POST Post Holdings Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 21, 2019

EXPLANATORY NOTE

On October 21, 2019, BellRing Brands, Inc., a subsidiary of Post Holdings, Inc. (the “Company” or “Post”), closed its initial public offering (the “IPO”) of its Class A common stock, $0.01 par value per share (the “Class A Common Stock”), at an offering price of $14.00 per share, pursuant to BellRing Brands, Inc.’s registration statement on Form S-1 (File No. 333-233867) (as amended from time to time, and together with the related registration statement of BellRing Brands, Inc. on Form S-1 (File No. 333-234237) filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), the “Registration Statement”).

In connection with the IPO, Post, BellRing Brands, Inc. and BellRing Brands, LLC (formerly known as Dymatize Holdings, LLC) completed a series of formation transactions (the “Formation Transactions”) so that, upon completion of the IPO and the Formation Transactions:

Post received total gross proceeds of $1,225.0 million in connection with the IPO and the Formation Transactions, consisting of the gross proceeds from the Post Bridge Loan (as defined below), and will be reimbursed by BellRing Brands, LLC for certain costs, fees and expenses incurred by it in connection with the IPO and the Formation Transactions (other than costs, fees and expenses relating to the Post Bridge Loan, pursuant to the Master Transaction Agreement (defined and described below)).

Brands, LLC attributable to (i) the redemption of BellRing Brands, LLC units by Post (or certain of its transferees or assignees) pursuant to the Limited Liability Company Agreement, (ii) deemed sales by Post (or certain of its transferees or assignees) of BellRing Brands, LLC units or assets to BellRing Brands, Inc. or BellRing Brands, LLC, (iii) certain actual or deemed distributions from BellRing Brands, LLC to Post (or certain of its transferees or assignees) and (iv) certain formation transactions, (b) disproportionate allocations of tax benefits to BellRing Brands, Inc. as a result of Section 704(c) of the Internal Revenue Code and (c) certain tax benefits (e.g., imputed interest, basis adjustments, deductions, etc.) attributable to payments under the Tax Receivable Agreement. Payments under the Tax Receivable Agreement are not conditioned on Post’s continued ownership of BellRing Brands, LLC units or Class A Common Stock or Class B Common Stock after the IPO. The rights of Post under the Tax Receivable Agreement are assignable to transferees of Post’s BellRing Brands, LLC units (other than BellRing Brands, Inc. and its subsidiaries as transferee pursuant to subsequent redemptions of the transferred BellRing Brands, LLC units). BellRing Brands, Inc. is expected to benefit from the remaining 15% of tax benefits, if any, that it may realize (or in some cases, be deemed to realize).

The actual increase in tax basis and the amount and timing of any payments under the Tax Receivable Agreement will vary depending upon a number of factors, including:

The foregoing summary of the Tax Receivable Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Tax Receivable Agreement, which is incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the SEC by BellRing Brands, Inc. on October 21, 2019 (File No. 001-39093).

Assumption of Bridge Loan

On October 21, 2019 and in connection with the completion of the IPO, BellRing Brands, LLC entered into a Borrower Assignment and Assumption Agreement with Post and Morgan Stanley Senior Funding, Inc., as administrative agent (the “Assignment and Assumption Agreement”), under which BellRing Brands, LLC became the borrower under a $1,225.0 million Bridge Facility Agreement, dated October 11, 2019, among Post, as borrower, certain subsidiaries of Post, as guarantors, each lender from time to time party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, and Morgan Stanley Senior Funding, Inc., BofA Securities, Inc., Citigroup Global Markets, Inc., Credit Suisse Loan Funding LLC, Goldman Sachs Bank USA and JPMorgan Chase Bank, N.A., as joint lead arrangers and joint physical bookrunners (the “Post Bridge Loan”). Pursuant to the Assignment and Assumption Agreement, Post and its subsidiaries (other than BellRing Brands, LLC and certain of its subsidiaries) have no further material obligations under the Post Bridge Loan. The domestic subsidiaries of BellRing Brands, LLC continued to guarantee the Post Bridge Loan and BellRing Brands, LLC’s obligations under the Post Bridge Loan became secured by a first priority security interest in substantially all of the assets of BellRing Brands, LLC and in substantially all of the assets of its subsidiary guarantors.

