TCS Container Store Group 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 8, 2024

  

THE CONTAINER STORE GROUP, INC.

(Exact name of registrant as specified in its charter)

  

Delaware	​	001-36161	​	26-0565401
(State or other jurisdiction of incorporation)	​	(Commission File Number)	​	(IRS Employer Identification No.)

 

500 Freeport Parkway Coppell, TX				75019
(Address of principal executive offices)				(Zip Code)

 

Registrant’s telephone number, including area code: (972) 538-60000

 

Not Applicable
(Former name or former address, if changed since last report)

  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

x

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 Par Value		TCS		New York Stock Exchange
Preferred Stock Purchase Rights		—		New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

  

Item 1.01. Entry Into a Material Definitive Agreement

 

Issuance and Sale of Series B Convertible Preferred Stock

 

On October 15, 2024, The Container Store Group, Inc., a Delaware corporation (the “Company”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Beyond, Inc., a Delaware corporation (the “Purchaser”). Pursuant to the Purchase Agreement (and subject to the conditions contained therein), the Company has agreed to issue and sell to the Purchaser and the Purchaser has agreed to purchase from the Company (the “Equity Investment”) (a) 40,000 shares of a new class of its capital stock titled its “Series B Convertible Preferred Stock” (the “Series B Convertible Preferred Stock”) with an initial conversion price of $17.25 plus (b) the number of shares of Series B Convertible Preferred Stock attributable to the Purchaser’s expenses incurred in connection with the Purchase Agreement and the Equity Investment (not to exceed $500,000) for an aggregate purchase price of $40,000,000. In connection with the issuance of the Series B Convertible Preferred Stock, the Company will file a Certificate of Designations (the “Certificate of Designations”) with the Secretary of State of the State of Delaware designating, authorizing an aggregate of 40,500 shares, and establishing the terms, of the Series B Convertible Preferred Stock.

 

The Purchase Agreement contains customary representations, warranties and covenants of the Company and the Purchaser, including covenants relating to the conduct of the Company’s business between the date of the signing of the Purchase Agreement (the “Signing” and such date of Signing, the “Signing Date”) and the closing of the Equity Investment (the “Closing” and such date of Closing, the “Closing Date”). Such covenants include, among other things, restrictions on the Company’s ability to issue equity interests or incur indebtedness for borrowed money, in each case, outside the ordinary course of business between the Signing Date and the Closing Date (such period, the “Interim Period”). The Purchase Agreement also provides that during the Interim Period, the Company is prohibited from initiating, soliciting or encouraging change of control proposals from third parties, other than the Purchaser.

 

The Equity Investment is subject to certain closing conditions, including the Company refinancing or amending its existing secured credit facilities in a manner that is acceptable to the Purchaser in its sole discretion.

 

The Purchase Agreement contains termination rights for the Company and the Purchaser, including, among others, by either the Company or the Purchaser if the Closing does not occur before January 31, 2025 by reason of the failure of any of the applicable closing conditions set forth in the Purchase Agreement to be satisfied.

 

Restrictions on Transfer

 

Following the Closing Date, the Purchaser may not transfer any of the Series B Convertible Preferred Stock to any person, except to affiliates of Purchaser and in connection with certain financings.

 

Designations of Series B Convertible Preferred Stock

 

The Series B Convertible Preferred Stock will have a par value of $0.01 per share and a liquidation preference of $1,000 per share (the “Liquidation Preference”). The Series B Convertible Preferred Stock will rank senior to the Company’s common stock, $0.01 par value per share (the “Common Stock”), with respect to the payment of dividends and the distribution of assets upon the Company’s liquidation, dissolution or winding up. If the Company liquidates, dissolves or winds up, whether voluntarily or involuntarily, then the holders of the Series B Convertible Preferred Stock will be entitled to receive payment of the Change of Control Repurchase Price (as defined below) out of the Company’s assets or funds legally available for distribution to its stockholders, before any such assets or funds are distributed to, or set aside for the benefit of, holders of the Common Stock or other junior stock.

 

 

