Item 1.01 Entry into a Material Agreement.
Purchase Agreement
On
October 10, 2018, DSW Inc. (the Company) announced the execution of a binding securities purchase agreement, dated as of October 10, 2018 (the Purchase Agreement), by and among DSW Shoe Warehouse, Inc., a wholly
owned subsidiary of the Company (DSW HoldCo), ABG-Camuto, LLC (ABG-Camuto and, together with DSW HoldCo, the Buyers), Camuto Group LLC and Camuto Consulting, Inc. (together, Camuto), the trusts and the
estate of the late Vincent Camuto, which together own all of the equity interests in Camuto (collectively, the Camuto Owners), Clear Thinking Group LLC, in the person of Stuart H. Kessler, solely in its capacity as representative for the
Camuto Owners, and, solely with respect to specified provisions, the Company and Authentic Brands Group LLC (ABG). Pursuant to the Purchase Agreement, the Buyers agreed to acquire substantially all of the business of Camuto, other than
the operations of Bernard Chaus Inc. (the Acquisition). The aggregate purchase price payable pursuant to the Purchase Agreement is approximately $341.3 million, subject to customary adjustments. In the Acquisition, DSW HoldCo will
acquire Camutos operating business for a purchase price of approximately $198.3 million, subject to customary adjustments, and ABG-Camuto will acquire the intellectual property of the Camuto brands for a purchase price of approximately
$143.0 million (40% of which will be funded by the Company, through its investment in ABG-Camuto). The Acquisition values Camuto at $375 million, including the operations of Bernard Chaus Inc.
Completion of the Acquisition remains subject to the satisfaction or waiver of customary closing conditions. The Company has received
antitrust clearance in the United States and does not expect that it requires antitrust clearances in other jurisdictions. The Acquisition is expected to close at the beginning of the Companys fiscal fourth quarter.
The foregoing summary of the Purchase Agreement and the transactions contemplated by the Purchase Agreement does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form
8-K.
The Purchase Agreement and the above description have been included to provide investors and security holders with information regarding the
terms of the Acquisition. They are not intended to provide any other factual information about DSW HoldCo, the Company, Camuto or their respective subsidiaries, affiliates, businesses or equityholders. The representations, warranties and covenants
contained in the Purchase Agreement are made only for purposes of that agreement and as of specific dates, are solely for the benefit of the parties and may be subject to limitations agreed upon by the parties, including being qualified by risks
between them that differ from those applicable to investors. Investors should be aware that the representations, warranties and covenants or any description thereof may not reflect the actual state of facts or condition of DSW HoldCo, the Company,
Camuto or any of their respective subsidiaries, affiliates, businesses or equityholders. 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 public disclosures by the Company. Accordingly, investors should read the representations and warranties, schedules and other disclosures made by each contracting party to the other for the
purposes of allocating contractual risk in the Purchase Agreement only in the context of the transactions contemplated by the Purchase Agreement that the Company includes in reports, statements and other filings that it makes with the U.S.
Securities and Exchange Commission.
The press release announcing the Acquisition is filed as Exhibit 99.1 and incorporated into this item
by reference.
Amendment to Credit Agreement
On October 10, 2018, the Company and certain of its subsidiaries entered into a second amendment (the Amendment) to the credit
agreement, dated as of August 25, 2017 (the Credit Agreement), among the Company, certain of the Companys Canadian subsidiaries that may become borrowers thereunder, the Companys domestic subsidiaries as guarantors, the
lenders party thereto, and PNC Bank, National Association as administrative agent for the lenders (the Agent).
The Amendment
makes certain modifications to the terms of the Credit Agreement, including modifications to the covenants set forth therein to permit the consummation of the transactions contemplated by the Purchase Agreement, including the Acquisition.
The Amendment further provides for the commitments in respect of the unsecured revolving credit facility to be increased by $100 million
to a total of $400 million (the New Commitments) upon the closing of the Acquisition and the satisfaction of certain other limited conditions.
The New Commitments will have the same terms as the existing commitments under the Credit Agreement (as modified by the Amendment). The
Companys obligations arising under the New Commitments will be guaranteed by the same subsidiaries of the Company that guarantee the Companys obligations arising under existing commitments under the Credit Agreement. Additionally,
certain subsidiaries formed and/or acquired in connection with the Acquisition shall be required to become guarantors under the Credit Agreement within thirty days following the closing of the Acquisition.
The foregoing summary of the Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to, the
full text of the Amendment, which is filed as Exhibit 10.1 to this Current Report on Form
8-K.