Virtus Investment Partners, Inc. (NASDAQ:VRTS) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement |
Merger Agreement
On December16, 2016, Virtus Investment Partners, Inc., a Delaware
corporation (the Company), and 100 Pearl Street 2, LLC, a
Delaware limited liability company and wholly owned subsidiary of
the Company (Merger Sub), entered into an Agreement and
Plan of Merger (the Merger Agreement) with RidgeWorth
Holdings LLC, a Delaware limited liability company
(RidgeWorth), and Lightyear Fund III AIV-2, L.P., a
Delaware limited partnership, solely in its capacity as Seller
Representative, to which Merger Sub will (on the terms and
subject to the satisfaction or waiver of the closing conditions
in the Merger Agreement) merge with and into RidgeWorth with
RidgeWorth continuing as the surviving company and a wholly owned
subsidiary of the Company (the Merger).
The purchase price (the Purchase Price) for the Companys
acquisition of RidgeWorth equals (x)$472,000,000, plus (y)the
fair market value of certain of RidgeWorths investments at the
effective time of the Merger (the Closing), with the final
Purchase Price subject to the adjustments described below. The
Merger is expected to be financed using a combination of the
Companys existing balance sheet resources, debt and equity and/or
equity-linked securities. In connection with the transaction, the
Company has received $475 million of committed debt financing
from Barclays Bank PLC and Morgan Stanley Senior Funding, Inc.
The Merger Agreement provides that the Purchase Price will be
reduced if RidgeWorth does not obtain client consents
(Consents) relating to (i)the assignment of advisory
contracts to which it and its subsidiaries provide investment
management services to their clients (other than mutual funds)
and (ii)the merger of the RidgeWorth mutual funds into the
Companys fund complex, representing revenues at least equal to
92.5% of a baseline revenue amount (the Base Revenue Run
Rate). The Purchase Price is subject to working capital and
net debt adjustments as well as reductions for unpaid transaction
expenses, accrued bonuses and commissions and other specified
liabilities of RidgeWorth, in each case as of immediately prior
to Closing. The Purchase Price is also subject to a customary
post-Closing adjustment as well as a true-up payment in respect
of Consents obtained in the six months following Closing.
In connection with the Merger, certain key employees holding
outstanding equity interests in RidgeWorth (the RidgeWorth
Equity Interests) have entered into rollover agreements with
the Company, to which, immediately prior to the Merger, each such
holder will exchange a portion of his or her RidgeWorth Equity
Interests (the Rollover Equity Interests) for a
combination of Company common stock and either deferred cash
consideration or investments in the Companys mutual funds.
The Closing of the Merger is subject to (1)the receipt of
Consents representing revenues that are not less than 77.5% of
the Base Revenue Run Rate, (2)the expiration or termination of
the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, (3)the absence of
any material adverse effect (as defined in the Merger Agreement)
on the business of RidgeWorth and its subsidiaries and (4)other
customary closing conditions. The Merger is expected to close in
mid-2017, subject to the satisfaction or waiver of such
conditions.
The Merger Agreement contains customary termination rights for
the Company and RidgeWorth, including in the event the Merger is
not consummated on or before July16, 2017 (subject to extension
to September16, 2017 in certain specified circumstances). The
Merger Agreement also contains customary representations,
warranties, covenants and indemnification and escrow provisions.
RidgeWorth is required, among other things, to conduct its
business in the ordinary course consistent with past practice
during the interim period between the execution of the Merger
Agreement and the consummation of the Merger, subject to certain
exceptions.
The foregoing description of the Merger Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Merger Agreement, a copy of
which is attached hereto as Exhibit2.1 and is incorporated herein
by reference.
The Merger Agreement and the above description of the Merger
Agreement have been included to provide investors with
information regarding the terms of the Merger Agreement and are
not intended to provide any other
factual information about the Company, RidgeWorth or their
respective subsidiaries or affiliates. The representations,
warranties and covenants contained in the Merger Agreement were
made only for purposes of the Merger Agreement and as of specific
dates, were solely for the benefit of the parties to the Merger
Agreement and may be subject to limitations agreed upon by the
parties in connection with negotiating the terms of the Merger
Agreement, including being qualified by confidential disclosures
made by each party to the other for the purposes of allocating
contractual risk between them that differ from those applicable
to investors. In addition, certain representations and warranties
may be subject to a contractual standard of materiality different
from those generally applicable to investors and may have been
used for the purpose of allocating risk between the parties
rather than establishing matters as facts. Information concerning
the subject matter of the representations, warranties and
covenants may change after the date of the Merger Agreement,
which subsequent information may or may not be fully reflected in
public disclosures by the Company. Investors should not rely on
the representations, warranties and covenants or any description
thereof as characterizations of the actual state of facts or
condition of the Company, RidgeWorth or any of their respective
subsidiaries, affiliates or businesses.
Debt Commitment Letter
In connection with entering into the Merger Agreement, on
December16, 2016, the Company entered into a debt financing
commitment letter (the Debt Commitment Letter) with
Barclays Bank PLC and Morgan Stanley Senior Funding, Inc.
