Item 1.01 Entry into a Material Definitive Agreement

On July 12, 2022 (the “Credit Agreement Closing Date”), Compass Group
Diversified Holdings LLC
(the “Company”) entered into a Third Amended and
Restated Credit Agreement (the “Credit Agreement”) with the lenders from time to
time party thereto (the “Lenders”), Bank of America, N.A., as Administrative
Agent (the “Agent”), Swing Line Lender and a letter of credit issuer, which
Credit Agreement amended and restated that certain Second Amended and Restated
Credit Agreement originally dated as of March 23, 2021 (as previously amended,
the “Prior Credit Agreement”).

The Credit Agreement provides for (i) revolving loans, swing line loans and
letters of credit (the “Revolving Line of Credit”) up to a maximum aggregate
amount of $600 million (the “Revolving Loan Commitment”), and (ii) a $400
million
term loan (the “Term Loan”). The Term Loan requires quarterly payments
ranging from $2.5 million to $7.5 million, commencing September 30, 2022, with a
final payment of all remaining principal and interest due on July 12, 2027,
which is the Term Loan’s maturity date. All amounts outstanding under the
Revolving Line of Credit will become due on July 12, 2027, which is the
termination date of the Revolving Loan Commitment. The Credit Agreement also
permits the Company, prior to the maturity date, to increase the Revolving Loan
Commitment and/or obtain additional term loans in an aggregate amount of up to
$250 million (or such larger amount that would not cause, on a pro forma basis,
the consolidated senior secured leverage ratio to exceed 3.00:1.00) (the
“Incremental Loans”), subject to certain restrictions and conditions. On the
Credit Agreement Closing Date, the Term Loan was advanced in full and the
initial borrowings outstanding under the Revolving Line of Credit were $115
million
.

The Company used the initial proceeds from the Credit Agreement to pay all
amounts outstanding under the Prior Credit Agreement, pay fees and expenses
incurred in connection with the Credit Agreement and fund the acquisition of
PrimaLoft (as defined below under Item 7.01). Further advances under the
Revolving Line of Credit and any Incremental Loans that are revolving loans may
be used to finance working capital, capital expenditures and other general
corporate purposes of the Company (including to fund acquisitions of additional
businesses, permitted distributions and loans by the Company to its
subsidiaries) and, in the case of Incremental Loans that are term loans, for the
purposes described in the definitive documentation for such Incremental Loans.

The Company may borrow, prepay and reborrow principal under the Revolving Line
of Credit from time to time during its term. Advances under the Revolving Line
of Credit can be either term SOFR loans or base rate loans. Term SOFR revolving
loans bear interest on the outstanding principal amount thereof for each
interest period at a rate per annum based on the applicable Secured Overnight
Financing Rate (“SOFR”) as administered by the Federal Reserve Bank of New York
(or a successor administrator), as adjusted, plus a margin ranging from 1.50% to
2.50%, based on the ratio of consolidated net indebtedness to the Company’s
subsidiaries’ adjusted consolidated earnings before interest expense, tax
expense, and depreciation and amortization expenses for such period (the
“Consolidated Total Leverage Ratio”). Base rate revolving loans bear interest on
the outstanding principal amount thereof at a rate per annum equal to the
highest of (i) Federal Funds Rate plus 0.50%, (ii) the rate of interest in
effect for such day as publicly announced from time to time by the Agent as its
“prime rate”, and (iii) the applicable SOFR plus 1.0% (the “Base Rate”), plus a
margin ranging from 0.50% to 1.50%, based on the Consolidated Total Leverage
Ratio.

Advances under term loans can be either term SOFR loans or base rate loans. The
Term Loan was advanced in full on the Credit Agreement Closing Date as a Term
SFOR loan with an interest period of one month. On the last day of an interest
period, Term SOFR loans may be converted to Term SOFR loans of a different
interest period or to Base Rate loans. Term SOFR term loans bear interest on the
outstanding principal amount thereof for each interest period at a rate per
annum based on the Term SOFR for such interest period plus a margin ranging from
1.50% to 2.50%, based on the Consolidated Total Leverage Ratio. Base rate term
loans bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus a
margin ranging from 0.50% to 1.50%, based on the Consolidated Total Leverage
Ratio.

The Company will pay to the Agent on a quarterly basis, for the account of each
Lender in accordance with its applicable percentage of the Revolving Loan
Commitment, a commitment fee equal to the product of (i) a rate ranging from
0.25% to 0.45% per annum, based on the Consolidated Total Leverage Ratio, times
(ii) the actual daily amount by which the Revolving Loan Commitment exceeds the
sum of (A) the outstanding amount of revolving loans plus (B) the outstanding
amount of letter of credit obligations. The Company will pay to the Agent on a
quarterly basis, for the account of each Lender in accordance with its
applicable percentage of the Revolving Loan Commitment, a letter of credit fee
equal to a rate ranging from 1.50% to 2.50%, based on the Consolidated Total
Leverage Ratio, times the daily amount available to be drawn under such letters
of credit (the “Stated Amount”). The

——————————————————————————–

Company will also pay letter of credit fronting fees with respect to each letter
of credit issued by the Agent or another letter of credit issuer and certain
. . .

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off Balance Sheet
Arrangement of a Registrant

The information contained in and incorporated into Item 1.01 above is hereby
incorporated into this Item 2.03 by reference.

