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SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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FORM
8-K
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Current
Report Pursuant
to
Section 13 or 15(d) of the
Securities
Exchange Act of 1934
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Date
of Report (Date of Earliest Event Reported):
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August
10, 2009 (August 7, 2009)
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BARNES
& NOBLE, INC.
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(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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(State
or Other Jurisdiction of Incorporation)
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1-12302
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06-1196501
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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122
Fifth Avenue, New York, NY
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10011
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(212)
633-3300
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(Registrant’s
Telephone Number, Including Area Code)
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Not
Applicable
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(Former
Name or Former Address, if Changed Since Last Report)
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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):
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Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item
1.01 Entry into a Material
Definitive Agreement
Purchase
Agreement
On August
7, 2009, Barnes & Noble, Inc. (the “Company”) entered into a Stock Purchase
Agreement (the “Purchase Agreement”) with Leonard Riggio and Louise Riggio (the
“Sellers”), pursuant to which the Company will acquire (the “Acquisition”) all
of the issued and outstanding capital stock of Barnes & Noble College
Booksellers, Inc. (“B&N College”) from the Sellers for $596 million in cash
and seller notes. Mr. Riggio is Chairman of the Company’s Board of
Directors.
B&N
College, which was founded by Leonard Riggio in 1965, is one of the nation’s
largest contract operators of college and university
bookstores. B&N College currently operates 624 campus
bookstores. B&N College also owns the “Barnes & Noble”
trademark, which it currently licenses to the Company.
The $596
million purchase price consists of $346 million in cash and $250 million in
aggregate principal amount of unsecured subordinated seller notes (the “Seller
Notes”). The Company intends to finance the Acquisition with a
combination of proceeds of a new four-year revolving credit facility described
under “Financing Commitment” below, the Seller Notes, and B&N College’s cash
on hand as of the closing.
The
Purchase Agreement contains customary representations, warranties, covenants and
indemnification provisions. The Acquisition is expected to close on
or around October 1, 2009, or such later date as all of the conditions are
satisfied or waived. There can be no assurances that the Acquisition
will be completed on the proposed terms or at all. The closing is subject to
customary conditions, including the expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the Company’s receipt of financing.
Prior to
the closing of the Acquisition, B&N College will distribute to the Sellers
certain assets that are not related to B&N College’s core business,
including an aircraft, common stock in the Company, common stock in GameStop
Corp. and certain GSC Holdings (GameStop Corp.) corporate bonds (the “Excluded
Assets”). Prior to the closing, the Sellers will be permitted to
cause B&N College to make certain bonus and other payments to employees of
B&N College in an aggregate amount not to exceed $100 million (the “Bonus
Payments”). The Bonus Payments may be made in cash and/or by
distributing Excluded Assets to the recipients of the Bonus
Payments. All cash Bonus Payments made by B&N College will be
deducted from the cash portion of the purchase price otherwise payable to the
Sellers.
B&N
College may not make any distributions of retained earnings prior to the closing
except that B&N College may make a one-time tax distribution in an amount
not to exceed $6.5 million on September 15, 2009. After the closing,
B&N College will make an additional tax distribution payment to the Sellers
in respect of taxes imposed on Sellers’ pro rata share of B&N
College S corporation taxable earnings from January 1, 2009 to the closing
date.
The
Seller Notes to be issued to the Sellers at the closing of the Acquisition will
consist of (i) a
senior subordinated note in the principal amount of $100 million, payable in
full on December 15, 2010, with interest of 8% per
annum payable
on the unpaid principal amount (the “Senior
Seller Note”),
and (ii) a junior subordinated note in the principal amount
of $150 million, payable in full on the fifth anniversary of the closing of the
Acquisition, with interest of 10% per
annum payable
on the unpaid principal amount (the “Junior
Seller Note”). The
Seller Notes will be unsecured and subordinated to the
obligations under the Credit Facility described below and certain other senior
obligations. The Company may prepay the Seller Notes at any time
without premium or penalty to the extent not prohibited by the senior debt
documents, provided that the Company
may not prepay the Junior Seller Note until the Senior Seller Note has been
repaid in full. In the event of a change in control (as defined in
the Seller Notes) of the Company, the Sellers will have the right to require the
Company to repurchase the Seller
Notes for cash at 100% of the principal amounts thereof plus accrued
interest. The Seller Notes will contain certain covenants with
respect to the incurrence of indebtedness, liens, and merger and consolidation
transactions.
In
connection with the Acquisition, the Company will terminate its existing license
agreement with Textbooks.com, Inc., which is wholly-owned by Leonard Riggio, and
as a result will no longer pay a royalty with respect to online textbook
sales.
In
connection with the Acquisition, B&N College will amend and restate its
existing long-term supply agreement with MBS Textbook Exchange, Inc., a textbook
wholesaler that is majority-owned by Leonard Riggio, Stephen Riggio and other
members of the Riggio family.