(together, the Initial Commitment Parties). to the Debt
Commitment Letter, the Initial Commitment Parties have committed
to arrange and provide the Company with a senior secured credit
facility composed of (i)a term loan facility of up to $475
million, provided that, if the Company issues equity securities
or equity-linked securities on or prior to the Closing Date, the
principal amount of the term loan may be reduced by the lesser of
the net cash proceeds received by the Company from such issuance
and $275 million, and (ii)a revolving credit facility of up to
$100 million (together, the Facilities). The proceeds of
the Facilities may be used to fund the Companys acquisition of
RidgeWorth to the Merger Agreement, to repay of amounts borrowed
under an existing revolving credit facility, and to pay
transaction fees and expenses related to the foregoing. The
availability of borrowings under the Facilities is subject to
satisfaction of certain customary conditions.
A copy of the Debt Commitment Letter is attached hereto as
Exhibit 10.1 and is incorporated herein by reference. The
foregoing description of the Debt Commitment Letter is qualified
in its entirety by reference to the full text of the Debt
Commitment Letter.
Cautionary Statements Regarding Forward-Looking
Statements
This document contains statements that are, or may be considered
to be, forward-looking statements. All statements that are not
historical facts, including statements about the Companys beliefs
or expectations, are forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995.
These statements may be identified by such forward-looking
terminology as expect, estimate, plan, intend, believe,
anticipate, may, will, should, could, continue, project, or
similar statements or variations of such terms.
The Companys forward-looking statements are based on a series of
expectations, assumptions and projections about the Company, are
not guarantees of future results or performance, and involve
substantial risks and uncertainty, including assumptions and
projections concerning the Companys assets under management, cash
inflows and outflows, operating cash flows, its ability to expand
distribution and product offerings, and future credit facilities,
for all forward periods. The Company can give no assurance that
such expectations or forward-looking statements will prove to be
correct. Actual results may differ materially.
The Companys business and its forward-looking statements involve
substantial known and unknown risks and uncertainties, including
those discussed under Risk Factors, and Managements Discussion
and Analysis of Financial Condition and Results of Operations in
its 2015 Annual Report on Form 10-K, as well as the following
risks and uncertainties: (a)any reduction in its assets under
management; (b)the withdrawal, renegotiation or termination of
investment advisory agreements; (c)damage to its reputation;
(d)failure to comply with investment guidelines or other
contractual requirements; (e)the inability to attract and retain
key personnel; (f)the competition the Company faces in its
business; (g)adverse regulatory and legal developments;
(h)unfavorable changes in tax laws or limitations; (i)adverse
developments, or changes in its relationships with unaffiliated
subadvisers; (j)changes in
key distribution relationships; (k)interruptions in service or
failure to provide service by third-party service providers;
(l)volatility associated with its common stock; (m)civil
litigation and government investigations or proceedings; (n)the
risk of capital loss associated with its investments; (o)the
inability to make quarterly distributions; (p)the lack of
availability of required and necessary capital on satisfactory
terms; (q)liabilities and losses not covered by insurance; (r)the
inability to satisfy financial covenants under its existing debt
agreement and committed debt financing; (s)the inability to
secure required consents, including the approval of shareholders
of the RidgeWorth funds and other clients; (t)the inability to
successfully close the acquisition and integrate the acquired
business, and other risks and uncertainties described in the
Companys 2015 Annual Report on Form 10-K or in any of its filings
with the Securities and Exchange Commission (SEC) and
(u)the ability to achieve expected financial benefits and
synergies.
Certain other factors which may impact the Companys continuing
operations, prospects, financial results and liquidity or which
may cause actual results to differ from such forward-looking
statements are discussed or included in the Companys periodic
reports filed with the SEC and are available on the Companys
website at www.virtus.com under Investor Relations. Statements in
this document should be carefully considered in light of all such
factors.
The Company does not undertake or plan to update or revise any
such forward-looking statements to reflect actual results,
changes in plans, assumptions, estimates or projections, or other
circumstances occurring after the date hereof, even if such
results, changes or circumstances make it clear that any
forward-looking information will not be realized. If there are
any future public statements or disclosures by the Company which
modify or impact any of the forward-looking statements contained
in or accompanying this document, such statements or disclosures
will be deemed to modify or supersede such statements herein.
| Item9.01. | Financial Statements and Exhibits |
(d) Exhibits.
|
ExhibitNo. |
Description |
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| 2.1 |
Agreement and Plan of Merger, dated as of December 16, 2016, among Virtus Investment Partners, Inc., 100 Pearl Street 2, LLC, Lightyear Fund III AIV-2, L.P. and RidgeWorth HoldingsLLC |
|
| 10.1 |
Commitment Letter, dated as of December 16, 2016, among Barclays Bank PLC, Morgan Stanley Senior Funding, Inc. and Virtus Investment Partners, Inc. |
About Virtus Investment Partners, Inc. (NASDAQ:VRTS)
Virtus Investment Partners, Inc. is a provider of investment management and related services to individuals and institutions. The Company provides its products in various forms and through multiple distribution channels. Its retail products include open-end mutual funds, closed-end funds, exchange traded funds, variable insurance funds, undertakings for collective investments in transferable securities (UCITS) and separately managed accounts. Its open-end mutual funds are distributed through intermediaries. Its closed-end funds trade on the New York Stock Exchange. Its variable insurance funds are available as investment options in variable annuities and life insurance products distributed by life insurance companies. Separately managed accounts consists of intermediary programs, sponsored and distributed by unaffiliated brokerage firms, and private client accounts, which are offered to the high net-worth clients of its affiliated managers. Virtus Investment Partners, Inc. (NASDAQ:VRTS) Recent Trading Information
Virtus Investment Partners, Inc. (NASDAQ:VRTS) closed its last trading session up +1.40 at 122.45 with 42,039 shares trading hands.