a5965539.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
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Date
of Report (Date of earliest event reported)
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May 12,
2009
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INGLES MARKETS,
INCORPORATED
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(Exact
name of registrant as specified in its
charter)
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North Carolina
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0-14706
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56-0846267
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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P.O. Box 6676, Asheville,
NC
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28816
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
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(828)
669-2941
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N/A
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(Former
name or former address, if changed since last
report.)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item 1.01. Entry into a
Material Definitive Agreement.
On May 12,
2009 (the “Closing
Date”), Ingles Markets, Incorporated (the “Company”) completed
its previously announced offering of its unsecured Senior Notes due 2017 (the
“Notes”) in a
private transaction exempt from the registration requirements of the Securities
Act of 1933, as amended (the “Securities
Act”). The offering was increased to an aggregate
principal amount of $575 million from a previously announced offering size of
$500 million. The Notes bear interest at 8 7/8% and were issued at a
price of 96.548%.
On the
Closing Date, in order to issue the Notes, the Company entered into an
Indenture, dated as of the Closing Date (the “Indenture”), between
the Company and U.S. Bank, National Association, as Trustee, and a Registration
Rights Agreement, dated as of the Closing Date (the “Registration Rights
Agreement”), among the Company and Banc of America Securities LLC,
Wachovia Capital Markets, LLC and BB&T, a division of Scott &
Stringfellow, LLC (collectively, the “Initial Purchasers”),
each of whom purchased the Notes from the Company under the related purchase
agreement by and among the parties.
Also on
the Closing Date, the Company entered into a new Credit Agreement (the “Credit Agreement”),
dated as of the Closing Date, among the Company and the lenders party thereto,
Bank of America, as administrative agent, swing line lender and l/c issuer,
Branch Banking and Trust Company, as syndication agent, Wachovia
Bank, National Association, as documentation agent, and Banc of America
Securities LLC, Branch Banking and Trust Company and Wachovia Capital Markets,
LLC, as joint lead arrangers and joint book managers. Concurrently
therewith, the Company repaid in full and terminated four other lines of
credit. The Credit Agreement provides for a unsecured revolving
credit line of $175 million.
The
Indenture, the Registration Rights Agreement and the Credit Agreement are
described below. All capitalized terms used in such descriptions that are not
otherwise defined therein have the meanings ascribed to them in the Indenture,
the Registration Rights Agreement and the Credit Agreement, as
applicable.
Indenture
Pursuant
to the Indenture, the Company issued and sold $575 million aggregate principal
amount of the Notes. The terms of the Indenture permit the issuance from time to
time of additional Notes. The material terms of the Indenture
include, among others:
Ranking. The Notes
are senior unsecured debt of the Company and will rank equally in right of
payment with the Company’s other existing and future senior debt and senior in
right of payment to all of the Company’s existing and future subordinated
debt. The Notes are effectively subordinated to the Company’s
existing and future secured debt to the extent of the value of the assets
securing such debt and are structurally subordinated to all of the existing and
future liabilities of each of the Company’s subsidiaries that do not guarantee
the Notes.
Guarantors. At
issuance, the Notes are not guaranteed. However, if any restricted
subsidiary of the Company subsequently becomes a guarantor or obligor in respect
of any other indebtedness of the Company or any other restricted subsidiary,
each such restricted subsidiary shall also guarantee the Notes on a senior
basis.
Final Maturity
Date. The Notes mature on May 15, 2017.
Interest
Rate. Interest on the Notes accrues at a rate of 8 7/8% per
annum. Interest on the Notes is payable semiannually in arrears on May 15 and
November 15 of each year, commencing on November 15, 2009.
Optional
Redemption. At any time prior to May 15, 2013, the
Company may redeem the Notes at its option, in whole at any time or in part from
time to time, upon not less than 30 nor more than 60 days’ notice at a
redemption price equal to 100% of the principal amount of the Notes redeemed
plus the Applicable Premium, plus accrued and unpaid interest, if any, to the
applicable redemption date (subject to the right of holders of record on the
relevant regular record date to receive interest due on an interest payment date
that is on or prior to the redemption date).
