Item 1.01. Entry into a Material Definitive Agreement.
On August 13, 2018, PGT Innovations, Inc. (the “Company”), through its direct wholly owned subsidiary, Coyote Acquisition Co., completed its previously announced acquisition of GEF WW Parent LLC, a Delaware limited liability company and a parent company of WWS Acquisition, LLC d/b/a Western Window Systems (“GEF WW”), and WWS Blocker LLC, a Delaware limited liability company (“Blocker,” and, together with GEF WW, “Western Window Systems”). Pursuant to the terms of a definitive purchase agreement dated as of July 24, 2018 (the “Purchase Agreement”) by and among the Company, Coyote Acquisition Co., a Delaware corporation and a wholly owned subsidiary of the Company, GEF WW, Blocker and various entities that currently collectively own all of the equity interests of GEF WW (collectively, the “Sellers”), the Company acquired from the Sellers all of the outstanding equity interests of GEF WW and Blocker for approximately $360 million in cash (the “Western Window Systems Acquisition”).
In connection with the Western Window Systems Acquisition, on August 10, 2018, PGT Escrow Issuer, Inc. (the “Escrow Issuer”), a Delaware corporation and wholly owned subsidiary of the Company, entered into an indenture (the “Indenture”) between the Escrow Issuer and U.S. Bank National Association, as trustee (the “Trustee”), relating to the issuance by the Escrow Issuer of $315.0 million aggregate principal amount of 6.75% senior notes due 2026 (the “notes”). The Escrow Issuer merged with and into the Company and the Company became the primary obligor under the notes (the “Assumption”). In addition, upon the consummation of the Western Window Systems Acquisition, the subsidiaries of Western Window Systems acquired pursuant to the Western Window Systems Acquisition executed a supplemental indenture, dated as of August 13, 2018 (the “First Supplemental Indenture”), pursuant to which they became guarantors of the notes, in addition to the Company’s existing wholly-owned subsidiaries.
The notes were sold on August 10, 2018 in a private transaction exempt from the registration requirements of the Securities Act of 1933 (the “Securities Act”). The notes have not been and will not be registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.
The notes bear interest at a rate of 6.75% per annum. Interest on the notes is payable semi-annually in arrears on February 1 and August 1 of each year, commencing on February 1, 2019. The notes mature on August 1, 2026.
The notes are jointly and severally and fully and unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future restricted subsidiaries, other than any restricted subsidiary of the Company that does not guarantee the existing senior secured credit facilities or any permitted refinancing thereof.
The terms of the notes are governed by the Indenture. The Indenture contains covenants limiting the ability of the Company and any guarantors to, among other things, (i) incur additional indebtedness; (ii) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; (iii) enter into agreements that restrict distributions from restricted subsidiaries; (iv) sell or otherwise dispose of assets; (v) enter into transactions with affiliates; (vi) create or incur liens; merge, consolidate or sell all or substantially all of the Company’s assets; (vii) place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Company; and (viii) designate the Company’s subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications. Upon the occurrence of a “change of control,” as defined in the Indenture, the Company is required to offer to repurchase the notes at 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase.
The Company may redeem some or all of the notes at the redemption prices and on the terms specified in the Indenture.
The Indenture contains customary events of default, including, among other things, (i) failure to make required payments; (ii) failure to comply with certain agreements or covenants; (iii) failure to pay certain other indebtedness; (iv) certain events of bankruptcy and insolvency; and (v) failure to pay certain judgments. An event of default under the applicable Indenture will allow either the Trustee or the holders of at least 25% in aggregate principal amount of the then-outstanding series of notes, as applicable, issued under such Indenture to accelerate, or in certain cases, will automatically cause the acceleration of, the amounts due under the applicable series of notes.