The Series B Convertible Preferred Stock will accumulate cumulative dividends at a rate per annum equal to 10% on the Liquidation Preference thereof (the “Regular Dividend Rate”), regardless of whether or not declared or funds are legally available for their payment (such dividends that accumulate on the Series B Convertible Preferred Stock pursuant to this sentence, “Regular Dividends”); provided, however, that if the “Requisite Stockholder Approval” (as defined in the Certificate of Designations to cover certain approvals under the New York Stock Exchange Listing Standards relating to the voting and conversion rights of the Series B Convertible Preferred Stock) has not been obtained or the “Financing Change of Control Amendment” (as defined in the Certificate of Designations, which generally refers to the amendment of certain change of control provisions (or negotiation of such provisions, in the case of a refinancing) of the Company’s credit agreements, permitting the Purchaser and its affiliates to own more than 35% of the Company’s voting equity securities) has not been effectuated on or before December 31, 2024 (the “Requisite Approvals Deadline Date”), then on the Requisite Approvals Deadline Date, and on each one (1) year anniversary thereto (if the Requisite Stockholder Approval has not been obtained, or the Financing Change of Control Amendment has not been effectuated, by such anniversary), the Regular Dividend Rate will be increased by an additional 100 basis points until such time that the Requisite Stockholder Approval is obtained and the Financing Change of Control Amendment is effectuated, at which time the Regular Dividend Rate will be adjusted to 10% per annum. Dividends will accumulate, quarterly in arrears (each a “Regular Dividend Payment Date”), beginning on the first applicable date following the Closing Date. On each Regular Dividend Payment Date, the dollar amount (expressed as an amount per share of Series B Convertible Preferred Stock) of dividends that have accumulated on the Series B Convertible Preferred Stock during a “Regular Dividend Period” (as defined in the Certificate of Designations) will (automatically and without the need of any action on the part of the Company or any other person) be added to the Liquidation Preference of each share of Series B Convertible Preferred Stock outstanding as of such time. Dividends will not be paid in cash except to the extent included in the “Change of Control Repurchase Price” (as defined in the Certificate of Designations) or the Redemption Price (as defined below) for the Series B Convertible Preferred Stock.

 

Unless previously converted, repurchased or redeemed, each outstanding share of Series B Convertible Preferred Stock will, subject to the availability of sufficient funds legally available, automatically be redeemed (the “Mandatory Redemption”) for a cash purchase price equal to (i) the Liquidation Preference of such share as of the close of business on the date that is five (5) years from the initial issuance date (the “Mandatory Redemption Date”) for such Mandatory Redemption; plus (ii) accumulated and unpaid Regular Dividends on such share to, but excluding, such Mandatory Redemption Date (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference) (the “Redemption Price”).

 

Subject to certain exceptions, the holders of the Series B Convertible Preferred Stock will have the right to convert all or any portion of their shares of Series B Convertible Preferred Stock at any time before the Mandatory Redemption into a number of shares of Common Stock equal to the quotient obtained by dividing (i) the Liquidation Preference of such share of Series B Convertible Preferred Stock immediately before the close of business on the conversion date for such conversion plus accumulated and unpaid dividends, if any, not included in such Liquidation Preference; by (ii) the conversion price in effect immediately before the close of business on such conversion date (the “Conversion Consideration”). The initial conversion price is equal to $17.25, which is subject to customary anti-dilution adjustment provisions.

 

In addition, the Series B Convertible Preferred Stock will automatically convert in certain circumstances and subject to certain conditions if the Company amends the maturity date of its senior secured term loans to a date no earlier than January 31, 2028 or if a “Change of Control” (as defined in the Certificate of Designations) occurs and the Company elects to cause the Series B Convertible Preferred Stock to convert.

 

If a Change of Control occurs, then the holders of the Series B Convertible Preferred Stock will have the right, subject to the availability of sufficient funds legally available, to require the Company to repurchase all, or any whole number of shares that is less than all, of such holder’s Series B Convertible Preferred Stock for a cash purchase price equal to the product of (i) 115% and (ii) the sum of (A) Liquidation Preference of such share at the close of business on the repurchase date for such Change of Control and (B) accumulated and unpaid Regular Dividends on such share to, but excluding, such repurchase date for such Change of Control (to the extent such accumulated and unpaid Regular Dividends are not included in such Liquidation Preference) (the “Change of Control Repurchase Price”).

 

The Series B Convertible Preferred Stock will have voting rights with respect to certain amendments to the Company’s Amended and Restated Certificate of Incorporation or the Certificate of Designations, certain business combination transactions and certain other matters. Subject to certain limitations, holders of the Series B Convertible Preferred Stock will also have the right to vote on an as-converted basis, together as a single class with the holders of the Common Stock on each matter submitted for a vote or consent by the holders of the Common Stock.

 

 

Stockholders Agreement

 

In connection with the Equity Investment, at the Closing, the Company and the Purchaser will enter into a Stockholders Agreement (the “Stockholders Agreement”).

 

Purchaser’s Directors and Nominees

 

After the Closing Date and until the date that the Series B Convertible Preferred Stock is required to convert into Common Stock in accordance with the Certificate of Designations (the “Conversion Date”), for so long as the Purchaser’s percentage ownership of the Company (measured on an as-converted basis) (the “Share Percentage Ownership”) is at least 10%, the Purchaser will have the right to nominate one (1) director for election to the board of directors of the Company (the “Board”).

 

After the Conversion Date, for so long as the Purchaser’s Share Percentage Ownership is (a) at least 20%, the Purchaser will have the right to nominate two (2) directors for election to the Board or (b) less than 20% but greater than 10%, the Purchaser will have the right to nominate one (1) director for election to the Board.