On or
after May 15, 2013, the Company may redeem all or a portion of the Notes, on not
less than 30 nor more than 60 days’ prior notice, in amounts of $1,000 or an
integral multiple thereof at the following redemption prices (expressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning on the years indicated below:
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Year
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Redemption
Price
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2013
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104.438%
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2014
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102.219%
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2015
and thereafter
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100.000%
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In
addition, at any time prior to May 15, 2012, the Company, at its option, may use
the net proceeds of one or more Equity Offerings to redeem up to an aggregate of
35% of the aggregate principal amount of Notes issued under the Indenture at a
redemption price equal to 108.875% of the aggregate principal amount of the
Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date
(subject to the rights of holders of record on relevant record dates to receive
interest due on an interest payment date that is on or prior to the redemption
date). At least 65% of the aggregate principal amount of Notes issued under the
Indenture must remain outstanding immediately after the occurrence of such
redemption. In order to effect this redemption, the Company must mail a notice
of redemption no later than 30 days after the closing of the related Equity
Offering and must complete such redemption within 60 days of the closing of the
Equity Offering.
Repurchase upon Change of
Control. Upon the occurrence of a Change of Control (as
defined in the Indenture), each holder of the Notes may require the Company to
repurchase all or a portion of the Notes in cash at a price equal to 101% of the
aggregate principal amount of the Notes to be repurchased, plus accrued and
unpaid interest, if any, thereon to the date of repurchase.
Other Covenants. The
Indenture contains affirmative and negative covenants that, among other things,
limit or restrict the Company’s ability (as well as those of the Company’s
restricted subsidiaries) to: incur additional debt; prepay subordinated
indebtedness; pay dividends or make other distributions on, redeem or
repurchase, capital stock; make investments and restricted payments; enter into
transactions with affiliates; sell assets; create liens on assets to secure
debt; or effect a consolidation or merger or sell all, or substantially all, of
the Company’s assets, in each case, subject to certain qualifications and
exceptions.
Events of Default. The
Indenture provides for customary events of default (subject in certain cases to
customary grace and cure periods), which include nonpayment, breach of covenants
in the Indenture, payment defaults or acceleration of other indebtedness,
failure to pay certain judgments and certain events of bankruptcy and
insolvency. Generally, if an event of default occurs, the Trustee or holders of
at least 25% in principal amount of the then outstanding Notes may declare the
principal of and accrued but unpaid interest, including additional interest, on
all the Notes to be due and payable.
The
foregoing description of the Indenture and the Notes is not complete and is
qualified in its entirety by reference to the Indenture and the Notes, copies of
which are attached hereto as Exhibits 4.1 and 4.2, respectively, and are
incorporated herein by reference.
Registration Rights
Agreement
Pursuant
to the Registration Rights Agreement, the Company has agreed with the Initial
Purchasers, for the benefit of the holders of the Notes, to file a registration
statement with respect to a registered offer to exchange the Notes for an issue
of registered notes of the Company (the “Exchange Notes”) with
terms identical to the Notes (except that the Exchange Notes will not be subject
to restrictions on transfer or any annual interest rate increases as described
below).
Promptly
after the Securities and Exchange Commission (the “SEC”) declares the exchange
offer registration statement effective, the Company will offer the Exchange
Notes in return for surrender of the Notes. The exchange offer will remain open
for at least 30 days after the date notice of the exchange offer is sent to
holders. For each Note surrendered to the Company under the exchange offer, the
holder will receive an Exchange Note of equal principal amount. Interest on each
Exchange Note will accrue from the last interest payment date on which interest
was paid on the Notes or, if no interest has been paid on the Notes, from the
issue date of the Notes (the “Issue Date”).
If
applicable interpretations of the staff of the SEC do not permit the Company to
effect the exchange offer, or under certain other circumstances, the Company
will use its reasonable best efforts to cause to become effective a shelf
registration statement relating to resales of the Notes and to keep that shelf
registration statement effective until the earlier of (i) two years after the
Issue Date and (ii) such time as all the Notes have been sold under the shelf
registration statement. The Company will, in the event that a shelf registration
is filed, provide to each holder copies of a prospectus, notify each holder when
the shelf registration statement has become effective and take certain other
actions as are required to permit resales of the Notes. A holder that sells its
Notes pursuant to the shelf registration statement generally will be required to
be named as a selling securityholder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with those sales
and will be bound by the provisions of the Registration Rights Agreement that
are applicable to a selling holder (including certain indemnification
obligations).
