SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 19, 2020
(Exact name of registrant as specified in its charter)
Commission File Number: 1-06620
|(State or other jurisdiction |
|(IRS Employer |
712 Fifth Avenue, 18th Floor
New York, New York 10019
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
(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:
|☐||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|☐||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, $0.25 par value per share||GFF||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
On February 19, 2020, Griffon Corporation (the “Company”) completed its previously announced notes offering (the “Notes Offering”) of $850 million aggregate principal amount of 5.75% senior notes due 2028 (the “Notes”). The Notes were sold in a private placement pursuant to a purchase agreement, dated February 4, 2020, among the Company, the guarantors named therein (the “Guarantors”) and BofA Securities, Inc., as representative of the several initial purchasers of the Notes (the “Initial Purchasers”). The Notes were resold by the Initial Purchasers to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933 (the “Securities Act”) and to non-U.S. persons pursuant to Regulation S of the Securities Act. The Notes have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements thereunder. The net proceeds to the Company from the Notes Offering were approximately $839.4 million.
In connection with the Notes Offering, the Company entered into an Indenture (the “Indenture”), dated as of February 19, 2020, among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee (the “Trustee”).
Certain terms and conditions of the Notes and the Indenture are as follows:
Maturity. The Notes mature on March 1, 2028.
Interest. The Notes accrue interest at a rate of 5.75% per year. Interest on the Notes is paid semi-annually on each March 1 and September 1, beginning on September 1, 2020.
Ranking. The Notes and guarantees will be senior unsecured obligations of the Company and the Guarantors and will be:
|•||equal in right of payment to all of the Company’s and the Guarantors’ existing and future unsecured indebtedness and other obligations that are not, by their terms, expressly subordinated in right of payment to the Notes;|
|•||effectively subordinated to all of the Company’s and the Guarantors’ existing and future secured indebtedness and other obligations to the extent of the value of the collateral securing that indebtedness and other obligations;|
|•||structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s or the Guarantors’ subsidiaries that do not guarantee the Notes; and|
|•||senior in right of payment to any of the Company’s and the Guarantors’ existing and future subordinated indebtedness.|
Guarantees. The Notes will be initially unconditionally guaranteed on a joint and several and senior unsecured basis by The Ames Companies, Inc., ATT Southern LLC, Clopay Ames Holding Corp., Clopay Corporation, ClosetMaid LLC, CornellCookson, LLC, Cornell Real Estate Holdings, LLC and Telephonics Corporation. If the Company or any of its restricted subsidiaries organize, acquire, transfer assets to or otherwise invest in any newly created or acquired domestic restricted subsidiary (other than a domestic restricted subsidiary if the Net Book Value (as defined in the Indenture) of such domestic restricted subsidiary’s assets, when taken together with the aggregate Net Book Value of the assets of all other domestic restricted subsidiaries that are not Guarantors, as of such date, does not exceed in the aggregate $50.0 million), then such domestic restricted subsidiary shall unconditionally guarantee the Notes.
In addition, to the extent that the collective Net Book Value of the assets of the Company’s non-guarantor domestic restricted subsidiaries, as of the date of the organization, acquisition, transfer of assets to or investment in a non-guarantor domestic restricted subsidiary, exceeds $50.0 million, then one or more of such non-guarantor
domestic restricted subsidiaries shall guarantee the Notes, such that the collective Net Book Value of the assets of all remaining non-guarantor domestic restricted subsidiaries does not exceed $50.0 million.
Optional Redemption. The Company may redeem some or all of the Notes at any time prior to March 1, 2023, for cash at a redemption price equal to 100% of their principal amount plus the Applicable Premium (as defined in the Indenture), plus accrued and unpaid interest to the redemption date. In addition, at any time (which may be more than once) before March 1, 2023, the Company may redeem up to 40% of the outstanding Notes with the proceeds from one or more public equity offerings at a redemption price equal to 105.750% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to the date of redemption, provided that the Notes are redeemed within 90 days of completing the public equity offering and at least 60% of the aggregate principal amount of Notes issued remains outstanding afterwards.
