. |
The New Senior Secured Notes were offered only to investors that were (i)accredited investors within the meaning of Rule 501(a) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), or (ii)outside the United States and persons other than U.S. persons in reliance upon Regulation S under the Securities Act. The New Senior Secured Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. The Company did not receive any cash proceeds from the issuance of the New Senior Secured Notes.
The foregoing summaries of the New Senior Secured Notes and the New Senior Secured Notes Indenture do not purport to be complete and are qualified in their entirety by reference to the full text of the New Senior Secured Notes Indenture and the form of note for the New Senior Secured Notes, which are attached to this Current Report on Form 8-K as Exhibit 4.2 and Exhibit 4.3, respectively, and are incorporated by reference into this Item 1.01.
New Senior Unsecured Notes
On March20, 2018, to the New Senior Unsecured Notes Supplemental Indenture, the Company issued approximately $214million aggregate principal amount of New Senior Unsecured Notes. The New Senior Unsecured Notes bear the same interest rate, have the same maturity date and have substantially identical terms as the Old Senior Unsecured Notes, except that:
| • | At the Company’s option and upon written notice to the New Senior Unsecured Notes Trustee of the amount of interest to be paid in such manner at least five (5)business days prior to the record date relating to the applicable interest payment date, interest on the New Senior Unsecured Notes may be paid by increasing the principal amount of the New Senior Unsecured Notes. The first interest payment on the New Senior Unsecured Notes, which will include interest accrued from the last interest payment date with respect to the Old Senior Unsecured Notes, will be paid in kind. |
| • | The New Senior Unsecured Notes are convertible into Common Stock at the option of an eligible holder at a conversion rate of 120 shares of Common Stock per $1,000 in principal amount of New Senior Unsecured Notes (subject to adjustment as set forth in the New Senior Unsecured Notes Indenture) (the “Senior Unsecured Notes Conversion Price”). |
| • | The New Senior Unsecured Notes are mandatorily convertible into Common Stock at the option of the Company at the Senior Unsecured Notes Conversion Price within 30 days following the end of any period of 30 consecutive trading days, ending on or after July2, 2018, during which the volume weighted average trading price of Common Stock on the NASDAQ exceeds $10.00 for a period of 20 trading days. |
| • | Except for any holder who directly or indirectly owned more than 9.9% of the vote or value of the outstanding Common Stock immediately prior to the issue date of the New Senior Unsecured Notes, to the extent that conversion of New Senior Unsecured Notes would result in any non-U.S. person directly or indirectly more than 9.9% of the vote or value of the outstanding Common Stock, New Senior Unsecured Notes will not be convertible at the option of such holder. |
The New Senior Unsecured Notes were offered only to investors that were (i)accredited investors within the meaning of Rule 501(a) of Regulation D of the Securities Act or (ii)outside the United States and persons other than U.S. persons in reliance upon Regulation S under the Securities Act. The New Senior Unsecured Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. The Company did not receive any cash proceeds from the issuance of the New Senior Unsecured Notes.
The foregoing summaries of the New Senior Unsecured Notes and the New Senior Unsecured Notes Supplemental Indenture do not purport to be complete and are qualified in their entirety by reference to the full text of the New Senior Unsecured Notes Supplemental Indenture and the form of note for the New Senior Unsecured Notes, which are attached to this Current Report on Form 8-K as Exhibit 4.4 and Exhibit 4.5, respectively, and are incorporated by reference into this Item 1.01.
The disclosure required by this item with respect to the Fifth Amendment, Sixth Amendment and FILO Loan is included in Item 1.01 and is incorporated herein by reference.
Item 1.01 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 is incorporated by reference into this Item 1.01.
| Item 1.01. | Material Modification to Rights of Security Holders. |
The description of the Old Senior Secured Notes Supplemental Indenture set forth in Item 1.01 above is incorporated by reference into this Item 1.01.
Item 1.01 Other Events.
The information set forth in the Introductory Note is incorporated by reference into this Item 1.01.
