Attached files
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| EX-99.1 - BOULDER BRANDS, INC. | v164961_ex99-1.htm |
| EX-10.1 - BOULDER BRANDS, INC. | v164961_ex10-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported) November 4,
2009
SMART
BALANCE, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-33595
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20-2949397
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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115
West Century Road - Suite 260
Paramus,
New Jersey
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07652
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number including area code: (201) 568-9300
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230
.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01. Entry
into a Material Definitive Agreement.
On
November 4, 2009, Smart Balance, Inc. (the “Company”), through its wholly-owned
subsidiary GFA Brands, Inc. (the “Borrower”), entered into a Credit Agreement
(the “Credit Agreement”) with the various Lenders named therein (the “Lenders”),
and Bank of Montreal, as Administrative Agent (the “Agent”). The
Credit Agreement provides for $100 million in secured debt financing consisting
of a $55 million term loan (the “Term Loan”) and a $45 million revolving
credit facility (the “Revolver”). The Revolver includes a $5 million
sublimit for the issuance of letters of credit and a $5 million sublimit for
swing line loans. Subject to certain conditions, the Borrower, to the
extent existing Lenders decline to do so by adding additional Lenders, may
increase the Term Loan or increase the commitments under the
Revolver (or a combination of the two) up to an aggregate additional amount of
$5 million, at the Borrower’s option.
The
Credit Agreement replaced the Company’s prior first lien and second lien credit
facilities with Bank of America Securities LLC and Bank of America, N.A. (the
“Prior Facilities”). As of September 30, 2009, outstanding debt under
the Prior Facilities totaled approximately $65 million. Proceeds of the Credit Agreement were used
to repay the debt outstanding under the Prior Facilities and may also be used
for general corporate purposes and general working capital
purposes.
The Term
Loan and the loans made pursuant to the Revolver will mature on November 3,
2013. The Credit Agreement requires annual principal payments on the
Term Loan of $5.5 million.
Loans
outstanding under the Credit Agreement will bear interest, at the Borrower’s
option, at either a base rate (defined in the Credit Agreement as the greatest
of (i) 2.5%, (ii) the Agent’s prime rate, (iii) the federal funds rate plus
0.50% and (iv) a reserve adjusted one-month LIBOR rate plus 1.0%) or a
Eurodollar rate (of no less than 1.5%), in each case plus an applicable
margin. The applicable margin is determined under the Credit
Agreement based on the ratio of the Company’s total funded debt to EBITDA for
the prior four fiscal quarters (the “Leverage Ratio”), and may range from 2.25%
to 3.25%, in the case of base rate loans, and 3.25% to 4.25%, in the case of
Eurodollar rate loans. The Borrower must also pay a commitment fee on
the unused portion of the Revolver determined under the Credit
Agreement based on the ratio of the Company’s Leverage Ratio and may
range from 0.50% to 0.75%.
Subject
to certain conditions, the Borrower may voluntarily prepay the loans under the
Credit Agreement in whole or in part, without premium or penalty (other than
customary breakage costs). Mandatory prepayments that are required
under the Credit Agreement include:
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●
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100%
of the net cash proceeds (as defined in the Credit Agreement) upon certain
dispositions of property or upon certain damages or seizures of property,
subject to limited exceptions;
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●
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50%
of all net cash proceeds from issuance of additional equity securities of
the Company, subject to limited exceptions, provided, however, if the
Company’s Leverage Ratio is less than 2.0 as of the end of the most
recently ended quarter, the prepayment is limited to 25% of such
proceeds;
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●
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100%
of the amount of net cash proceeds for certain issuances of additional
indebtedness for borrowed money;
and
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●
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Beginning
on December 31, 2010 and each fiscal year thereafter, an annual prepayment
equal to 25% of excess cash flow of the Company (as defined in the Credit
Agreement) for such fiscal year, provided such prepayment is not required
if the Company has a Leverage Ratio of 2.0 or less, measured as of the end
of such fiscal year.
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The
Credit Agreement contains covenants that are customary for agreements of this
type. These covenants include, among others: a limitation on the
incurrence of additional indebtedness; a limitation on mergers, acquisitions,
investments and dividend payments; and maintenance of specified financial
ratios. Under the Credit Agreement, the Company must maintain (1) a
Leverage Ratio that is not greater than 2.75 to 1.0 until December 30, 2011 and
not greater than 2.50 to 1.0 thereafter and (2) a ratio of EBITDA to Debt
Service (as defined in the Credit Agreement), in each case for the prior four
fiscal quarters, of not less than 2.00 to 1.00. The Company is also
limited to spending not more than $6 million of capital expenditures per year
with any unspent funds carried over to the next twelve months.
The
failure to satisfy covenants under the Credit Agreement or the occurrence of
other specified events that constitute an event of default could result in the
acceleration of the repayment obligations of the Borrower. The Credit
Agreement contains customary provisions relating to events of default for
agreements of this type. The events of default include, among others: the
nonpayment of any outstanding principal, interest, fees or other amounts due
under the Credit Agreement; certain bankruptcy events, judgments or decrees
against the Company or the Borrower; cross defaults to other indebtedness
exceeding $5.0 million; a change in control (as defined in the Credit Agreement)
of the Company or the Borrower; and the failure to perform or observe covenants
in the Credit Agreement.
The
obligations under the Credit Agreement are guaranteed by the Company and all
existing and future subsidiaries of the Borrower. The Borrower, the
Company and the other guarantors granted to the Agent, for the benefit of the
Lenders, a security interest in substantially all of its respective assets,
including, among other things, patents, patent licenses, trademarks and
trademark licenses.
After the
close of the transaction, total debt outstanding debt under the Credit Agreement
totaled approximately $60.6 million comprised of $55 million of Term Loan debt
and $5.643 million of borrowings under the Revolver.
The
summary description of the Credit Agreement in this Item 1.01 does not purport
to be complete and is qualified in its entirety by reference to the full text of
the Credit Agreement, a copy of which is attached to this Current Report on Form
8-K as Exhibit 10.1 and is incorporated herein by reference.
Item
1.02. Termination
of a Material Definitive Agreement.
See Item
1.01 above with respect to the Prior Facilities.
Item
2.03.
Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
See Item
1.01 above.
Item
8.01. Other
Events.
On
November 4, 2009, the Company issued a press release announcing the Credit
Agreement. The text of the press release is attached to this Current
Report on Form 8-K as Exhibit 99.1 and is incorporated herein by
reference.
Item
9.01. Financial
Statements and Exhibits.
(d)
| Exhibits. | |||
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10.1
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Credit
Agreement, dated as of November 4, 2009, by and among, GFA Brands, Inc.,
as the Borrower, Smart Balance, Inc., as the Parent, the Guarantors from
time to time parties thereto, the Lenders from time to time parties
thereto, and Bank of Montreal, as Administrative Agent.
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99.1
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Press
Release, dated November 4, 2009, issued by Smart Balance,
Inc.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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November
6, 2009
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SMART
BALANCE, INC.
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(registrant)
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By:
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/s/ Alan
S. Gever
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Alan
S. Gever
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Executive
Vice President and Chief Financial Officer
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EXHIBIT
INDEX
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Exhibit
Number
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Description
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10.1
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Credit
Agreement, dated as of November 4, 2009, by and among, GFA Brands, Inc.,
as the Borrower, Smart Balance, Inc., as the Parent, the Guarantors from
time to time parties thereto, the Lenders from time to time parties
thereto, and Bank of Montreal, as Administrative Agent.
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99.1
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Press
Release, dated November 4, 2009, issued by Smart Balance,
Inc.
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