Item 1.01.
|
Entry into a Material Definitive Agreement
|
On February 27, 2017, Barnes & Noble
Education, Inc. (the Company or BNED), Ellar LLC (Ellar), Leonard Riggio (Mr. Riggio) and the other unitholders of Ellar party thereto (the Unitholders) and Ellar, as the Designated
Representative, entered into a Purchase Agreement (the Purchase Agreement). In the Purchase Agreement, Ellar and the Unitholders are referred to, collectively, as the MBS Parties.
Pursuant to the terms and subject to the conditions of the Purchase Agreement, the Company acquired 100% of the equity interests of MBS Textbook Exchange, LLC
(MBS) from Ellar (the Transaction), for cash consideration of $174.2 million. The Purchase Agreement was executed, and the Transaction closed, on the same day, and the Transaction was funded from cash
on-hand
and proceeds from the Companys Existing Credit Agreement, as amended (as discussed below).
The Purchase
Agreement contains customary representations and warranties made by the MBS Parties and customary
non-compete
provisions applicable to the MBS Parties. Subject to certain exceptions and other provisions, the
Company and the MBS Parties have agreed to indemnify each other for breaches of representations and warranties, breaches of covenants and certain other matters.
Prior to the Transaction, MBS was privately held and majority-owned by Mr. Riggio, who also owns approximately 16% of BNEDs outstanding shares. The
Board of Directors of the Company (the Board) established a committee of the Board (the Special Committee), comprised solely of independent and disinterested directors, to evaluate the MBS acquisition opportunity, negotiate
the terms and make a recommendation to the Board. The Special Committee retained independent financial and legal advisors. Both the Special Committee and the full Board approved the Transaction unanimously.
Note 11 (Related Party Transactions) set forth on page 67 in the Companys Form 10-K for the fiscal year ended April 30, 2016 is hereby incorporated by
reference.
The foregoing descriptions of the Purchase Agreement and the Transaction do not purport to be complete and are qualified in their entirety by
reference to the Purchase Agreement which is filed as Exhibit 2.1 to this Current Report on Form
8-K
and incorporated into this Item 1.01 by reference in its entirety.
Amendment to Credit Agreement
In connection with
entering into the Purchase Agreement and the Companys existing Credit Agreement, dated as of August 3, 2015 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the Existing Credit
Agreement), by and among the Company, the other persons party thereto from time to time as borrowers, the lenders party thereto from time to time (the Lenders), and Bank of America, N.A., as agent (the Agent), on
February 27, 2017, the Company entered into the First Amendment to Credit Agreement (the Amendment), by and among the Company, the Lenders and the Agent.
The Amendment amends the Existing Credit Agreement to add a new $100 million incremental first in, last out
seasonal loan facility (the FILO Facility). Loans under the FILO Facility will bear interest at a rate equal to the LIBOR rate, plus 3.00%. The FILO Facility will be available solely during the draw period each year, from April 1
through July 31. The Company is required to borrow 100% of the aggregate commitments under the FILO Facility on April 1 of each year, and the loans must be repaid in full (including interest and fees) on July 31 of each year. The
Commitments under the FILO Facility will decrease from $100 million to $75 million on August 1, 2018, from $75 million to $50 million on August 1, 2019 and from $50 million to $25 million on August 1,
2020. The Company will pay a commitment fee of 0.375% on the daily unused portion of the FILO Facility.
The foregoing description of the Amendment does
not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is attached as Exhibit 10.1 to this Current Report on Form
8-K
and incorporated into this Item 1.01 by
reference in its entirety.
The Purchase Agreement and the Amendment have been included as exhibits to this Current Report on Form
8-K
to provide investors and security holders with information regarding their respective terms. They are not intended to provide any other financial information about the parties thereto or their respective
subsidiaries or affiliates. The representations, warranties and covenants contained in the Purchase Agreement and the Amendment are made only for purposes of those agreements and as of specific dates thereof, are solely for the benefit of the
parties thereto, may be subject to limitations agreed upon by such parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties thereto 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 should not rely on the representations, warranties and covenants or any description thereof as
characterizations of the actual state of facts or condition of the parties to the Purchase Agreement or the Amendment or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations,
warranties and covenants may change after the dates of or set forth in the Purchase Agreement and the Amendment, which subsequent information may or may not be fully reflected in public disclosures by the parties thereto.