Item 1.01 Entry into a Material Definitive Agreement.
As previously reported, on December 3, 2020, Francesca's Holdings Corporation
(the "Company") and each of its subsidiaries (together with the Company, the
"Debtors") commenced voluntary cases (the "Chapter 11 Cases") for relief under
chapter 11 of title 11 of the United States Code, §§ 101-1532, et seq. (the
"Bankruptcy Code") in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"). The Chapter 11 Cases are being jointly
administered under the caption In re: Francesca's Holdings Corporation, et al.,
Case No. 20-13076 (BLS). The Debtors also filed a motion seeking authorization
to pursue a bidding and sale process under section 363 of the Bankruptcy Code,
which was approved by the Bankruptcy Court in an order entered on January 4,
2021.
Also as previously reported, on January 7, 2021, the Debtors entered into a
"stalking horse" Asset Purchase Agreement (the "Prior Asset Purchase Agreement")
with Francesca's Acquisition, LLC, a Delaware limited liability company
("Francesca's Acquisition"), Tiger Capital Group, LLC, a Delaware limited
liability company ("Tiger" and, together with Francesca's Acquisition, "Buyer"),
and TerraMar Capital, LLC ("TerraMar"), a Delaware limited liability company,
pursuant to which Francesca's Acquisition agreed to purchase, upon the terms and
subject to the conditions set forth in the Prior Asset Purchase Agreement, the
Acquired Assets (as defined in the Prior Asset Purchase Agreement) for a cash
purchase price of $17,360,000, subject to certain adjustments, and assume
certain contracts, leases and other Assumed Liabilities (as defined in the Prior
Asset Purchase Agreement).
On January 15, January 17 and January 19, 2021, the Debtors conducted an auction
(the "Auction"), through a Bankruptcy Court-supervised process pursuant to
Bankruptcy Court-approved bidding procedures, to determine the highest and best
offer to purchase the Acquired Assets (as defined in the Amended and Restated
Asset Purchase Agreement) and assume certain contracts, leases and other Assumed
Liabilities (as defined in the Amended and Restated Asset Purchase Agreement).
Buyer and two other parties participated in the Auction. At the conclusion of
the Auction, the Debtors determined that the bid submitted by Buyer at the
Auction was the highest and otherwise best offer to purchase the Acquired Assets
(as defined in the Amended and Restated Asset Purchase Agreement) and assume
certain contracts, leases and other Assumed Liabilities (as defined in the
Amended and Restated Asset Purchase Agreement). On January 19, 2021, the Debtors
entered into an Amended and Restated Asset Purchase Agreement (the "Amended and
Restated Asset Purchase Agreement") with Buyer and TerraMar, pursuant to which
Francesca's Acquisition agreed to (a) purchase, upon the terms and subject to
the conditions set forth in the Amended and Restated Asset Purchase Agreement,
the Acquired Assets (as defined in the Amended and Restated Asset Purchase
Agreement) in exchange for (i) a cash purchase price of $18,000,000, subject to
certain adjustments,(ii) the issuance by Buyer of a promissory note to the
Debtors in the principal amount of $1,250,000 payable on or prior to December
31, 2021 and (iii) the reimbursement of certain financing-related fees, and (b)
the assumption of certain contracts, leases and other Assumed Liabilities (as
defined in the Amended and Restated Asset Purchase Agreement).The Amended and
Restated Asset Purchase Agreement supersedes and replaces the Prior Asset
Purchase Agreement.
On January 21, 2021, the Bankruptcy Court approved the Transactions pursuant to
Section 363 of the Bankruptcy Code. All documents filed with the Bankruptcy
Court on the docket of and other information related to the Chapter 11 Cases are
available for review and free of charge online at
https://cases.stretto.com/francescas.
Each party's obligation to consummate the transactions contemplated by the
Amended and Restated Asset Purchase Agreement (the "Transactions") is subject to
customary closing conditions. In addition, the Company (on behalf of itself and
the other Debtors) will enter into an Agency Agreement with Tiger and SB360
Capital Partners, LLC (together, the "Agent"), pursuant to which the Agent will
act as the Company's agent for the purpose of conducting store closing sales at
certain of the Company's locations. If the Transactions are consummated, the
stores to be closed will be determined by Buyer subject to the outcome of
negotiations with landlords in the Chapter 11 Cases, among other factors, and
subject to the terms of the Amended and Restated Asset Purchase Agreement,
except that, pursuant to the Amended and Restated Asset Purchase Agreement,
Buyer agreed to assume the respective leases for no fewer than 275 stores
currently operated by the Debtors, which assumption could be pursuant to an
amended lease.