If the (i)
the Company does not file the exchange offer registration statement with the SEC
on or before September 9, 2009, (ii) the exchange offer registration statement
has not been declared effective by the SEC on or before December 8, 2009, (iii)
the exchange offer is not consummated Company on or before January 17, 2010 or
(iv), if applicable, a shelf registration statement covering resales of the
Notes has not been declared effective or such shelf registration statement
ceases to be effective at any time during the shelf registration period (subject
to certain exceptions), then additional interest shall accrue on the principal
amount of the Notes at a rate of 0.25% per annum with respect to each subsequent
90-day period, up to a maximum additional rate of 1.0% per annum thereafter,
until any such registration default has been cured. Any amounts of additional
interest due will be payable in cash on the same interest payment dates as
interest on the Notes is otherwise payable.
The
foregoing description of the Registration Rights Agreement is not complete and
is qualified in its entirety by reference to the Registration Rights Agreement,
a copy of which is attached hereto as Exhibit 4.3 and incorporated herein
by reference.
Credit
Agreement
The Credit
Agreement consists of a senior unsecured three-year revolving credit facility in
an aggregate principal amount of $175 million.
The
material terms of the Credit Agreement include, among others:
Maturity. The
Credit Agreement is scheduled to mature, and the commitments thereunder will
terminate, on May 12, 2012.
Interest Rate and
Fees. Each Eurodollar Rate Loan shall bear interest on the
outstanding principal amount thereof for each interest period at a rate per
annum equal to the Eurodollar Rate for such interest period plus the Applicable
Rate, as described below; (ii) each Base Rate Committed Loan shall bear interest
on the outstanding principal amount thereof from the applicable borrowing date
at a rate per annum equal to the Base Rate plus the Applicable
Rate, as described below; and (iii) each Swing Line Loan shall bear interest on
the outstanding principal amount thereof from the applicable borrowing date at a
rate per annum equal to the Base Rate plus the Applicable
Rate, as described below. The Company will pay fees on letters
of credit issued under the Credit Agreement at a rate equal to the Applicable
Rate, as described below, times the daily amount available to be drawn under
such letters of credits. The Applicable Rate will be the percentage per annum,
based upon the Company’s Consolidated Leverage Ratio from time to time,
described in the following chart that corresponds to one of two pricing
levels.
Applicable
Rate
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Pricing
Level
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Consolidated
Leverage
Ratio
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Eurodollar
Rate
Loans
Letters
of Credit
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Base
Rate
Loans
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1
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Less
than 4.00 to 1.00
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2.75%
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1.75%
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2
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Greater
than or equal to 4.00 to 1.00
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3.00%
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2.00%
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The
Company will pay certain fees with respect to the Credit Agreement, including
(i) a quarterly commitment fee equal to 0.25% times the actual daily amount by
which the aggregate commitments exceed the sum of (x) the outstanding amount of
committed loans and (y) the outstanding amount of letter of credit
obligations, (ii) fees specified in fee letters between
any issuing lender and the Company and (iii) customary annual administration
fees.
Mandatory
Prepayments. If at any time the Company’s outstanding
borrowings under the Credit Agreement (including outstanding letters of credit
and swing line loans) exceed the aggregate revolving commitments as in effect at
such time, the Company will be required to prepay an amount equal to such
excess.
When the
aggregate amount of Excess Proceeds resulting from permitted Asset Sales exceed
$20 million, the Company will be required apply 100% of such excess proceeds to
prepay outstanding amounts under the Credit Agreement. Such mandatory
prepayments will permanently reduce the available commitments under the Credit
Agreement.
Voluntary Reductions and
Prepayments. Subject to certain conditions and restrictions,
the Credit Agreement allows the Company to voluntarily reduce the amount of the
revolving commitments and to prepay the loans.