 

If the Purchaser’s Share Percentage Ownership is less than 10%, it will not have the right to nominate any directors for election to the Board.

 

In addition, prior to the Conversion Date, the Purchaser has the right to designate one (1) non-voting observer to the Board.

 

Standstill

 

Subject to certain customary exceptions, until the earlier of (i) one (1) year anniversary of the Conversion Date and (ii) the date that the Commercial Agreement (as defined below) is validly terminated by the Purchaser due to a material breach by the Company of the terms thereof (the “Standstill Expiration Date”), the Purchaser will be prohibited from, among other things, (i) acquiring equity securities of the Company, (ii) effecting an acquisition, by tender or exchange offer, merger, amalgamation or a similar business combination, of the Company, (iii) soliciting proxies or seeking a director/management change in the Company, (iv) forming, joining or participating in any “group” (as defined under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), (the "Exchange Act") with respect to the Company and (v) nominating candidates for election to the Board or otherwise seeking representation on the Board (subject to the Purchaser’s nomination rights) or seeking removal of any member of the Board (except for such person nominated by the Purchaser).

 

Voting Rights

 

Subject to the Purchaser’s rights to nominate a director to the Board, until the Standstill Expiration Date, at each annual or special meeting of the stockholders of the Company, the Purchaser will agree to vote all of the shares of Series B Convertible Preferred Stock, shares of Common Stock issued upon conversion of such Series B Convertible Preferred Stock, and other shares of Common Stock owned, directly or indirectly, of record or beneficially by the Purchaser (i) in favor of each director nominated or recommended by the Board for election at any such meeting, and against the removal of any director who has been elected following nomination or recommendation by the Board and (ii) against any stockholder nomination for director that is not approved and recommended by the Board for election at any such meeting. The Purchaser also will agree to be present, in person or by proxy, at all meetings of the stockholders of the Company.

 

Information Rights

 

For so long as the Purchaser’s Share Ownership Percentage is at least 10%, the Purchaser will be entitled to customary information rights, including, audited annual and unaudited quarterly financial statements of the Company.

 

 

Participation and Notification Rights

 

The Stockholders Agreement also will grant the Purchaser certain participation and notification rights, including, among other things (i) from and after Closing Date, until the Standstill Expiration Date, the Company is required to provide the Purchase written notice of any unsolicited acquisition proposal regarding a potential fundamental change or change of control and (ii) so long as the Purchaser’s Share Ownership Percentage is at least 10%, if the Company determines to initiate a strategic alternatives process that could reasonably be expected to give rise to a change of control transaction or other extraordinary transaction, the Company will be required to provide the Purchaser written notice and provide the Purchaser a bona fide opportunity to participate in such strategic alternatives process (but the Company will not be obligated to enter into a strategic alternative transaction with the Purchaser in connection with such process).

 

Registration Rights

 

Pursuant to the Stockholders Agreement, the Company also will grant, among other things, the Purchaser certain registration rights. Pursuant to these rights, the Company will be required to use its reasonable best efforts to cause the registration of the shares of Common Stock issued or issuable upon conversion of the Series B Convertible Preferred Stock.

 

Voting Agreement

 

On October 15, 2024, in connection with the Equity Investment, the Company, the Purchaser and certain of the Company’s stockholders (including Leonard Green & Partners, L.P.) and the Company’s directors and officers (each, a “Specified Company Stockholder” and collectively, the “Specified Company Stockholders”) each entered into a Voting Agreement (the “Voting Agreement”) pursuant to which each Specified Company Stockholder agreed to refrain from taking certain corporate actions regarding the Company and agree to vote all of their shares of Common Stock (and other equity interests of the Company then-owned) in favor of the proposal to remove the 19.9% cap at the Stockholder Meeting.

 

Rights Plan Amendment

 

On October 15, 2024, the Company and Equiniti Trust Company (the “Rights Agent”) entered into an Amendment (the “Rights Agreement Amendment”) to the Rights Agreement, by and between the Company and the Rights Agent, dated as of October 8, 2024 (the “Rights Agreement”), which provides that none of the Purchaser or its Permitted Transferees (as defined in the Purchase Agreement) will be deemed an “Acquiring Person” (as defined in the Rights Agreement), either individually or together, solely by virtue of or as a result of, (i) the approval, adoption, execution, delivery or performance of the Transaction Documents (as defined in the Purchase Agreement), (ii) the acquisition or right to acquire beneficial ownership of the Common Stock, as a result of the execution and entry into of the Transaction Documents, including any conversion of the shares of Series B Convertible Preferred Stock into Common Stock acquired pursuant thereto, or (iii) the announcement or consummation of any of the transactions contemplated by the Transaction Documents. The Rights Agreement otherwise remains in full force an effect in accordance with the terms previously disclosed by the Company.

