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Subsequent Events
12 Months Ended
Dec. 31, 2016
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 15 - SUBSEQUENT EVENTS

 

Amended and Restated Warrant Cancellation and Stock Issuance Agreement

 

Effective January 9, 2017, the Company entered into that certain Amended and Restated Warrant Cancellation and Stock Issuance Agreement (the “Warrant Cancellation Agreement”) with Goldman, Sachs & Co. (“GS”). Pursuant to the Warrant Cancellation Agreement, upon the closing of a “Qualified Offering” as defined in the Warrant Cancellation Agreement, the Amended and Restated Warrant will be cancelled and the Company will issue to GS restricted shares of common stock in the amount equal to a 6.5% ownership interest in the Company calculated on a fully-diluted basis, which includes the shares of common stock issued pursuant to this offering, but excludes all warrants issued pursuant to such Qualified Offering and all shares underlying such warrants, pursuant to the terms and conditions of the Warrant Cancellation Agreement. As a result the Company issued GS 421,326 shares of common stock for the warrant cancellation. Pursuant to the Warrant Cancellation Agreement, GS entered into a lock-up agreement, prohibiting the offer for sale, issue, sale, contract for sale, pledge or other disposition of any of the Company’s common stock or securities convertible into common stock for a period of 180 days after the date of the Qualified Offering, and no registration statement for any of our common stock owned by GS can be filed during such lock-up period

 

Underwriting Agreement

 

On January 24, 2017, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Joseph Gunnar & Co., LLC, as representative of the several underwriters listed therein (the “Underwriters”), with respect to the issuance and sale in an underwritten public offering (the “Offering”) by the Company of an aggregate 3,000,000 shares of the Company’s common stock, par value $0.025 per share (“Shares”) and warrants to purchase up to an aggregate of 3,000,000 shares of common stock (the “Warrants”), at a combined public offering price of $4.13 per unit comprised of one Share and one Warrant. Each warrant is exercisable for five years from issuance and has an exercise price equal to $5.16.

 

Pursuant to the Underwriting Agreement, the Company granted the Underwriters a 45-day option to purchase up to an additional 450,000 Shares and/or 450,000 Warrants. Axiom Capital Management, Inc. acted as a co-manager for the offering.

 

The Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions. In addition, pursuant to the terms of the Underwriting Agreement and related “lock-up” agreements, the Company, each director and executive officer of the Company, and the Company’s principal stockholders have agreed, subject to certain exceptions, not to sell, transfer or otherwise dispose of securities of the Company for a period of 180 days after the date of the Underwriting Agreement, in the case of the Company and its directors and officers, and 90 days after the date of the Underwriting Agreement, in the case of the Company’s principal stockholders, subject to extensions in certain circumstances.

 

The Offering closed on January 30, 2017, upon satisfaction of customary closing conditions.

 

The Company received approximately $11,000,000 in net proceeds from the Offering after deducting the underwriting discount and other estimated offering expenses payable by the Company. The Company expects to use the net proceeds of the Offering for capital expenditures, potential acquisitions, repayment of certain debt obligations, working capital, and other general corporate purposes.

  

Preferred Series C conversion

 

In February of 2017 all 35,750 shares of Preferred Series C was converted into 1,082,022 shares of common stock. The shares were converted according to the terms in the original agreement which was the lower of $22.40 or at a 20% discount to the public offering price per unit of $4.13 or $3.30.

 

All holders of the Company's Series C Preferred Stock have entered into lock-up agreements restricting their ability to sell or dispose of any shares of common stock issued upon conversion of the Series C Preferred Stock for a period of 90 days from the effective date of this offering.

 

Convertible Note Payable 

 

In February of 2017 the convertible promissory note issued to the seller of Christian Disposal was paid in full, including all accrued interest.

