During July 2020, the Crestview Parties and their advisors, including their legal
counsel Paul, Weiss, Rifkind, Wharton & Garrison LLP (Paul Weiss), conducted substantial due diligence on the Company and its operations, including in-person meetings and access to an
electronic data room containing certain business, financial, legal and other information. In addition, Paul Weiss and Latham exchanged drafts of the definitive documents necessary to consummate the transaction.
Also during July 2020, in light of the continuing effects of the COVID-19 outbreak on the
Companys business, the Company entered into negotiations in respect of an amendment to the Credit Agreement contingent upon the consummation of the First Closing, which would provide for, among other things, a further suspension of the testing
of the interest coverage ratio and the leverage ratio.
On July 28, 2020, in light of (a) ongoing due diligence of the
Company by Crestview, (b) the expected continued impact of the COVID-19 outbreak on the Companys business, and (c) the recent decline in the Companys stock price, the Crestview Parties
approached the Company with a revised non-binding proposal for the transaction that included (i) a cumulative dividend of 5.9% and (ii) a conversion price of $20.50 per share. After discussion
between representatives of the Company and the Crestview Parties, on July 29, 2020, the Crestview Parties submitted a revised non-binding proposal for the transaction that included (a) a cumulative
dividend of 5.5% and (b) a conversion price of $21.25 per share.
At a special meeting of the Board on July 30, 2020, the
Board reviewed, with the assistance of Moelis, the revised non-binding transaction terms proposed by the Crestview Parties. The Board discussed the benefits of the Crestview Parties proposal, including
that (i) it provided a large single source of capital for the Company, (ii) the Additional Liquidity Commitment provided potential access to fully-committed financing which could be used for general corporate expenses and to satisfy the
Liquidity Covenant if needed, due to further changes in economic conditions or to accelerate growth of the Companys businesses, (iii) it provided capital that was less restrictive than debt, (iv) as of July 30, 2020, the
conversion price was at a 36.1% premium to the 10-day trailing volume-weighted average Common Stock price of the Company, and (v) the Board believed that the strategic relationship with the Crestview
Parties provides significant benefits to the Company as a result of Crestviews broad business relationships, including the Crestview Parties experience in both the live events and the travel/hospitality industries. Additionally, the
Board believed that the Crestview Parties, through their representation on the Board, would provide valuable insight to the Company as it continues to execute its strategy. Notably, one of the Crestview Parties Board representatives, Kevin
Rabbitt, has direct experience leading the Companys GES business as its President from 2006 through 2009.
After discussion,
the Board determined that the proposal of the Crestview Parties provided the most favorable economic terms and structure, and provided the most financial flexibility for the Company and it was in the best interest of the Company to continue
negotiations with the Crestview Parties and finalize definitive documentation. On that same day, the exclusivity period was extended by the mutual agreement of the Company and the Crestview Parties until August 5, 2020.
On August 5, 2020, the Company entered into the Investment Agreement with the Crestview Parties, pursuant to which the Company
agreed to issue and sell to the Crestview Parties up to an aggregate of 180,000 newly issued shares of Preferred Stock, at a purchase price of $1,000 per share in the Private Placement. The Investment Agreement provides that the Private Placement
can occur in multiple tranches. Pursuant to the Investment Agreement, on August 5, 2020, the Company issued and sold an aggregate of 135,000 shares of Preferred Stock for an aggregate purchase price of $135 million. Pursuant to the
Investment Agreement, for 12 months following the First Closing, the Company has the option to require the Crestview Parties to purchase, in the aggregate, in one or more additional closings, up to $45 million in additional Preferred Stock, on
the same terms and conditions as the First Closing Shares. As of August 4, 2020 and August 5, 2020, the conversion price was at a 41.3% and 42.2% premium to the 10-day trailing
volume-weighted average Common Stock price of the Company, respectively.
Also on August 5, 2020, the Company entered into an
amendment of the Credit Agreement which, among other things, (i) suspended the testing of the interest coverage ratio and the leverage ratio for any fiscal quarter ending on or before June 30, 2022 and (ii) continued the Liquidity
Covenant until the first business day after the Company
|
|
|
|
|
10
|
|
VIAD CORP | PROPOSAL 1: SUBSEQUENT PLACEMENT PROPOSAL
|
|
|