The
transactions contemplated by the Purchase Agreement, including the Seller Notes,
were negotiated and evaluated on behalf of the Company by a special committee
comprised solely of independent directors (the “Transaction Committee”), with
the assistance of independent financial and legal advisors. The
members of the Transaction Committee are Irene R. Miller (chair), William
Dillard, II, Patricia L. Higgins and Margaret T. Monaco. The
Transaction Committee was advised by an independent financial advisor, Greenhill
& Co., LLC (“Greenhill”), and an independent legal advisor, Davis Polk &
Wardwell LLP. Upon the unanimous recommendation of the Transaction
Committee, the Acquisition and related transactions were unanimously approved by
the board of directors of the Company (with the interested directors – Leonard
Riggio, Stephen Riggio, and Lawrence Zilavy – not participating in the
vote). The Transaction Committee and the Board of Directors of the
Company received a fairness opinion from Greenhill.
The
foregoing description of the Purchase Agreement, the Seller Notes and the
transactions contemplated thereby does not purport to be complete and is subject
to and qualified in its entirety by reference to the Purchase
Agreement. A copy of the Purchase Agreement (including the forms of
each Seller Note attached thereto as exhibits) is attached as Exhibit 2.1 to
this report and is incorporated herein by reference.
The
Purchase Agreement has been included to provide investors with information
regarding its terms. It is not intended to provide any other factual
information about the Company, B&N College or any of their respective
subsidiaries or affiliates. The representations, warranties and
covenants
contained in the Purchase Agreement were made only for purposes of that
agreement and as of specific dates; were made solely for the benefit of the
parties to the Purchase Agreement; may be subject to limitations agreed upon by
the contracting parties, including being qualified by confidential disclosures
made for the purposes of allocating contractual risk between the parties to the
Purchase Agreement instead of establishing any matter as a fact; and may be
subject to standards of materiality applicable to contracting parties that
differ from those applicable to investors. Investors should not rely
on the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the Company,
B&N College or any of their respective subsidiaries or
affiliates. Moreover, information concerning the subject matter of
the representations, warranties and covenants may change after the date of the
Purchase Agreement, which subsequent information may or may not be fully
reflected in the Company’s public disclosures.
Financing
Commitment
On August
7, 2009, in connection with the Acquisition, the Company entered into an amended
and restated commitment letter (the “Commitment Letter”) pursuant to which Bank
of America, N.A., JPMorgan Chase Bank N.A. and Wells Fargo Retail Finance, LLC
(collectively, the “Lead Commitment Parties”) have committed to provide up to
$600 million under a $1 billion four-year asset-backed revolving credit facility
(the “Credit Facility”).
The
commitments of the Lead Commitment Parties are subject to various
conditions,
including consummation of the Acquisition in accordance with the terms of the
Purchase Agreement; no material adverse change having occurred in the operations
or condition (financial or otherwise) of the Company, B&N College and their
subsidiaries, taken
as a whole; the negotiation of definitive documentation with respect to the
Credit Facility satisfactory to the Lead Commitment Parties; satisfaction of a
minimum excess availability under the Credit Facility at closing; and the other
closing conditions
set forth in the Commitment Letter.
The
Company has also received commitments exceeding $400 million in the aggregate
from other financial institutions pursuant to individual commitment letters with
terms and conditions that are substantially similar to those contained in the
Commitment Letter.
The
Credit Facility would replace the Company’s and B&N College’s existing
revolving credit facilities.
The
foregoing description of the Commitment Letter and the transactions contemplated
thereby does not purport
to be complete and is qualified in its entirety by reference to the full text of
the Commitment Letter, a copy of which is attached hereto as Exhibit 10.1 and
the terms of which are incorporated herein by
reference.
Item
9.01. Financial Statements and
Exhibits
(d) Exhibits
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2.1
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Stock
Purchase Agreement dated as of August 7, 2009 among Barnes & Noble,
Inc., Leonard Riggio and Louise Riggio*
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10.1
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Amended
and Restated Commitment Letter dated
August 7, 2009
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*
Schedules and certain exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. The Company agrees to furnish supplementally to the
Securities and Exchange Commission a copy of any omitted schedule or exhibit
upon request.
Forward-Looking Statements —
Certain statements in this Form 8-K may contain forward-looking information
regarding the Company, B&N College, and the combined company after the
completion of the Acquisition that are intended to be covered by the safe harbor
for “forward-looking statements” provided by the Private Securities Litigation
Reform Act of 1995. These statements include, but are not limited to, the
benefits of the Acquisition, including future strategic and financial benefits,
the plans, objective, expectations and intentions of the Company following the
completion of the Acquisition, and other statements that are not historical
facts. Such statements are based upon the current beliefs and expectations of
the Company’s management and are subject to significant risks and uncertainties.
Actual results may differ from those set forth in the forward-looking
statements. The following factors, among others, could cause actual
results to differ from those as set forth in the forward-looking statements: the
risk that the Acquisition will not be completed; the risk that the businesses
will not be integrated successfully; the risk that the revenue opportunities,
cost savings and other anticipated synergies from the Acquisition may not be
fully realized or may take longer to realize than expected; disruption from the
Acquisition making it difficult to maintain relationships with customers,
employees or suppliers; competition and its effect on pricing, spending and
third-party relationships and revenues; social and political conditions such as
war, political unrest or terrorism; general economic conditions and normal
business uncertainty. Please refer to the Company’s annual, quarterly
and periodic reports on file with the SEC for a more detailed discussion of
these and other risks that could cause results to differ
materially.
SIGNATURE
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.
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BARNES
& NOBLE, INC.
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By:
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/s/ Joseph
J. Lombardi |
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Joseph
J. Lombardi
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Chief
Financial Officer
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