 

The foregoing description of the Rights Agreement Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Rights Agreement Amendment, a copy of which is being filed as Exhibit 10.1 hereto and is incorporated by reference herein.

 

Credit Agreement Amendment

 

On October 8, 2024, The Container Store, Inc. (“TCS”), a wholly-owned subsidiary of the Company, entered into Amendment No. 9 (the “Amendment”) to that certain Credit Agreement, dated as of April 6, 2012 (as amended, modified, extended, restated, replaced, or supplemented prior to the effectiveness of the Amendment, the “Existing Term Loan Credit Agreement”) among TCS, the guarantors party thereto, including the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, which constituted the Required Lenders (as defined in the Existing Term Loan Credit Agreement).

 

 

The Amendment amends the Existing Term Loan Credit Agreement to, among other things: (i) waive the testing of the consolidated leverage ratio covenant (defined in the Existing Term Loan Credit Agreement as the ratio of total debt to consolidated EBITDA) for the second quarter of fiscal year 2024, (ii) add a covenant for the Company to enter into a qualified financing transaction, subject to the approval of the Required Lenders by November 15, 2024 (as such date may be extended by the Required Lenders), and (iii) amend certain of the covenants in the Existing Credit Term Loan Agreement, which, among other things, further restrict the Company and its subsidiaries’ ability to incur additional indebtedness or engage in certain non-ordinary course transactions. In connection with the Amendment, a customary fee was paid in-kind to consenting lenders.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

 

The information contained in Item 1.01 with respect to the Amendment is incorporated by reference into this Item 2.03.

 

Item 3.02. Unregistered Sales of Equity Securities

 

The information contained in Item 1.01 with respect to the Purchase Agreement is incorporated by reference into this Item 3.02. The issuance and sale of 40,500 shares of Series B Convertible Preferred Stock (together with the amount of shares attributable to the Purchaser's expenses, as described above) by the Company to the Purchaser pursuant to the Purchase Agreement is exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Purchaser has represented to the Company that it is an “accredited investor” as defined in Rule 501 of the Securities Act and that the Series B Convertible Preferred Stock are being acquired for investment purposes and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends will be affixed to any certificates evidencing shares of Series B Convertible Preferred Stock or shares of Common Stock issued in connection with any future conversion of the Series B Convertible Preferred Stock.

 

The shares of Common Stock issuable to the Purchaser upon conversion of shares of the Series B Convertible Preferred Stock will be issued in reliance upon the exemption from registration in Section 3(a)(9) of the Securities Act or pursuant to another available exemption.

 

Item 3.03. Material Modification to Rights of Security Holders

 

The information contained in Item 1.01, other than with respect to the Credit Agreement Amendment, is incorporated by reference into this Item 3.03.

 

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

 

The information contained in Item 1.01 with respect to the Certificate of Designations is incorporated by reference into this Item 5.03.

 

Item 7.01. Regulation FD Disclosure

 

On October 15, 2024, the Company issued a press release (the “Press Release”) announcing the Company’s execution of the Purchase Agreement and the Amendment. The full text of the Press Release is attached as Exhibit 99.1 to this Current Report and is incorporated by reference herein.

 

The information disclosed in this Item 7.01 (including Exhibit 99.1) shall not be deemed “filed” for purposes of the Exchange Act , or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, except as expressly provided by specific reference in such a filing.

 

 

Item 8.01. Other Events

 

Collaboration Agreement

 

On October 15, 2024, in connection with the Equity Investment, the Company and the Purchaser entered into a Collaboration Agreement (the “Collaboration Agreement”) pursuant to which each of the Company and the Purchaser desire to work together to identify, evaluate and prioritize collaboration opportunities which are mutually beneficial to their respective business, including, among other things, (i) reducing customer acquisition costs and increasing marketing ROI through sharing customer data (where possible) and joint marketing efforts across their respective organizations and affiliates, (ii) enhancing mutual assortments by leveraging relevant brands, products, and channels across their respective organizations and affiliates, (iii) optimizing the .com experience by sharing technical resources and services, as well as products, branding and creative content across their respective organizations and affiliates, (iv) capturing benefits of scale by sharing resources (i.e., technical, product, data, vendor, people, etc.) across their respective organizations and affiliates and (v) delivering better customer experiences, convenience, and value by offering cross-company programs (i.e., offers, integrated loyalty program, credit card).

 

If the Purchase Agreement is terminated prior to the Closing, the Collaboration Agreement will automatically terminate.

 

Item 9.01. Financial Statements and Exhibits

 

(d)

 Exhibits

 

Exhibit Number		Description
10.1		Amendment to Rights Agreement, dated October 15, 2024, by and between the Company and Equiniti Trust Company.
99.1		Press Release, dated October 15, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

About The Container Store Group, Inc.

