Form 8-K BOISE CASCADE Co For: Mar 30
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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): March 30, 2016
BOISE CASCADE COMPANY
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation) | 1-35805 (Commission File Number) | 20-1496201 (IRS Employer Identification No.) | ||
1111 West Jefferson Street, Suite 300
Boise, Idaho 83702-5389
(Address of principal executive offices) (Zip Code)
(208) 384-6161
(Registrant’s telephone number, including area code)
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)) |
Item 1.01 Entry Into a Material Definitive Agreement.
Term Loan Agreement
On March 30, 2016 (Closing Date), Boise Cascade Company (Boise Cascade or the Company) and its principal operating subsidiaries, Boise Cascade Wood Products, L.L.C., and Boise Cascade Building Materials Distribution, L.L.C., as borrowers, and the guarantors party thereto, entered into a term loan agreement (Term Loan Agreement) with American Agcredit, PCA, as administrative agent and sole lead arranger, and the lenders from time to time party thereto.
The Term Loan Agreement contemplates a $75.0 million secured term loan. The outstanding principal balance of the term loan amortizes and is payable in equal installments of $10 million per year on each of the sixth, seventh, eighth, and ninth anniversaries of the Closing Date. The remaining principal balance is due and payable on March 30, 2026. The term loan may be repaid from time to time at the discretion of the borrowers without premium or penalty. Optional principal prepayments are credited toward scheduled amortization installments as directed by the Company. However, any principal amount of term loan repaid may not be subsequently re-borrowed.
Interest rates under the Term Loan Agreement are based, at the Company’s election, on either the London Interbank Offered Rate (LIBOR) or a base rate, as defined in the Term Loan Agreement, plus a spread over the index. The applicable spread for the term loan ranges from 0.875% to 1.125% for base rate loans, and 1.875% to 2.125% for LIBOR rate loans, both dependent on the Company’s Interest Coverage Ratio (as defined in the Term Loan Agreement). The term loan was issued by three institutions within the farm credit system and will be eligible for patronage credits.
Pursuant to the Term Loan Agreement, the borrowers are also required to maintain, as of the end of any fiscal quarter of the Company, a Capitalization Ratio lower than 60%, a Consolidated Net Worth greater than $350 million, and Available Liquidity greater than $100 million (each as defined in the Term Loan Agreement). In addition, under the Term Loan Agreement, and subject to certain exceptions, the borrowers may not, among other things, (i) incur indebtedness, (ii) incur liens, (iii) make junior payments, (iv) make certain investments, and (v) under certain circumstances, make capital expenditures in excess of $50 million during four
consecutive quarters. The Term Loan Agreement also includes customary representations of the borrowers and provides for certain events of default customary for similar facilities.
On the Closing Date, the Company borrowed $75.0 million under the term loan and used the proceeds to partially finance the purchase (the Acquisition) of Georgia-Pacific LLC’s engineered lumber production facilities in Thorsby, Alabama and Roxboro, North Carolina (Acquired Facilities) as described in Item 2.01 herein.
The term loan is secured by a first priority mortgage on the Acquired Facilities and a first priority security interest on the equipment and certain tangible personal property located therein.
The foregoing summary of the Term Loan Agreement is qualified in its entirety by reference to the complete text of the Term Loan Agreement, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.
First Amendment to Asset Purchase Agreement
On March 31, 2016, the Company and Boise Cascade Wood Products, L.L.C. entered into a First Amendment (Amendment) to the Asset Purchase Agreement, dated as of December 18, 2015 (Purchase Agreement), with Georgia-Pacific LLC and certain of its affiliates (collectively GP). The Amendment designated a time and date for the closing of the Acquisition, waived certain covenants and obligations of GP related to ordinary conduct of the business pending closing of the Acquisition, and provided for agreement on the terms and conditions on which the Company acquired certain inventory in the Acquisition that was originally designated as Excluded Assets (as defined in the Purchase Agreement).
The foregoing summary of the Amendment is qualified in its entirety to the complete text of the Amendment, which is filed herewith as Exhibit 2.2 and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On March 31, 2016, the Company and Boise Cascade Wood Products, L.L.C., completed the previously announced purchase of GP’s engineered lumber production facilities located at Thorsby, Alabama and Roxboro, North Carolina. The Company purchased the Acquired Facilities for a purchase price of $215 million, including closing date estimated working capital of
$25 million, which is subject to post-closing adjustments. The Company financed the Acquisition and related expenses with $90 million of cash on hand, its new $75 million term loan described under Item 1.01 herein, and a $55 million draw under its revolving credit facility. No financial statements of the Acquired Facilities are required to be filed under Rule 3-05 of Regulation S-X and no pro formas are required to be filed under Article 11 of Regulation S-X in connection with the Acquisition because the Acquisition involved a “business” that does not meet the definition of “significant.”
