Item 1.01. Entry into a Material Definitive Agreement.
On December 31, 2021, The ODP Corporation, a Delaware corporation (the
"Company"), entered into a Securities Purchase Agreement (the "Agreement") with
Lincoln Merger Sub Two LLC, a Delaware limited liability company and an indirect
wholly owned subsidiary of the Company ("Seller"), CompuCom Super Holdings LLC,
a Delaware limited liability company and a wholly owned subsidiary of Seller
("CompuCom"), and Project Heritage Acquisition, LLC, a Delaware corporation and
an affiliate of Variant Equity ("Purchaser"), pursuant to which Seller agreed to
sell to Purchaser all of the issued and outstanding equity interest in CompuCom
for consideration of up to $305 million, consisting of a cash purchase price
equal to $125 million (subject to customary adjustments, including for cash,
debt and working capital), an interest-bearing promissory note in the amount of
$55 million (the "Note"), and an earn-out provision providing for payments of up
to $125 million in certain circumstances (the "Earnout" and, such transaction,
the "CompuCom Sale").
Project Heritage Intermediate Holdings I, Inc., a Delaware corporation and
parent entity of Purchaser, is the obligor under the Note (the "Obligor"). The
Note accrues interest at six percent (6%) per annum, payable on a quarterly
basis in cash or in-kind. The Note is payable in full on June 30, 2027 and must
be prepaid in full if the Obligor (i) defaults under the Note, (ii) fails to own
at least two thirds of CompuCom or (iii) sells more than twenty percent (20%) of
CompuCom's assets.
Under the Earnout, if Variant Equity receives dividends or sale proceeds from
the CompuCom business equal to (i) three (3) times its initial capital
investment (of approximately $25 million) in the CompuCom business plus (ii)
fifteen percent (15%) per annum on subsequent capital investments, the Company
will be entitled to fifty percent (50%) of any subsequent dividends or sale
proceeds up to and until the Company has received an aggregate of $125 million.
The CompuCom Sale was consummated on December 31, 2021.
Item 7.01. Regulation FD Disclosure.
A copy of the Company's press release issued on December 31, 2021 announcing the
consummation of the CompuCom Sale is attached as Exhibit 99.1 to this Current
Report on Form 8-K.
As disclosed in the Company's press release attached hereto as Exhibit 99.1, on
December 31, 2021, the Company announced that its Board of Directors authorized
an increase to the aggregate amount of common stock the Company may repurchase
under the Company's current share repurchase program to $650.0 million, an
increase of $200.0 million. The stock repurchase program expires on June 30,
2022.
The information furnished pursuant to Item 7.01 in this Current Report on Form
8-K, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, and shall not be
deemed incorporated by reference into any filing made by the Company under the
Securities Act of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in any such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
Exhibit 99.1 Press release of The ODP Corporation, dated December 31, 2021.
Exhibit 104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document.
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