Item 1.01. Entry into a Material Definitive Agreement.
Investment Agreement
On June 29, 2020 (the “First Closing Date”), Emerald Holding, Inc., a Delaware corporation (the “Company”), completed the previously announced issuance and sale of 47,058,332 shares (the “Private Placement”) of its 7% Series A Convertible Participating Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) to OPV Gem Aggregator LP, a Delaware limited partnership (in its capacity as assignee of Onex Partners V LP) (OPV Gem Aggregator LP and Onex Partners V LP, together with certain investment funds managed by an affiliate of Onex Corporation that are currently holders of the Company’s outstanding common stock, collectively “Onex”).
In connection with the Investment Agreement, assuming the Company’s registration statement (as defined below) relating to the rights offering is declared effective, the Company will distribute to holders of its common stock non-transferable subscription rights to purchase up to an aggregate of 24,388,014 shares of Series A Preferred Stock (the “rights offering”). Holders of the Company’s common stock will receive one subscription right to purchase one share of Series A Preferred stock at a price of $5.60 per share for each share of the Company’s common stock held as of 5:00 p.m. New York City time on July 6, 2020 (the “record date”). Onex has agreed that it and its affiliates will not exercise any subscription rights to purchase Series A Preferred Stock in the rights offering. Further, Onex has agreed and is obligated, as backstop provider, to purchase additional shares of Series A Preferred Stock (if any) not subscribed for in the rights offering by common stockholders. The Company expects to use the aggregate proceeds from the Private Placement, the rights offering and this backstop commitment, to repay outstanding debt under its revolving credit facility and for general corporate purposes, including organic and acquisition growth initiatives. The Company filed a registration statement on Form S-3 (Registration No. 333-239322) (the “registration statement”) relating to the rights offering with the Securities and Exchange Commission (the “SEC”) on June 19, 2020, which registration statement has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The rights offering will be made only by means of a prospectus. Copies of the prospectus, when available, will be mailed to all stockholders as of the record date and may also be obtained free of charge at the website maintained by the SEC at www.sec.gov or by contacting the information agent for the rights offering, Georgeson LLC, at (866) 856-6388.
The terms of the Series A Preferred Stock have been previously disclosed in the Company’s Current Report on Form 8-K filed on June 11, 2020, which description is incorporated by reference into this Item 1.01 of this Current Report on Form 8-K. In connection with the sale of the Series A Preferred Stock, the Company and Onex agreed to certain modifications to the Certificate of Designations (as defined below) to reflect certain technical changes. The foregoing description of the Certificate of Designations does not purport to be complete, and is subject to, and qualified in its entirety by, the full text of the Certificate of Designations. A copy of the final Certificate of Designations, as filed with the Secretary of State of Delaware on June 29, 2020, is attached as Exhibit 3.1 hereto and incorporated herein by reference.
In addition, on June 29, 2020 the Company received early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 for the sale of Series A Preferred Stock to Onex and, as a result, (i) the restrictions on voting rights on the shares of Series A Preferred Stock held by Onex described in the Company’s Current Report on Form 8-K filed on June 11, 2020 will not apply, and (ii) the shares of Series A Preferred Stock held by Onex will be convertible at the option of the holder consistent with the Certificate of Designations.
As part of the transactions contemplated by the Investment Agreement, as of June 29, 2020, the Company also entered into a registration rights agreement and the stockholder letter agreements, each as described below.
Registration Rights Agreement
The Company and Onex entered into a Registration Rights Agreement (the “Registration Rights Agreement”), whereby Onex will be entitled to certain demand and piggyback registration rights in respect of the Series A Preferred Stock and the shares of common stock issuable upon conversion thereof.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the agreement, a copy of which is attached hereto as Exhibit 4.2, and incorporated herein by reference