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information in Item 1.01 hereto with respect to the Term Loan Agreement is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On March 31, 2016, the Company issued a press release regarding the completion of the Acquisition. The press release is furnished as Exhibit 99.1 to this report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are furnished as part of this Report on Form 8-K:
Exhibit Number | Description of Exhibit |
2.1*† | Asset Purchase Agreement, dated as of December 18, 2015, by and among Georgia-Pacific Wood Products LLC, Georgia-Pacific Wood Products South LLC, Georgia-Pacific LLC, Boise Cascade Wood Products, L.L.C., and Boise Cascade Company (incorporated by reference from Boise Cascade Company’s current Report on Form 8-K/A filed on February 19, 2016). |
2.2* | First Amendment to Asset Purchase Agreement, dated as of March 31, 2016, by and among Georgia-Pacific Wood Products LLC, Georgia-Pacific Wood Products South LLC, Georgia-Pacific LLC, Boise Cascade Wood Products, L.L.C., and Boise Cascade Company. |
99.1 | Press Release by Boise Cascade Company dated March 31, 2016. |
* | Exhibits and schedules were omitted pursuant to Item 601(b)(2) of Regulation S-K and will be furnished to the Securities and Exchange Commission upon request. |
† | Certain portions were omitted pursuant to a confidential treatment request filed separately with the Securities and Exchange Commission. Omitted information was filed separately with the Securities and Exchange Commission. |
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 hereunto duly authorized.
BOISE CASCADE COMPANY | ||
By | /s/ John T. Sahlberg | |
John T. Sahlberg Senior Vice President, Human Resources and General Counsel | ||
Date: April 1, 2016 | ||
Exhibit 2.2
First Amendment
to
Asset Purchase Agreement
This First Amendment (this “Amendment”) to that certain Asset Purchase Agreement (the “Asset Purchase Agreement”), dated as of December 18, 2015, by and among Georgia-Pacific Wood Products LLC, a Delaware limited liability company (“Wood Products”), Georgia-Pacific Wood Products South LLC, a Delaware limited liability company (“Wood Products South”), Georgia-Pacific LLC, a Delaware limited liability company (“Seller Parent” and, collectively with Wood Products and Wood Products South, “Seller”); Boise Cascade Wood Products, L.L.C., a Delaware limited liability company (“Buyer”), and, as set forth in Section 10.14 of the Asset Purchase Agreement, Boise Cascade Company, a Delaware corporation (“Buyer Parent”), is made and effective as of March 31, 2016. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them by the Asset Purchase Agreement.
RECITALS
A.The Parties desire to amend certain terms of the Asset Purchase Agreement.
B.Pursuant to Section 2.3 of the Asset Purchase Agreement, the Parties wish to designate a time and date for the Closing and the Closing Date.
C.Buyer and Buyer Parent wish to waive Seller’s compliance with the covenants and obligations set forth in Section 5.1(a) of the Asset Purchase Agreement to the extent necessary or appropriate to permit Seller to (v) enter into and perform the following agreements or amendments: (i) Letter Agreement, dated March 7, 2016, between Builders First Source, Inc. and Wood Products related to that certain Distribution Agreement, dated February 13, 2012, by and between ProBuild Holdings LLC and Wood Products, and (ii) Amendment, dated January 20, 2016, and Second Amendment, dated March 18, 2016, to that certain First Amended and Restated Distribution Agreement, dated June 1, 2015, by and between Wood Products and U.S. Lumber Group, LLC; (w) transfer to the applicable customer or distributor of the Business all VMI inventory held by such customer or distributor for 120 days or more (or other relevant period, as applicable) pursuant to the applicable sales or distribution agreements (including, without limitation, the applicable agreements specified in the immediately preceding clause (v)); (x) pay, and accelerate the payment of, certain accrued wages and salaries and benefits due to certain Business Employees prior to Closing and certain accounts payable and other Liabilities of or related to the Business prior to Closing, in each case substantially consistent with the Estimated Closing Statement, (y) suspend or cease operation of the Facilities, including shipments from the Facilities to Seller’s customers, commencing on the close of business on the day immediately preceding the Closing Date and continuing through the Effective Time (as defined below), and (z) suspend, cease or limit shipments of inventory from the Facilities
to VMI locations commencing on March 25, 2016 and continuing through the Effective Time (such activities as described in the foregoing clauses (v), (w), (x), (y) and (z), the “Permissible Activities”) and, in each case, to consent thereto.
