UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange At of 1934
Date of report (Date of earliest event reported):
June 16, 2005
NORTH ATLANTIC HOLDING COMPANY, INC.
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware
--------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
333-115587 20-0709285
--------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
257 Park Avenue South
New York, New York 10010-7304
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(212) 253-8185
--------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
--------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| 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.
On June 16, 2005, North Atlantic Holding Company, Inc.'s ("NAHC")
wholly owned subsidiary North Atlantic Trading Company, Inc. ("NATC") refinanced
its existing $35.0 million Amended and Restated Loan Agreement, dated as of
February 17, 2004, by and among JP Morgan Chase Bank, N.A., as agent, NAHC, NATC
and its subsidiaries named therein and the lenders party thereto (as amended,
the "Prior Loan Agreement") by entering into a Financing Agreement (the
"Financing Agreement") among NAHC, NATC, North Atlantic Operating Company, Inc.,
National Tobacco Company, L.P., North Atlantic Cigarette Company, Inc., National
Tobacco Finance Corporation, RBJ Sales, Inc., Fred Stoker & Sons, Inc., and
Stoker, Inc., the financial institutions from time to time party thereto as
lenders ("Lenders"), and Fortress Credit Corp., as agent for the Lenders
("Agent"). The Financing Agreement consists of a $30.0 million term loan
facility and a $55.0 million revolving credit facility, and includes a letter of
credit sublimit of $10.0 million (collectively, the "Credit Facility"). The
Credit Facility will mature on June 30, 2010, and does not provide for any
amortization of the term loan prior to maturity. NATC and its subsidiaries will
use the revolving credit facility for working capital requirements and other
general corporate purposes.
Indebtedness under the Financing Agreement is guaranteed by NAHC and
each of NATC's current and future direct and indirect subsidiaries, and is
secured by a first perfected lien on substantially all of NAHC's, NATC's and its
direct and indirect subsidiaries' current and future assets and property. The
collateral includes a pledge by NAHC of its equity interest in NATC and a first
priority lien on all equity interests and intercompany notes held by NATC and
its direct and indirect subsidiaries.
Loans and advances under the Financing Agreement bear interest at a
variable rate based on either the prime rate or LIBOR, at NATC's option, plus a
specified margin ranging from 1.00% to 3.75% in case of prime rate indebtedness,
and from 3.50% to 6.25% in the case of LIBOR indebtedness, based on the sum of
NATC's secured indebtedness in relation to its EBITDAR (as defined in the
Financing Agreement).
NATC paid the Lenders a closing fee of $1.275 million and is required
to pay the Agent a quarterly servicing fee in the amount of $25,000. Under the
revolving credit facility, NATC is required to pay the Lenders an annual
commitment fee in an amount equal to 0.50% of the difference between $40 million
and the average usage of the revolving credit facility, payable on a monthly
basis. NATC is also required to pay the Lenders letter of credit fees equal to
4.00% per annum multiplied by the face amount of the letters of credit issued
under the Financing Agreement, payable on the date any such letter of credit is
issued. In addition, NATC is required to pay the Agent the standard charges
customarily charged by the institution issuing letters of credit under the
Financing Agreement in connection with the issuance, administration, amendment,
payment or cancellation of any such letter of credit.
The Financing Agreement requires NATC and its subsidiaries to meet a
maximum leverage ratio and a minimum EBITDAR test. The Financing Agreement also
contains covenants which, among other things, limit the incurrence of additional
indebtedness, distribution of dividends, transactions with affiliates, asset
sales, acquisitions, mergers, prepayments of other indebtedness, liens and
2
encumbrances, capital expenditures, and other matters customarily restricted in
such agreements. In addition, the Financing Agreement requires that the chief
executive officer of the business of NAHC be reasonably acceptable to the Agent
and the Lenders during the term of the Credit Facility.
The Financing Agreement contains customary events of default,
including payment defaults, breach of representations and warranties, covenant
defaults, cross-acceleration, cross-defaults to certain other indebtedness,
certain events of bankruptcy and insolvency, the occurrence of a Change of
Control (as defined in the Financing Agreement), and judgment defaults. Further,
it is an event of default under the Financing Agreement if an event or
development occurs that results in a Material Adverse Effect (as defined in the
Financing Agreement), as determined by the Agent in its reasonable business
judgment. If any events of default occur and are not cured within applicable
grace periods or waived, the outstanding loans may be accelerated and the
Lenders' commitments may be terminated. The occurrence of the bankruptcy and
insolvency event of default will result in the automatic termination of
commitments and acceleration of outstanding loans under the Financing Agreement.