 

The Container Store Group, Inc.

 

The Container Store Group, Inc. (NYSE: TCS) is the nation’s leading specialty retailer of organizing solutions, custom spaces, and in-home services – a concept they originated in 1978. Today, with locations nationwide, the retailer offers more than 10,000 products designed to transform lives through the power of organization.

 

Visit www.containerstore.com for more information about products, store locations, services offered and real-life inspiration.

 

Follow The Container Store on Facebook, X, Instagram, TikTok, YouTube, Pinterest, and LinkedIn.

 

Additional Information About the Transaction and Where to Find It

 

This communication relates to, among other things, the proposed transaction of the issuance of preferred stock by the Company pursuant to the definitive documents, which provides that the Company shall use efforts to call and hold a special meeting of the stockholders of the Company, as promptly as reasonably practicable following the closing of the transaction, to seek stockholder approval. In connection with the proposed special meeting of stockholders to seek stockholder approval, the Company will file relevant materials with the Securities Exchange Commission (the “SEC”), including the Company’s proxy statement on Schedule 14A (the “Proxy Statement”). This communication is not a substitute for the Proxy Statement or any other document that the Company may file with the Securities Exchange Commission or send to its stockholders in connection with the proposed transaction. INVESTORS AND STOCKHOLDERS OF THE CONTAINER STORE ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE CONTAINER STORE AND THE PROPOSED TRANSACTION. Investors may obtain a free copy of these materials (when they are available) and other documents filed by The Container Store with the SEC at the SEC’s website at www.sec.gov or from The Container Store at its website at https://investor.containerstore.com.

 

Participants in the Solicitation

 

The Container Store and certain of its directors, executive officers and other members of management and employees may be deemed to be participants in soliciting proxies from its stockholders in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of The Container Store’s stockholders in connection with the proposed transaction will be set forth in The Container Store’s definitive proxy statement for its stockholder meeting at which the proposed transaction will be submitted for approval by The Container Store’s stockholders. You may also find additional information about The Container Store’s directors and executive officers in The Container Store’s Annual Report on Form 10-K for the fiscal year ended March 30, 2024, which was filed with the SEC on May 28, 2024, The Container Store’s Definitive Proxy Statement for its 2024 annual meeting of stockholders, which was filed with the SEC on July 9, 2024, and in subsequently filed Current Reports on Form 8-K and Quarterly Reports on Form 10-Q.

 

 

Forward Looking Statements

 

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this communication that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the terms and potential benefits of our collaboration with Beyond; expectations regarding positive same store sales growth, improved profitability and creating shareholder value; Beyond’s potential equity investment, the potential amendment or refinancing of our debt; and our strategies, priorities, challenges and initiatives and growth opportunities. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, risks relating to our collaboration with Beyond; the equity investment by Beyond is subject to conditions, including our ability to amend or refinance our debt in a manner commercially acceptable to Beyond; and the other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K on May 28, 2024 filed with the Securities and Exchange Commission (the “SEC”) and our other reports filed with the SEC. These factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this communication. Any such forward-looking statements represent management’s estimates as of the date of this communication. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this communication.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		The Container Store Group, Inc.
		(Registrant)
Date: October 15, 2024		By:	/s/ Satish Malhotra
		Name:	Satish Malhotra
		Title:	President & Chief Executive Officer

  

 

 

Exhibit 10.1

 

Amendment No. 1 TO RIGHTS AGREEMENT

 

THIS Amendment No. 1 (the “Amendment No. 1”), dated as of October 15, 2024, to the Rights Agreement (as amended or modified from time to time, the “Rights Agreement”), dated October 8, 2024, between The Container Store Group, Inc., a Delaware corporation (the “Company”), and Equiniti Trust Company, LLC (the “Rights Agent”), is being executed at the direction of the Company and shall be effective immediately prior to the Company’s entry into that certain Securities Purchase Agreement (as it may be amended or modified from time to time, the “Securities Purchase Agreement”) to be entered into by and between the Company and Beyond, Inc., a Delaware corporation; provided, however, if the Securities Purchase Agreement is not executed as of the date herewith, this Amendment No. 1 shall terminate, in either such case, immediately (without any further action or notice required), and shall be of no further force and effect. Capitalized terms used in this Amendment No. 1 and not otherwise defined herein shall have the meanings given them in the Rights Agreement.

 

WHEREAS, Section 26 of the Rights Agreement provides that, for so long as the Rights are then redeemable, the Company may and the Rights Agent shall, if the Company so directs, supplement or amend any provision of the Rights Agreement without the approval of any holders of Rights or Common Stock, any such supplement or amendment to be evidenced by a writing signed by the Company and the Rights Agent;

 

WHEREAS, pursuant to Section 26 of the Rights Agreement, the Company has delivered to the Rights Agent a certificate signed by an appropriate officer of the Company certifying that the proposed amendment of the Rights Agreement is in compliance with the terms of Section 26 of the Rights Agreement; and

 

WHEREAS, as of the date of this Amendment No. 1, to the knowledge of the Company, no Trigger Event has occurred and the Rights are redeemable in accordance with the Rights Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

 

1.

