Chefs’ Warehouse makes changes to Prudential note purchase agreement

By Angela McDaniels

Tacoma, Wash., Jan. 15 – A group of Chefs’ Warehouse, Inc. subsidiaries amended their note purchase agreement with Prudential Insurance Co. of America ahead of the company’s planned acquisition of Del Monte Capitol Meat Co., according to an 8-K filing with the Securities and Exchange Commission

The amendment makes the following changes:

• Replaces the definition of leverage ratio with definitions of total leverage ratio and senior secured leverage ratio and establishes limits on the amount of leverage and senior secured leverage that the obligors may incur, which limits shall decrease through Sept. 30, 2016;

• Modifies the applicable rate for borrowings under the note purchase agreement to provide for an increased interest rate when the obligors’ total leverage ratio is greater than or equal to 3.25 to 1.00; and

• Permits the acquisition and the merger and the related issuance of the company’s common stock and up to $38.25 million of subordinated debt and the payment of an earn-out consideration so long as the obligors are not in default under the note purchase agreement.

The issuers are Dairyland USA Corp., Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, Chefs’ Warehouse West Coast, LLC and Chefs’ Warehouse of Florida, LLC.

The amendment was made Jan. 9. Its effectiveness is conditioned on, among other things, the closing of the acquisition and, at such time, the total leverage ratio and senior secured leverage ratio not exceeding certain thresholds.

Chefs’ Warehouse plans to use borrowings on its credit facility to help fund the $191.2 million acquisition. The purchase price will be paid as $127.5 million of cash, to be funded from cash on hand and bank borrowings; 1.2 million shares valued at $22.00 per share and $38.3 million of 2.5% convertible subordinated notes with a six-year maturity and a $29.70 conversion price.

The companies expect the acquisition to close near the end of the first quarter.

Chefs’ Warehouse is a Ridgefield, Conn. distributor of specialty food products. Del Monte Capitol Meat is a supplier of beef, pork, lamb, veal, poultry and seafood products to Northern California.

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