TURNING POINT BRANDS, INC. (NYSE:TPB) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement.
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On February 17, 2017, Turning Point Brands, Inc. (the Company)
and its wholly-owned subsidiary, North Atlantic Trading Company,
Inc., entered into a $250 million secured credit facility,
comprised of (i) a First Lien Credit Agreement with Fifth Third
Bank, as administrative agent, and other lenders (the First Lien
Credit Agreement), and (ii) a Second Lien Credit Agreement with
Prospect Capital Corporation, as administrative agent, and other
lenders (the Second Lien Credit Agreement, and together with the
First Lien Credit Agreement, the Credit Agreements). The Company
used the proceeds of the credit facility to repay in full the
Companys prior credit facilities and to pay related fees and
expenses.
and its wholly-owned subsidiary, North Atlantic Trading Company,
Inc., entered into a $250 million secured credit facility,
comprised of (i) a First Lien Credit Agreement with Fifth Third
Bank, as administrative agent, and other lenders (the First Lien
Credit Agreement), and (ii) a Second Lien Credit Agreement with
Prospect Capital Corporation, as administrative agent, and other
lenders (the Second Lien Credit Agreement, and together with the
First Lien Credit Agreement, the Credit Agreements). The Company
used the proceeds of the credit facility to repay in full the
Companys prior credit facilities and to pay related fees and
expenses.
The First Lien Credit Agreement consists of: (i) a $50 million
revolving credit facility (of which $31.55 million was drawn at
closing); (ii) a $110 million first out term loan facility (the
First Out Tranche), and (iii) a $35 million second out term loan
facility (the Second Out Tranche), which will be repaid in full
only after repayment in full of the First Out Tranche. The First
Lien Credit Agreement also includes an accordion feature that
allows the Company to borrow up to an additional $40 million upon
the satisfaction of certain conditions, including obtaining
commitments from one or more lenders. Borrowings under the
revolving credit facility may be used for general corporate
purposes, including acquisitions.
revolving credit facility (of which $31.55 million was drawn at
closing); (ii) a $110 million first out term loan facility (the
First Out Tranche), and (iii) a $35 million second out term loan
facility (the Second Out Tranche), which will be repaid in full
only after repayment in full of the First Out Tranche. The First
Lien Credit Agreement also includes an accordion feature that
allows the Company to borrow up to an additional $40 million upon
the satisfaction of certain conditions, including obtaining
commitments from one or more lenders. Borrowings under the
revolving credit facility may be used for general corporate
purposes, including acquisitions.
The First Out Tranche and the revolving credit facility have a
maturity date of February 17, 2022, and the Second Out Tranche
has a maturity date of May 17, 2022.
maturity date of February 17, 2022, and the Second Out Tranche
has a maturity date of May 17, 2022.
The First Out Tranche and the revolving credit facility bear
interest at LIBOR plus a spread of 2.5% to 3.5% based on the
Companys senior leverage ratio. The Second Out Tranche bears
interest at LIBOR plus 6% (subject to a floor of 1.00%).
interest at LIBOR plus a spread of 2.5% to 3.5% based on the
Companys senior leverage ratio. The Second Out Tranche bears
interest at LIBOR plus 6% (subject to a floor of 1.00%).
The First Lien Credit Agreement contains certain financial
covenants of the Company, including maximum senior leverage ratio
of 3.75x with step-downs to 3.00x, a maximum total leverage ratio
of 4.75x with step-downs to 4.00x, and a minimum fixed charge
coverage ratio of 1.20x.
covenants of the Company, including maximum senior leverage ratio
of 3.75x with step-downs to 3.00x, a maximum total leverage ratio
of 4.75x with step-downs to 4.00x, and a minimum fixed charge
coverage ratio of 1.20x.
The First Lien Credit Agreement is secured by guarantees of each
of the Companys subsidiaries and first priority liens on all
tangible and intangible assets of the Company and its
subsidiaries, other than certain excluded assets, as each are
described in a First Lien Guaranty and Security Agreement dated
February 17, 2017.
of the Companys subsidiaries and first priority liens on all
tangible and intangible assets of the Company and its
subsidiaries, other than certain excluded assets, as each are
described in a First Lien Guaranty and Security Agreement dated
February 17, 2017.
The Second Lien Credit Agreement consists of a $55 million second
lien term loan (the Second Lien Term Loan) having a maturity date
of August 17, 2022. The Second Lien Term Loan bears interest at a
fixed rate of 11%.
lien term loan (the Second Lien Term Loan) having a maturity date
of August 17, 2022. The Second Lien Term Loan bears interest at a
fixed rate of 11%.
The Second Lien Credit Agreement contains certain financial
covenants of the Company, including a maximum senior leverage
ratio of 4.25x with step-downs to 3.50x, a maximum total leverage
ratio of 5.25x with step-downs to 4.50x, and a minimum fixed
charge coverage ratio of 1.10x.
covenants of the Company, including a maximum senior leverage
ratio of 4.25x with step-downs to 3.50x, a maximum total leverage
ratio of 5.25x with step-downs to 4.50x, and a minimum fixed
charge coverage ratio of 1.10x.
The Second Lien Credit Agreement is secured by guarantees of each
of the Companys subsidiaries and second priority liens on all
tangible and intangible assets of the Company and its
subsidiaries, other than certain excluded assets, as each are
described in a Second Lien Guaranty and Security Agreement dated
February 17, 2017.
of the Companys subsidiaries and second priority liens on all
tangible and intangible assets of the Company and its
subsidiaries, other than certain excluded assets, as each are
described in a Second Lien Guaranty and Security Agreement dated
February 17, 2017.