Section 1.1 of the Rights Agreement is hereby amended by adding the following sentences to the end of such Section 1.1:

 

Notwithstanding anything in this Agreement to the contrary, none of the Beyond Holders shall be deemed to be an Acquiring Person, either individually or collectively, by virtue of or as a result of (i) the approval, adoption, execution, delivery or performance of the Transaction Documents, (ii) the acquisition or the right to acquire beneficial ownership of the Common Stock as a result of the execution of and entry into the Transaction Documents, including upon any conversion of Preferred Shares (as defined therein) acquired pursuant thereto, or (iii) the announcement or consummation of any of the transactions contemplated by the Transaction Documents (collectively the “Permitted Events” and each a “Permitted Event”).

 

 

2.

Section 1.3 of the Rights Agreement is hereby amended by adding the following sentence to the end of such Section 1.3:

 

Notwithstanding anything in this Section 1.3 or this Agreement to the contrary, the Beyond Holders, either individually or together, shall not be, and shall not be deemed to be, a ‘Beneficial Owner’ of, or to ‘Beneficially Own,’ any securities solely by virtue of, or as a result of, any Permitted Event.

 

3.

Section 1 of the Rights Agreement is hereby amended by adding the following new Section 1.16 immediately following Section 1.15:

 

1.16        The following additional terms shall have the meanings indicated:

 

(a)             “Beyond” shall mean Beyond, Inc., a Delaware corporation.

 

(b)             “Securities Purchase Agreement” shall mean that certain Securities Purchase Agreement dated as of October 15, 2024 by and between the Company and Beyond, as amended or modified from time to time in accordance with the terms thereof.

 

(c)             “Beyond Holders” shall mean Beyond, together with its Permitted Transferees (as defined in the Securities Purchase Agreement) who acquire Series B Preferred Shares (as defined in the Securities Purchase Agreement) pursuant to and in accordance with the terms and conditions of the Securities Purchase Agreement or Common Stock due to the conversion of such Preferred Shares into shares of Common Stock, and each of their respective Affiliates and Associates.

 

(d)             “Transaction Documents” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

4.             The following is added as a new Section 35 of the Rights Agreement:

 

Section 35. Transaction Documents. Notwithstanding anything in this Agreement to the contrary, none of Permitted Events shall result in, (x) the deemed occurrence of any of a Trigger Event, a Stock Acquisition Date or a Distribution Date or (y) the separation of the Rights from the Common Stock.

 

4.             Other than as expressly provided in this Amendment No. 1, the Rights Agreement shall not otherwise be supplemented or amended by virtue of this Amendment No. 1, but shall remain in full force and effect. This Amendment No. 1 may be executed in one or more counterparts, including by facsimile or PDF copy, all of which shall be considered one and the same amendment and each of which shall be deemed an original.

 

5.             Section 32 of the Rights Agreement shall apply to this Amendment No. 1 mutatis mutandis.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and attested, all as of the day and year first above written.

 

THE CONTAINER STORE GROUP, INC.			EQUINITI TRUST COMPANY, LLC, as Rights Agent
By:	/s/ Satish Malhotra		By:	/s/ Michael Legregin
Name:	Satish Malhotra		Name:	Michael Legregin
Title:	President & Chief Executive Officer		Title:	Senior Vice President, Corporate Actions Relationship Management & Operations

 

SIGNATURE PAGE TO Amendment No. 1 TO RIGHTS AGREEMENT

 

 

Exhibit 99.1

 

Filed by The Container Store Group, Inc.

Pursuant to Rule 14a-12 under the Securities Exchange Act of 1934

Subject Company: The Container Store Group, Inc.

Commission File No.: 001-36161

 

 

 

The Container Store Group, Inc. and Beyond, Inc. Announce Strategic Partnership Leveraging Both

the Iconic Bed Bath and Beyond Brand and The Container Store

 

Beyond, Inc. enters into agreement to Invest $40 million in The Container Store Group, Inc. through Preferred Equity Transaction

 

Coppell, TX & Midvale, Utah – October 15, 2024 – The Container Store Group, Inc. (NYSE: TCS) (“The Container Store” or “the Company”), the nation’s leading specialty retailer offering custom spaces, organizing solutions, and in-home services and Beyond, Inc. (NYSE:BYON) (“Beyond”), owner of Bed Bath & Beyond, Overstock, Zulily, and other online retail brands designed to unlock your home’s potential, today announced that the companies have entered into a strategic partnership with the objective to improve customary experience utilizing both the Iconic Bed Bath and Beyond Brand and The Container Store.

