Item 1.01 Entry into a Material Definitive Agreement
As previously announced on June 30, 2022 by Heritage-Crystal Clean, Inc. (the “Company”), on June 29, 2022, Heritage-Crystal Clean, LLC, an Indiana limited liability company and a wholly owned subsidiary of the Company (“Buyer”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Channel PES Acquisition Co., LLC, a Delaware limited liability company (“Seller”), for the acquisition of all of the issued and outstanding shares of the capital stock (the “Shares”) of Patriot Environmental Services, Inc., a California corporation (“Patriot”). The Stock Purchase Agreement provides that, upon the terms and subject to the conditions thereof, Buyer will acquire all of the Shares, on a cash-free, debt-free basis, for an aggregate cash consideration of approximately $156 million, subject to certain adjustments set forth in the Stock Purchase Agreement. The transaction is not subject to any financing condition or contingency, and the Company expects to fund the purchase price with cash on hand and using its existing credit facility (and, in connection therewith, exercising the accordion feature of such credit facility to increase the borrowing availability of such credit facility).
Each party’s obligation to consummate the transactions contemplated by the Stock Purchase Agreement is subject to certain customary conditions, including (i) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (ii) the absence of any order issued by any governmental authority restraining, enjoining or otherwise making illegal the transactions contemplated by the Stock Purchase Agreement and (iii) the absence of any law which makes the consummation of such transactions illegal. Buyer’s obligation to consummate the transactions contemplated by the Stock Purchase Agreement is also conditioned on, among other things, the absence of a Material Adverse Effect (as defined in the Stock Purchase Agreement) having occurred since June 29, 2022.
The Stock Purchase Agreement contains customary representations, warranties and covenants of the parties. Among other things, from the date of the Stock Purchase Agreement until the earlier of the consummation of the transactions or the termination of the Stock Purchase Agreement in accordance with its terms, Seller is required to cause Patriot and its subsidiaries to conduct their businesses in the ordinary course of business consistent with past practice and to comply with certain other covenants regarding the operation of their businesses. Buyer and Seller have also agreed to use their respective reasonable best efforts to obtain all consents, approvals and authorizations from governmental authorities for the transaction on the terms and subject to the conditions set forth in the Stock Purchase Agreement.
The Stock Purchase Agreement also contains certain customary termination rights, including the right of either Buyer or Seller to terminate the Stock Purchase Agreement (i) if the transactions contemplated by the Stock Purchase Agreement have not been consummated by October 1, 2022, (which date shall automatically be extended to the date that is sixty days after such date if all conditions other than those pertaining to approvals required under applicable antitrust laws have been satisfied or waived), (ii) if a governmental authority of competent jurisdiction has issued an order permanently enjoining or otherwise prohibiting the transactions contemplated by the Stock Purchase Agreement, or (iii) in the event of certain uncured material breaches of the Stock Purchase Agreement by the other party.
The foregoing description of the Stock Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the full text of the Stock Purchase Agreement, which is attached hereto as Exhibit 2.1 and incorporated herein by reference.
The Stock Purchase Agreement has been attached as an exhibit to this Current Report in order to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, Buyer, Seller, Patriot, or their respective subsidiaries and affiliates. The representations, warranties and covenants contained in the Stock Purchase Agreement were made only for purposes of that agreement and as of specific dates as set forth therein; are solely for the benefit of the parties to the Stock Purchase Agreement; may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Stock Purchase Agreement; may have been made for the purposes of allocating contractual risk between the parties to the Stock Purchase Agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. Investors should not rely on the representations, warranties or covenants or any description thereof as characterizations of the actual state of facts or condition of the Company, Buyer, Seller, Patriot, or their respective subsidiaries and affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Stock Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures by the Company.
Forward Looking Statements
Certain statements in this Current Report are forward-looking statements, which includes all statements other than those made solely with respect to historical fact. These forward-looking statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from our expectations. These statements can be identified by the
