INTRODUCTORY NOTE
On October 4, 2022, Dorman Products, Inc., a Pennsylvania corporation (“Dorman”), completed its previously announced acquisition of Super ATV, LLC, an Indiana limited liability company (“SuperATV”), pursuant to the terms of the Purchase Agreement (as defined below).
| Item 1.01 | Entry into a Material Definitive Agreement. |
On October 4, 2022 (the “Closing Date”), Dorman entered into an Amendment No. 1 to Credit Agreement (the “Amendment”) which amended Dorman’s Credit Agreement, dated as of August 10, 2021 (as amended by the Amendment, the “Amended Credit Agreement”) by and among Dorman, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent. The Amendment provides for a $500 million term loan facility. The term loan facility matures on the five-year anniversary of the Closing Date and is guaranteed by Dorman’s material domestic subsidiaries (together with Dorman, the “Credit Parties”) and is supported by a security interest in substantially all of the Credit Parties’ personal property and assets, subject to certain exceptions.
Proceeds of the loans borrowed under the Amended Credit Agreement on the Closing Date were used to fund the transactions contemplated by the Purchase Agreement, including the consummation of the Transaction (as defined below) and the repayment of SuperATV’s existing credit facility, and to pay related transaction fees and expenses. Proceeds of any loans or letters of credit borrowed after the Closing Date under the Amended Credit Agreement will be used for general corporate purposes.
Borrowings under the Amended Credit Agreement bear interest at a rate per annum equal to, at Dorman’s option, either a Term SOFR rate (subject to a 0.00% floor) or a base rate, in each case plus an applicable margin of, initially (i) in the case of Term SOFR rate loans, 1.50% or (ii) in the case of base rate loans, 0.50%. The applicable margin for (i) base rate loans ranges from 0.000% to 1.000% per annum and (ii) for Term SOFR loans ranges from 1.000% to 2.000% per annum, in each case, based on the Total Net Leverage Ratio (as defined in the Credit Agreement). The commitment fee is initially equal to 0.20% and thereafter ranges from 0.125% to 0.250% based on the Total Net Leverage Ratio (as defined in the Credit Agreement).
The foregoing description of the Amended Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Amended Credit Agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
On October 4, 2022, Dorman entered into an amendment (the “Purchase Agreement Amendment”) to the Unit Purchase Agreement, dated as of August 17, 2022 (as amended, the “Purchase Agreement”), by and among Dorman, SuperATV, the Sellers listed on the signature pages thereto (the “Sellers”), and Lindsay Hunt, in her capacity as the Sellers’ Representative, pursuant to which, among other things, the Purchase Agreement was amended to provide for the deletion of the reciprocal cap on post-closing purchase price adjustments.
The foregoing description of the Purchase Agreement Amendment 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 Purchase Agreement Amendment, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference, and the full text of the Purchase Agreement, a copy of which was attached as Exhibit 2.1 to Dorman’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2022 and is incorporated herein by reference.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On October 4, 2022, Dorman completed its previously announced acquisition of SuperATV pursuant to the terms of the Purchase Agreement. Pursuant to, and subject to the terms and conditions of, the Purchase Agreement, Dorman acquired 100% of the issued and outstanding equity interests of SuperATV (the “Transaction”), for aggregate consideration of $490 million, subject to certain customary adjustments based on, among other things, the amount of cash, debt and working capital in the business of SuperATV as of the closing of the Transaction, plus a potential earn-out payment to Sellers not to exceed $100 million in the aggregate, which remains subject to the achievement by SuperATV of certain revenue and gross margin targets in fiscal years 2023 and 2024.
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