The Amended and Restated Asset Purchase Agreement contains certain customary
representations and warranties made by each party, which are qualified by the
confidential disclosures provided to Buyer in connection with the Amended and
Restated Asset Purchase Agreement. The Company and Buyer have agreed to various
customary covenants, including, among others, covenants regarding the conduct of
the Company's business prior to the consummation of the Transactions (the
"Closing"). A portion of the purchase price will be placed in escrow at Closing
to serve as a source of funds for, among other things, a working capital
purchase price adjustment and the satisfaction of certain cure costs associated
with contracts and leases assigned to Buyer. In connection with the execution of
the Prior Asset Purchase Agreement, Buyer deposited $850,000 (the "Performance
Deposit") with a third party escrow agent, which amount will be credited against
the purchase price payable by Buyer, and released from the escrow to the
Debtors, at the Closing. If the Amended and Restated Asset Purchase Agreement is
terminated, the Performance Deposit will be returned to Buyer except in certain
circumstances relating to certain breaches by Buyer of the Amended and Restated
Asset Purchase Agreement or the failure of Buyer to consummate the Transactions
when otherwise required.
The Amended and Restated Asset Purchase Agreement provides Buyer with certain
bid protections that have been approved by the Bankruptcy Court. In particular,
if the Amended and Restated Asset Purchase Agreement is terminated for certain
reasons, including if the Company enters into a definitive agreement with
respect to, or consummates, an Alternative Transaction (as defined in the
Amended and Restated Asset Purchase Agreement), or if the Bankruptcy Court
enters an order approving an Alternative Transaction, the Company may be
required to reimburse Buyer for its reasonable expenses up to $350,000 and pay
Buyer a termination fee of $693,000.
The foregoing description of the Amended and Restated Asset Purchase Agreement
is qualified in its entirety by reference to the Amended and Restated Asset
Purchase Agreement, which is filed as Exhibit 2.1 hereto and incorporated by
reference herein. The Amended and Restated Asset Purchase Agreement has been
. . .
Item 7.01 Regulation FD Disclosure.
On January 19, 2021, the Company issued a press release announcing the Amended
and Restated Asset Purchase Agreement disclosed under Item 1.01 of this Current
Report on Form 8-K. A copy of the press release is furnished as Exhibit 99.1 to
this report. This information shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, and is not
incorporated by reference into any filing of the Company, whether made before or
after the date hereof, regardless of any general incorporation language in such
filing.
Item 8.01 Other Events.
As previously reported, on December 4, 2020, the Listing Qualifications
Department staff of the Nasdaq Stock Market LLC ("Nasdaq") notified the Company
that trading in the Company's common stock, par value $0.01 per share (the
"Common Stock"), would be suspended from Nasdaq at the opening of business on
December 15, 2020, and a Form 25-NSE would be filed with the Securities and
Exchange Commission (the "SEC"), which will become effective 10 days after such
filing and will remove the Common Stock from listing and registration on Nasdaq.
Subsequent to such notification, the Company submitted a request for a hearing
to appeal the delisting action and, as a result of such request, the delisting
action was stayed, pending a final written decision by the Nasdaq Hearings
Panel. In connection with the auction process, the Company withdrew its hearing
request and, as a result of such withdrawal, Nasdaq notified the Company that it
will file a Form 25-NSE with the SEC when all internal appeals periods have run.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
2.1 Amended and Restated Asset Purchase Agreement, dated January 19,
2021, by and among Francesca's Holdings Corporation, a Delaware
corporation, Francesca's Services Corporation, a Texas corporation,
Francesca's Collections, Inc., a Texas corporation, Francesca's LLC,
a Delaware limited liability company, Francesca's Acquisition, LLC,
a Delaware limited liability company, Tiger Capital Group, LLC, a
Delaware limited liability company, and TerraMar Capital, LLC a
Delaware limited liability company
99.1 Press Release issued by Francesca's Holdings Corporation on
January 19, 2021
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