S-4/A 1 prmw20161110_s4a.htm FORM S-4/A prmw20161018_s4.htm Table Of Contents

As filed with the Securities and Exchange Commission on November 29, 2016

Registration No. 333-214200

 



 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

Amendment No. 1

to

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

_________________________

PRIMO WATER CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of

incorporation or organization)

5141

(Primary Standard Industrial

Classification Code Number)

30-0278688

(I.R.S. Employer

Identification No.)

     

101 North Cherry Street, Suite 501

Winston-Salem, North Carolina 27101

(336) 331-4000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Mark Castaneda

Chief Financial Officer

Primo Water Corporation

101 North Cherry Street, Suite 501

Winston-Salem, North Carolina 27101

(336) 331-4000

 (Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Gerald F. Roach

Amy M. Batten

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.

Wells Fargo Capitol Center

150 Fayetteville Street, Suite 2300

Raleigh, North Carolina 27601

(919) 821-1220

Sean M. Jones

K&L Gates LLP

214 North Tryon Street

Suite 4700

Charlotte, North Carolina 28202

(704) 331-7406

Howard F. Hart

Ervin Cohen & Jessup LLP

9401 Wilshire Boulevard, Ninth Floor

Beverly Hills, California 90212-2974

(310) 281-6370

 

Approximate Date of Commencement of Proposed Sale of the Securities to the Public: As soon as practicable after the effective date of this Registration Statement and upon completion of the merger described in the enclosed consent solicitation statement/prospectus.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐__________

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐ __________

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

Accelerated filer

☒ 

 

Non-accelerated filer

  (Do not check if a smaller reporting company)

Smaller reporting company

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

  

 

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

The information in this consent solicitation statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This consent solicitation statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

 

Preliminary—Subject to Completion Dated November 29, 2016

 

 

CONSENT SOLICITATION STATEMENT OF

GLACIER WATER SERVICES, INC.

 

PROSPECTUS OF

PRIMO WATER CORPORATION

 

 

To Stockholders of Glacier Water Services, Inc.:

 

As you may be aware, Primo Water Corporation, a Delaware corporation (“Primo”), entered into an Agreement and Plan of Merger, dated as of October 9, 2016 (the “Merger Agreement”), by and among Primo, Primo Subsidiary, Inc., a Delaware corporation and wholly-owned subsidiary of Primo (“Merger Sub”), Glacier Water Services, Inc., a Delaware corporation (“Glacier”), and David Shladovsky, as Stockholder Representative. Pursuant to the Merger Agreement, Merger Sub will merge with and into Glacier with Glacier remaining as the surviving entity and a wholly-owned subsidiary of Primo (the “Merger”).

 

The aggregate purchase price to be paid by Primo to holders of Glacier common stock, holders of options to purchase shares of Glacier common stock and the holder of LLC common units of GW Services LLC (the “Merger consideration”) will consist of (a) approximately $86.0 million in a combination of cash and shares of Primo common stock (less certain expenses incurred by Glacier in connection with the Merger), subject to adjustment pursuant to the Merger Agreement, and (b) warrants to purchase 2.0 million shares of Primo common stock. The precise amount of the aggregate Merger consideration and the resulting Per Share Merger Consideration (as defined in this consent solicitation statement/prospectus) will not be known until shortly before the effective time of the Merger, but it is currently expected to consist approximately of $12.17 in cash, 0.87 of a share of Primo common stock and a warrant to purchase 0.54 of a share of Primo common stock.

 

Primo common stock is traded on the Nasdaq Global Market under the symbol “PRMW.” On October 7, 2016, the last trading day prior to the announcement of the Merger, the last reported sale price of Primo common stock on the Nasdaq Global Market was $11.85. On November 25, 2016, the most recent practicable date prior to the filing of the accompanying consent solicitation statement/prospectus, the last reported sale price of Primo common stock on the Nasdaq Global Market was $13.35. We urge you to obtain current stock price quotations for Primo common stock from a newspaper, the internet or your broker.

 

Glacier common stock is quoted in the Pink Sheet Electronic Quotation Service under the symbol “GWSV.” On October 7, 2016, the last trading day prior to the announcement of the Merger, the last reported sale price of Glacier common stock on the Pink Sheet Electronic Quotation Service was $11.00. On November 25, 2016, the most recent practicable date prior to the filing of the accompanying consent solicitation statement/prospectus, the last reported sale price of Glacier common stock on the Pink Sheet Electronic Quotation Service was $23.10. We urge you to obtain current stock price quotations for Glacier common stock from the internet or your broker.

 

The Glacier board of directors has carefully considered the Merger and the terms of the Merger Agreement and has unanimously determined that the Merger and the Merger Agreement are advisable, fair to and in the best interests of Glacier and its stockholders. Accordingly, the Glacier board of directors has unanimously adopted and approved the Merger and the Merger Agreement. However, the approval of Glacier stockholders holding a majority of the outstanding shares of Glacier common stock entitled to vote on the adoption of the Merger Agreement is required for the Merger to close, and you are being sent this document to ask you to adopt and approve the Merger Agreement and the Merger by signing and returning the consent furnished with this consent solicitation statement/prospectus. No vote of Primo stockholders is required to complete the Merger.

