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DXYN > SEC Filings for DXYN > Form 8-K on 20-Mar-2014All Recent SEC Filings

Show all filings for DIXIE GROUP INC

Form 8-K for DIXIE GROUP INC


20-Mar-2014

Entry into a Material Definitive Agreement, Creation of a Direct Financial Obliga


ITEM 1.01 Entry into a Material Definitive Agreement

Stock Purchase Agreement.

On March 14, 2014, TDG Operations, LLC (the "Buyer"), a wholly owned subsidiary of The Dixie Group, Inc. (the "Company") entered into a Stock Purchase Agreement with James Horwich, Trustee under the Horwich Trust of 1973, dated July 13, 1973 (the "Seller"), and James Horwich, pursuant to which the Buyer agreed to acquire and the Seller agreed to sell all of the outstanding capital stock of Atlas Carpet Mills, Inc. ("Atlas") for a purchase price of approximately $17.5 million, consisting of a cash payment, assumption of outstanding purchase orders and the payoff of existing debt. The acquisition was completed on March 19, 2014.

The foregoing description of the Stock Purchase Agreement is not a complete description of all of the parties' rights and obligations under the Stock Purchase Agreement, the above description is qualified in its entirety by reference to the Stock Purchase Agreement, which is filed as Exhibit 1.01 hereto and incorporated herein to this Item 1.01 by reference.

Eighth Amendment to Credit Agreement.

On March 14, 2014, the Company and certain of its subsidiaries entered into the Eighth Amendment to Credit Agreement (the "Eighth Amendment"), effective as of March 19, 2014, with respect to the Credit Agreement dated as of September 13, 2011, as previously amended, with Wells Fargo Capital Finance, LLC.

The Eighth Amendment specifically permits the acquisition of Atlas by means of an overadvance (structured in the amendment as a "Tranche B Advance") of $5,437,943 maturing on June 30, 2014, at which time the overadvance must be repaid. In connection with the Atlas acquisition, the Company also borrowed $11,105,127, repayable on the normal terms of its revolving line of credit under the Credit Agreement which require daily payments of available cash. The Tranche B Advance is limited to a borrowing base of 5% of eligible accounts and inventory (as defined in the Eighth Amendment) and bears interest at a rate of 3.50% plus LIBOR, subject also to various availability percentages, limitations, covenants and conditions. The due date for payment of amounts due could be accelerated upon an event of default due to nonpayment of principal or interest when due or upon violation of a financial covenant.

The Credit Agreement, as modified by the Eighth Amendment (the "Amended Agreement"), includes the assets of Atlas in the Company's borrowing base from and after the acquisition, and increases the revolver portion of the facility by $20 million to a maximum of $150 million (contingent on availability). The excess availability "trigger level" (as defined in the Amended Agreement), which determines whether the Company must meet the Fixed Charge Coverage Ratio (as defined in the Amended Agreement) covenant of the Amended Agreement, is increased from $14.4 million to $16.5 million, from and after June 1, 2014, and the term of the facility is extended to March 2019 (from March 2018).

The Eighth Amendment also provides for waiver of the measurement and application of the Fixed Charge Coverage Ratio that would otherwise be required by a reduction in Excess Availability (as defined in the Amended Agreement) from March 14, 2014 through and including April 13, 2014. As of March 19, 2014, the Company would not have met the covenant without the waiver.

The foregoing description of the Eighth Amendment is not a complete description of all of the parties' rights and obligations under the Eighth Amendment, the above description is qualified in its entirety by reference to the Eighth Amendment, which is filed as Exhibit 10.2 hereto and incorporated herein to this Item 1.01 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 in Item 1.01 of this Current Report is incorporated into this Item 2.03 by reference.



Item 9.01 Financial Statements and Exhibits
(d) Exhibits. The following exhibits are filed with this report:

10.1  Stock Purchase Agreement dated March 14, 2014.
10.2         Eighth Amendment to Credit Agreement dated March 19, 2014, by and
             among The Dixie Group, Inc., certain of its subsidiaries and Wells
             Fargo Capital Finance, LLC, as Agent, and the persons identified as
             Lenders therein.


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