On March20, 2018, SRAC, Sears, Roebuck and Co., a wholly owned subsidiary of the Company, each of the other guarantors party thereto and certain third party holders of approximately $100million aggregate principal amount of SRAC’s outstanding notes entered into a Note Exchange Agreement (the “SRAC Note Exchange Agreement”). to the SRAC Note Exchange Agreement, SRAC agreed to exchange approximately $100million aggregate principal amount of its outstanding notes of various series for a like principal amount of 7.0% / 12.0% PIK-Toggle Notes of SRAC due March2028 (the “New SRAC Notes”). The New SRAC Notes mature on March2028 and bear interest at a rate of 7.0% per annum, except that interest on the New SRAC Notes may, at the option of the Company, be paid by increasing the principal amount of the New SRAC Notes (in which event the interest rate in respect of the applicable interest period would be 12.0% per annum).
On March21, 2018, the Company issued a press release announcing the results of the Exchange Offers and related matters. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated by reference into this Item 1.01.
Item 1.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit4.1 | Fifth Supplemental Indenture, dated as of March20, 2018, by and among Sears Holdings Corporation, the guarantors party thereto and Wilmington Trust, National Association, as trustee. |
| Exhibit4.2 | Indenture, dated as of March 20, 2018, by and among Sears Holdings Corporation, the guarantors party thereto and Computershare Trust Company, N.A., as trustee (attaching form of 6 5/8% Senior Secured Convertible PIK Toggle Note due 2019). |
| Exhibit4.3 | Form of 6 5/8% Senior Secured Convertible PIK Toggle Note due 2019 (included in Exhibit 4.2). |
| Exhibit4.4 | Second Supplemental Indenture, dated as of March 20, 2018, by and between Sears Holdings Corporation, as obligor, and Computershare Trust Company, N.A., as trustee (attaching form of 8% Senior Unsecured Convertible PIK Toggle Note due 2019). |
| Exhibit4.5 | Form of 8% Senior Unsecured Convertible PIK Toggle Note due 2019 (included in Exhibit 4.4). |
| Exhibit10.1 | Fourth Amendment to the Second Lien Credit Agreement, dated as of March 20, 2018, by and among Sears Holdings Corporation, Sears Roebuck Acceptance Corp. and Kmart Corporation, the lenders party thereto, and JPP, LLC, as administrative agent and collateral administrator. |
| Exhibit10.2 | Amended and Restated Security Agreement, dated as of March 20, 2018, between Sears Holdings Corporation, the other Grantors party thereto and Wilmington Trust, National Association, as collateral agent. |
| Exhibit10.3 | Second Amended and Restated Intercreditor Agreement, dated as of March 20, 2018, by and among Bank of America, N.A. and Wells Fargo Bank, National Association as ABL Agents, and Wilmington Trust, National Association, as trustee. |
| Exhibit 10.4 | Fifth Amendment to the Third Amended and Restated Credit Agreement, dated as of March 21, 2018, among Sears Holdings Corporation, Sears Roebuck Acceptance Corp., Kmart Corp., the lenders party thereto, Bank of America, N.A., as administrative agent, and the other parties thereto. |
| Exhibit 10.5 | Sixth Amendment to the Third Amended and Restated Credit Agreement, dated as of March 21, 2018, among Sears Holdings Corporation, Sears Roebuck Acceptance Corp., Kmart Corp., the lenders party thereto, Bank of America, N.A., as administrative agent, and the other parties thereto. |
| Exhibit99.1 | Press Release, dated March21, 2018. |
SEARS HOLDINGS CORP ExhibitEX-4.1 2 d500560dex41.htm EX-4.1 EX-4.1 Exhibit 4.1 EXECUTION VERSION FIFTH SUPPLEMENTAL INDENTURE This FIFTH SUPPLEMENTAL INDENTURE,…To view the full exhibit click here
About SEARS HOLDINGS CORPORATION (NASDAQ:SHLD)
Sears Holdings Corporation is an integrated retailer. The Company is the parent company of Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. (Sears). It operates through two segments: Kmart and Sears Domestic. It operates approximately 940 Kmart stores across over 50 states, Guam, Puerto Rico and the United States Virgin Islands. Kmart stores carry an array of products across various merchandise categories, including seasonal merchandise, toys, lawn and garden equipment, food and consumables and apparel, including products sold under labels, such as Jaclyn Smith, Joe Boxer and Alphaline and certain Sears brand products (such as Kenmore, Craftsman and DieHard) and services. Its Sears Domestic segment’s operations consist of full-line stores, specialty stores, commercial sales and home services. Full-line stores offer an array of products and service offerings across various merchandise categories, including appliances, consumer electronics/connected solutions and tools.
