Western Capital Resources, Inc. (OTCMKTS:WCRS) Files An 8-K Entry into a Material Definitive Agreement

Western Capital Resources, Inc. (OTCMKTS:WCRS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.

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On October 2, 2017, Western Capital Resources, Inc. (the “Company”) entered into a Purchase and Sale Agreement (the “Agreement”) with U.S. Business Holdings, Inc. (the “Purchaser”), MBE WorldWide S.p.A. (as guarantor to the Purchaser), BC Alpha, LLC (“BCA”, a wholly owned subsidiary of BC Alpha Holdings II, LLC), and BC Alpha Holdings II, LLC (“BCAH”, a wholly owned subsidiary of the Company). to the Agreement, BCA sold all of its shares of capital stock of AlphaGraphics, Inc. (“AGI”) to the Purchaser. This sale, which closed on October 3, 2017, constitutes the sale of the Company’s franchise business. The cash purchase price paid by the Purchaser to the Agreement was $61.5 million, subject to post-closing working capital adjustments. BCA, BCAH, the Company and the Purchaser also agreed to make a joint election under Section 338(h)(10) of the Internal Revenue Code, which treats the transaction as an asset purchase for tax purposes subject to satisfaction of applicable legal requirements.

to the Agreement, the Company, BCA and BCAH made customary representations and warranties regarding AGI and its business, and agreed to certain covenants, including customary non-compete and no-solicit covenants related to the AGI business for a period of three years from the closing date. In addition, the Agreement requires the Company to indemnify the Purchaser for damages resulting from or arising out of any inaccuracy or breach of any representation, warranty or covenant of the Company, BCA or BCAH in the Agreement and for certain other matters. The Company’s indemnification obligations generally survive for 24 months following the closing. The Company’s maximum aggregate liability for indemnification claims for any such inaccuracies or breaches is generally limited to an indemnification escrow of $6.5 million, of which 50% of the balance (less any indemnification claims) is to be disbursed 12 months following the closing, with the remaining balance (less any indemnification claims) to be disbursed 24 months following the closing.

As a result of the transaction, the Company received approximately $49.0 million in proceeds from the sale, after taking into the impact of the estimated working capital and similar purchase price adjustments, the escrowing of $6.5 million of sale proceeds, the paydown of the Company’s current balance on its Fifth Third credit facility of approximately $4.3 million, and the payoff of an aggregate amount of approximately $1.6 million in transaction costs and pre-closing AGI liabilities related to the cancellation and redemption of securities at the AGI level that occurred prior to the transaction.

In connection with the transaction, the Company also entered into a Consent and Third Loan Modification Agreement (the “Modification Agreement”) with Fifth Third Bank, as lender (“Fifth Third”), which amended that certain Credit Agreement between the Company and Fifth Third, dated April 22, 2016, as amended (the “Credit Agreement”) to (i) release Fifth Third’s liens on the assets of AGI, BCA and BCAH, (ii) remove AGI, BCA and BCAH as guarantors of the Company’s obligations under the Credit Agreement, and (iii) release Fifth Third’s lien on the Company’s equity interests in BCAH. In connection with the Modification Agreement, the Company paid off the $4.3 million outstanding balance on its credit facility with Fifth Third.

Item 2.01.Completion of Acquisition or Disposition of Assets.

The information set forth in Item 1.01 above is incorporated into this Item 2.01 by reference.

Item 9.01.Financial Statements and Exhibits.

(a)Not applicable.

(b)Pro forma financial information.

Unaudited pro forma financial information of the Company as of June 30, 2017 and for the six months ended June 30, 2017 and the year ended December 31, 2016 and 2015 is filed herein as Exhibit 99.1 and is incorporated by reference into this Current Report on Form 8-K.

(c)Not applicable.

(d) Exhibits.

The following exhibits are attached to this Current Report on Form 8-K:


WESTERN CAPITAL RESOURCES, INC. Exhibit
EX-99.1 2 s107720_ex99-1.htm EXHIBIT 99.1   EXHIBIT 99.1   UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS OF WESTERN CAPITAL RESOURCES,…
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About Western Capital Resources, Inc. (OTCMKTS:WCRS)

Western Capital Resources, Inc. (WCR) is a holding company. The Company’s segments are Franchise segment, Cellular Retail segment, Direct to Consumer segment and Consumer Finance segment. The Franchise segment consists of AlphaGraphics, Inc., the franchisor of AlphaGraphics customized print and marketing solutions. Its Cellular Retail segment consists of an authorized Cricket Wireless dealer and involves the retail sale of cellular phones and accessories to consumers through its subsidiary PQH Wireless, Inc. and its subsidiaries. Its Direct to Consumer segment consists of an online and direct marketing retailer and distributor of live plants, seeds, holiday gifts and garden accessories, and an online and direct marketing distribution retailer of home improvement and restoration products operating as Van Dyke’s Restorers. Its Consumer Finance segment consists of retail financial services conducted through its subsidiaries, Wyoming Financial Lenders, Inc. and Express Pawn, Inc.

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