Introductory Note
As previously disclosed on April 11, 2019 in the Current Report on Form8-K filed with the Securities and Exchange Commission (the “SEC”) by Papa Murphy’s Holdings, Inc., a Delaware corporation (the “Company”), the Company is party to an Agreement and Plan of Merger, dated as of April 10, 2019 (the “Merger Agreement”), by and among the Company, MTY Franchising USA, Inc. (“Parent”) and MTY Columbia Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of Parent, providing for the acquisition of the Company by Parent in anall-cash transaction, consisting of a tender offer (the “Offer”) for all of the outstanding shares of common stock, par value $0.01 per share (the “Common Stock”), of the Company by Merger Sub, followed by a subsequent merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent. Parent and Merger Sub are affiliates of MTY Food Group Inc. (“MTY”).
Item 1.02. Termination of a Material Definitive Agreement
On May 23, 2019, in connection with the closing of the transactions contemplated by the Merger Agreement, the Company prepaid its indebtedness under and terminated its Credit Agreement (the “Credit Facility”), dated as of August 28, 2014 (as amended, restated, supplemented or otherwise modified from time to time), by and among PMI Holdings, Inc., the Credit Parties (as defined therein), Wells Fargo Bank, National Association, as Administrative Agent for the lenders (as successor to Antares Capital LP (as successor to General Electric Capital Corporation)), and the lenders party thereto. In connection with the termination, the Company repaid all of the outstanding obligations in respect of principal, interest and fees under the Credit Facility. No prepayment premium or early termination penalties were incurred by the Company in connection with the termination of the Credit Facility.
The Credit Facility consisted of a $112.0 million term loan, of which approximately $77.7 million was outstanding as of May 23, 2019, and a $7.5 million revolving credit facility, of which none was drawn as of May 23, 2019. The Credit Facility was scheduled to mature in August 2020. The obligations under the Credit Facility were guaranteed by certain domestic subsidiaries of the Company (the “subsidiary guarantors”) and were secured by substantially all assets of the Company and the subsidiary guarantors. The obligations of the subsidiary guarantors and all security interests were terminated and released in connection with the termination of the Credit Facility.
Item 2.01. Completion of Acquisition or Disposition of Assets
Pursuant to the Merger Agreement, on April 25, 2019, Merger Sub commenced the Offer to acquire all of the outstanding shares of Common Stock (“Shares”) for $6.45 per Share (the “Offer Price”), net to the seller in cash, without interest and subject to any required withholding of taxes (the “Merger Consideration”), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated April 25, 2019 (as amended or supplemented), and the related Letter of Transmittal.
The Offer and withdrawal rights expired one minute following 11:59 p.m. (12:00 midnight), Eastern Time, on Wednesday, May 22, 2019 (the “Expiration Time”). American Stock Transfer & Trust Co., LLC, in its capacity as the depositary and paying agent for the Offer (the “Depositary and Paying Agent”), has advised Parent and Merger Sub that, as of the Expiration Time, a total of 15,201,906 Shares (excluding Shares with respect to which notices of guaranteed delivery were delivered but which Shares were not yet delivered) had been validly tendered and not withdrawn pursuant to the Offer, representing approximately 89.2% of the outstanding Shares. The Depositary and Paying Agent also advised Parent and Merger Sub that, as of the Expiration Time, it received Notices of Guaranteed Delivery with respect to 159,903 additional Shares, representing approximately 0.9% of the outstanding Shares.