Covenants. The Credit
Agreement contains affirmative and negative covenants that, among other things,
limit or restrict the Company’s ability (as well as those of the Company’s
restricted subsidiaries) to: create liens and encumbrances; incur debt; merge,
dissolve, liquidate or consolidate; make acquisitions and investments; dispose
of or transfer assets; pay dividends or make other distributions on, redeem or
repurchase, capital stock; amend material documents; change the nature of the
Company’s business; make certain payments of debt; and engage in certain
transactions with affiliates, in each case, subject to certain qualifications
and exceptions.
In
addition, the Company is required to maintain (x) a Consolidated Fixed Charge
Coverage ratio of not less than 1.20 to 1.00 as of the end of any fiscal quarter
or any other date of determination as required under the Credit Agreement, (y) a
Consolidated Leverage Ratio of not greater than 5.00 to 1.00 as of the end of
any fiscal quarter or any other date of determination as required under the
Credit Agreement and (z) Consolidated Net Worth at any time of not less than the
sum of (i) $336,579.094 (ii) an amount equal to 50% of Consolidated Net Income
earned in each full fiscal quarter ending after March 31, 2009 (with no
deduction for a net loss in any such fiscal quarter) and (iii) an
amount equal to 50% of the aggregate increases in shareholders’ equity of the
Company and its subsidiaries after May 12, 2009 by reason of the issuance and
sale of equity interests of the Company or any subsidiary (other than issuances
to the Company or a wholly-owned subsidiary), including upon any conversion of
debt securities of the Company into such equity interests.
Events of
Default. The Credit Agreement contains customary events of
default such as non-payment of obligations under the Credit Agreement, violation
of affirmative and negative covenants, material inaccuracy of representations,
cross defaults under other material debt, bankruptcy, ERISA and judgment
defaults, invalidity of the credit documents (or the Company’s assertion of any
such invalidity), change of control and the invalidity of the subordination
provisions of subordinated debt documents.
The
foregoing description of the Credit Agreement is not complete and is qualified
in its entirety by reference to the Credit Agreement, a copy of which is
attached hereto as Exhibit 10.1, and 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 provided in Item 1.01 of this Form 8-K is hereby incorporated
into this Item 2.03.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
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4.1
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Indenture,
dated as of May 12, 2009, between the Company and U.S. Bank, National
Association, as Trustee
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4.2
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Form
of 8 7/8% Senior Note due 2017 (included in Exhibit
4.1)
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4.3
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Registration
Rights Agreement, dated May 12, 2009, among the Company and Banc of
America Securities LLC, Wachovia Capital Markets, LLC and BB&T, a
division of Scott & Stringfellow, LLC
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10.1
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Credit
Agreement, dated as of May 12, 2009, among the Company and the lenders
party thereto, , Bank of America, as administrative agent, swing line
lender and l/c issuer, Branch Banking and Trust Company, as syndication
agent, Wachovia Bank, National Association, as documentation
agent, and Banc of America Securities LLC, Branch Banking and Trust
Company and Wachovia Capital Markets, LLC, as joint lead arrangers and
joint book
managers
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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INGLES MARKETS,
INCORPORATED
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(Registrant)
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Date: May
15,
2009
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By:
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/s/ Ronald B. Freeman
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Ronald
B. Freeman
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Chief
Financial
Officer
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EXHIBIT
INDEX
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4.1
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Indenture,
dated as of May 12, 2009, between the Company and U.S. Bank, National
Association, as Trustee
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4.2
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Form
of 8 7/8% Senior Note due 2017 (included in Exhibit
4.1)
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4.3
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Registration
Rights Agreement, dated May 12, 2009, among the Company and Banc of
America Securities LLC, Wachovia Capital Markets, LLC and BB&T, a
division of Scott & Stringfellow, LLC
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10.1
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Credit
Agreement, dated as of May 12, 2009, among the Company and the lenders
party thereto, Bank of America, as administrative agent, swing
line lender and l/c issuer, Branch Banking and Trust Company, as
syndication agent, Wachovia Bank, National Association, as
documentation agent, and Banc of America Securities LLC, Branch Banking
and Trust Company and Wachovia Capital Markets, LLC, as joint lead
arrangers and joint book
managers
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8