|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
On April 1, 2022, SL Delaware Holdings, Inc. (“Seller”), a subsidiary of Steel Partners Holdings L.P. (the “Company”), and the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) by and among Seller, AEI US Subsidiary LLC, a subsidiary of Advanced Energy Industries, Inc. (“Purchaser”), SL Power Electronics Corporation, a wholly-owned subsidiary of the Company (“SL Power”), and, for the limited purposes set forth in the Purchase Agreement, Advanced Energy Industries, Inc. (“Purchaser Guarantor”) and the Company (collectively, the “Parties”). SL Power comprises the Company’s Electrical Products business and designs, manufactures and markets power conversion solutions for original equipment manufacturers in the medical, lighting, audio-visual, controls and industrial sectors.
Pursuant to the Purchase Agreement, on the terms and subject to the conditions set forth therein, Seller has agreed to sell to Purchaser SL Power for a total purchase price of approximately $144.5 million (the “Transaction”), consisting entirely of cash. The closing of the Transaction is subject to certain customary conditions, including the accuracy of the representations and warranties of, and compliance with covenants by, each of the Parties to the Purchase Agreement and certain internal corporate reorganization, including the transfer of SL Power’s interests in Condor Power Supplies de Mexico, S.A. de C.V. to Seller. There can be no assurance that these closing conditions will be satisfied. The closing of the Transaction is not subject to a financing condition or to the approval of the Company’s unitholders, and is expected to occur in the second quarter of 2022.
The Purchase Agreement contains representations, warranties and covenants of the Parties that are customary for transactions of this type. Until the closing of the Transaction, Seller and SL Power have agreed, subject to certain exceptions, to, and to cause SL Power and its subsidiaries to, conduct their respective business in the ordinary course consistent with past practice. The Parties are required to use their respective commercially reasonable efforts to take, or cause to be taken, all actions necessary, proper or advisable under applicable laws to consummate the Transaction.
In addition, the Purchase Agreement contains certain termination rights that are customary for a transaction of this type, including, for example, if the closing of the Transaction has not occurred on or prior to the date that is 60 days after the date of the execution of the Purchase Agreement, 2022 (the “Outside Date”), which may be extended once by Purchaser in certain circumstances where certain regulatory approvals remain the only conditions to the closing of the Transaction that have not been satisfied and the terminating party is not in breach of the Purchase Agreement and such breach was not the primary cause of the failure of closing of the Transaction to occur before the Outside Date.
Pursuant to the Purchase Agreement, the Company and Purchaser will enter into a transition services agreement at the closing of the Transaction to ensure an orderly transition in effecting the Transaction.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is attached to this Current Report on Form 8-K (this “Form 8-K”) as
Exhibit 2.1 and is incorporated herein by reference. The Purchase Agreement has been attached to provide investors with information regarding its terms. The terms and information therein should not be relied on as disclosure about the Company without consideration of the reports that the Company files with the Securities and Exchange Commission (the “SEC”). The terms of the Purchase Agreement (such as the representations and warranties) govern the contractual rights and relationships, and allocate risks, among the Parties in relation to the Transaction. In particular, the representations and warranties made by the Parties to each other in the Purchase Agreement have been negotiated among the Parties with the principal purpose of setting forth their respective rights with respect to their obligation to close the Transaction should events or circumstances change or be different from those stated in the representations and warranties. Matters may change from the state of affairs contemplated by the representations and warranties. The Company does not undertake any obligation to release publicly any revisions to these representations and warranties, except as required under U.S. federal or other applicable securities laws.