Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On July 8, 2021, Cirrus Logic, Inc. a Delaware corporation ("Cirrus Logic"),
entered into an Agreement and Plan of Merger (the "Merger Agreement") by and
among Cirrus Logic, Inc., Lion Semiconductor Inc., a Delaware corporation
("Lion"), Leo Merger Sub, Inc., a Delaware corporation and wholly owned
Subsidiary of Cirrus Logic ("Merger Sub"), and Fortis Advisors LLC, solely in
its capacity as agent for Lion's securityholders ("Company Holders' Agent"),
pursuant to which Cirrus Logic has agreed to acquire all of the outstanding
shares of capital stock of Lion, with Lion continuing as the surviving
corporation and a wholly-owned subsidiary of Cirrus Logic (the "Merger").
Subject to the terms and conditions of the Merger Agreement, at the effective
time of the Merger, holders of Lion's outstanding stock, options, warrants, and
notes will be entitled to receive a portion of the merger consideration of $335
million in cash, which amount will be adjusted for cash, debt, net working
capital, transaction expenses, and holdback amounts.
The closing of the Merger is subject to the satisfaction of certain conditions,
including, among others: (1) the accuracy of representations and warranties of,
and performance of covenants by, the other party (in each case, subject to
certain qualifications, if applicable), (2) the absence of a continuing material
adverse effect, and (3) the absence of any order, injunction or order limiting
or restricting the Merger. The closing is also subject to the adoption of the
Merger Agreement by Lion's stockholders. Cirrus Logic expects the Merger to
close in its fiscal second quarter.
Cirrus Logic, Lion, and Merger Sub have made customary representations,
warranties, and covenants in the Merger Agreement, including, among other
things, covenants with respect to the conduct of Lion's business during the
period between the execution of the Merger Agreement and consummation of the
Merger.
The Merger Agreement contains certain termination rights for both Cirrus Logic
and Lion including, but not limited to, (1) in the event that the Merger has not
been consummated on or prior to August 19, 2021, (2) the parties' mutual written
agreement to terminate the Merger Agreement, or (3) a material breach by one
party, which breach cannot be cured within 10 business days, entitling the
non-breaching party to not consummate its closing conditions under the Merger
Agreement.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement,
a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by
reference. It is not intended to provide any financial or other factual
information about Cirrus Logic, Lion, or Merger Sub. There are representations,
warranties, and covenants contained in the Merger Agreement which were made by
the parties to each other as of specific dates. The representations, warranties,
and covenants (1) were made only for purposes of the Merger Agreement and were
solely for the benefit of the parties to the Merger Agreement and the parties
expressly identified as third-party beneficiaries thereto, as applicable, (2)
may be subject to important qualifications and limitations agreed to by the
parties in connection with negotiating its terms, including being qualified by
confidential disclosures made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of establishing matters as
facts, and (3) may be subject to a contractual standard of materiality that is
different from certain standards generally applicable to investors. Investors
should not rely on the representations, warranties, and covenants as
characterizations of the actual state of facts regarding or condition of the
parties or their respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of representations and warranties may change after
the date of the Merger Agreement or earlier dates specified therein, which
subsequent information may or may not be fully reflected in public disclosures
by Cirrus Logic. Accordingly, investors should read the Merger Agreement not in
isolation but in conjunction with other information about Cirrus Logic, Lion,
and Merger Sub that is included in reports, statements and other filings made
with the SEC by Cirrus Logic.
Second Amended and Restated Credit Agreement
On July 8, 2021, Cirrus Logic, Inc., a Delaware corporation ("Cirrus Logic"),
entered into a second amended and restated credit agreement (the "Second Amended
Credit Agreement") with Wells Fargo Bank, National Association, as
Administrative Agent, and the Lenders party thereto. Capitalized terms used and
not defined in this section of Item 1.01 have the meanings given to such terms
in the Second Amended Credit Agreement. The Second Amended Credit Agreement
provides for a $300 million senior secured revolving credit facility (the
"Revolving Credit Facility"). The Revolving Credit Facility matures on July 8,
2026 (the "Maturity Date"). Cirrus Logic must repay any outstanding principal
amount of all borrowings, together with all accrued but unpaid interest thereon,
on the Maturity Date.
The Revolving Credit Facility is required to be guaranteed by all of Cirrus
Logic's material domestic subsidiaries (the "Subsidiary Guarantors"). The
Revolving Credit Facility is secured by substantially all the assets of Cirrus
Logic and any Subsidiary Guarantors, except for certain excluded assets.
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Borrowings under the Revolving Credit Facility may, at Cirrus Logic's election,
bear interest at either (a) a Base Rate plus the Applicable Margin ("Base Rate
Loans") or (b) a LIBOR Rate plus the Applicable Margin ("LIBOR Rate Loans"). The
Applicable Margin ranges from 0% to.75% per annum for Base Rate Loans and 1.00%
to 1.75% per annum for LIBOR Rate Loans based on the ratio of consolidated
funded indebtedness to consolidated EBITDA for the most recently ended period of
four consecutive fiscal quarters (the "Consolidated Leverage Ratio"). The Second
Amended Credit Agreement further provides a method for determining an
alternative rate of interest if the LIBOR Rate is no longer available or upon
the occurrence of certain other events.
A Commitment Fee accrues at a rate per annum ranging from 0.175% to 0.275%
(based on the Consolidated Leverage Ratio) on the average daily unused portion
of the Commitment of the Lenders.
The Second Amended Credit Agreement contains customary affirmative covenants,
including, among others, covenants regarding the payment of taxes and other
obligations, maintenance of insurance, reporting requirements, and compliance
with applicable laws and regulations. Further, the Second Amended Credit
Agreement contains customary negative covenants limiting the ability of Cirrus
Logic or any Subsidiary to, among other things, incur debt, grant liens, make
investments, effect certain fundamental changes, make certain asset
dispositions, and make certain restricted payments. The Revolving Credit
Facility also contains certain financial covenants providing that (a) the ratio
. . .
Item 2.03 Creation of a Direct Financial Obligation or Obligation under an
Off Balance Sheet Arrangement of a Registrant.
On July 8, 2021, Cirrus Logic entered into the Second Amended Credit Agreement
as described under Item 1.01 above. The description of the Amended Credit
Agreement under Item 1.01 above is incorporated into this Item 2.03 by
reference.
Item 7.01 Regulation FD Disclosure
A copy of the press release issued by Cirrus Logic and the investor presentation
to be posted to the Company website regarding the proposed Merger reported in
Item 1.01 are attached hereto as Exhibits 99.1 and 99.2 and incorporated herein
by reference.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The exhibits listed in the accompanying Exhibit Index are being filed herewith.
Exhibit Description
Exhibit Agreement and Plan of Merger, entered July 8, 2021, among Lion,
10.1 Cirrus Logic, Merger Sub, and the Agent.*
Exhibit Second Amended and Restated Credit Agreement, entered July 8,
10.2 2021, among Cirrus Logic, Inc., the Lenders party thereto and Wells
Fargo Bank, National Association, as a Lender and Administrative
Agent
Exhibit Press Release issued July 8, 2021
99.1
Exhibit Investor Presentation
99.2
Exhibit Cover Page Interactive Data File (formatted as Inline XBRL)
104
* Certain schedules and exhibits have been omitted pursuant to Item
601(a)(5) of Regulation S-K, and Cirrus Logic agrees to furnish a copy of any
omitted schedules or exhibits to the Securities and Exchange Commission upon
request.
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