Form 8-K BOB EVANS FARMS INC For: Apr 18
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E-mailUNITED 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): April 18, 2016 (April 14, 2016)
Bob Evans Farms, Inc. (Exact name of registrant as specified in its charter) |
Delaware | 0-1667 | 31-4421866 |
(State or other jurisdiction of incorporation or organization) | (Commission File No.) | (I.R.S. Employer Identification No.) |
8111 Smith’s Mill Road, New Albany, Ohio 43054
(Address of principal executive offices Zip Code)
(614) 491-2225
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and formal fiscal year, 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)
¨ 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-2b)
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c)
Item 1.01. Entry into a Material Definitive Agreement.
The disclosure under Item 2.01 of this Current Report on Form 8-K, or this Current Report, is incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
As previously reported, on December 16, 2015, Bob Evans Farms, LLC, a wholly owned subsidiary (“Bob Evans Restaurants” or “Seller”), signed a non-binding letter of intent to sell 145 restaurant properties for up to $200.0 million, and on February 22, 2016, Bob Evans Restaurants entered into Purchase and Sale Agreements (each, a “PSA”) for the restaurant properties. The PSA’s were entered into with Mesirow Realty Sale-Leaseback, Inc., an Illinois corporation (“Mesirow”) and with National Retail Properties, LP, a Delaware limited partnership (“National”). The PSA’s provided that Bob Evans Restaurants would sell to Mesirow a portfolio of 26 Bob Evans Restaurant properties for $36.6 million, and to National a portfolio of 119 Bob Evans Restaurant properties for a purchase price of $163.4 million. The PSA’s further provided that prior to the closing of each sale the final portfolio of properties could be adjusted with a corresponding adjustment of the purchase price, and the final purchase prices may be adjusted for customary real estate adjustments. Pursuant to the PSA’s with Mesirow and National, and as a condition of closing, Bob Evans Restaurants has agreed to enter into absolute net master leases for the portfolio properties, and that the Company and BEF Foods, Inc. would provide payment and performance guaranties of the Mesirow Lease and each National Lease.
On April 14, 2016, we completed the closing of the transactions with Mesirow and National. Pursuant to the PSA’s with Mesirow and National, we sold a portfolio of 26 Bob Evans Restaurant properties for $36.4 million, and a portfolio of 117 Bob Evans Restaurant properties for a purchase price of $160.8 million, respectively, for a total of $197.2 million. The closing of the sale-leaseback transactions provided the Company with net proceeds (after tax and transaction related costs) of approximately $164.0 million. The net proceeds are to be used to pay down debt under the Company’s credit agreement, repurchase Company shares, and for other corporate purposes, while maintaining a prudent level of leverage.
As part of the transactions, Bob Evans Restaurants entered into absolute net master leases for the portfolio properties, for an initial term of 20 years, with five renewal options of five years each, at an annual rent of 6.65 percent of the purchase price for the first year. The National lease includes a CPI-based rent escalator with a maximum 1.5% annual increase, while the Mesirow lease includes a 1.5% annual rent escalator. In addition, the Company and BEF Foods, Inc. entered into separate payment and performance guaranties, one for the Mesirow Lease and one for the National Lease.
The transactions, which will be recorded in the Company’s fiscal 2016 fourth-quarter results, resulted in an estimated pre-tax gain of $57.0 million on certain of the properties, which will be amortized over the initial term of the lease and an estimated pre-tax loss of $9.0 million that will be recorded in the fiscal 2016 fourth quarter. Rent expense (net of the gain amortization) of approximately $11.0 million is expected to be incurred during fiscal year 2017. Depreciation expense of approximately $9.0 million related to the properties sold will no longer impact financial results beginning in fiscal year 2017.
Other than, in respect to the transactions discussed above, there are no material relationships between the parties involved and the registrant or any of its affiliates, or any director or officer of the registrant, or any associate of any such director or officer.
The description of the agreements contained in this Current Report on Form 8-K is a summary and is qualified in its entirety by the terms of the agreements. The purchase agreements are filed herewith. The Company will file the master leases and guaranties with the U.S. Securities and Exchange Commission as exhibits to its next Quarterly Report on Form 10-K.
A copy of the press release announcing the execution of the agreements is attached as Exhibit 99.1 and is incorporated by reference herein.
Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosure under Item 2.01 of this Current Report is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired - Not Applicable
(b) Pro Forma Financial Information - Not applicable
(c) Shell Company Transactions - Not Applicable
(d) Exhibits:
The following exhibits are included with this Current Report on Form 8‑K:
Exhibit No. | Description | Filed |
10.1 | Purchase and Sale Agreement between Bob Evans Farms, LLC and National Retail Properties, LP dated February 23, 2016 | Incorporated herein by reference to Exhibit 10.3 to Bob Evans Farms, Inc.’s Form 10-Q filed March 2, 2016 (File No. 0-1667) |
10.2 | First Amendment to Purchase and Sale Agreement between Bob Evans Farms, LLC and National Retail Properties, LP dated February 25, 2016 | Incorporated herein by reference to Exhibit 10.4 to Bob Evans Farms, Inc.’s Form 10-Q filed March 2, 2016 (File No. 0-1667) |
10.3 | Purchase and Sale Agreement between Bob Evans Farms, LLC and Mesirow Realty Sale-Leaseback, Inc. dated February 23, 2016 | Incorporated herein by reference to Exhibit 10.5 to Bob Evans Farms, Inc.’s Form 10-Q filed March 2, 2016 (File No. 0-1667) |
99.1 | News release issued by Bob Evans Farms, Inc. on April 18, 2016 | Filed herewith |
SIGNATURE
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 thereunto duly authorized.
BOB EVANS FARMS, INC. | |||
Date: April 18, 2016 | By: | /s/ Kevin C. O'Neil | |
Kevin C. O’Neil, Vice President, Assoc. General Counsel and Asst. Corporate Secretary | |||
Bob Evans Farms Completes Sale-Leaseback of 143 Restaurant Properties for $197 Million
NEW ALBANY, Ohio - April 18, 2016 - Bob Evans Farms, Inc. (NASDAQ: BOBE) (“Company”) today announced that on April14, 2016, it completed the previously announced sale-leaseback transactions with a subsidiary of National Retail Properties, Inc. (“NNN”), and Mesirow Realty Sale-Leaseback, Inc., (“Mesirow”). The transactions are summarized as follows:
• | the sale for a purchase price of $160.8 million by Bob Evans Restaurants to NNN of a portfolio of 117 Bob Evans Restaurant properties, and |
• | the sale for a purchase price of $36.4 million by Bob Evans Restaurants to Mesirow of a portfolio of 26 Bob Evans Restaurant properties. |
As part of the transactions, Bob Evans Restaurants entered into absolute net master leases with NNN and with Mesirow pursuant to which Bob Evans Restaurants will lease the locations for an initial term of 20 years, with five renewal options of five years each. The Company and certain of its subsidiaries have agreed to provide payment and performance guaranties to NNN and Mesirow.
Chief Administrative and Chief Financial Officer Mark Hood said, “The sale-leaseback transactions provided the Company with net proceeds (after tax- and transaction-related costs) of approximately $164 million, which we expect to use to pay down debt under the Company’s credit agreement, repurchase Company shares, and for other corporate purposes, while maintaining prudent leverage.”
The transactions, which will be recorded in the Company’s fiscal 2016 fourth-quarter results, resulted in an estimated pre-tax gain of $57 million on certain of the properties which will be amortized over the initial term of the lease and an estimated pre-tax loss of $9 million on other of the properties that will be recorded in the fourth quarter. Additionally, rent expense (net of the gain amortization) of approximately $11 million is expected to be incurred during fiscal year 2017. Depreciation expense of approximately $9 million related to the properties sold will no longer impact financial results beginning in fiscal year 2017.
Franchise Capital Advisors along with Quantum Global LLC served as lead arrangers while J.P. Morgan Chase & Co. served as financial advisor to the Company on this transaction.
Information concerning this event was filed by the Company today with the Securities and Exchange Commission and can be obtained at www.sec.gov.
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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain statements in this news release that are not historical facts are forward-looking statements. Forward-looking statements involve various important assumptions, risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events. We discuss these factors and events, along with certain other risks, uncertainties and assumptions, under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 24, 2015, and in our other filings with the Securities and Exchange Commission. We note these factors for investors as contemplated by the Private Securities Litigation Reform Act of 1995. Predicting or identifying all such risk factors is impossible. Consequently, investors should not consider any such list to be a complete set of all potential risks and uncertainties. Any strategic transaction with respect to our restaurant real estate remains subject to closing conditions and there can be no assurance if such transaction will be consummated. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect circumstances or events that occur after the date of the statement to reflect unanticipated events. All subsequent written and oral forward-looking statements attributable to us or any person acting on behalf of the Company are qualified by the cautionary statements in this section.
About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans Restaurants brand name. At the end of the third fiscal quarter (January 22, 2016), Bob Evans Restaurants owned and operated 548 family restaurants in 18 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States. Bob Evans Farms, Inc., through its BEF Foods segment, is also a leading producer and distributor of refrigerated side dishes, pork sausage and a variety of refrigerated and frozen convenience food items under the Bob Evans and Owens brand names. For more information about Bob Evans Farms, Inc., visit www.bobevans.com.
About Mesirow Realty Sale-Leaseback, Inc.
Mesirow Realty Sale-Leaseback, Inc. is the net-lease real estate investment arm of Mesirow Financial, a highly respected, Chicago based privately-held investment bank and capital management firm founded in 1937.
Contact:
Scott C. Taggart
Vice President, Investor Relations
(614) 492-4954
BOBE-G
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