SYNALLOY CORPORATION (NASDAQ:SYNL) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
As previously reported, on November 30, 2018, Synalloy Corporation’s wholly-owned subsidiary, ASTI Acquisition, LLC, a North Carolina limited liability company (“ASTI”), entered into a Purchase and Sale Agreement (the “PSA”) with American Stainless Tubing, Inc., a North Carolina corporation (“American Stainless”). to the terms and conditions of the PSA, ASTI agreed to purchase American Stainless’ real estate property in Statesville, North Carolina and Troutman, North Carolina (together the “Properties”) for a purchase price of $5 million.
On January 1, 2019, ASTI designated its rights to take title to the Properties to Store Capital Acquisitions, LLC, a Delaware limited liability company or its affiliate (together, “Store”), who funded the full purchase price of the transaction and took title to the Properties.
On January 1, 2019, Synalloy and Store Master Funding XII, LLC, a Delaware limited liability company and an affiliate of Store, entered into a second Amended and Restated Master Lease Agreement (the “Master Lease”), to which Synalloy will lease the Properties, purchased by Store from American Stainless on January 1, 2019, for the remainder of the initial term of 20 years set forth in the Master Lease, with two renewal options of ten years each. First year rent expense will be $430,000. The lease includes a rent escalator equal to the lesser of 1.25 times the percentage increase in the Consumer Price Index since the previous increase or 2.00%. The Master Lease also grants Synalloy an option to sell approximately 13.5 acres of excess land at the Statesville, North Carolina Property and receive a corresponding reduction in rent based on the net proceeds of the sale using a capitalization rate of 8.60%. Synalloy will sublease both Properties to ASTI.
The description of the Master Lease contained in this Current Report on Form 8-K is a summary and is qualified in its entirety by the terms of the Master Lease. The Company will file the Master Lease with the U.S. Securities and Exchange Commission as an exhibit to its Annual Report on Form 10-K.
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
As previously reported, on November 30, 2018, ASTI entered into an Asset Purchase Agreement (the “APA”) with American Stainless. On January 1, 2019, to the terms and conditions of the APA, ASTI completed its purchase of substantially all of American Stainless’ assets and operations in Statesville, North Carolina and Troutman, North Carolina.
The purchase price for the all-cash acquisition was approximately $22.7 million, subject to a post-closing working capital adjustment. American Stainless will also receive quarterly earn-out payments for a period of three years following closing. to the APA, earn-out payments will equate to six and one-half percent (6.5%) of ASTI’s revenue over the three-year earn-out period.
Synalloy funded the acquisition with a new five-year $20 million term note and a draw against its recently increased $100 million asset based line of credit, both with Synalloy’s current lender, Branch Banking and Trust Company.
Other than in respect to the transaction discussed above, there are no material relationships between the parties involved and the registrant or any of its affiliates, or any director or officer of the registrant, or any associate of any such director or officer.
A copy of the press release announcing the closing of this transaction is attached as Exhibit 99.1 and is incorporated by reference herein.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
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Exhibit Number |
Description of Exhibit |
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99.1 |
Press Release issued by Synalloy Corporation on January 4, 2019. |
SYNALLOY CORP Exhibit
EX-99.1 2 synl-astiacqpressreleasexe.htm EXHIBIT 99.1 Exhibit Exhibit 99.1CORRECTED RELEASE – Synalloy AnnouncesASTI Closing; Projections for 2018 and 2019Richmond,…
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About SYNALLOY CORPORATION (NASDAQ:SYNL)
Synalloy Corporation is a chemical manufacturing company. The Company operates through two segments: the Metals Segment and the Specialty Chemicals Segment. The Company’s Metals Segment comprises three subsidiaries: Synalloy Metals, Inc., which owns Bristol Metals, LLC (BRISMET), located in Bristol, Tennessee; Palmer of Texas Tanks, Inc. (Palmer), located in Andrews, Texas; and Specialty Pipe & Tube, Inc. (Specialty), located in Mineral Ridge, Ohio and Houston, Texas. The Company’s Metals Segment manufactures stainless steel, other alloy pipe, storage solutions and separation equipment. The Company’s Specialty Chemicals segment consists of the Company’s subsidiary, Manufacturers Soap and Chemical Company (MS&C). The Specialty Chemicals Segment manufactures lubricants, surfactants, reaction intermediaries, sulfated fats and oils, and chemical tolling manufacturing resources.