The foregoing summary of the Assignment and Assumption Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Assignment and Assumption Agreement, which is incorporated herein by reference to Exhibit 10.8 to the Current Report on Form 8-K filed with the SEC by BellRing Brands, Inc. on October 21, 2019 (File No. 001-39093).

Credit Agreement

On October 21, 2019, BellRing Brands, LLC entered into a Credit Agreement (the “Credit Agreement”) by and among BellRing Brands, LLC, the institutions from time to time party thereto as lenders (the “Lenders”), Credit Suisse Loan Funding LLC, BofA Securities, Inc., Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Citibank, N.A., Goldman Sachs Bank USA and JPMorgan Chase Bank, N.A., as joint lead arrangers and joint bookrunners, and BMO Capital Markets Corp., Coöperatieve Rabobank U.A., New York Branch, Nomura Securities International, Inc., Suntrust Robinson Humphrey, Inc., UBS Securities LLC and Wells Fargo Securities, LLC, as co-managers, and Credit Suisse AG, Cayman Islands Branch, as administrative agent for the Lenders (in such capacity, the “Agent”).

The Credit Agreement provides for a term B loan facility in an aggregate principal amount of $700.0 million (the “Term B Facility”), and a revolving credit facility in an aggregate principal amount of $200.0 million (the “Revolving Credit Facility”; and together with the Term B Facility, the “Loans”), with the commitments under the Revolving Credit Facility to be made available to BellRing Brands, LLC in U.S. Dollars, Euros and Pounds Sterling. Letters of credit are available under the Credit Agreement in an aggregate amount of up to $20.0 million. The outstanding amounts under the Revolving Credit Facility and Term B Facility must be repaid on or before October 21, 2024.

On October 21, 2019, BellRing Brands, LLC borrowed the full amount under the Term B Facility and $100.0 million under the Revolving Credit Facility and used the proceeds, together with the net proceeds of the IPO that were contributed to it by BellRing Brands, Inc., (i) to repay in full the balance of the Post Bridge Loan and all interest thereunder, (ii) to pay directly, or reimburse Post for, as applicable, all fees and expenses incurred by BellRing Brands, LLC or BellRing Brands, Inc. in connection with the IPO and the Formation Transactions, (iii) to reimburse Post for the amount of cash on BellRing Brands, LLC’s balance sheet immediately prior to the completion of the IPO and (iv) to the extent there were any remaining proceeds, for general corporate and working capital purposes.

Borrowings under the Term B Facility bear interest, at the option of BellRing Brands, LLC, at an annual rate equal to either (a) the Eurodollar rate or (b) the base rate determined by reference to the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month Eurodollar rate plus 1.00% per annum, in each case plus an applicable margin of 5.00% for Eurodollar rate-based loans and 4.00% for base rate-based loans. The Term B Facility requires scheduled amortization payments of $8,750,000, payable quarterly (commencing on March 31, 2020), with the balance to be paid at maturity on October 21, 2024. The Term B Facility contains customary mandatory prepayment provisions, including provisions for mandatory prepayment (a) from the net cash proceeds of certain asset sales and (b) beginning with the fiscal year ending September 30, 2020, of 75% of annual excess cash flow (which percentage will be reduced to 50% if the secured net leverage ratio (as defined in the Credit Agreement) is below a specified level as of a fiscal year end). The Term B Facility may be optionally prepaid at 101% of the principal amount prepaid at any time during the first 12 months following the closing of the Term B Facility, and without premium or penalty thereafter.