Additionally, the Company may redeem the Notes, in whole or in part, at any time on and after March 1, 2023 at the redemption prices set forth in the Indenture (initially 102.875% of the principal amount of the Notes and declining to 100% of the principal amount of the Notes on or after March 1, 2026), plus accrued and unpaid interest to the redemption date.
Repurchases at the Option of Holders. Upon the occurrence of a Change of Control (as defined in the Indenture) or certain Asset Sales (as defined in the Indenture), the Company must offer to repurchase the Notes at a price equal to 101%, in the case of a Change of Control, or 100%, in the case of an Asset Sale, of the principal amount of the Notes plus accrued and unpaid interest to the date of repurchase.
Covenants. The Indenture contains customary covenants limiting the Company’s ability and the ability of the Company’s restricted subsidiaries to, among other things:
|•||incur additional debt, issue preferred stock or enter into sale and leaseback transactions;|
|•||pay dividends or distributions on its capital stock or repurchase its capital stock or make other restricted payments;|
|•||issue preferred stock of subsidiaries;|
|•||make certain investments;|
|•||create liens on the Company’s and its restricted subsidiaries’ assets;|
|•||enter into transactions with affiliates;|
|•||merge, consolidate or sell substantially all of the Company’s assets;|
|•||transfer and sell assets;|
|•||create restrictions on dividends or other payments by the Company’s restricted subsidiaries; and|
|•||create guarantees of indebtedness by restricted subsidiaries.|
These covenants are subject to a number of important limitations and exceptions, which are set forth in the Indenture filed as an exhibit hereto. Many of these covenants will cease to apply to the Notes during any period that the Notes have investment grade ratings from both Moody’s Investors Service, Inc. and Standard & Poor’s Rating Services, provided no default has occurred and is continuing under the Indenture.
Events of Default. If an event of default, as specified in the Indenture, shall occur and be continuing, either the Trustee or the holders of a specified percentage of the Notes may accelerate the maturity of all the Notes.
The description of certain terms of the Indenture set forth herein does not purport to be complete and is qualified in its entirety by the full text of the Indenture, which is filed herewith as Exhibit 4.1 and which is incorporated herein by reference.
Registration Rights Agreement.
In connection with the Notes Offering, the Company and the Guarantors entered into a Registration Rights Agreement, dated as of February 19, 2020, with BofA Securities, Inc., as the representative of the Initial Purchasers (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company is obligated to file with the Securities and Exchange Commission (the “Commission”) a registration statement, and use its commercially reasonable efforts to cause such registration statement to become or be declared effective, relating to an offer to exchange the Notes for new notes issued by the Company that are registered under the Securities Act and otherwise have terms substantially identical to those of the Notes. If the Company is not able to effect the exchange offer or, in certain circumstances, an exchange offer is not available, the Company will instead and/or in addition be obligated to file a shelf registration statement covering the resale of the Notes and use its commercially reasonable efforts to cause such registration statement to become or be declared effective. If the Company fails to satisfy its registration obligations by certain dates specified in the Registration Rights Agreement, it will be required to pay additional interest to the holders of the Notes.
The description of certain terms of the Registration Rights Agreement set forth herein does not purport to be complete and is qualified in its entirety by the full text of the Registration Rights Agreement, which is filed herewith as Exhibit 4.2 and is incorporated herein by reference.
Use of Proceeds; Tender Offer
On February 19, 2020, the Company used a portion of the proceeds from the Notes Offering to repurchase $490,385,000 aggregate principal amount of its existing 5.25% senior notes due 2022 (the “2022 Notes”) that were validly tendered (and not validly withdrawn) prior to the early tender deadline of 5:00 p.m., New York City time, on February 18, 2020, of the Company’s previously announced tender offer (the “Tender Offer”).
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information provided in Item 1.01 of this Report is hereby incorporated by reference into this Item 2.03.
Item 8.01. Other Events
On February 19, 2020, the Company issued a press release announcing the closing of the Notes Offering and the early settlement of the Tender Offer with respect to the outstanding 2022 Notes. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
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.
|Date: February 20, 2020||By:||/s/ Seth L. Kaplan|
|Seth L. Kaplan|
|Senior Vice President, General Counsel and Secretary|