Item 1.01 Entry into a Material Definitive Agreement.
On February 3, 2023, LOL Foods, Inc. ("LOL Foods"), a wholly owned subsidiary of
AMCON Distributing Company (the "Company"), and HF Real Estate, LLC, a wholly
owned subsidiary of the Company ("HF" and, together with LOL Foods, the
"Borrowers"), entered into a Loan and Security Agreement (the "Loan Agreement")
with BMO Harris Bank N.A. ("BMO"), as administrative agent, and the lenders
party thereto. The Borrowers entered into the Loan Agreement in connection with
the closing of the acquisition described in Item 2.01 below and used the
proceeds thereunder to partially fund the acquisition.
The Loan Agreement provides for a $40 million senior secured asset-based
revolving credit facility (the "ABL Revolver"), secured by substantially all of
the Borrowers' assets, including accounts receivable, intangibles, inventory,
deposit accounts and real property, excluding certain equipment. Outstanding
amounts under the Loan Agreement bear interest at rates per annum equal to, at
the Borrowers' election, SOFR or an alternate base rate, plus a core interest
rate mark-up based on excess availability. The Loan Agreement will mature on
February 3, 2026, at which time all amounts borrowed under the ABL Revolver will
be payable in full unless otherwise refinanced.
The Borrowers may prepay amounts borrowed under the Loan Agreement at any time
without penalty. The Loan Agreement also includes an unused commitment fee
provision and is subject to customary covenants and a minimum fixed charge
ratio.
Contemporaneously with entering into the Loan Agreement with BMO, LOL Foods also
entered into an equipment loan financing arrangement with Bank of America
Leasing and Capital, LLC ("BALC") pursuant to which BALC made a $7 million term
loan to LOL Foods secured by various equipment (the "BALC Equipment Financing").
The BALC Equipment Financing has a fixed interest rate and is payable over a
60-month term. The proceeds of the BALC Equipment Financing were used to
partially fund the acquisition described in Item 2.01 below.
In addition, on February 2, 2023, the Company and certain of its subsidiaries
entered into an amendment (the "Amendment") to their existing revolving credit
facility (the "Existing Facility") with Bank of America, N.A. and BMO. The
Amendment amended the Existing Facility to, among other things, provide lender
consent to the acquisition described under Item 2.01 below, including the use of
proceeds thereunder to partially fund the acquisition.
The foregoing descriptions of the ABL Facility and the Amendment do not purport
to be complete and are subject to, and qualified in their entirety by, reference
to the full text of the ABL Facility and the Amendment, copies of which will be
filed with the Securities and Exchange Commission as exhibits to the Company's
Quarterly Report on Form 10-Q for the quarter ending March 31, 2023.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On February 3, 2023, LOL Foods closed the transactions contemplated by the
previously disclosed asset purchase agreement, dated December 7, 2022 (the
"Asset Purchase Agreement"), by and among LOL Foods, Henry's Foods, Inc., The
Eidsvold Family LLC, and the other parties thereto. Under the Asset Purchase
Agreement, LOL Foods (or its affiliate, HF, with respect to certain real
property) purchased substantially all of Henry's Foods, Inc. wholesale
distribution assets for approximately $55.0 million, inclusive of working
capital adjustments as set forth in the Asset Purchase Agreement. The Company
or its subsidiaries funded the transaction with borrowings of $23.0 million
under the ABL Facility, $7.0 million under the BALC Equipment Financing, and
$25.0 million drawn and applied under the Company's Existing Facility.
The foregoing description of the Asset Purchase Agreement does not purport to be
complete and is subject to, and qualified in its entirety by, reference to the
full text of the Asset Purchase Agreement, a copy of which was filed with the
Securities and Exchange Commission as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 2022.
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Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Items 1.01 and 2.01 above is incorporated herein
by reference as if fully set forth herein.
Item 7.01 Regulation FD Disclosure.
On February 6, 2023, the Company issued a press release announcing the closing
of the transaction described under Item 2.01 above, a copy of which is furnished
as Exhibit 99.1 hereto and incorporated herein by reference.
The information in this Item 7.01 (including Exhibit 99.1) shall not be deemed
to be "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities of that Section. The
information set forth in this Item 7.01 (including Exhibit 99.1) shall not be
incorporated by reference into any registration statement or other document
pursuant to the Securities Act of 1933, as amended, except as shall be expressly
set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
EXHIBIT NO. DESCRIPTION
99.1 Press release, dated February 6, 2023, issued by AMCON Distributing
Company.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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