Item 1.01 Entry into a Material Definitive Agreement.
On November 1, 2017, Nathans Famous, Inc. (the Company) completed its previously announced offering of
$150.0 million aggregate principal amount of 6.625% Senior Secured Notes due 2025 (the Notes). The Company will use the net proceeds of the Notes offering to satisfy and discharge the indenture relating to its 10.000% Senior
Secured Notes due 2020 (the 2020 Notes) and redeem the 2020 Notes (the Redemption), to pay a portion of a special $5.00 per share cash dividend to the Companys stockholders of record and to use any remaining net
proceeds for general corporate purposes, including working capital. The Notes were sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and outside the
United States in accordance with Regulation S under the Securities Act.
Indenture
The Notes were issued pursuant to an indenture, dated as of November 1, 2017 (the Indenture), by and among the Company,
certain of its wholly-owned subsidiaries, as guarantors, and U.S. Bank National Association, a national banking association, as trustee and collateral trustee.
The Notes mature on November 1, 2025 and bear interest at a rate of 6.625% per annum, payable semi-annually in cash in arrears on
May 1 and November 1 of each year, beginning May 1, 2018. The Notes will be redeemable at the Companys option, in whole or in part, at any time prior to November 1, 2020 at a price equal to 100% of the principal amount,
plus any accrued and unpaid interest to the date of redemption, plus an applicable premium. Thereafter, the Company may redeem the Notes, at any time on or after November 1, 2020, at redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest, on the Notes redeemed to (but not including) the applicable redemption date, if redeemed during the periods indicated below:
|
|
|
|
|
Year
|
|
Percentage
|
|
On or after November 1, 2020 and prior to November 1, 2021
|
|
|
103.313
|
%
|
On or after November 1, 2021 and prior to November 1, 2022
|
|
|
101.656
|
%
|
On or after November 1, 2022
|
|
|
100.000
|
%
|
In addition, before November 1, 2020, the Company may redeem up to 35% of the original aggregate
principal amount of the Notes at a redemption price equal to 106.625% of the aggregate principal amount of the Notes, plus accrued and unpaid interest, with the proceeds from certain types of public equity offerings.
The Notes are fully and unconditionally guaranteed on a senior secured basis by each of the Companys wholly-owned domestic subsidiaries,
with certain exceptions. Pursuant to the terms of a collateral trust agreement, the liens securing the Notes and the guarantees will be contractually subordinated to the liens securing any future credit facility.
The Notes and the guarantees will be the Company and the guarantors senior secured obligations and will rank:
|
|
|
senior in right of payment to all of the Company and the guarantors future subordinated indebtedness;
|
|
|
|
effectively senior to all unsecured senior indebtedness to the extent of the value of the collateral securing the Notes and the guarantees;
|
|
|
|
pari passu with all of the Company and the guarantors other senior indebtedness;
|
|
|
|
effectively junior to any future credit facility to the extent of the value of the collateral securing any future credit facility and the Notes and the guarantees and certain other assets;
|
|
|
|
effectively junior to any of the Company and the guarantors existing and future indebtedness that is secured by assets other than the collateral securing the Notes and the guarantees to the extent of the value of
any such assets; and
|
|
|
|
structurally subordinated to the indebtedness of any of the Companys current and future subsidiaries that do not guarantee the Notes.
|
Upon the occurrence of a change of control (as defined in the Indenture), if the Company has not previously exercised its right to redeem all
of the outstanding Notes pursuant to the optional redemption as described above, the Company must offer to repurchase the Notes at 101% of the principal amount of the Notes, plus accrued and unpaid interest to the date of repurchase.
The Indenture contains certain covenants limiting the Companys ability and the ability of its restricted subsidiaries (as defined in the
Indenture) to, subject to certain exceptions and qualifications: (i) incur additional indebtedness; (ii) pay dividends or make other distributions on, redeem or repurchase, capital stock; (iii) make investments or other restricted
payments; (iv) create or incur certain liens; (v) incur restrictions on the payment of dividends or other distributions from its restricted subsidiaries; (vi) enter into certain transactions with affiliates; (vii) sell assets; or
(viii) effect a consolidation or merger.
The Indenture also contains customary events of default, including, among other things,
failure to pay interest, failure to comply with agreements related to the indenture, failure to pay at maturity or acceleration of other indebtedness, failure to pay certain judgments, and certain events of insolvency or bankruptcy. Generally,
if any event of default occurs, the Trustee or the holders of at least 25% in principal amount of the Notes may declare the Notes due and payable by providing notice to the Company. In case of default arising from certain events of bankruptcy
or insolvency, the Notes will become immediately due and payable.
The description of the Indenture contained herein does not purport to
be complete and is qualified in its entirety by reference to the full text of the Indenture, which is filed as Exhibit 4.1 to this Current Report on Form
8-K
and incorporated herein by reference.