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CODI > SEC Filings for CODI > Form 8-K on 8-Aug-2014All Recent SEC Filings




Other Events, Financial Statements and Exhibits

Item 8.01 Other Events

Compass Group Diversified Holdings LLC (the "Company") and Compass Diversified Holdings ("Holdings" and, together with the Company, collectively "CODI," "us" or "we") acquires and manages small to middle market businesses in the ordinary course of its business. The following description relates to the recent acquisition of one such business.

CEHI Acquisition Corporation

On August 7, 2014, CEHI Acquisition Corporation (the "Buyer"), a subsidiary of the Company, entered into a stock purchase agreement (the "Clean Earth Purchase Agreement") with Clean Earth Holdings, Inc. ("Clean Earth"), the holders of stock and options in Clean Earth (the "Holders") and Littlejohn Fund III, L.P. (in its capacity as "Seller's Representative," and collectively with Clean Earth and the Holders, the "Sellers"), pursuant to which Buyer will acquire all of the issued and outstanding capital stock of Clean Earth (the "Acquisition"). The purchase price for Clean Earth will be based on a total enterprise value of $243 million and will also include cash and working capital adjustments upon closing. Clean Earth generated approximately $32 million of EBITDA for the last twelve months ending June 30, 2014. In addition, Clean Earth incurs between approximately $4 million and $5 million in annual maintenance capital expenditures. The Company intends to fund the Acquisition with cash on hand and through drawings under its revolving credit facility.

Headquartered in Hatboro, Pennsylvania, Clean Earth provides environmental services for a variety of contaminated materials including soils, dredged material, hazardous waste and drill cuttings. The company analyzes, treats, documents and recycles waste streams generated in multiple end-markets such as power, construction, oil and gas, infrastructure, industrial and dredging. Treatment includes thermal desorption, dredged material stabilization, bioremediation, physical treatment/screening and chemical fixation. Before the company accepts contaminated materials, it identifies a third party "beneficial reuse" site such as commercial redevelopment or landfill capping where the materials are sent after they are treated. In 2013, Clean Earth managed and treated 3.4 million tons of material, of which 98% was beneficially reused. The company holds the largest market share in the contaminated materials and dredged material management market and operates 12 permitted facilities in the Eastern U.S. For the year ended December 31, 2013, Clean Earth reported revenue of approximately $155.9 million.

The Clean Earth Purchase Agreement contains customary representations, warranties, covenants and indemnification provisions. Buyer expects to obtain "representation and warranty" insurance, which will provide coverage for breaches of certain representation and warranties contained in the Clean Earth Purchase Agreement, subject to deductibles and certain other terms and conditions. Each party's obligation to consummate the Clean Earth Purchase Agreement is subject to certain conditions, including, but not limited to (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party and (ii) performance in all material respects by the other party of its covenants.

The Acquisition is subject to customary closing conditions and is expected to close at the end of August, 2014 or such other time as the parties may mutually agree. However, there can be no assurances that of the conditions to closing will be satisfied.

The foregoing brief description of the Clean Earth Purchase Agreement is not meant to be exhaustive and is qualified in its entirety by the Clean Earth Purchase Agreement itself, which is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits
(d) Exhibits.

99.1     Stock Purchase Agreement dated as of August 7, 2014, by and among CEHI
         Acquisition Corporation, Clean Earth Holdings, Inc., the holders of
         stock and options in Clean Earth Holdings, Inc. and Littlejohn Fund III,

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