Business Context and Reporting Period
This Form 8-K Current Report was filed by Leidos Holdings, Inc. and Leidos, Inc. on July 17, 2015. The report details an amendment to a material definitive agreement regarding the sale of a subsidiary.
Key Financial Metrics and Transaction Details
The filing concerns the sale of Leidos Renewable Energy, LLC (indirectly owned by Leidos Engineering, LLC) to Greenleaf Power Consolidated, LLC. Key financial terms of the amended agreement include:
- Base Price (Closing Payment): Reduced to $101,000,000, subject to adjustments.
- Contingent Consideration: Earn-out payments and other consideration increased to a maximum of $30,000,000.
- Cash Payment at Closing: $28,785,000 to be paid in cash by the Buyer.
- Debt Instrument: The balance of the Closing Payment will be funded via a secured promissory note delivered by Plainfield Renewable Energy, LLC.
Material Changes Versus Prior Period
Compared to the original Membership Interest Purchase Agreement dated March 24, 2015, the following material changes were executed:
- Removal of several outstanding covenants and conditions to closing.
- Reduction in the aggregate base price.
- Increase in the potential contingent earn-out payments.
- Restructuring of the payment method to include a significant secured promissory note component.
Outlook, Risks, and Unusual Items
Closing Date: The transaction is expected to close on July 24, 2015, or as soon as practicable thereafter.
Risks and Contingencies: The final consideration is subject to certain adjustments. The filing text does not provide specific details on the nature of these adjustments or the specific covenants removed, referring instead to the full text of the Amendment filed as Exhibit 10.1.
Investor Verification Checklist
- Verify the specific adjustments applicable to the $101,000,000 Closing Payment.
- Review the terms of the secured promissory note covering the balance of the purchase price.
- Examine the specific covenants and conditions removed from the original March 2015 agreement.
- Confirm the criteria and timeline for the contingent earn-out payments up to $30,000,000.