| Item 1.01 | Entry into a Material Definitive Agreement. |
On February 1, 2024, Sonida Senior Living, Inc. (the “Company”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Conversant Parkway (A) LP (“Conversant A”), Conversant Parkway (B) LP (“Conversant B” and, together with Conversant A, “Conversant”), Silk Partners, LP (“Silk”), PF Investors, LLC (“PF Investors” and, together with Silk, the “Silk Investors”), Solas Capital Partners, LP (“Solas I”), Solas Capital Partners II, LP (“Solas II”), Blackwell Partners LLC - Series A (“Blackwell” and, together with Solas I and Solas II, “Solas”), and Paul J. Isaac (Mr. Isaac, collectively, with Conversant, the Silk Investors and Solas, the “Purchasers”), pursuant to which the Purchasers agreed to purchase from the Company, and the Company agreed to sell to the Purchasers, in a private placement transaction (the “Private Placement”) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), an aggregate of 5,026,318 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at a price of $9.50 per share.
The Private Placement will occur in two closings. At the first closing, which was completed on February 1, 2024, the Company issued and sold an aggregate of 3,350,878 Shares to the Purchasers and received gross cash proceeds of $31,833,341. At the second closing, which is anticipated to occur on or around March 31, 2024, the Company will issue the remaining 1,675,440 Shares to the Purchasers and receive additional gross cash proceeds of $15,916,680. The second closing is subject to the Company’s stockholders approving an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of Common Stock by an additional 15,000,000 shares (the “Stockholder Approval”) and other customary closing conditions. The Securities Purchase Agreement provides that the Company will use its reasonable best efforts to obtain the Stockholder Approval at a meeting of the Company’s stockholders no later than April 30, 2024 and each Purchaser has agreed to vote all voting securities of the Company owned or controlled by such Purchaser in favor of the Stockholder Approval.
In addition to its aggregate deposits of $1.5 million made in December 2023 and January 2024, the Company funded the remaining cash portion of the purchase price (including one-time closing costs) for the Protective Life Loan Purchase (as defined below) with approximately $15.4 million of net proceeds from the sale of the Shares at the first closing of the Private Placement. The Company obtained additional debt proceeds through its existing finance facility with Ally Bank for the remaining portion of the purchase price for the Protective Life Loan Purchase. The Company will use the remaining proceeds from the sale of the Shares at the first closing and the proceeds from the sale of the Shares at the second closing, if any, for capital expenditure projects at the Company’s senior living communities, working capital, potential acquisition opportunities and other general corporate purposes.
The Securities Purchase Agreement also provides that, as soon as reasonably practicable following the second closing of the Private Placement and no later than September 30, 2024, the Company will use its commercially reasonable efforts to prepare and file with the Securities Exchange Commission (the “SEC”) a registration statement of the Company registering the resale, on a continuous or delayed basis pursuant to Rule 415 promulgated by the SEC pursuant to the Securities Act, of all of the Shares. The Securities Purchase Agreement contains customary representations, warranties, covenants and conditions for a transaction of this nature.
The Company previously entered into an Investor Rights Agreement, dated November 3, 2021, with Conversant and Silk, the Company’s two largest stockholders, which pertains to, among other things, the appointment of a certain number of directors nominated by Conversant A to the Board based upon the ownership percentage in the Company of Conversant and its affiliates and permitted transferees, and two directors nominated by Silk for so long as Silk and its affiliates beneficially own at least five percent of the outstanding shares of Common Stock on an as-converted basis. The Company filed the Investor Rights Agreement with the Securities and Exchange Commission as Exhibit 10.1 to a Current Report on Form 8-K on November 4, 2021.
The foregoing description of the Securities Purchase Agreement and the Private Placement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Securities Purchase Agreement, which is filed as Exhibit 10.1 to this Form 8-K and incorporated herein by reference.
