UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Item 1.01 Entry into a Material Definitive Agreement.
Partsmaster Acquisition
The information set forth below in Item 2.01 of this Current Report on Form 8-K with respect to the Purchase Agreement is incorporated by reference into this Item 1.01.
First Amendment to Credit Agreement
On August 31, 2020, the First Amendment to Credit Agreement (the “First Amendment”) by and among Lawson Products, Inc. (the “Company”) and certain of its subsidiaries, the lenders party thereto and JPMorgan Chase Bank, N.A., individually as a lender, as an issuing bank and as administrative agent, became effective. The First Amendment amends the Credit Agreement, dated as of October 11, 2019 (the “Credit Agreement”), (i) to increase the authorized amount of letters of credit and related obligations from $15.0 million to $40.0 million until the first anniversary of the First Amendment and (ii) to authorize the Company to incur the Indebtedness (as defined in the Credit Agreement) in an amount up to $36.0 million represented by the deferred asset consideration payable pursuant to the Purchase Agreement as described below in Item 2.01 of this Current Report on Form 8-K.
The foregoing summary of the First Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the First Amendment, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On August 31, 2020, Lawson Products, Inc., an Illinois corporation and a wholly-owned subsidiary of the Company (“Buyer”), NCH Corporation, a Delaware corporation (“NCH”), NCH Canada, Inc., a corporation organized and existing under the laws of Ontario, Canada (together with NCH, “Sellers”), and the Company entered into the Asset Purchase Agreement (the “Purchase Agreement”) pursuant to which Buyer acquired the Partsmaster division of Sellers. Partsmaster is a leading maintenance, repair and operations solutions provider. The purchase price for the acquisition was $35.3 million plus the assumption of certain liabilities and is subject to a post-closing working capital adjustment. Buyer paid $2.3 million of the purchase price at closing and will pay the deferred asset consideration of $33.0 million in May, 2021. Buyer will satisfy the deferred asset consideration with cash on hand and, to the extent necessary, any remaining portion using the $100.0 million committed facility under the Credit Agreement. The Company guaranteed Buyer’s payment of the $33.0 million deferred asset consideration under the Purchase Agreement, including the issuance pursuant to the Credit Agreement of a $33.0 million irrevocable standby letter of credit. The Purchase Agreement contains customary representations and warranties of the parties. The parties have also agreed to customary post-closing covenants and indemnities.
The foregoing summary of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.
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 above in Item 1.01 and Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03. For additional information regarding the Credit Agreement, reference is hereby made to Note 8 of the notes to unaudited financial statements contained in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020.
Item 8.01 Other Events.
On September 1, 2020, the Company issued a press release announcing the acquisition of Partsmaster. A copy of such press release is filed as Exhibit 99.1 hereto and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LAWSON PRODUCTS, INC. | ||
| (Registrant) | ||
| Date: September 2, 2020 | By: | /s/ Ronald J. Knutson |
| Name: Ronald J. Knutson | ||
| Title: Executive Vice President, Chief Financial Officer, Treasurer and Controller | ||
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