 

Amended and Restated Credit and Guaranty Agreement

 

On February 15, 2017 (the “Restatement Date”), the Company closed an Amended and Restated Credit and Guaranty Agreement (the “Credit Agreement”) by and among the Company and all subsidiaries, (the “Companies”), and certain subsidiaries of the Company, as Guarantors, the Lenders party thereto from time to time and Goldman Sachs Specialty Lending Group, L.P., as Administrative Agent, Collateral Agent, and Lead Arranger. The Credit Agreement amended and restated the Credit and Guaranty Agreement entered into as of December 22, 2015 (the “Closing Date”) by and among the Company, certain of the Companies, and certain subsidiaries of the Company, as Guarantors, the Lenders party thereto from time to time and Goldman Sachs Specialty Lending Group, L.P., as Administrative Agent, Collateral Agent, and Lead Arranger (as amended prior to the Restatement Date, the “Prior Credit Agreement”).


Pursuant to the Credit Agreement, the Lenders thereunder have agreed to extend certain credit facilities to the Companies, in an aggregate amount not to exceed $89,100,000, consisting of $65,500,000 aggregate principal amount of Tranche A Term Loans (the “Tranche A Term Loans”), $8,600,000 aggregate principal amount of Tranche B Term Loans (the “Tranche B Term Loans”), $10,000,000 aggregate principal amount of MDTL Term Loans (the “MDTL Term Loans”), and up to $5,000,000 aggregate principal amount of Revolving Commitments (the “Revolving Commitments”, the Revolving Commitments together with the Tranche A Term Loans, Tranche B Term Loans and the MDTL Term Loans, the “Loans”). The principal amount of the Tranche A Term Loans in the Credit Agreement is $25,500,000 greater than the principal amount provided in the Prior Credit Agreement; the Tranche B Term Loans were not contemplated in the Prior Credit Agreement; and the principal amount of the MDTL Term Loans and Revolving Credit Agreements in the Credit Agreement are the same as provided in the Prior Credit Agreement. The proceeds of the Tranche A Term Loans made on the Closing Date were used to pay a portion of the purchase price for the acquisitions made in connection with the closing of the Prior Credit Agreement, to refinance existing indebtedness, to fund consolidated capital expenditures, and for other purposes permitted under Section 2.5 of the Prior Credit Agreement. The proceeds of the Tranche A Term Loans and Tranche B Term Loans made on the Restatement Date shall be applied by Companies to (i) partially fund the Restatement Date Acquisition (as defined below), (ii) refinance existing indebtedness of the Companies, (iii) pay fees and expenses in connection with the transactions contemplated by the Credit Agreement, and (iv) for working capital and other general corporate purposes.

 

The “Restatement Date Acquisition” means the acquisition of all membership interests of CFS, CFS Disposal and RWG5, as contemplated in the Purchase Agreement (defined below).

 

The proceeds of the Revolving Loans will be used for working capital and general corporate purposes. The proceeds of the MDTL Term Loans may be used for Permitted Acquisitions (as defined in the Credit Agreement). The Loans are evidenced, respectively, by that certain Tranche A Term Loan Note, Tranche B Term Loan Note, MDTL Note and Revolving Loan Note, all issued on February 15, 2017 (collectively, the “Notes”). Payment obligations under the Loans are subject to certain prepayment premiums, in addition to acceleration upon the occurrence of events of default under the Credit Agreement.

 

The amounts borrowed pursuant to the Loans are secured by a first position security interest in substantially all of the Company’s and the Companies’ assets in favor of Agent, in accordance with that certain Amended and Restated Pledge and Security Agreement dated as of February 15, 2017 (the “Pledge and Security Agreement”).

 

As of December 31, 2016 and at certain times thereafter, the Company was in violation of covenants within its credit agreement with Goldman Sachs & Co. The lenders and agents and the Company and its affiliates entered into a waiver and amendment letter dated April 11, 2017, whereby the covenant violations as of December 31, 2016 were waived. The next measurement date of all covenants is as of March 31, 2017, we are in the process of preparing our submission to our lender.

 

The CFS Group Acquisition

 

On February 15, 2017, the Company, in order to expand into new markets outside of the state of Missouri, acquired 100% of the membership interests of The CFS Group, LLC, The CFS Group Disposal & Recycling Services, LLC and RWG5, LLC (collectively, “The CFS Group”) pursuant to that certain Membership Interest Purchase Agreement, dated February 15, 2017.

 

The purchase price was approximately $42,000,000, which consisted of approximately $37,500,000 in cash, $1,300,000 of restricted common stock and approximately $3,000,000 of working capital.