| Item 1.01. | Entry into a Material Definitive Agreement |
Membership Interest Purchase Agreement and Asset Purchase Agreement
On July 21, 2024, Clearwater Paper Corporation (the “Company”) and Sofidel America Corp. (“Sofidel”), a wholly owned subsidiary of Sofidel S.p.A. (“Buyer Parent”), entered into (i) a Membership Interest Purchase Agreement (the “MIPA”) and (ii) an Asset Purchase Agreement (the “APA” and, together with the MIPA, the “Purchase Agreements”), pursuant to which, among other things, Sofidel will acquire the Company’s consumer products division through the acquisition of certain wholly owned subsidiaries and certain assets of the Company.
Pursuant to the MIPA, Sofidel will purchase from the Company all of the outstanding membership interests of Clearwater Paper Tissue, LLC, a Delaware limited liability company, which indirectly owns and/or leases the Company’s Las Vegas, Nevada manufacturing facility, its Elwood, Illinois manufacturing facility, and its Shelby, North Carolina manufacturing facility (the “MIPA Transferred Business”). Pursuant to the APA, Sofidel will receive, acquire and take assignment of, all of the Company’s right, title and interest in and to the Transferred Assets (as defined in the APA), including the Company’s consumer product division facilities located on the real property in Lewiston, Idaho, and assume, and agree to pay, perform, fulfill and discharge when due all of the Assumed Liabilities (as defined in the APA) (the “APA Transferred Business” and, together with the MIPA Transferred Business, the “Transferred Business” and such acquisitions and related transactions contemplated by the Purchase Agreements, the “Transaction”).
The purchase price for the Transaction will be $1.06 billion (the “Purchase Price”), subject to adjustments for debt, cash and transaction expenses. Buyer Parent has deposited $450 million of the Purchase Price into a third-party escrow account as of the signing date. To support the obligations of Sofidel under the Purchase Agreements, Buyer Parent (i) obtained debt commitments totaling up to 600 million euros with various financial institutions subject to customary closing conditions, including the consummation of the Transaction, approximately representing the remaining portion of the Purchase Price, and (ii) delivered a guaranty of the performance and payment obligations of Sofidel for the Transaction.
The Company and Sofidel each made representations and warranties and agreed to be bound by covenants and agreements in the Purchase Agreements customary for a transaction of this nature. The Purchase Agreements contain pre-closing covenants, including, among other things, covenants by the Company to conduct the Transferred Business in the ordinary course of business consistent with past practice during the interim period between the date of the execution of the Purchase Agreements and the closing of the Transaction, subject to certain prohibited actions.
Under the MIPA, except in the case of fraud (a) the representations and warranties of the parties terminate as of, and do not survive, the Closing and following the Closing no claims may be made against any person as a result of a breach of a representation or warranty, and (b) no person shall have any liability, with respect to any of the representations and warranties other than insurers and reinsurers under any representation and warranty insurance policy that may be procured by Sofidel at its sole expense. In addition, none of the covenants and agreements that are required to be performed at or prior to the Closing will survive the Closing. All covenants and agreements that contemplate performance after the Closing or otherwise expressly by their terms survive the Closing will survive in accordance with their terms. The MIPA provides for a mutual release of claims by the Company and by Buyer for claims arising prior to the Closing with respect to the Transferred Business, except for claims to enforce the terms of the Transaction Documents or fraud.
Pursuant to the APA, the Company agrees to indemnify Sofidel for all Excluded Liabilities (as defined in the APA) and, separately, the Retained Pre-Closing Environmental Liabilities (as defined in the APA). The Company’s indemnity obligations with respect to Retained Pre-Closing Environmental Liabilities are subject to the limitations described in the APA.
Pursuant to the MIPA, the Company will be bound post-Closing by (i) a two-year non-solicitation covenant applicable to any employees of the Transferred Business, subject to customary exceptions, and (ii) a three-year non-competition covenant related to the Transferred Business, subject to certain exceptions.
Under the MIPA, each of the Company and Sofidel agreed to cooperate with each other and take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable federal, state or foreign antitrust or fair trade laws (“Antitrust Laws”) to consummate and make effective as promptly as practicable the Transaction, including to make all necessary filings for government clearances as soon as practicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), responding to any requests in connection with any Antitrust Laws, and litigating potential actions under Antitrust Laws. All filing fees with respect to such Antitrust Laws will be borne by Sofidel.
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