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CODI > SEC Filings for CODI > Form 8-K on 27-Aug-2014All Recent SEC Filings

Show all filings for COMPASS DIVERSIFIED HOLDINGS

Form 8-K for COMPASS DIVERSIFIED HOLDINGS


27-Aug-2014

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 26, 2014, CEHI Acquisition Corporation, a subsidiary of the Company (the "Buyer"), Clean Earth Holdings, Inc. ("Clean Earth"), the holders of stock and options in Clean Earth (the "Sellers") and Littlejohn Fund III, L.P., in its capacity as Seller's representative ("Sellers' Representative"), entered into the First Amendment (the "Amendment") to that certain Stock Purchase Agreement dated as of August 7, 2014 among the Buyer, Clean Earth, the Sellers and Sellers' Representative, previously disclosed in the Current Report on Form 8-K filed by Holdings on August 8, 2014 and filed by the Company on August 11, 2014 (as amended, the "Clean Earth Purchase Agreement"). Among other things, the Amendment provides that, immediately prior to Closing (as defined below), certain investors in Clean Earth (the "Rollover Stockholders") will, instead of selling all of the shares of Clean Earth owned by them to Buyer, contribute a portion of such shares (the "Rollover Shares") to Buyer in exchange for shares of common stock of Buyer.

On August 26, 2014, the Buyer completed the acquisition of all the issued and outstanding capital stock of Clean Earth ("Closing") pursuant to the Clean Earth Purchase Agreement (the "Transaction"). The purchase price of $252.9 million for the Transaction is based on a total enterprise value for Clean Earth of $243 million, and includes $9.9 million of estimated cash and working capital adjustments. Acquisition-related costs were approximately $1.9 million. The Company funded the Transaction, in part, with available cash on hand and in part, through a $95 million draw under its revolving credit facility. Certain of the Sellers (including the Rollover Stockholders) invested in the Transaction alongside the Company, collectively representing an approximate 2% non-controlling interest in Buyer on a primary basis. The Company's initial ownership position in Buyer is approximately 98% on a primary and 86% on a fully diluted basis.

Concurrent with the Closing, the Company provided a credit facility to Clean Earth and certain of its subsidiaries, as co-borrowers (collectively, the "Co-Borrowers"), pursuant to which a secured revolving loan commitment and secured term loan were made available to the Co-Borrowers (the "Clean Earth Credit Agreement"). The initial amount outstanding under these facilities at the close of the Transaction was $146.3 million. The loans to the Co-Borrowers are guaranteed by Buyer and certain other subsidiaries of Clean Earth (collectively, the "Guarantors") and are secured by security interests in substantially all the assets and properties of Buyer, the Co-Borrowers and the Guarantors, including a pledge by Buyer of the equity interests in Clean Earth and by each Co-Borrower of the equity interests in its directly-owned subsidiaries. In addition to being similar to the terms and conditions of the credit facilities in place with our existing subsidiary businesses, the Company believes that the agreed terms of the loans are fair and reasonable given the leverage and risk profile of Clean Earth and its subsidiaries.

The foregoing brief description of the Clean Earth Purchase Agreement is not meant to be exhaustive and is qualified in its entirety by, the full text of (i) the Amendment, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference and (ii) the Clean Earth Purchase Agreement, which is incorporated herein by reference to Exhibit 99.1 to Holdings' Current Report on Form 8-K filed on August 8, 2014 and the Company's Current Report on Form 8-K filed on August 11, 2014.



Item 9.01 Financial Statements and Exhibits

a) Financial statements of the businesses acquired

To the extent required by this item, historical financial statements for the Transaction referenced in Item 8.01 above will be filed in an amendment to this Current Report on Form 8-K no later than 71 calendar days after the date of this report is due.

b) Pro forma financial information


To the extent required by this item, pro forma financial information relating to the Transaction referenced in Item 8.01 above will be filed in an amendment to this Current Report on Form 8-K no later than 71 calendar days after the date of this report is due.

d) Exhibits

The following exhibit is furnished herewith:

Exhibit                       Description

99.1                          First Amendment to Stock Purchase Agreement dated
                              August 26, 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, L.P.


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