Hillman Solutions Corp. Form 8-K Summary
Business context and reporting period
Filed July 20, 2021, regarding events occurring primarily on July 14, 2021. Landcadia Holdings III, Inc. completed its business combination with HMAN Group Holdings Inc. and changed its name to Hillman Solutions Corp. The combined company ceased to be a shell company and began trading on Nasdaq under HLMN and HLMNW on July 15, 2021.
Transaction, capitalization, and financing
- Hillman Holdco stockholders received approximately $939.6 million of consideration paid entirely in New Hillman common stock valued at $10.00 per share.
- New Hillman issued 137,569,511 shares in the merger. A concurrent PIPE investment issued 37,500,000 shares at $10.00 per share, generating approximately $375.0 million of gross proceeds.
- Immediately after closing, 187,569,511 common shares and 24,666,667 warrants were outstanding.
- Former Hillman Holdco securityholders collectively owned approximately 48.73% of New Hillman immediately after closing. Directors, executive officers, and affiliated entities beneficially owned approximately 48.1%, while former Landcadia securityholders owned approximately 31.3%.
- New debt financing included an $835.0 million funded term loan and a $200.0 million delayed-draw term facility, of which $16.0 million was drawn at closing.
- The amended asset-based revolving credit facility increased aggregate commitments to $250.0 million, subject to borrowing-base limitations.
- Term loans mature on July 14, 2028; ABL commitments mature on May 31, 2026. The facilities are secured by substantially all assets of the borrowers and guarantors and contain customary covenants and events of default. The term loan has no financial maintenance covenants.
- Refinancing proceeds were used to repay prior term loans and revolving debt and redeem the outstanding 6.375% senior notes due July 15, 2022. Junior subordinated debentures were also scheduled for redemption, and trust preferred and trust common securities were scheduled to be redeemed on August 12, 2021.
Revenue, profit, cash flow, and margins
This Form 8-K does not provide current-period revenue, net income, operating cash flow, free cash flow, margins, or balance-sheet liquidity balances. It incorporates historical and pro forma financial information from the definitive proxy, including financial statements through March 27, 2021 and unaudited pro forma information as of March 31, 2021.
Material changes versus the prior comparable period
- The principal change was the transformation of Landcadia into the combined operating company, Hillman Solutions Corp., through the merger.
- The company replaced its prior debt structure with new term financing and an amended ABL facility, redeemed or refinanced legacy obligations, and raised PIPE equity capital.
- Governance, executive leadership, registration rights, equity compensation arrangements, and the company’s certificate of incorporation and bylaws were revised in connection with the closing.
Guidance, outlook, risks, and unusual items
- The filing provides no specific revenue, earnings, margin, or cash-flow guidance.
- Management’s forward-looking statements are subject to risks described in the definitive proxy, including risks associated with the business combination, leverage, execution, market conditions, and potential effects of COVID-19.
- The delayed-draw term facility may be used for permitted acquisitions and similar investments, which could increase leverage if drawn.
- Registration rights allow certain shareholders to register shares and other securities for resale, although sponsor and supporting-stockholder lock-ups apply for specified periods.
- The company has not paid cash dividends to date; future dividends depend on earnings, capital requirements, financial condition, and board discretion.
- The filing states that all principal facilities are leased and generally considered to be in good condition. One Springdale, Ohio lease expires July 31, 2021.
Most important facts for investors to verify
- Review the definitive merger agreement, PIPE subscription agreements, registration rights agreement, and lock-up provisions.
- Confirm closing debt balances, interest-rate margins, borrowing-base availability, maturity dates, collateral, and covenant compliance under the term and ABL facilities.
- Review the pro forma financial statements and subsequent financial statements to assess leverage, liquidity, purchase accounting, and post-transaction earnings.
- Assess dilution from the 24.7 million warrants, options, restricted stock units, equity incentive plan capacity, and employee stock purchase plan.
- Evaluate ownership concentration, including CCMP Capital’s approximately 38.4% and Oak Hill’s approximately 8.1% beneficial ownership.
- Monitor the planned redemption of the trust preferred securities and related securities on August 12, 2021.