Business Context and Reporting Period
This Form 8-K Current Report, filed on February 22, 2022, covers events occurring on February 18, 2022, for RumbleOn, Inc. (formerly Ridenow Group, Inc.). The filing primarily details the completion of a strategic acquisition and associated financing amendments.
Key Financial Metrics and Transaction Details
The Company completed the acquisition of Freedom Powersports, LLC and Freedom Powersports Real Estate LLC (collectively, the "Freedom Companies") for an aggregate consideration of approximately $130.0 million. The consideration breakdown is as follows:
- Business Assets (FPS): Approximately $83.4 million.
- Real Estate Assets: Approximately $46.6 million (including the payoff of ~$27.0 million in outstanding mortgage debt).
Financing and Payment Structure:
- Cash on Hand: Utilized to fund a portion of the transaction.
- Debt Financing: $84.5 million drawn from a delayed draw term loan facility under Amendment No. 3 to the Term Loan Credit Agreement.
- Equity Issuance: 1,048,718 restricted shares of Class B Common Stock issued at a volume-weighted average price of $29.45 per share (subject to a six-month lock-up).
The filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period, as this is a transactional report rather than a periodic financial statement.
Material Changes and Agreements
Acquisition Completion: The transaction closed on February 18, 2022, subject to customary net working capital and indebtedness adjustments. A First Amendment to the Membership Interest Purchase Agreement was executed on the closing date, setting a three-year restricted period for certain covenants and clarifying mechanics for option holder participation.
Credit Agreement Amendments: The Company entered into Amendment No. 3 to its Term Loan Credit Agreement to facilitate the $84.5 million delayed draw term loan. Previous amendments (No. 1 and No. 2) regarding customer loan limits and warehouse facility structures were incorporated into the updated agreement.
Outlook, Risks, and Unusual Items
Management Commentary and Events: The Company announced the acquisition closing via press release on February 22, 2022. Additionally, the Company scheduled its fourth quarter and full-year 2021 earnings release and conference call for March 16, 2022.
Unregistered Securities: The issuance of 1,048,718 Class B Common Stock shares was conducted under Section 4(a)(2) of the Securities Act of 1933 as a transaction not involving a public offering.
Risks and Contingencies: The filing notes that the restricted shares are subject to a six-month lock-up. The full text of the acquisition agreement and credit amendments, which contain detailed covenants and conditions, are incorporated by reference as exhibits.
Investor Verification Checklist
- Verify the exact net working capital and indebtedness adjustments applied to the final $130.0 million purchase price.
- Review the full text of Amendment No. 3 to the Term Loan Credit Agreement (Exhibit 10.1) for specific debt covenants and repayment terms.
- Confirm the integration timeline and expected synergies from the Freedom Powersports acquisition in the upcoming Q4 2021 earnings call (March 16, 2022).
- Monitor the impact of the $84.5 million new debt draw on the Company's liquidity and leverage ratios in the next quarterly report.