Attached files
file | filename |
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EX-4.1 - EX-4.1 - BAKERS FOOTWEAR GROUP INC | c65333exv4w1.htm |
EX-4.2 - EX-4.2 - BAKERS FOOTWEAR GROUP INC | c65333exv4w2.htm |
EX-10.1 - EX-10.1 - BAKERS FOOTWEAR GROUP INC | c65333exv10w1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): June 30, 2011
reported): June 30, 2011
Bakers Footwear Group, Inc.
(Exact Name of Registrant as Specified in Charter)
Missouri | 000-50563 | 43-0577980 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
2815 Scott Avenue St. Louis, Missouri |
63103 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code:
(314) 621-0699
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
Amendment to Subordinated Convertible Debentures and Subordinated Convertible Debenture Purchase
Agreement.
On June 30, 2011, Bakers Footwear Group, Inc. (the Company) entered into an amendment to its
$4 million in aggregate principal amount of 9.5% Subordinated Convertible Debentures (the
Debentures) issued by the Company to investors on June 26, 2007, and an amendment to the related
Subordinated Convertible Debenture Purchase Agreement dated June 13, 2007, by and among the Company
and the investors named therein (collectively, the Debenture Amendments). The Debenture
Amendments defer payment of principal under the Debentures. Originally, all $4 million in
principal amount was payable on June 30, 2012. Under the Debenture Amendments, principal will be
repaid in four equal annual installments of $1 million beginning on June 30, 2012. The interest
rate on the Debentures was also increased from 9.5% to 12% per annum. The Debentures continue to be
nonamortizing, with interest payable semi-annually on each June 30 and December 31. The Debenture
Amendments are attached hereto as Exhibit 4.1 and incorporated herein by reference.
Also as previously reported, the Companys Second Amended and Restated Loan and Security
Agreement, as amended (the Senior Secured Loan Agreement), required that the Company refinance
the Debentures on or before May 1, 2012, to extend the maturity to a date beyond July 27, 2013 (the
Refinancing Covenant). The Senior Secured Loan Agreement matures
on May 28, 2013. In
connection with the Debenture Amendments, the Companys senior lender, Bank of America, N.A. (the
Bank), consented to the Debenture Amendments, subject to the terms of an amendment to that
certain Senior Secured Loan Agreement (Bank Amendment), which was entered into between the Bank
and the Company on June 30, 2011. The Banks consent was also subject to the terms of an amended
and restated subordination agreement in favor of the Bank entered into on June 30, 2011 among the
Company, the Debenture Investors, and the Bank (the Bank Subordination Agreement).
The Bank Amendment and the Bank Subordination Agreement remove the Refinancing Covenant and
allow the Company to make the $1 million required principal payment on June 30, 2012, provided that
certain conditions are met, including that the Company maintains at least a 1.0 to 1.0 ratio of
adjusted EBITDA to its interest expense for the 12 month period ending May 26, 2012, all as
calculated pursuant to the Senior Secured Loan Agreement. As previously disclosed, the Companys
Senior Secured Loan Agreement already requires that the Company maintain unused availability greater than
20% of the calculated borrowing base or maintain the ratio of its adjusted EBITDA to its interest
expense (both as defined in the amendment) of no less than 1.0:1.0. The minimum availability
covenant is tested daily and, if not met, then the adjusted EBITDA covenant is tested on a rolling
twelve month basis. The Bank Amendment and Bank Subordination Agreement are filed herewith as
Exhibits 10.1 and 4.2 and are incorporated herein by reference. For more information on the
Companys Senior Secured Loan Agreement or the risks of the Companys liquidity situation and its
ability to comply with its financial covenants, please see the Companys most recent Form 10-Q
filed on June 14, 2011.
As previously disclosed in a Current Report of Form 8-K filed on June 19, 2007, investors in
the Debentures included corporate director Scott C. Schnuck, former director Andrew Baur, an entity
affiliated with Mr. Baur, and advisory directors Bernard A. Edison and Julian Edison and are set
forth in the attached Exhibit 4.1. Bernard Edison is also the father of Peter Edison, the Companys
Chairman and Chief Executive Officer. Julian Edison is a cousin of Peter Edison. Each of Messrs.
Schnuck, B. Edison and J. Edison receive fees and other compensation from the Company from time to
time in their capacities with the Company. The audit committee and Board of Directors of the
Company reviewed and approved the transaction.
Other terms of Subordinated Convertible Debentures.
