Winmark Corporation (NASDAQ:WINA) Files An 8-K Entry into a Material Definitive AgreementItem 1.01; 2.03Entry into a Material Definitive Agreement; Creation of a Direct Financial Obligation or an Obligation under an Off-Balance sheet Arrangement of a Registrant.
Credit Agreement
On July 18, 2017, Winmark Corporation and its subsidiaries’ (collectively, the “Company”) entered into Amendment No. 5 to its Credit Agreement with The PrivateBank and Trust Company and BMO Harris Bank N.A. (collectively, the “Lenders”).The amendment, among other things,
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Provides the consent of the Lenders for a self-tender offer by the Company to purchase up to 400,000 shares of its outstanding common stock for a price of $124.48 per share that was announced on July 19, 2017 (the “Tender Offer”); |
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Extends the termination date of the Agreement from April 14, 2019 to July 19, 2021; |
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Amends the tangible net worth covenant calculation to remove the effect of the Tender Offer; |
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Reduces the applicable margin on interest rate options in connection with LIBOR loans under the Agreement; |
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Permits the Company to sell up to $15 million in term notes to one or more affiliates or managed accounts of Prudential Investment Management, Inc. (collectively, “Prudential”) to partially fund the Tender Offer. |
Amendment No. 5 to the Credit Agreement is effective as of July 19, 2017. The foregoing description of Amendment No. 5 to the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full amendment referenced hereto as Exhibit 10.1
Note Agreement
On July 19, 2017, the Company entered into Amendment No. 1 to its Note Agreement with Prudential.The amendment, among other things,
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Provides the consent of Prudential for the Tender Offer; |
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Amends the tangible net worth covenant calculation to remove the effect of the Tender Offer; |
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Provides for a new $12.5 million term loan to partially fund the Tender offer, with such loan summarized as follows: |
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Prudential will purchase from the Company senior notes of $12.5 million; |
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The final maturity of the notes is 10 years; |
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Interest at a rate of 5.10% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $312,500 quarterly until the principal is paid in full; |
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The notes may be prepaid, at the option of the Company, in whole or in part (in a minimum amount of $1 million), but prepayments will require payment of a Yield Maintenance Amount. |