Item 1.01 Entry into a Material Definitive Agreement.
Convertible Note Offering
On
April 9, 2018, Gannett Co., Inc. (the “Company”) completed its previously announced sale of $201.25 million aggregate principal amount of its 4.750% Convertible Senior Notes due 2024 (the “Notes”), including
$26.25 million aggregate principal amount of Notes pursuant to the option granted to the Initial Purchaser (as defined below) to purchase additional Notes. The Notes were sold in a private placement under a purchase agreement, dated as of
April 3, 2018 (the “Purchase Agreement”), entered into by and between the Company and Jefferies LLC, as initial purchaser (the “Initial Purchaser”), for resale to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended (the “Securities Act”).
The net proceeds from the sale of the Notes were
approximately $195.0 million after deducting the Initial Purchaser’s discount and the Company’s estimated offering expenses. The Company intends to use the net proceeds from the sale to repay borrowings under its revolving credit
facility. Borrowings under its revolving credit facility may be used for general corporate purposes, including acquisitions of or investments in businesses or assets, funding for working capital, capital expenditures, repayment of other debt and
repurchases of its common stock.
Indenture
On April 9, 2018, the Company entered into an indenture (the “Indenture”) with respect to the Notes with U.S. Bank National
Association, as trustee (the “Trustee”). Under the Indenture, the Notes will be senior unsecured obligations of the Company and bear interest at a rate of 4.750% per year, payable semi-annually in arrears on April 15 and
October 15 of each year, beginning on October 15, 2018. The Notes will mature on April 15, 2024, unless earlier converted, redeemed or repurchased.
The Notes are convertible into shares of the Company’s common stock, cash or a combination of shares of the Company’s common
stock and cash, at the Company’s election, subject to certain limitations, based on an initial conversion rate of 82.4572 shares per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately
$12.13 per share), subject to adjustment upon the occurrence of certain events.
The Notes will be convertible prior to January 15,
2024 at the option of the holders only upon the occurrence of specified events and during certain periods, and will be convertible on or after January 15, 2024 at any time until the close of business on the second scheduled trading day
immediately preceding the maturity date of the Notes.
If certain corporate events that constitute a “make-whole fundamental
change” as set forth in the Indenture occur prior to the maturity date or if the Company calls the Notes for redemption, the conversion rate may, in certain circumstances, be increased for a holder who elects to convert its Notes in connection
with such event. The conversion rate is subject to customary anti-dilution provisions.
The Company will not be able to redeem the Notes
prior to April 15, 2022. On or after April 15, 2022, the Company will be able to redeem for cash all or any portion of the Notes, at its option, if the last reported sale price of its common stock is equal to or greater than 130% of the
conversion price for a specified period of time, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If the Company undergoes a “fundamental change” as defined in the Indenture, subject to certain conditions, holders may
require the Company to repurchase for cash all or any portion of their Notes. The fundamental change repurchase price will be 100% of the principal amount of the Notes to be repurchased plus any accrued and unpaid interest to, but excluding,
the fundamental change repurchase date.
The Indenture contains customary terms and covenants, including that if an event of default
occurs and is continuing, either the Trustee or the holders of at least 25% of the aggregate principal amount of the outstanding Notes may declare 100% of the principal of, and accrued and unpaid interest, if any, on all the Notes to be due and
payable immediately.
The above description of the Purchase Agreement, the Indenture and the Notes is a summary only and is qualified in
its entirety by reference to the Purchase Agreement and the Indenture (and the Form of Note included therein), which are attached hereto as Exhibit 1.1 and Exhibit 4.1, respectively, and are incorporated herein by reference.