D.The Parties wish to agree on the terms and conditions on which Buyer will acquire certain Inventory that, pursuant to the Asset Purchase Agreement, would otherwise be an Excluded Asset.
Now, therefore, in consideration of the covenants and agreements hereinafter set forth, the Parties agree as follows:
AMENDMENT
1.Inventory Count.
(a)Pursuant to Section 10.7 of the Asset Purchase Agreement, Section 2.5(b) thereof is hereby amended and restated in its entirety to read as follows:
Inventory Count. On the Closing Date, Seller shall (i) take a physical count of the Inventory at each of the Facilities, (ii) take a physical count of the Inventory managed by Seller’s customers through a vendor managed inventory system (“VMI”) at each applicable location, except as set forth on Schedule 11.1(h), and (iii) review reports regarding Inventory managed by Seller’s customers through a VMI for each of the locations designated for such a review on Schedule 11.1(h), in the case of each of clauses (i) through (iii), using methods consistent with its past practice with respect to the Business (including those set forth in Schedule 11.1(h)), in which count and review Buyer shall be permitted to observe and participate, which shall be the sole Inventory count and review used in connection with the preparation of the Closing Statement and otherwise in the calculation of the Net Working Capital, absent manifest error.
(b)Pursuant to Section 10.7 of the Asset Purchase Agreement, each Footnote 2 and 3 under the heading, “Overview of inventory count methodology” on the penultimate and ultimate pages of Schedule 11.1(h) of the Asset Purchase Agreement is hereby amended and restated in its entirety to read as follows:
2. GP and Boise will conduct testing and sampling of (i) all items of storeroom inventory with a value in excess of unit value of $5,000 and (ii) an additional 20 items of storeroom inventory at Thorsby (the “Thorsby Other Counted Items”) and 10 items of storeroom inventory at Roxboro (the “Roxboro Other Counted Items”), as have been agreed by the Parties as of the date hereof.
If the aggregate value of the Thorsby Other Counted Items or Roxboro Other Counted Items is within 3% or less of the aggregate value thereof for the applicable Facility
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as listed in the storeroom ledger for such Facility, then the applicable percentage difference, whether positive or negative, will be used to adjust proportionally the value of all other items in the storeroom ledger for such Facility that were not sampled.
If the aggregate value of the Thorsby Other Counted Items or the Roxboro Other Counted Items differs from the aggregate value thereof for the applicable Facility as listed in the storeroom ledger for such Facility by more than 3%, then, with respect to Thorsby, if applicable, the Parties will conduct testing and sampling of an additional 20 items of storeroom inventory at Thorsby and, with respect to Roxboro, if applicable, the Parties will conduct testing and sampling of additional 10 items of storeroom inventory at Roxboro, as have been agreed by the Parties as of the date hereof (such items, the “Thorsby Additional Counted Items” and the “Roxboro Additional Counted Items,” respectively). The percentage difference of the aggregate value of the Thorsby Additional Counted Items or the Roxboro Additional Counted Items, if applicable, and the aggregate value thereof for the applicable Facility as listed in the storeroom ledger for such Facility, whether positive or negative, will be used to adjust proportionally the value of all other items in the storeroom ledger for such Facility that were not sampled.
With respect to finished goods of the Business in transit (including any VMI inventory in transit), the Parties will rely on Seller’s shipping records to determine product age and volume.
3. On the Closing Date, VMI inventory (other than any VMI inventory in transit) will be counted with a physical inventory count for all locations except the Probuild Rockport, Texas location (the “Probuild Rockport Location”) and any location to which the Parties are unable to obtain access through reasonable means (any such location, a “No-Access Location”). On the Closing Date, VMI inventory at the Probuild Rockport Location and all No-Access Locations will be counted using the most recent VMI inventory report.
2.VMI Inventory Receivables.
(a) Pursuant to Section 10.7 of the Asset Purchase Agreement, the following sentence shall be added immediately prior to the ultimate sentence of the defined term “Purchased Assets”:
For the avoidance of doubt, “Purchased Assets” shall include accounts receivable of the Business in respect of finished goods and VMI inventory that has been manufactured and sold on or prior to the Closing Date, without regard to the date of manufacture of such finished goods or VMI inventory.