The Credit Agreements contain customary events of default,
including payment defaults, breaches of representations and
warranties, covenant defaults, cross-defaults to certain other
material indebtedness in excess of specified amounts, certain
events of bankruptcy and insolvency, certain ERISA events,
judgments in excess of specified amounts and change in control
defaults.
including payment defaults, breaches of representations and
warranties, covenant defaults, cross-defaults to certain other
material indebtedness in excess of specified amounts, certain
events of bankruptcy and insolvency, certain ERISA events,
judgments in excess of specified amounts and change in control
defaults.
The Credit Agreements also contain certain negative covenants
customary for facilities of these types including, covenants
that, subject to exceptions described in the Credit Agreements,
restrict the ability of the Company and its subsidiary
guarantors: (i) to pledge assets; (ii) to incur additional
indebtedness; (iii) to pay dividends; (iv) to make distributions;
(v) to sell assets; and (vi) to make investments.
customary for facilities of these types including, covenants
that, subject to exceptions described in the Credit Agreements,
restrict the ability of the Company and its subsidiary
guarantors: (i) to pledge assets; (ii) to incur additional
indebtedness; (iii) to pay dividends; (iv) to make distributions;
(v) to sell assets; and (vi) to make investments.
Also, on February 17, 2017, in connection with the Credit
Agreements, the Company and the lenders entered into an
intercreditor agreement (the Intercreditor Agreement) setting
forth the respective rights of the lenders.
Agreements, the Company and the lenders entered into an
intercreditor agreement (the Intercreditor Agreement) setting
forth the respective rights of the lenders.
There are no material relationships between the Company or its
affiliates and any of the lenders, other than as described above.
affiliates and any of the lenders, other than as described above.
The foregoing descriptions of the First Lien Credit Agreement,
the Second Lien Credit Agreement, the First Lien Guaranty and
Security Agreement, the Second Lien Guaranty and Security
Agreement and the Intercreditor Agreement are qualified in their
entirety by reference to the full text of those documents, which
are filed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5,
respectively, to this Current Report on Form 8-K and are
incorporated by reference herein.
the Second Lien Credit Agreement, the First Lien Guaranty and
Security Agreement, the Second Lien Guaranty and Security
Agreement and the Intercreditor Agreement are qualified in their
entirety by reference to the full text of those documents, which
are filed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5,
respectively, to this Current Report on Form 8-K and are
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 contained in Item 1.01 of this Current Report on
Form 8-K is hereby incorporated by reference into this Item 2.03.
Form 8-K is hereby incorporated by reference into this Item 2.03.
| Item 8.01 |
Other Events.
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On February 17, 2017, the Company issued a press release
announcing its entry into the new credit facility. A copy of the
press release is attached as Exhibit 99.1 to this Current Report
on Form 8-K and is incorporated herein by reference.
announcing its entry into the new credit facility. A copy of the
press release is attached as Exhibit 99.1 to this Current Report
on Form 8-K and is incorporated herein by reference.
| Item 9.01 |
Financial Statement and Exhibits.
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| (d) |
Exhibits
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Exhibit No.
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Description
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10.1
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First Lien Credit Agreement, dated as of February 17, 2017,
by and among Turning Point Brands, Inc. and North Atlantic Trading Company, Inc., as the Borrowers, Fifth Third Bank, as administrative agent, and the lenders party thereto. |
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10.2
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Second Lien Credit Agreement, dated as of February 17,
2017, by and among Turning Point Brands, Inc. and North Atlantic Trading Company, Inc., as the Borrowers, Prospect Capital Corporation, as administrative agent, and the lenders party thereto. |
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10.3
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First Lien Guaranty and Security Agreement, dated as of
February 17, 2017, by and among Turning Point Brands, Inc. and its subsidiaries, as the Grantors, Fifth Third Bank, as administrative agent, and the lenders party thereto. |
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10.4
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Second Lien Guaranty and Security Agreement, dated as of
February 17, 2017, by and among Turning Point Brands, Inc. and its subsidiaries, as the Grantors, Prospect Capital Corporation, as administrative agent, and the lenders party thereto. |
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10.5
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Second Lien Intercreditor Agreement, dated as of February
17, 2017, by and among Turning Point Brands, Inc., North Atlantic Trading Company, Inc. and the other grantors party thereto, Fifth Third Bank, as first lien collateral agent, and Prospect Capital Corporation, as second lien collateral agent. |
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99.1
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Press Release dated February 17, 2017.
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About TURNING POINT BRANDS, INC. (NYSE:TPB)
Turning Point Brands, Inc., formerly North Atlantic Holding Company, Inc., is a provider of Other Tobacco Products (OTP) in the United States. The Company operates through three segments: smokeless products, smoking products and NewGen products. The Smokeless products market consists of approximately four product categories, which includes loose leaf chewing tobacco, Moist Snuff, Moist Snuff Pouches and Snus. The smoking products consist of various product categories, including cigarette papers, large cigars, (MYO cigar wraps and MYO cigar smoking tobacco, MYO cigarette smoking tobacco and related products, and traditional pipe tobacco. The NewGen products consist of various products, such as liquid vapor products, tobacco vaporizer products and a range of non-tobacco products and other non-nicotine products. Its portfolio of brands includes Zig-Zag, Beech-Nut, Stoker’s, Trophy, Havana Blossom, Durango, Our Pride and Red Cap. TURNING POINT BRANDS, INC. (NYSE:TPB) Recent Trading Information
TURNING POINT BRANDS, INC. (NYSE:TPB) closed its last trading session 00.00 at 13.23 with 29,238 shares trading hands.