| Item 1.01 | Entry into a Material Definitive Agreement. |
Securities Purchase Agreement
On August 8, 2022, MarineMax, Inc. (“MarineMax” or the “Company”) and its wholly-owned subsidiary, MarineMax East, Inc., a Delaware corporation (the “Buyer”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Island Marina Holdings LLC, a Delaware limited liability company, and Island Marinas Subsidiary Corp., a Delaware corporation (together, the “Sellers”), pursuant to which the Buyer agreed to purchase all of the outstanding membership interest units of Island Global Yachting LLC, a Delaware limited liability company, in exchange for $480 million in cash, subject to customary purchase price adjustments set forth in the Purchase Agreement, with an additional potential payment of up to $100 million in cash two years after closing, subject to the achievement of certain performance metrics set forth in the Purchase Agreement (the “Transaction”). Certain portions of the purchase price are being held in escrow. The Purchase Agreement contains representations, warranties, covenants, and conditions customary for transactions of this type.
The closing of the Transaction is subject to customary closing conditions, including the expiration or termination of applicable anti-trust waiting periods. MarineMax expects the Transaction to close in the first half of fiscal 2023, subject to the satisfaction of customary closing conditions. The Transaction will be financed through MarineMax’s recently completed expansion of its credit facilities (described below) and cash on hand.
This description of the Purchase Agreement is qualified in its entirety by reference to the complete terms and conditions of the Purchase Agreement which is expected to be filed as exhibits to MarineMax’s Annual Report on Form 10-K for its fiscal year ended September 30, 2022.
On August 9, 2022, MarineMax issued a press release announcing the Transaction. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
New Credit Facility
On August 8, 2022, the Company and its subsidiaries refinanced its existing Amended and Restated Loan and Security Agreement with Wells Fargo Commercial Distribution Finance, LLC , as agent, and the lenders party thereto, dated July 9, 2021, evidencing a $500 million floor plan facility (the “Existing Credit Facility”). The Company refinanced the Existing Credit Facility with a new facility (the “New Credit Facility”) pursuant to a Credit Agreement with Manufacturers and Traders Trust Company as Administrative Agent, Swingline Lender, and Issuing Bank, Wells Fargo Commercial Distribution Finance, LLC, as Floor Plan Agent, and the lenders party thereto (the “New Credit Agreement”). The New Credit Agreement, among other things, increases the size of the floor plan facility to $750 million and establishes a revolving credit facility in the maximum amount of $100 million (including a $20 million swingline facility and a $20 million letter of credit sublimit), a delayed draw term loan facility to finance the Transaction (as defined above) in the maximum amount of $400 million, and a $100 million delayed draw mortgage loan facility. The maturity of each of the facilities is August 2027. The interest rate is (a) for amounts outstanding under the floor plan facility, 3.45% above the one month secured term rate as administered by the CME Group Benchmark Administration Limited (CBA) (“SOFR”), (b) for amounts outstanding under the revolving credit facility or the term loan facility, a range of 1.50% to 2.0%, depending on the total net leverage ratio, above the one month, three month, or six month term SOFR rate, and (c) for amounts outstanding under the mortgage loan facility, 2.20% above the one month, three month, or six month term SOFR rate. The alternate base rate with a margin is available for amounts outstanding under the revolving credit, term, and mortgage loan facilities and the Euro Interbank Offered Rate plus a margin is available for borrowings in Euro or other currencies other than dollars under the revolving credit facility.
The New Credit Facility is secured by the Company’s personal property assets, including inventory and related accounts receivable. The mortgage loans will also be secured by the real estate pledged as collateral for such loans. Substantially all of the lenders under the New Credit Facility (or their affiliates) have various other relationships with the Company and its subsidiaries involving the provision of financial services, including cash management, loans, letters of credit and bank guarantee facilities, investment banking and trust services, and some may serve as a source of retail financing for the Company’s customers. In addition, some of the lenders under the New Credit Facility (or their affiliates) were also lenders under the Existing Credit Facility.
