UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 30, 2017
HENNESSY ADVISORS, INC.
(Exact name of registrant as specified in its charter)
| California | 001-36423 | 68-0176227 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
7250 Redwood Blvd., Suite 200 Novato, California |
94945 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number including area code: (415) 899-1555
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 1.01. | Entry into a Material Definitive Agreement |
On November 30, 2017, Hennessy Advisors, Inc. (the “Company”) entered into a Third Amendment to Term Loan Agreement (the “Amendment”), by and between the Company, U.S. Bank National Association, as administrative agent (in such capacity, “Agent”) and as a lender, and California Bank & Trust, as a lender, which amended the Term Loan Agreement, dated as of September 17, 2015, by and between the Company, U.S. Bank National Association, as Agent and as a lender, and California Bank & Trust, as syndication agent and as a lender (the “Loan Agreement”), as amended by the First Amendment to the Term Loan Agreement, dated as of September 19, 2016 (the “First Amendment”), and the Second Amendment to the Term Loan Agreement, dated as of November 16, 2017 (the “Second Amendment”).
The Amendment provided the Agent’s authorization for Hennessy Advisors to consummate the acquisition described in Item 2.01 below.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment filed herewith as Exhibit 99.1 and incorporated herein by reference. A complete copy of the Loan Agreement is incorporated by reference herein from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on September 23, 2015. Complete copies of the First Amendment and Second Amendment are incorporated by reference herein from Exhibit 99.1 to each of the Company’s Current Reports on Form 8-K filed with the SEC on September 23, 2016, and November 20, 2017, respectively.
| Item 2.01. | Completion of Acquisition or Disposition of Assets |
On December 1, 2017, the Company completed the acquisition (the “Acquisition”) of certain assets of Rainier Investment Management, LLC (“Rainier”) related to the management of the Rainier Large Cap Equity Fund and the Rainier Mid Cap Equity Fund (collectively, the “Rainier Large and Mid Cap Funds”). The Acquisition was consummated in accordance with the terms and conditions of the previously announced Transaction Agreement, dated as of May 10, 2017, among the Company, Rainier, and Rainier’s majority owner, Manning & Napier Group, LLC (the “Transaction Agreement”). As provided in the Transaction Agreement, at the closing of the Acquisition, the Rainier Large Cap Equity Fund was reorganized into the Hennessy Cornerstone Large Growth Fund, and the Rainier Mid Cap Equity Fund was reorganized into the Hennessy Cornerstone Mid Cap 30 Fund.
In connection with the closing of the Acquisition, the Company paid a total of $1.0 million in cash, which was based on 0.85% of the aggregate current net asset value of the Rainier Large and Mid Cap Funds measured as of the close of business on the trading day immediately preceding the closing date of the transaction.
A description of the principal terms of the Transaction Agreement and the Acquisition is incorporated by reference herein from Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 11, 2017.
| Item 7.01. | Regulation FD Disclosure |
On December 1, 2017, the Company issued a press release announcing the completion of the Acquisition. A copy of the press release is being furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated into this Form 8-K by reference.
| Item 8.01. | Other Events |
The Transaction Agreement also provides for the purchase of the assets relating to the management of the Rainier Small/Mid Cap Equity Fund. The special meeting of the shareholders of the Rainier Small/Mid Cap Equity Fund to approve that transaction was adjourned to December 26, 2017. If approved by the shareholders, it is anticipated that the reorganization of the Rainier Small/Mid Cap Equity Fund into the Hennessy Cornerstone Mid Cap 30 Fund will be completed during the first quarter of calendar year 2018.
| Item 9.01. | Financial Statements and Exhibits |
Exhibit 99.1 listed in the exhibit index below is filed under Item 1.01 of this Current Report on Form 8-K, and Exhibit 99.2 listed in the exhibit index below is furnished under Item 7.01 of this Current Report on Form 8-K.
EXHIBIT INDEX
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HENNESSY ADVISORS, INC. | |||
| December 1, 2017 | By: | /s/ Neil J. Hennessy | |
| Neil J. Hennessy | |||
| Chief Executive Officer | |||
Exhibit 99.1
THIRD AMENDMENT TO TERM LOAN AGREEMENT
THIS THIRD AMENDMENT TO TERM LOAN AGREEMENT (this “Amendment”) is made and entered into as of November 30, 2017 (the “Effective Date”), by and between HENNESSY ADVISORS, INC., a California corporation (“Borrower”), Lenders from time to time party to the Agreement (defined below), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as Administrative Agent (“Agent”); and has reference to the following facts and circumstances (the “Recitals”):
A. Borrower, Lenders and Agent executed the Term Loan Agreement dated as of September 17, 2015, the First Amendment to Term Loan Agreement dated as of September 19, 2017 and the Second Amendment to Term Loan Agreement dated as of November 21, 2017 (as previously amended and as amended by this Amendment, the “Agreement”; all capitalized terms used and not otherwise defined in this Amendment shall have the respective meanings ascribed to them in the Agreement as amended by this Amendment and prior amendments).