Borrowings under the Revolving Credit Facility bear interest, at the option of BellRing Brands, LLC, at an annual rate equal to either the Eurodollar rate or the base rate (determined as described above) plus a margin, which initially will be 4.25% for Eurodollar rate-based loans and 3.25% for base rate-based loans, and thereafter, will be determined by reference to the secured net leverage ratio, with the applicable margin for Eurodollar rate loans and base rate loans being (i) 4.25% and 3.25%, respectively, if the secured net leverage ratio is greater than or equal to 3.50:1:00, (ii) 4.00% and 3.00%, respectively, if the secured net leverage ratio is less than 3.50:1:00 and greater than or equal to 2.50:1.00 or (iii) 3.75% and 2.75%, respectively, if the secured net leverage ratio is less than 2.50:1:00. Facility fees on the daily unused amount of commitments under the Revolving Credit Facility will initially accrue at the rate of 0.50%, and thereafter, depending on BellRing Brands, LLC’s secured net leverage ratio, will accrue at rates ranging from 0.25% to 0.50%.

The Credit Agreement provides for potential incremental revolving and term facilities at the request of BellRing Brands, LLC and at the discretion of the Lenders or other persons providing such incremental facilities, in each case on terms to be determined, and also permits BellRing Brands, LLC to incur other secured or unsecured debt, in all cases subject to conditions and limitations on the amount as specified in the Credit Agreement.

The Credit Agreement contains customary affirmative and negative covenants for agreements of this type, including: delivery of financial and other information; compliance with laws; maintenance of property, existence, insurance and books and records; maintenance of public ratings; inspection rights; obligation to provide collateral and guarantees by certain new subsidiaries; delivery of environmental reports; participation in an annual meeting with the Agent and the Lenders; further assurances; and limitations with respect to indebtedness, liens, fundamental changes, restrictive agreements, use of proceeds, amendments of organization documents, prepayments and amendments of certain indebtedness, dispositions of assets, acquisitions and other investments, sale leaseback transactions, changes in the nature of business, transactions with affiliates and dividends and redemptions or repurchases of stock.

The Credit Agreement also contains a financial covenant requiring BellRing Brands, LLC to maintain a total net leverage ratio (as defined in the Credit Agreement) not to exceed 6.00 to 1.00, measured as of the last day of each fiscal quarter, beginning with the fiscal quarter ending March 31, 2020.

The Credit Agreement provides for customary events of default, including material breach of representations and warranties, failure to make required payments, failure to comply with certain agreements or covenants, failure to pay or default under certain other material indebtedness, certain events of bankruptcy and insolvency, inability to pay debts, the occurrence of one or more unstayed or undischarged judgments in excess of $65.0 million, attachments issued against all or any material part of BellRing Brands, LLC’s property, certain ERISA events, a change in control, the invalidity of any loan document and the failure of the collateral documents to create a valid and perfected first priority lien. Upon the occurrence and during the continuance of an event of default, the maturity of the loans under the Credit Agreement may accelerate and the Agent and Lenders under the Credit Agreement may exercise other rights and remedies available at law or under the loan documents, including with respect to the collateral and guarantees of BellRing Brands, LLC’s obligations under the Credit Agreement.

BellRing Brands, LLC’s obligations under the Credit Agreement are unconditionally guaranteed by its existing and subsequently acquired or organized direct and indirect domestic subsidiaries (other than immaterial domestic subsidiaries and certain excluded subsidiaries) and are secured by security interests in substantially all of BellRing Brands, LLC’s assets and the assets of its subsidiary guarantors, but excluding, in each case, real property.

The foregoing summary of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, which is incorporated herein by reference to Exhibit 10.9 to the Current Report on Form 8-K filed with the SEC by BellRing Brands, Inc. on October 21, 2019 (File No. 001-39093).

Representations and warranties contained in the Master Transaction Agreement, the Tax Receivable Agreement, the Assignment and Assumption Agreement and the Credit Agreement were made only for purposes of each such agreement and as of the dates specified therein; were solely for the benefit of the parties to each such agreement; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations and warranties or any description thereof as characterizations of the actual state of facts or condition of BellRing Brands, Inc. and its subsidiaries or Post and its subsidiaries. Moreover, information concerning the subject matter of the representations and warranties may change after the date of such agreements, which subsequent information may or may not be fully reflected in public disclosures by Post.