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Item 1.01
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Entry into a Material Definitive Agreement
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Merger
Agreement
GP Investments Acquisition
Corp. (“
GPIAC
”), a blank check company incorporated in the Cayman Islands, was formed for the purpose of effecting
a business combination with one or more businesses. As previously announced on April 19, 2016, GPIAC entered into an Agreement
and Plan of Merger (the “
Merger Agreement
”) with Let’s Go Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of GPIAC (“
Merger Sub
”), WKI Holding Company, Inc., a Delaware corporation (“
WKI
”),
and, solely in its capacity as the initial Holder Representative thereunder, WKI Group, LLC, a Delaware limited liability company
(“
Holder Representative
”). WKI is the parent company of World Kitchen, LLC, a leading multinational manufacturer
and marketer of houseware products whose portfolio of brands includes Corelle, Pyrex, CorningWare and Snapware, among others.
The Merger Agreement
provides that, among other things and in accordance with the terms and subject to the conditions thereof, Merger Sub will merge
with and into WKI (the “
Merger
”) with WKI continuing as the surviving corporation and a wholly-owned subsidiary
of GPIAC. Prior to the Merger, GPIAC shall domesticate as a Delaware corporation. On April 19, 2016, following execution and delivery
of the Merger Agreement, WKI delivered irrevocable written consents executed by WKI stockholders holding sufficient shares of WKI
common stock to approve the Merger Agreement and the Merger.
The aggregate purchase
price is $500,000,000, as adjusted in accordance with the terms of the Merger Agreement (the “
Merger Consideration
”).
GPIAC will pay the Merger Consideration seventy-five percent (75%) in cash and twenty-five percent (25%) in newly issued shares
of GPIAC common stock based on a per share issue price of $10.00 per share.
At the effective
time of the Merger (the “
Effective Time
”), (i) each outstanding share of WKI common stock that is issued
and outstanding immediately prior to the Effective Time and (ii) whether vested or unvested, each (A) Time-Based Option, (B)
Performance-Based Option (assuming attainment of full performance targets) and (C) SAR (in each case, as defined in
the Merger Agreement), granted for compensatory purposes to a WKI employee or outside WKI director or other service provider
under a WKI Incentive Plan (as defined in the Merger Agreement) will automatically be cancelled and converted into the right
to receive the applicable portion of the Merger Consideration as more particularly set forth in the Merger Agreement. The
Merger Consideration for SARs is payable entirely in cash.
The cash portion of
the Merger Consideration is also subject to (i) a purchase price escrow of $5,000,000 for any post-closing adjustments to the
purchase price and (ii) an indemnity escrow for eighteen months from the closing date of $5,000,000 for any indemnification claims
by GPIAC under the Merger Agreement. Any proceeds remaining (i) in the purchase price escrow after completion of the post-closing
purchase price adjustment and (ii) in the indemnification escrow after eighteen months, will be distributed to the pre-closing
holders of WKI common stock, Time-Based Options, Performance-Based Options and SARs.
GPIAC intends
to finance the cash required for the Merger and related transactions primarily through a combination of cash held in its
trust account after redemptions (as described herein), proceeds from the
Credit Facilities and proceeds from the Equity Financing (in each case, as defined and as described below). However,
the Merger Agreement is not conditioned on obtaining the debt financing under the Credit Facilities, the Equity Financing or
any other third-party financing.
In connection
with the Merger Agreement, GPIAC has entered into a debt commitment letter, dated as of April 19, 2016, with Citigroup Global
Markets Inc., Bank of Montreal and BMO Capital Markets Corp. (collectively, the “
Commitment Parties
”),
pursuant to which, among other things, the Commitment Parties have committed to provide, in accordance with the terms and
subject to the conditions thereof, (i) a $100 million senior secured asset-based revolving credit facility (the “
ABL
Facility
”) and (ii) a $250 million senior secured first lien term facility (the “
Term
Facility
” and, together with the ABL Facility, the “
Credit Facilities
”) to Merger Sub.
Proceeds of the Term Facility will be used at Closing, together with up to $25 million of proceeds of the ABL Facility, to
finance a portion of the Merger Consideration and fees, commissions and expenses in connection therewith. Upon the
consummation of the Merger, the post-combination company will assume all of the obligations of the Merger Sub under the
Credit Facilities. The Credit Facilities will be guaranteed by GPIAC, the parent entity of the Merger Sub, and certain
of GPIAC’s direct or indirect wholly-owned restricted subsidiaries. The Credit Facilities will be secured by
substantially all of the assets of the Merger Sub and such guarantors. The funding of the Credit Facilities is subject
to customary conditions, including the negotiation of definitive documentation and other customary closing conditions.