Copies of the Financing Agreement and the related Security Agreement
and Pledge Agreement, and the press release announcing the entering into of the
Financing Agreement, are attached hereto as Exhibits 10.1, 10.2, 10.3 and 99.1,
respectively, and are incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
As described in Item 1.01 above, on June 16, 2005, the Prior Loan
Agreement was paid off and terminated and replaced by the Financing Agreement. A
brief description of the material terms and conditions of the Prior Loan
Agreement is set forth in Item 2 of NAHC's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2005, under "Liquidity and Capital Resources," which
description is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
As described in Item 1.01 above, on June 16, 2005, NAHC, NATC and its
subsidiaries entered into the Financing Agreement and related agreements. The
information set forth in Item 1.01 above is incorporated into this Item 2.03 by
reference.
Item 9.01 Financial Statement and Exhibits.
(c) Exhibits.
10.1 Financing Agreement, dated as of June 16, 2005, among North
Atlantic Holding Company, Inc., as guarantor, North Atlantic
Trading Company, Inc., National Tobacco Company, L.P., North
Atlantic Operating Company, Inc., North Atlantic Cigarette
Company, Inc., National Tobacco Finance Corporation, RBJ
Sales, Inc., Fred Stoker & Sons, Inc. and Stoker, Inc., as
borrowers, the financial institutions from time to time
party thereto as lenders and Fortress Credit Corp., as agent
for the lenders.
3
10.2 Security Agreement, dated as of June 16, 2005, among North
Atlantic Holding Company, Inc., North Atlantic Trading
Company, Inc., National Tobacco Company, L.P., North
Atlantic Operating Company, Inc., North Atlantic Cigarette
Company, Inc., National Tobacco Finance Corporation, RBJ
Sales, Inc., Fred Stoker & Sons, Inc. and Stoker, Inc. in
favor of Fortress Credit Corp., as agent.
10.3 Pledge Agreement, dated as of June 16, 2005, among North
Atlantic Holding Company, Inc., North Atlantic Trading
Company, Inc., National Tobacco Company, L.P., North
Atlantic Operating Company, Inc., North Atlantic Cigarette
Company, Inc., National Tobacco Finance Corporation, RBJ
Sales, Inc., Fred Stoker & Sons, Inc. and Stoker, Inc. in
favor of Fortress Credit Corp., as agent.
99.1 Press release, dated June 16, 2005.
4
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.
NORTH ATLANTIC HOLDING COMPANY, INC.
By: /s/ Douglas P. Rosefsky
----------------------------
Name: Douglas P. Rosefsky
Title: President
Date: June 22, 2005
5
EXHIBIT INDEX
No. Description
--- -----------
10.1 Financing Agreement, dated as of June 16, 2005, among North
Atlantic Holding Company, Inc., as guarantor, North Atlantic
Trading Company, Inc., National Tobacco Company, L.P., North
Atlantic Operating Company, Inc., North Atlantic Cigarette
Company, Inc., National Tobacco Finance Corporation, RBJ
Sales, Inc., Fred Stoker & Sons, Inc. and Stoker, Inc., as
borrowers, the financial institutions from time to time
party thereto as lenders and Fortress Credit Corp., as agent
for the lenders.
10.2 Security Agreement, dated as of June 16, 2005, among North
Atlantic Holding Company, Inc., North Atlantic Trading
Company, Inc., National Tobacco Company, L.P., North
Atlantic Operating Company, Inc., North Atlantic Cigarette
Company, Inc., National Tobacco Finance Corporation, RBJ
Sales, Inc., Fred Stoker & Sons, Inc. and Stoker, Inc. in
favor of Fortress Credit Corp., as agent.
10.3 Pledge Agreement, dated as of June 16, 2005, among North
Atlantic Holding Company, Inc., North Atlantic Trading
Company, Inc., National Tobacco Company, L.P., North
Atlantic Operating Company, Inc., North Atlantic Cigarette
Company, Inc., National Tobacco Finance Corporation, RBJ
Sales, Inc., Fred Stoker & Sons, Inc. and Stoker, Inc. in
favor of Fortress Credit Corp., as agent.
99.1 Press release, dated June 16, 2005.
6