Item 7.01 Regulation FD Disclosure

On July 13, 2022, Compass Diversified Holdings (“Compass Diversified” and,
together with the Company, “CODI”) issued a Press Release announcing the closing
(the “Closing”) of the previously announced transaction, whereby, the Company,
through its indirect subsidiary, Relentless Intermediate, Inc. (“Buyer”),
acquired PrimaLoft Technologies Holdings, Inc. (“PrimaLoft”) pursuant to a Stock
Purchase Agreement (the “Purchase Agreement”), dated June 4, 2022, by and
between Buyer and VP PrimaLoft Holdings, LLC (“Seller”). A copy of the press
release is attached as Exhibit 99.1 hereto.

The foregoing description of the press release is qualified in its entirety by
reference to the complete text of the press release furnished as Exhibit 99.1
hereto, which is incorporated by reference herein. The information in this Item
7.01 and Exhibit 99.1 is being furnished and shall not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or otherwise subject to the liabilities of that section, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, or the Exchange Act, except as shall be expressly set
forth in such filing.


Item 8.01 Other Events

CODI acquires and manages small to middle market businesses in the ordinary
course of its business. The following description relates to the recent
acquisition of one such business.

——————————————————————————–

PrimaLoft

On July 12, 2022 (the “Acquisition Closing Date”), Buyer completed its
acquisition of PrimaLoft pursuant to the Purchase Agreement (the “Transaction”).
Upon the completion of the Transaction, PrimaLoft became a wholly owned
subsidiary of Buyer and an indirect subsidiary of the Company. The Company paid
a purchase price of approximately $530 million, before working capital and
certain other adjustments, at the Closing (the “Purchase Price”) in connection
with the Transaction. The Company funded the purchase price with cash on its
balance sheet, a draw on its revolving credit facility of $115 million, and a
draw in full on its term loan facility of $400 million.

Prior to the Closing, certain equity holders of Seller had a portion of their
equity in Seller redeemed in exchange for equity of PrimaLoft in order to
facilitate a rollover of such PrimaLoft equity (the “Rollover Shares”) into
Relentless Topco, Inc., the parent of Buyer (“TopCo”). Following such rollover,
TopCo contributed the Rollover Shares to Buyer. Certain other members of
PrimaLoft management contributed cash in exchange for equity in TopCo. Upon
consummation of the Transaction, CODI directly owns approximately 91% of TopCo,
which in turn owns all of issued and outstanding equity interests of Buyer,
which in turn owns all of the issued and outstanding equity interests of
PrimaLoft.

Concurrent with the Closing, the Company provided a credit facility to
PrimaLoft, and its wholly owned subsidiary, PrimaLoft, Inc. (“OpCo”), as
borrowers, pursuant to which a secured revolving loan commitment and secured
term loan were made available to PrimaLoft and OpCo (the “PrimaLoft Credit
Agreement”). The initial revolving loan and term loan commitments under these
facilities on the Acquisition Closing Date were $178 million. The loans advanced
under the PrimaLoft Credit Agreement to PrimaLoft and OpCo are guaranteed by
TopCo and Buyer and are secured by security interests in substantially all the
assets and properties of TopCo, Buyer, PrimaLoft and OpCo, including a pledge by
Buyer of all of the equity interests in PrimaLoft, a pledge by TopCo of all of
the equity interests in Buyer, a pledge by PrimaLoft of all of the equity
interests in OpCo, and a pledge by OpCo of 65% of the equity interests in its
foreign subsidiaries PrimaLoft GmbH, PL VAT Services S.r.l., and PrimaLoft
(Xiamen) Trading Co., Ltd.
. In addition to being similar to the terms and
conditions of the credit facilities in place with its existing subsidiary
businesses, the Company believes that the agreed terms of the loans are fair and
reasonable given the leverage and risk profile of PrimaLoft and its
subsidiaries.

Compass Group Management (“CGM”) has entered into a waiver of the Management
Services Agreement (“MSA”) with the Company as of the Acquisition Closing Date
for the period through September 30, 2023 to receive 50% of the annual
management fee that the Company will pay to CGM under the MSA related to the net
assets of PrimaLoft.

The foregoing brief description of the Transaction is not meant to be exhaustive
and is qualified in its entirety by the full text of the Purchase Agreement,
which is incorporated herein by reference to Exhibit 99.3 to CODI’s Current
Report on Form 8-K filed on June 6, 2022.

Item 9.01 Financial Statements and Exhibits

(a) Financial statements of the businesses acquired

To the extent required by this item, historical financial statements for the
Transaction referenced in Item 8.01 above will be filed in an amendment to this
Current Report on Form 8-K no later than 71 calendar days after the date of this
report is due.

(b) Pro forma financial information

To the extent required by this item, pro forma financial information relating to
the Transaction referenced in Item 8.01 above will be filed in an amendment to
this Current Report on Form 8-K no later than 71 calendar days after the date of
this report is due.

(d) Exhibits.

——————————————————————————–

Exhibit Number                Description

10.1                            Third Amended and Restated Credit Agreement among Compass Group
                              Diversified Holdings LLC, the financial institutions party thereto and
                              Bank of America, N.A., dated as of July 12, 2022.

99.1                            Press Release dated July 13, 2022 announcing the closing of the
                              Transaction.

                              Cover Page Interactive Data File (embedded within the Inline XBRL
104                           document)






——————————————————————————–

© Edgar Online, source Glimpses

By AKDSEO