Item 1.01.
Entry into a Material Definitive Agreement.
Indenture with respect to 6.500% Senior Notes due 2027
On March 15, 2019, Summit Materials, LLC (the “Company”) and Summit Materials Finance Corp. (together with the Company, the “Issuers”), indirect subsidiaries of Summit Materials, Inc., issued and sold $300.0 million aggregate principal amount of their 6.500% Senior Notes due 2027 (the “Notes”), which mature on March 15, 2027, pursuant to an indenture dated as of March 15, 2019, by and among the Issuers, the subsidiary guarantors named on the signature pages thereto (the “Guarantors”) and Wilmington Trust, National Association, as trustee (the “Trustee”) (the “Indenture”). The Notes were sold within the United States only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.
The Notes were issued at 100.0% of their par value. The Notes bear interest at a rate of 6.500% per year, payable semi-annually in arrears. The Issuers’ obligations under the Notes are guaranteed on a senior unsecured basis by all of the Company’s existing and future wholly-owned domestic restricted subsidiaries that guarantee its senior secured credit facilities and its existing senior notes. The Notes are not guaranteed by Summit Materials, Inc.
The net proceeds from the Notes were used to redeem (the “Redemption”) all $250.0 million in aggregate principal amount of its outstanding 8.500% Senior Notes due 2022 (the “2022 Notes”) and to pay fees and expenses incurred in connection with the offering of the Notes and the Redemption. Any remaining net proceeds will be used for general corporate purposes, including to finance acquisitions.
Upon the occurrence of a change of control or upon the sale of certain assets in which the Issuers do not apply the proceeds as required, the holders of the Notes will have the right to require the Issuers to make an offer to repurchase each holder’s Notes at a price equal to 101% (in the case of a change of control) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest.
The Issuers may redeem all or a part of the Notes at any time prior to March 15, 2022 at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus a make-whole premium and accrued and unpaid interest, if any, to, but not including, the redemption date. In addition, beginning on March 15, 2022, the Issuers may redeem all or a part of the Notes at a redemption price equal to 103.250% of the principal amount redeemed. The redemption price decreases to 101.625% and 100.000% of the principal amount redeemed on March 15, 2023 and March 15, 2024, respectively. In addition, at any time prior to March 15, 2022, the Issuers may redeem up to 40% of the Notes from the proceeds of certain equity offerings at a redemption price equal to 106.500% of the principal amount thereof, plus accrued and unpaid interest.
The Notes contain covenants limiting, among other things, the Company and the Guarantors’ ability to incur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets, enter into certain transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications. The Notes also contain customary events of default, the occurrence of which could result in the principal of and accrued interest on the Notes to become or be declared due and payable.
Each of the foregoing descriptions of each of the Indenture and the Notes do not purport to be complete and are qualified in their entirety by reference to the full text of each of such documents, which
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