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(b) Pursuant to Section 10.7 of the Asset Purchase Agreement, the following sentence shall be added immediately prior to the ultimate sentence of the defined term “Net Working Capital”:
For the avoidance of doubt, the calculation of “Net Working Capital” shall include and take into account accounts receivable of the Business in respect of finished goods and VMI inventory that has been manufactured and sold on or prior to the Closing Date, without regard to the date of manufacture of such finished goods or VMI inventory.
3. Certain Inventory; Net Working Capital. Notwithstanding anything to the contrary set forth in the Asset Purchase Agreement (including, without limitation, the Schedules thereto) the provisions of Schedule 1 to this Amendment shall control and apply with respect to the inventory addressed thereon.
4. Aged Facilities Inventory. Notwithstanding anything to the contrary in the Asset Purchase Agreement:
(a) For 30 days following the Closing Date, Buyer shall at its own cost and expense hold separately in trust for the benefit of Seller finished goods located at the Facilities as of the Closing Date and manufactured 180 days or more prior to the Closing Date (the “Aged Facilities Inventory”). Such Aged Facilities Inventory shall be stored and maintained in substantially the same manner and condition as such was stored and maintained by Seller prior to the Closing Date. Buyer shall maintain the Aged Facilities Inventory free from any Lien, except those attributable to Seller, and shall not permit the use of the Aged Facilities Inventory as collateral or security for any Liability of Buyer.
(b) On or prior to the 30th day following the Closing Date, Seller will sell or otherwise arrange for transport, from time to time, of the Aged Facilities Inventory or any portion thereof to another location or locations. Buyer shall assist Seller, at Seller’s request and expense, in loading such Aged Facilities Inventory onto trucks at the Facilities for shipment to Seller’s customers or to another location or locations as may be specified in writing by Seller from time to time. Seller shall indemnify and hold harmless the Buyer Indemnified Parties from and against all Losses that the Buyer Indemnified Parties incur that arise out of such loading of the Aged Facilities Inventory, except to the extent such Losses arise out of the gross negligence or willful misconduct of a Buyer Indemnified Party.
(c) In furtherance of the foregoing, Buyer shall provide to Seller, its employees and representatives, reasonable access to enter the Facilities upon not less than twenty-four (24) hours’ prior written notice to inspect, alter or remove the Aged Facilities Inventory or any portion thereof.
(d) Seller agrees that for 7 days after the Closing it shall not remove any such Aged Facilities Inventory from the Facilities. During such time Buyer may evaluate the Aged Facilities Inventory, and Seller and Buyer shall in good faith discuss the purchase by Buyer of any Aged Facilities Inventory from Seller.
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5. Use of APA Product and Code Reports. Effective upon and subject to the Closing, Seller hereby grants to Buyer a limited, non-exclusive and royalty-free license to manufacture and sell from the Facilities engineered lumber products using any of Seller’s APA quality control certifications, APA product reports, and code reports that are in effect at the time of Closing (the “Licensed Approvals”), and the duration of such Licensed Approvals shall be coterminous with the “License Term” as set forth in the Trademark License Agreement dated March 31, 2016 between Seller and Buyer. Buyer shall indemnify and hold harmless the Seller Indemnified Parties from and against all Losses that the Seller Indemnified Parties incur that arise out of the use of the Licensed Approvals after the Closing Date or from any products using the Licensed Approvals manufactured or sold after the Closing Date.
6. Tax Representations. Pursuant to Section 10.7 of the Asset Purchase Agreement, Section 3.8 thereof is hereby amended by inserting the following new Section 3.8(e) and, in order to maintain the integrity of the Section numbering and all related cross-references in the Asset Purchase Agreement, by making corresponding changes to the numbering of existing Section 3.8(e) (and any cross references thereto):
None of the Purchased Assets being sold by Seller Parent pursuant to this Agreement is a “United States real property interest” as defined in Section 897(c) of the Code.
DESIGNATION OF CLOSING DATE AND TIME
The Parties hereby agree, pursuant to Section 2.3 of the Asset Purchase Agreement, that, subject to the prior satisfaction or waiver of the conditions set forth in Article VI of the Asset Purchase Agreement (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time) (i) the Closing Date shall be March 31, 2016, (ii) the Closing shall take place at 11:00 a.m. EDT on the Closing Date, and (iii) the Closing shall be deemed effective as of 11:59 p.m. EDT on the Closing Date (the “Effective Time”).