The Debentures continue to be convertible into shares of common stock at any time. The initial
conversion price was $9.00 per share. The conversion price, and thus the number of shares into
which the Debentures are convertible, is subject to anti-dilution and other adjustments. If the
Company distributes any assets (other than ordinary cash dividends), then generally each holder is
entitled to receive a like amount of such distributed property. In the event of a merger,
consolidation, sale of substantially all of the Companys assets, or reclassification or compulsory
share exchange, then upon any subsequent conversion
each holder will have the right to either the same property as it would have otherwise been
entitled or cash in an amount equal to 100% principal amount of the Debenture, plus interest and
any other amounts owed. The Debentures also contain a weighted average conversion price adjustment
generally for future issuances, at prices less than the then current conversion price, of common
stock or securities convertible into, or options to purchase, shares of common stock, excluding
generally currently outstanding options, warrants or performance shares and any future issuances or
deemed issuances pursuant to any properly authorized equity compensation plans. The Debentures
contain limitations on the number of shares issuable pursuant to the Debentures regardless of how
low the conversion price may be, including limitations generally requiring that the conversion
price not be less than $8.10 per share for Debentures originally issued to advisory directors,
corporate directors or the entity affiliated with Mr. Baur, that the Company does not issue common
stock amounting to more than 19.99% of its common stock in the transaction or such that following
conversion, the total number of shares beneficially owned by each holder does not exceed 19.999% of
the Companys common stock. These limitations may be removed with shareholder approval.
As a result of prior issuances of common stock, the weighted average conversion price of the
subordinated convertible debentures has decreased to $6.76 with respect to $1 million in aggregate
principal amount of debentures and to $8.10, the minimum conversion price, with respect to $3
million in aggregate principal amount of debentures originally issued to directors and director
affiliates. The debentures are now convertible into a total of 518,299 shares of the Companys
common stock. The Debenture Amendments had no impact on the conversion terms.
The Debentures generally provide for customary events of default, which could result in
acceleration of all amounts owed, including default in required payments, failure to pay when due,
or the acceleration of, other monetary obligations for indebtedness (broadly defined) in excess of
$1 million (subject to certain exceptions), failure to observe or perform covenants or agreements
contained in the transaction documents, including covenants relating to using the net proceeds,
maintaining legal existence, prohibiting the sale of material assets outside of the ordinary
course, prohibiting cash dividends and distributions, share repurchases, and certain payments to
the Companys officers and directors. The Company generally has the right, but not the obligation,
to redeem the unpaid principal balance of the Debentures at any time prior to conversion if the
closing price of the Companys common stock (as adjusted for stock dividends, subdivisions or
combinations) is equal to or above $16.00 per share for each of 20 consecutive trading days and
certain other conditions are met. The Company has also agreed to provide certain piggyback and
demand registration rights, until two years after the Debentures cease to be outstanding, to the
holders under the Securities Act of 1933 relating to the shares of common stock issuable upon
conversion of the Debentures.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 is incorporated herein by reference.
For the Debenture Amendments, the Company relied on the exemption from registration relating
to offerings that do not involve any public offering pursuant to Section 4(2) under the Securities
Act of 1933 and Section 3(a)(9) under the Securities Act of 1933 for an exchange with existing
security holders where no commission or other remuneration is paid or given for soliciting such
exchange. The offering of the securities was conducted without general solicitation or advertising.
The Debentures continue to bear, and certificates evidencing the shares of common stock issuable
upon conversion of the Debentures will bear, restrictive legends permitting the transfer thereof
only in compliance with applicable securities laws. The Company believes that the Investors are
holding the Debentures for investment purposes and not with a view to or for distribution in these
transactions and that each was an accredited investor under Rule 501(e) under Regulation D under
the Securities Act of 1933.
Item 3.03. Material Modification of Rights of Security Holders.
The information set forth under Item 1.01 is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. See Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BAKERS FOOTWEAR GROUP, INC. |
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Date: July 5, 2011 | By: | /s/ Charles R. Daniel, III | ||
Charles R. Daniel, III | ||||
Executive Vice President, Chief Financial Officer, Controller, Treasurer and Secretary |
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EXHIBIT INDEX
Exhibit No. | Description of Exhibit | |
4.1
|
Second Amendment to Subordinated Convertible Debentures and Subordinated Convertible Debenture Purchase Agreement dated June 30, 2011. | |
4.2
|
Amended and Restated Subordination Agreement dated June 30, 2011 by and among the Company, the Investors named therein and Bank of America, N.A. | |
10.1
|
Sixth Amendment to Second Amended and Restated Loan and Security Agreement dated June 30, 2011 by and among the Company and Bank of America, N.A. |