 

The companies intend for the partnership to position The Container Store to return to profitable comparable store growth over time by utilizing and benefitting from Beyond’s IP, customer data, network of brands and affiliate relationships.

 

The companies expect key aspects of the partnership to include:

 

·

Utilizing The Container Store’s world class real estate locations and utilizing the Bed Bath & Beyond brand to launch appropriately sized spaces that showcase the iconic Bed Bath & Beyond assortment for kitchen, bath and bedroom which will be co-branded. With this collaboration, the companies expect to drive increased traffic for The Container Store’s core assortment and its high margin, solution driven Custom Spaces services business;

·

Beyond will offer a global loyalty program, multiple payment solutions and ancillary insurance and protection products through The Container Store brick-and-mortar locations and website to capitalize on the whitespace opportunity for Custom Spaces and increase conversion of design leads to drive growth through the well-established, vertically integrated model;

·

Beyond to integrate The Container Store’s differentiated and proprietary Custom Spaces offering, including its Elfa and Preston product lines, across Beyond’s portfolio of e-commerce banners as well as other ventures where Bed Bath and Beyond future licensed stores exist globally This will service to drive improved revenue, inventory turns and margins and improved customer experience for both companies ;

·

The Container Store will join Beyond’s growing data platform and both companies will benefit from enhanced customer analytics that The Container Store will use to improve conversion, drive traffic and reduce both customer acquisition and retention costs; and

·

Beyond to assist with expanded and renewed e-commerce platforms and strategies driving improved customer experience, customer conversion, traffic monetization and profitability.

 

 

As part of the terms of the collaboration, Beyond, Inc. has agreed to invest $40 million in The Container Store through a preferred equity transaction subject to certain terms and conditions, including an amendment or refinancing of The Container Store’s credit facilities in a manner commercially acceptable to Beyond.

 

“We are excited about the opportunities this partnership unfolds for us. We believe its benefits will further our strategic initiatives including deepening our relationship with customers, expanding our reach and strengthening our capabilities while accelerating our return to positive same store sales growth and profitability. This agreement will enable us to harness Beyond’s data platform and analytics to better identify and target customers at critical points in their purchase journeys and enhance communications with new and existing customers. It will allow us to expand our reach across our combined network, and position us to leverage Beyond’s e-commerce expertise to further our own omni-channel tools and capabilities,” said Satish Malhotra, CEO of The Container Store. “Beyond’s enthusiasm for this collaboration is reflected in the investment they plan to make in The Container Store that will strengthen our financial position, allow us to continue to execute on our growth strategy and deliver a best-in-class experience for our customers. We look forward to sharing more on our upcoming earnings call.”

 

Marcus Lemonis, Executive Chairman of Beyond, Inc., commented, “We see tremendous whitespace for The Container Store’s best-in-class, solution-based offering across the entire Beyond portfolio, particularly within its high margin Custom Spaces offering through the proprietary Elfa and Preston lines. We will build a lead management and conversion model coupled with various consumer financial products to gain share and tap into a well-oiled, vertically integrated manufacturing platform that has plenty of untapped capacity. Through the licensing of the Bed Bath and Beyond brand, The Container Store will enhance their store format and current general merchandise offering by incorporating the most popular Bed Bath & Beyond products to drive improved financial performance while providing customers a more fulsome product offering for their home and organizational needs.”

 

Lemonis added, “Partnerships like this further support the value of iconic brands leveraging each other’s assets and core competencies while improving customer conversion and retention, enhancing margins and optimizing marketing expenses which are the principal drivers in delivering value creation and profitable growth.”

 

Transaction Terms

 

Pursuant to the securities purchase agreement and contingent upon the Company refinancing or amending its secured credit facilities, The Container Store will issue approximately 40,000 shares of a newly created series of the Company’s preferred stock (the “Series B Preferred Shares”) to Beyond for an aggregate purchase price of $40,000,000.

 

Following a refinancing or amendment of the Company’s credit facilities and the approval by shareholders pursuant to a shareholder vote in Q4 2024 or Q1 2025, and subject to certain other conditions, the Preferred stock would convert to Common Stock at a price of $17.25 which would result in ownership of approximately 40% of The Container Store common equity by Beyond.

 

 

Latham & Watkins LLP served as legal counsel to The Container Store and JP Morgan served as their financial advisor. King & Spaulding LLP served as legal counsel to Beyond and Goldman Sachs served as their financial advisor.

 

In addition, The Container Store announced that it has entered into an amendment of its existing term loan credit agreement, dated as of April 6, 2012 with JPMorgan Chase Bank, N.A., as agent and the lenders party thereto.

 

Additional details of the transactions are included in a Form 8-K filed with the SEC. 

 

About The Container Store Group, Inc.