WAIVERS BY BUYER
Buyer and Buyer Parent hereby waive Seller’s compliance with the covenants and obligations set forth in Section 5.1(a) of the Asset Purchase Agreement to the extent necessary or appropriate to permit the Permissible Activities, and Buyer and Buyer Parent hereby consent to the Permissible Activities.
MISCELLANEOUS
1.No Additional Changes; Confirmation. Except as expressly set forth in this Amendment, the Parties make no other amendment, alteration or modification of the Asset Purchase Agreement. In the event of any conflict between the terms of the Asset Purchase Agreement and the terms of this Amendment, the terms of this Amendment shall control.
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2.Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Amendment and all of which, when taken together, will be deemed to constitute one and the same agreement. A signature delivered by facsimile or other electronic transmission will be considered an original signature.
3.Governing Law. This Amendment shall be governed by and construed in accordance with the Laws of the State of Delaware without regard to the Laws of the State of Delaware or any other jurisdiction that would call for the application of the substantive Laws of any jurisdiction other than Delaware.
4.Binding Effect. This Amendment will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
[Signatures on Following Page]
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IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their respective authorized officers as of the date first written above.
SELLER: GEORGIA-PACIFIC WOOD PRODUCTS LLC By: /s/ David G. Park Name: David G. Park Title: Vice President GEORGIA-PACIFIC WOOD PRODUCTS SOUTH LLC By: /s/ David G. Park Name: David G. Park Title: Vice President GEORGIA-PACIFIC LLC By: /s/ David G. Park Name: David G. Park Title: Senior Vice President - Strategy & Business Development | |
[Signature Page to APA Amendment]
BUYER: BOISE CASCADE WOOD PRODUCTS, L.L.C. By: /s/ Dan Hutchinson Name: Dan Hutchinson Title: Executive Vice President BUYER PARENT: BOISE CASCADE COMPANY By: /s/ Wayne Rancourt Name: Wayne Rancourt Title: EVP, CFO, & Treasurer | |
[Signature Page to APA Amendment]
Boise Cascade Company | Exhibit 99.1 | ||
1111 West Jefferson Street Ste 300 PO Box 50 Boise, ID 83728 | |||
T 208-384-6161 F 208-331-5757 | |||
News Release |  |
Media Contact | Investor Relations Contact | |
John Sahlberg | Wayne Rancourt | |
208-384-6451 | 208-384-6073 | |
For Immediate Release: March 31, 2016
Boise Cascade Company Completes Engineered Lumber Acquisition from Georgia-Pacific LLC
BOISE, Idaho – Boise Cascade Company (Boise Cascade) (NYSE: BCC) announced today that it has completed the acquisition of Georgia-Pacific LLC’s engineered lumber production facilities located at Thorsby, Alabama and Roxboro, North Carolina for $215 million including closing date estimated working capital of $25 million which is subject to final adjustment. The Company used $90 million of its cash and $130 million in new borrowing to pay for the transaction and closing-related expenses.
“We are pleased to welcome the 270 employees at Thorsby and Roxboro, along with the commercial sales team supporting those facilities, to the Boise Cascade family,” commented Tom Corrick, CEO of Boise Cascade. “The acquired engineered lumber capacity fits well into our current production facilities and will help us optimize production across our entire system and expedite delivery to our customers across the southeastern United States. With this acquisition, we will have engineered lumber facilities strategically placed throughout our North American markets and be able to provide product to our customers as the housing market continues to recover.” Boise Cascade currently has engineered lumber
(also called engineered wood products) facilities in White City, Oregon; Alexandria, Louisiana; and St. Jacques, New Brunswick, Canada.
The Thorsby facility produces laminated veneer lumber (LVL) while the Roxboro facility currently produces I-joists. Roxboro’s LVL production assets are currently idled. Boise Cascade expects to invest capital and hire additional employees to increase production at these mills in 2016 and beyond to obtain significant logistics benefits as well as to meet expected growth in new residential construction. The Company believes the addition of Thorsby and Roxboro will increase LVL billet capacity by 9 million cubic feet and I-joist capacity by 80 million lineal feet and expects the acquisition to add approximately $40 million to the company’s mid-cycle EBITDA.
About Boise Cascade
Boise Cascade is one of the largest producers of plywood and engineered wood products in North America and a leading U.S. wholesale distributor of building products. For more information, please visit our website at www.bc.com.
Forward-Looking Statements
This news release contains statements that are “forward looking” within the Private Securities Litigation Reform Act of 1995. These statements speak only as of the date of this press release. While they are based on the current expectations and beliefs of management, they are subject to a number of uncertainties and assumptions that could cause actual results to differ from the expectations expressed in this release.
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