Turning Point Brands Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Other Events

 

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7.625% Senior Secured Notes due 2032

 

On February 19, 2025 (the “Closing Date”), Turning Point Brands, Inc., a Delaware corporation (“TPB” or the “Company”) entered into an indenture (the “Indenture”) relating to the previously announced issuance of $300.0 million aggregate principal amount of its 7.625% Senior Secured Notes due 2032 (the “Notes”), by and among the Company, the Guarantors (as defined below) and GLAS Trust Company LLC, as trustee and notes collateral agent (the “Trustee”). Proceeds from the sale of the Notes were used (i) to refinance all of the Company’s Senior Secured Notes due 2026 (the “2026 Notes”), (ii) to pay related fees, costs and expenses and (iii) for general corporate purposes.

 

The Notes mature on March 15, 2032 and bear interest at a rate of 7.625% per annum. Interest on the Notes is payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2025.

 

Obligations under the Notes are guaranteed by the Company’s current wholly-owned domestic restricted subsidiaries (the “Guarantors”) that guaranteed its 2026 Notes. The Notes and the related guarantees are secured by first-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions, pursuant to a security agreement among the Company, the Guarantors and the Trustee and related ancillary documents.

 

The Company may redeem the Notes, in whole or in part, at any time prior to March 15, 2028, at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding the applicable redemption date, plus a “make-whole” premium. Thereafter, the Company may redeem the Notes, in whole or in part, at established redemption prices, plus accrued and unpaid interest, if any. In addition, on or prior to March 15, 2028, the Company may redeem up to 40% of the aggregate principal amount of the Notes with the net cash proceeds from certain equity offerings at a redemption price equal to 107.625% of the aggregate principal amount of such Notes, plus accrued and unpaid interest, if any to the redemption date; provided, however, that at least 50% of the original aggregate principal amount of the Notes (calculated after giving effect to the issuance of any additional notes) remains outstanding after such redemption and, provided further, that such redemption occurs within 180 days after the date of such equity offerings. In addition, at any time and from time to time prior to March 15, 2028, but not more than once in any calendar year, the Company may redeem up to 10% of the aggregate principal amount of the Notes at a redemption price (expressed as a percentage of the principal amount thereof) of 103% plus accrued and unpaid interest of the Notes, if any to but not including the redemption date, on the Notes to be redeemed.

 

If the Company experiences a change of control (as defined in the Indenture), the Company must offer to repurchase the Notes at a repurchase price equal to 101% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to the applicable repurchase date.

 

The Indenture contains covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to:

These covenants are subject to a number of limitations and exceptions set forth in the Indenture. The Indenture provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, certain events of bankruptcy or insolvency involving the Company and its significant subsidiaries and the security documents related to the Notes ceasing to be effective with respect to collateral in excess of a specified amount. In the case of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company, the Company or a significant subsidiary thereof, all Notes then outstanding will become due and payable immediately without further action or notice. If any other event of default occurs with respect to the Notes, up to two years following the first public notice or notice to the trustee of such event, the Trustee or holders of at least 30% in aggregate principal amount of the Notes may declare all Notes then outstanding to be due and payable immediately.

 

2026 Notes Redemption

 

On February 10, 2025, the Company issued a notice of conditional redemption (the “Notice of Conditional Redemption”) pursuant to the indenture, dated as of February 11, 2021 (the “Existing Indenture”) by and among the Company, the guarantors party thereto and GLAS Trust Company LLC, as trustee, collateral agent, registrar and paying agent, governing its 2026 Notes.

 

Pursuant to the Notice of Conditional Redemption, the Company gave holders of the 2026 Notes notice that, upon the satisfaction of the Condition Precedent (as defined below), it intends to redeem all $250.0 million of its outstanding 2026 Notes on February 20, 2025 (the “Redemption Date”) at a redemption price equal to 100.0% of the aggregate principal amount of the 2026 Notes, plus accrued and unpaid interest thereon to, but excluding the Redemption Date, in an aggregate amount of $250,195,312.50 (the “Redemption Price”). The redemption of the 2026 Notes is conditioned upon the receipt by the Company of proceeds from a completed debt financing in an amount sufficient, in the Company’s opinion, to fund the Redemption Price on the Redemption Date pursuant to the terms of the Existing Indenture (the “Condition Precedent”).

This Current Report on Form 8-K should not be construed as a notice of redemption for any of the outstanding 2026 Notes nor does it constitute an offer to sell, a solicitation of an offer to purchase, or an offer to purchase with respect to, any of the Company’s securities.

 

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