THE CHEFS’ WAREHOUSE ADOPTS LIMITED DURATION STOCKHOLDER RIGHTS AGREEMENT
March 23 2020 - 8:30AM
The Chefs’ Warehouse, Inc. (NASDAQ:CHEF) (the “Company”), a premier
distributor of specialty food products in North America, today
announced that it has adopted a 364-day duration stockholder rights
agreement (the “Rights Agreement”), effective March 22, 2020.
The Rights Agreement is similar to stockholder
rights plans adopted by other public companies, and is intended to
promote the fair and equal treatment of all Company stockholders
and ensure that no person or group can gain control of the Company
through open market accumulation or other tactics potentially
disadvantaging the interests of all stockholders without paying an
appropriate control premium to deliver sufficient value for all
Company stockholders. The Company’s Board of Directors (the
“Board”) has taken note in particular that, in light of the
COVID-19 pandemic and recent market events, the closing price of
the Company’s common stock on March 20, 2020 was more than 80%
below the price just over a month ago. The Rights Agreement will
also position the Board to fulfill its fiduciary duties on behalf
of all stockholders by ensuring that the Board has sufficient time
to make informed judgments that are in the best long-term interests
of the Company and its stockholders. The Rights Agreement is not
intended to deter offers that are fair and otherwise in the best
interest of the Company’s stockholders.
Under the Rights Agreement, the Rights will
become exercisable if a person or group becomes the beneficial
owner of 10% or more of the Company’s outstanding Common Stock (20%
or more in the case of eligible passive institutional investors, as
further described in the Rights Agreement). In the event that the
Rights become exercisable due to the triggering ownership threshold
being crossed, each Right will entitle its holder to purchase, at
the Right’s exercise price, a number of units of Series A Preferred
Stock (having similar voting and economic rights as shares of
common stock) or equivalent securities having a market value at
that time of twice the Right’s exercise price. Rights held by the
triggering entity will become void and will not be exercisable to
purchase units at the reduced purchase price. The Board may, rather
than permitting the exercise of the Rights, exchange each Right
(other than Rights held by the triggering entity) for one or more
units of Series A Preferred Stock per Right, subject to adjustment
and as further described in the Rights Agreement. The Board will,
prior to the Rights becoming exercisable, generally be entitled to
amend the Rights Agreement or to redeem the Rights for $0.01 per
Right.
This announcement is a summary only and is
qualified by reference to the full text of the Rights Agreement.
Additional details regarding the Rights Agreement will be contained
in a Form 8-K to be filed by the Company with the U.S. Securities
and Exchange Commission.
Jefferies LLC is serving as financial advisor to
the Company and Shearman & Sterling LLP is serving as legal
counsel.
About The Chefs’ Warehouse
The Chefs’ Warehouse, Inc.
(http://www.chefswarehouse.com) is a premier distributor of
specialty food products in the United States and Canada focused on
serving the specific needs of chefs who own and/or operate some of
the nation's leading menu-driven independent restaurants, fine
dining establishments, country clubs, hotels, caterers, culinary
schools, bakeries, patisseries, chocolatiers, cruise lines, casinos
and specialty food stores. The Chefs’ Warehouse, Inc. carries and
distributes more than 55,000 products to more than 34,000 customer
locations throughout the United States and Canada.
Forward-Looking Statements
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995: Statements in this press
release regarding the Company’s business that are not historical
facts are “forward-looking statements” that involve risks and
uncertainties and are based on current expectations and management
estimates; actual results may differ materially. The risks and
uncertainties which could impact these statements include, but are
not limited to, the Company’s sensitivity to general economic
conditions, including disposable income levels and changes in
consumer discretionary spending; the Company’s ability to expand
its operations in its existing markets and to penetrate new markets
through acquisitions; the Company may not achieve the benefits
expected from its acquisitions, which could adversely impact its
business and operating results; the Company may have difficulty
managing and facilitating its future growth; conditions beyond the
Company’s control could materially affect the cost and/or
availability of its specialty food products or center-of-the-plate
products and/or interrupt its distribution network; the Company’s
increased distribution of center-of-the-plate products, like meat,
poultry and seafood, involves increased exposure to price
volatility experienced by those products; the Company’s business is
a low-margin business and its profit margins may be sensitive to
inflationary and deflationary pressures; because the Company’s
foodservice distribution operations are concentrated in certain
culinary markets, the Company is susceptible to economic and other
developments, including adverse weather conditions, in these areas;
fuel cost volatility may have a material adverse effect on the
Company’s business, financial condition or results of operations;
the Company’s ability to raise capital in the future may be
limited; the Company may be unable to obtain debt or other
financing, including financing necessary to execute on our
acquisition strategy, on favorable terms or at all; and the
Company’s business operations and future development could be
significantly disrupted if it loses key members of its management
team.
Any forward-looking statements are made pursuant
to the Private Securities Litigation Reform Act of 1995 and, as
such, speak only as of the date made. A more detailed description
of these and other risk factors is contained in the Company’s most
recent annual report on Form 10-K filed with the Securities and
Exchange Commission (“SEC”) on February 24, 2020 and other
reports filed by the Company with the SEC since that date. The
Company is not undertaking to update any information in the
foregoing report until the effective date of its future reports
required by applicable laws.
For Investor Relations Inquiries:Jim Leddy,
CFO(718) 684-8415
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