B. Borrower, Lenders and Agent agree to further amend the Agreement as set forth below.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, Lenders and Agent hereby agree as follows:
1. Recitals. The Recitals are true and correct, and, together with the defined terms set forth therein, are incorporated herein by this reference.
2. Amendment to Agreement. As of the Effective Date, the Agreement is amended as follows:
(a) The following definition of “Rainier Acquisition” is added to Section 1.01 of the Agreement (in the correct alphabetical order):
Rainier Acquisition shall mean the Acquisition by Borrower of the Purchased Assets (as defined therein) of Rainer Investment Management, LLC (“Seller”) as described in the Transaction Agreement dated as of May 10, 2017, executed by Borrower, Seller, and Manning & Napier Group, LLC (the “Rainier Agreement”).
(b) The following is added to the end of Section 5.02(l):
Notwithstanding anything to the contrary in this Agreement, Borrower may consummate the Rainier Acquisition as long as (1) no Default or Event of Default has occurred and is outstanding, (2) Borrower provides Agent with evidence reasonably acceptable to Agent that the conditions described in Section 5.02(l)(i), 5.02(l)(ii), 5.02(l)(iii) and 5.02(l)(iv) have been complied with, (3) the Rainier Acquisition may be consummated in two parts as long as the entire Rainier Acquisition is closed no later than February 28, 2018 and (4) the Purchase Price (as defined in the Rainier Agreement) does not exceed $4,000,000. The Rainier Acquisition shall be disregarded with respect to future Acquisitions for purposes of clauses (vi) and (vii) above.
3. Costs and Expenses. Borrower hereby agrees to reimburse Agent upon demand for all out-of-pocket costs and expenses (including, without limitation, Attorneys’ Fees) incurred by Lender in the preparation, negotiation and execution of this Amendment and any and all other agreements, documents, instruments and/or certificates relating to the amendment of Borrower’s existing credit facilities with Lender. Borrower further agrees to pay or reimburse Agent and Lenders: (a) for any stamp or other taxes (excluding income or gross receipts taxes) which may be payable with respect to the execution, delivery, filing and/or recording of any of the Transaction Documents; and (b) for the cost of any filings and searches, including, without limitation, Uniform Commercial Code filings and searches. All of the obligations of Borrower under this Section 3 shall survive the payment of Borrower’s Obligations, the Maturity Date, and the termination of the Agreement.
4. References to the Agreement. All references in the Agreement to “this Agreement”, “the Agreement” and any other references of similar import shall mean the Agreement as previously amended and as amended by this Amendment.
5. Full Force and Effect. Except to the extent specifically amended by this Amendment, all of the terms, provisions, conditions, covenants, representations and warranties contained in the Agreement and the other Transaction Documents shall be and remain in full force and effect and the same are hereby ratified and confirmed.
6. Benefit. The Agreement and the other Transaction Documents shall be binding upon and inure to the benefit of Borrower, Lenders, Agent and their respective successors and assigns, except that Borrower may not assign, transfer or delegate any of its rights or obligations under the Agreement and the other Transaction Documents as amended by this Amendment.
7. Representations and Warranties. Borrower hereby represents and warrants to Lenders and Agent that:
(a) the execution, delivery and performance by Borrower of this Amendment are within the corporate powers of Borrower, have been duly authorized by all necessary corporate action on the part of Borrower and require no action by or in respect of, consent of or filing or recording with, any governmental or regulatory body, instrumentality, authority, agency or official or any other Person;
(b) the execution, delivery and performance by Borrower of this Amendment do not conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under or result in any violation of, the terms of the Articles of Incorporation or the Second Amended and Restated Bylaws of Borrower, any applicable Laws, order, writ, judgment or decree of any court or Governmental Authority or any agreement, document or instrument to which Borrower is a party or by which Borrower or any of its Property is bound or to which Borrower or any of its Property is subject;
(c) this Amendment has been duly executed and delivered by Borrower and constitutes the legal, valid and binding obligation of Borrower enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency or other similar Laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);
(d) all of the representations and warranties made by Borrower in the Agreement and in the other Transaction Documents are true and correct in all material respects on and as of the Effective Date as if made on and as of the Effective Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true or correct in all material respects on and as of such earlier date;
(e) no Default or Event of Default under or within the meaning of the Agreement has occurred and is continuing; and
(f) there has been no change in the financial condition or results of operations of Borrower since September 30, 2017, which had a Material Adverse Effect.