In connection with
the Merger Agreement, GPIAC has entered into an equity commitment letter, dated April 19, 2016, with GPIC Ltd., which will provide
equity financing by means of purchasing newly issued shares of GPIAC common stock based on a per share issue price of $10.00 per
share in an aggregate amount of up to $58 million (the “
Equity Financing
”), of which (i) $50 million is solely
for the purpose of providing a portion of the financing for the Merger and (ii) up to an additional $8 million is, for
use only in certain circumstances, as further described in the Merger Agreement.
The Board of Directors
of GPIAC has unanimously (1) determined that the Merger Agreement and the Merger are fair to and in the best interests of
GPIAC and its shareholders, (2) approved the execution, delivery and performance of the Merger Agreement and (3) resolved
to recommend adoption of the Merger Agreement and other related matters by the shareholders of GPIAC.
Pursuant to its Amended
and Restated Memorandum and Articles of Association and in accordance with the terms and subject to the conditions of the Merger
Agreement, GPIAC will provide certain of its shareholders with the opportunity to redeem, contemporaneously with a vote on the
Merger, their GPIAC common shares for cash equal to their pro rata share of the GPIAC trust account.
The closing of the
Merger is subject to customary closing conditions, including, among others, (1) adoption by the GPIAC’s shareholders of the
Merger Agreement and approval of certain related matters, including the change in the jurisdiction of incorporation to Delaware
and adoption of new governing documents and certain governance and other matters in connection therewith, issuance of shares of
GPIAC common stock in connection with the Merger, certain approvals required by the rules of the Nasdaq Capital Market (“NASDAQ”),
and an incentive equity plan, (2) effectiveness of a registration statement on Form S-4 registering the shares of GPIAC common
stock to be issued to WKI’s stockholders pursuant to the Merger, (3) approval for the listing of such shares on NASDAQ ,
(4) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (“
HSR
”), (5) net redemptions of GPIAC common shares by its shareholders shall not exceed thirty percent
(30%) of the outstanding common shares and the cash available in GPIAC’s trust account shall not be less than $122,000,000
(in each case, after giving effect to payments in respect of redemptions) and (6) appointment of the Nominee Director (as defined
in the Merger Agreement) to GPIAC’s Board of Directors in accordance with the terms and subject to the conditions of the
Merger Agreement and the Stockholder Letter (as defined below).
GPIAC has
made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants
to (1) make required HSR filings and to use its reasonable best efforts to obtain expiration or termination of the
waiting period under the HSR, (2) prepare and submit a listing application to NASDAQ and take other related actions required
to list the common shares of GPIAC to be issued in connection with the Merger, (3) use its reasonable best efforts to arrange
and obtain the debt financing described above and (4) subject to certain conditions, appoint the Nominee Director to the
GPIAC board of directors, with such appointment to take effect on the first business day after the Closing Date (as defined
in the Merger Agreement).
WKI has made customary
representations, warranties and covenants in the Merger Agreement, including, among others, covenants to conduct its business
in the ordinary course during the period between the execution of the Merger Agreement and the Effective Time.
The Merger Agreement
contains customary non-solicitation restrictions prohibiting (1) WKI and its subsidiaries from initiating, soliciting or otherwise
encouraging an Acquisition Proposal (as defined in the Merger Agreement) or conducting discussions or negotiations or entering
into a definitive agreement in connection therewith and (2) GPIAC from making any proposal or offer that constitutes a Business
Combination Proposal (as defined in the Merger Agreement) or initiating discussions or negotiations or entering into a definitive
agreement in connection therewith, provided, that, subject to certain conditions, GPIAC may take certain actions related to an
Acquiror Acquisition Proposal (as defined in the Merger Agreement).
The Merger Agreement
may be terminated at any time prior to the consummation of the Merger (whether before or after the required GPIAC stockholder votes
have been obtained) by mutual written consent of GPIAC and WKI and, in certain other limited circumstances, including if the Merger
has not been consummated by September 20, 2016, subject to extension until November 19, 2016 in certain circumstances.
In connection
with the Merger Agreement and the receipt by certain of WKI’s stockholders of shares of GPIAC common stock in
connection with the Merger, GPIAC, the Principal Stockholders of WKI and the Lock-up Stockholders of WKI (in each case, as
defined in the Merger Agreement) have executed a letter agreement (the “Stockholder Letter”), dated as of April
19, 2016, pursuant to which, among other things, (i) the Principal Stockholders and the Lock-up Stockholders have agreed
to certain restrictions regarding the transfer of the shares of GPIAC common stock received by such persons in connection
with the Merger and (ii) GPIAC has agreed to provide certain registration rights to the Principal Stockholders and
the Lock-up Stockholders.
The foregoing description
of the Merger Agreement and the transactions contemplated thereby is not complete and is subject to and qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed with this Current Report on Form 8-K as Exhibit 2.1 and the
terms of which are incorporated by reference herein.
The Merger Agreement
has been included to provide investors with information regarding its terms. It is not intended to provide any other factual information
about GPIAC. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the
Merger Agreement as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, may be subject
to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes
of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and
may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors.
Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and
covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or
any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and
warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in
the GPIAC’s public disclosures.