 

The Container Store Group, Inc. (NYSE: TCS) is the nation’s leading specialty retailer of organizing solutions, custom spaces, and in-home services – a concept they originated in 1978. Today, with locations nationwide, the retailer offers more than 10,000 products designed to transform lives through the power of organization.

 

Visit www.containerstore.com for more information about products, store locations, services offered and real-life inspiration.

 

Follow The Container Store on Facebook, X, Instagram, TikTok, YouTube, Pinterest, and LinkedIn.

 

About Beyond

 

Beyond, Inc. (NYSE: BYON), based in Midvale, Utah, is an ecommerce expert with a singular focus: connecting consumers with products and services that unlock their families’ and homes’ potential. The Company owns Overstock, Bed Bath & Beyond, Baby & Beyond, Zulily, and other related brands and associated intellectual property. Its suite of online shopping brands features millions of products for various life stages that millions of customers visit each month. Beyond regularly posts information about the Company and other related matters on the Newsroom and Investor Relations pages on its website, Beyond.com.

 

Beyond, Bed Bath & Beyond, Welcome Rewards, Zulily, Overstock and Backyard are trademarks of Beyond, Inc. Other service marks, trademarks and trade names which may be referred to herein are the property of their respective owners.

 

Additional Information About the Transaction and Where to Find It

 

This communication relates to, among other things, the proposed transaction of the issuance of preferred stock by the Company pursuant to the definitive documents, which provides that the Company shall use efforts to call and hold a special meeting of the stockholders of the Company, as promptly as reasonably practicable following the closing of the transaction, to seek stockholder approval. In connection with the proposed special meeting of stockholders to seek stockholder approval, the Company will file relevant materials with the Securities Exchange Commission (the “SEC”), including the Company’s proxy statement on Schedule 14A (the “Proxy Statement”). This communication is not a substitute for the Proxy Statement or any other document that the Company may file with the Securities Exchange Commission or send to its stockholders in connection with the proposed transaction. INVESTORS AND STOCKHOLDERS OF THE CONTAINER STORE ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE CONTAINER STORE AND THE PROPOSED TRANSACTION. Investors may obtain a free copy of these materials (when they are available) and other documents filed by The Container Store with the SEC at the SEC’s website at www.sec.gov or from The Container Store at its website at https://investor.containerstore.com.

 

 

Participants in the Solicitation

 

The Container Store and certain of its directors, executive officers and other members of management and employees may be deemed to be participants in soliciting proxies from its stockholders in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of The Container Store’s stockholders in connection with the proposed transaction will be set forth in The Container Store’s definitive proxy statement for its stockholder meeting at which the proposed transaction will be submitted for approval by The Container Store’s stockholders. You may also find additional information about The Container Store’s directors and executive officers in The Container Store’s Annual Report on Form 10-K for the fiscal year ended March 30, 2024, which was filed with the SEC on May 28, 2024, The Container Store’s Definitive Proxy Statement for its 2024 annual meeting of stockholders, which was filed with the SEC on July 9, 2024, and in subsequently filed Current Reports on Form 8-K and Quarterly Reports on Form 10-Q.

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the terms and potential benefits of our collaboration with Beyond; expectations regarding positive same store sales growth, improved profitability and creating shareholder value; Beyond’s potential equity investment, the potential amendment or refinancing of our debt; and our strategies, priorities, challenges and initiatives and growth opportunities. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, risks relating to our collaboration with Beyond; the equity investment by Beyond is subject to conditions, including our ability to amend or refinance our debt in a manner commercially acceptable to Beyond; and the other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K on May 28, 2024 filed with the Securities and Exchange Commission (the “SEC”) and our other reports filed with the SEC. These factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

 

Investors:

 

ICR, Inc. Farah Soi/Caitlin Churchill

 

203-682-8200

 

Farah.Soi@icrinc.com

 

Caitlin.Churchill@icrinc.com

 

Media:

 

ICR, Inc. Phil Denning/Lee Pacchia

 

332-242-4366

 

Phil.Denning@icrinc.com

 

Lee.Pacchia@icrinc.com

 

 

v3.24.3

Cover	Oct. 08, 2024
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 08, 2024
Current Fiscal Year End Date	--03-29
Entity File Number	001-36161
Entity Registrant Name	THE CONTAINER STORE GROUP, INC.
Entity Central Index Key	0001411688
Entity Tax Identification Number	26-0565401
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	500 Freeport Parkway
Entity Address, City or Town	Coppell
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75019
City Area Code	972
Local Phone Number	538-60000
Written Communications	false
Soliciting Material	true
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock, $0.01 Par Value [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $0.01 Par Value
Trading Symbol	TCS
Security Exchange Name	NYSE
Preferred Stock Purchase Rights [Member]
Document Information [Line Items]
Title of 12(b) Security	Preferred Stock Purchase Rights
No Trading Symbol Flag	true
Security Exchange Name	NYSE

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