8. Inconsistency. In the event of any inconsistency or conflict between this Amendment and the Agreement, the terms, provisions and conditions contained in this Amendment shall govern and control.
9. Governing Law. This Amendment shall be governed by and construed in accordance with the substantive laws of the State of Missouri (without reference to conflict of law principles) but giving effect to Federal laws applicable to national banks.
10. Electronic Imaging. Borrower acknowledges the receipt of copies of the Agreement, the Note, this Amendment and all other Transaction Documents. Lender may, on behalf of Borrower, create a microfilm or optical disk or other electronic image of the Agreement, the Note, this Amendment and any or all of the Transaction Documents. Lender may store the electronic image of the Agreement, the Note, this Amendment and any other Transaction Document in its electronic form and then destroy the paper original as part of Lender’s normal business practices, with the electronic image deemed to be an original.
| -2- |
11. Notice Required by Section 432.047 R.S. Mo. ORAL OR UNEXECUTED AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
10. Conditions Precedent. Notwithstanding any provision contained in this Amendment to the contrary, this Amendment shall not be effective unless and until Agent shall have received the following, all in form and substance reasonably acceptable to Agent:
(a) this Amendment, duly executed by Borrower;
(b) the Certificate of Secretary (with the form of a Unanimous Written Consent Action of the Board of Directors attached thereto), duly certified by the Secretary of Borrower;
(c) a current certificate of good standing for Borrower, issued by the California Secretary of State (or other evidence of good standing acceptable to Lender); and
(d) such other documents and information as reasonably requested by Lender.
Borrower, Lenders and Agent executed this Amendment as of the Effective Date.
[SIGNATURES ON FOLLOWING PAGE]
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SIGNATURE PAGE-
THIRD AMENDMENT TO TERM LOAN AGREEMENT
| Borrower: | |||
| HENNESSY ADVISORS, INC. | |||
| By: | /s/ Neil J. Hennessy | ||
| Name: | Neil J. Hennessy | ||
| Title: | President and Chief Executive Officer | ||
| Agent and Lenders: | |||
| U.S. BANK NATIONAL ASSOCIATION, as Agent and Lender | |||
| By: | /s/ Karen D. Myers | ||
| Name: | Karen D. Myers | ||
| Title: | Senior Vice President | ||
| CALIFORNIA BANK & TRUST, | |||
| a division of ZB, N.A., as a Lender | |||
| By: | /s/ James Lee | ||
| Name: | James Lee | ||
| Title: | Senior Vice President | ||
| -4- |
Exhibit 99.2
Hennessy Advisors, Inc. Acquires Two Rainier U.S. Equity Funds
NOVATO, Calif., Dec. 1, 2017 /PRNewswire/ -- Hennessy Advisors, Inc. (NASDAQ: HNNA) today announced that it has completed the acquisition of assets related to the management of the Rainier Large Cap Equity Fund and the Rainier Mid Cap Equity Fund. As a result, the Rainier Large Cap Equity Fund will be reorganized into the Hennessy Cornerstone Large Growth Fund, and the Rainier Mid Cap Equity Fund will be reorganized into the Hennessy Cornerstone Mid Cap 30 Fund. This acquisition represents approximately $122 million in assets, bringing total assets managed by Hennessy Advisors, Inc. to nearly $7 billion.
"I want to thank the shareholders of the Rainier Large Cap Equity and Rainier Mid Cap Equity Funds for placing their confidence in us and welcome them into the Hennessy family of funds," said Neil Hennessy, Chairman, CEO and President of Hennessy Advisors, Inc. "We are honored to have the opportunity to serve these shareholders and look forward to helping them meet their investment goals," he added.
The Special Meeting of shareholders of the Rainier Small/Mid Cap Equity Fund, the last remaining Rainier U.S. Fund, has been adjourned to December 26, 2017. Pending shareholder approval, the Rainier Small/Mid Cap Equity Fund will be reorganized into the Hennessy Cornerstone Mid Cap 30 Fund in mid-January 2018.
About Hennessy Advisors, Inc.
Hennessy Advisors, Inc. is a publicly traded investment manager offering a broad range of domestic equity, multi-asset, sector and specialty mutual funds. Hennessy Advisors, Inc. is committed to its consistent and repeatable investment process, combining time-tested stock selection strategies with a highly disciplined, team-managed approach, and to superior service to shareholders.
Additional Information
Nothing in this press release shall be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.
Available Topic Expert: For information on the listed expert, click appropriate link.
Neil J. Hennessy - http://www.profnetconnect.com/neil_hennessy
CONTACT: Tania Kelley, Hennessy Advisors, Inc., tania@hennessyadvisors.com, Phone: 800-966-4354