ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Indenture and Securities
On May 13, 2021, Carriage Services, Inc. (the “Company”) completed the issuance of $400 million in aggregate principal amount of 4.25% Senior Notes due 2029 (the “Notes”) and related guarantees by the Subsidiary Guarantors (as defined below) (the “Guarantees” and, together with the Notes, the “Securities”) in a private offering (the “Private Offering”) under Rule 144A and Regulation S of the Securities Act of 1933, as amended (the “Securities Act”).
The Company used the net proceeds from the offering of approximately $395.5 million, together with borrowings under the Company’s newly amended and restated credit facility (discussed below) and cash on hand, to satisfy and discharge the indenture with respect to its existing 6.625% senior notes due 2026 (the “Existing Notes”). The Existing Notes are scheduled to be redeemed on June 1, 2021. This Current Report on Form 8-K does not constitute a notice of redemption with respect to the Existing Notes.
The Securities were issued under an indenture, dated as of May 13, 2021 (the “Indenture”), among the Company, certain of the Company’s existing subsidiaries (collectively, the “Subsidiary Guarantors”), as guarantors, and Wilmington Trust, National Association, as trustee (“Collateral Trustee”).
The Notes will bear interest at an annual rate of 4.25%. Interest is payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021. The Notes mature on May 15, 2029, unless earlier redeemed or purchased. The Notes are unsecured, senior obligations of the Company. The Notes are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by each of the Subsidiary Guarantors.
The Company may redeem all or part of the Notes at any time prior to May 15, 2024 at a redemption price equal to 100% of the principal amount of Notes redeemed, plus a “make whole” premium, and accrued and unpaid interest, if any, to the date of redemption. The Company has the right to redeem the Notes at any time on or after May 15, 2024 at the redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption. Additionally, at any time before May 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the Notes outstanding under the Indenture using an amount of cash equal to the net proceeds of certain equity offerings, at a price equal to 104.250% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption; provided that (1) at least 50% of the aggregate principal amount of the Notes (including any additional Notes) outstanding under the Indenture remain outstanding immediately after the occurrence of such redemption (unless all Notes are redeemed concurrently), and (2) each such redemption must occur within 180 days of the date of the consummation of any such equity offering.
If a “change of control” occurs, each holder of the Notes will have the option to require the Company to purchase for cash all or a portion of their Notes at a price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest to (but excluding) the date of purchase. In addition, if the Company makes certain asset sales and does not reinvest the proceeds thereof or use such proceeds to repay certain debt, it will be required to use the proceeds of such asset sales to make an offer to purchase the Notes at a price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest.
The Indenture contains restrictive covenants limiting the ability of the Company and its Restricted Subsidiaries (as defined in the Indenture) to, among other things, incur additional indebtedness or issue certain preferred shares, create liens on certain assets to secure debt, pay dividends or make other equity distributions, purchase or redeem capital stock, make certain investments, sell assets, agree to certain restrictions on the ability of Restricted Subsidiaries to make payments to the Company, consolidate, merge, sell or otherwise dispose of all or substantially all assets, or engage in transactions with affiliates. The Indenture also contains customary events of default.
A copy of the Indenture is attached as Exhibit 4.1 to this Current Report on Form 8-K and is hereby incorporated by reference herein. The form of the Notes (included as Exhibit A of the Indenture filed as Exhibit 4.1 hereto) is filed as Exhibit 4.2 to this Current Report on Form 8-K and is hereby incorporated by reference herein. The descriptions of the material terms of the Indenture and the Securities are qualified in their entirety by reference to such exhibits.
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