 

Certain principal stockholders of Glacier have entered into voting agreements with Primo with respect to a portion of their shares, representing approximately 33.3% of all currently outstanding shares of Glacier common stock, under which they have agreed, among other things, to vote all of the shares covered by the voting agreements in favor of adoption and approval of the Merger Agreement and the Merger.

 

The Glacier board of directors has set October 6, 2016 as the record date for determining holders of Glacier common stock entitled to sign and deliver consents with respect to this solicitation. If you are a record holder of outstanding Glacier common stock on that date, you are urged to complete, date and sign the enclosed consent and promptly return it to Glacier. See the section entitled “Solicitation of Consents” beginning on page 45.

 

We encourage you to read carefully this consent solicitation statement/prospectus and the documents incorporated by reference into this consent solicitation statement/prospectus in their entirety, including the section entitled “Risk Factors” beginning on page 30.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this consent solicitation statement/prospectus, or determined if this consent solicitation statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

This consent solicitation statement/prospectus is dated [•], 2016, and is first being mailed to Glacier stockholders on or about [•], 2016.

 

 

/s/ Brian H. McInerney

 

Brian H. McInerney

 

President and Chief Executive Officer

Glacier Water Services, Inc.

 

 
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GLACIER WATER SERVICES, INC.

1385 Park Center Drive

Vista, California 92081

 

Notice of Solicitation of Consent

 

To Stockholders of Glacier Water Services, Inc.:

 

Pursuant to an Agreement and Plan of Merger, dated as of October 9, 2016 (the “Merger Agreement”), by and among Primo Water Corporation, a Delaware corporation (“Primo”), Primo Subsidiary, Inc., a Delaware corporation and wholly-owned subsidiary of Primo (“Merger Sub”), Glacier Water Services, Inc., a Delaware corporation (“Glacier”), and David Shladovsky, as Stockholder Representative, Merger Sub will merge with and into Glacier with Glacier remaining as the surviving entity and a wholly-owned subsidiary of Primo (the “Merger”).

 

This consent solicitation statement/prospectus is being delivered to you on behalf of the Glacier board of directors to request that holders of Glacier common stock as of the record date of October 6, 2016 sign and return consents to adopt and approve the Merger Agreement and the Merger.

 

This consent solicitation statement/prospectus describes the proposed Merger and the actions to be taken in connection with the Merger and provides additional information about the parties involved. Please give this information your careful attention. A copy of the Merger Agreement is attached as Appendix A to this consent solicitation statement/prospectus.

 

A summary of the appraisal rights that may be available to you is described below under “Appraisal Rights.” Please note that if you wish to exercise appraisal rights you must not sign and return a consent adopting and approving the Merger Agreement and the Merger. However, so long as you do not return a consent form at all, it is not necessary to affirmatively vote against or disapprove the Merger. In addition, you must take all other steps necessary to perfect your appraisal rights.

 

The Glacier board of directors has carefully considered the Merger and the terms of the Merger Agreement and has unanimously determined that the Merger and the Merger Agreement are advisable, fair to and in the best interest of Glacier and its stockholders.

 

Please complete, date and sign the consent furnished with this consent solicitation statement/prospectus and return it promptly to Glacier by one of the means described in the section entitled “Solicitation of Consents.”

 

 

By Order of the Board of Directors,

   
 

/s/ Steven D. Stringer

  Steven D. Stringer
 

Secretary

 

 

ADDITIONAL INFORMATION

 

This consent solicitation statement/prospectus incorporates by reference important business and financial information about Primo from other documents that Primo has filed with the U.S. Securities and Exchange Commission (the “SEC”). These documents are furnished to you with this consent solicitation statement/prospectus. For a listing of the documents incorporated by reference into this consent solicitation statement/prospectus, see the section entitled “Where You Can Find Additional Information.”

 

Primo will provide you with copies of such documents (excluding all exhibits, unless Primo has specifically incorporated by reference an exhibit in the accompanying consent solicitation statement/prospectus), without charge, upon written or oral request to:

 

Primo Water Corporation

Investor Relations

101 North Cherry Street, Suite 501

Winston-Salem, North Carolina 27101

(336) 331-4000

 

To ensure timely delivery, any request should be made at least five business days before [•], 2016, the targeted final date for receipt of consents.

 

ABOUT THIS CONSENT SOLICITATION STATEMENT/PROSPECTUS

 

This consent solicitation statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by Primo, constitutes a prospectus of Primo under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of Primo common stock and the warrants to purchase shares of Primo common stock to be issued to Glacier stockholders, holders of Glacier stock options and the holder of LLC common units (the “minority LLC common units”) of GW Services LLC, a California limited liability company and subsidiary of Glacier, pursuant to the Merger Agreement. This document also constitutes a consent solicitation statement of Glacier with respect to the proposal to adopt the Merger Agreement.

 

Primo has supplied all information contained or incorporated by reference in this consent solicitation statement/prospectus relating to Primo, including Primo’s most recent Annual Report on Form 10-K for the year ended December 31, 2015 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016. Primo has not authorized anyone to provide you with information that is different from what is contained in this consent solicitation statement/prospectus.

 

You should rely only on the information contained in or incorporated by reference into this consent solicitation statement/prospectus. Neither Primo nor Glacier has authorized anyone to provide you with different information. This consent solicitation statement/prospectus is dated as of [•], 2016. You should not assume that information contained in this consent solicitation statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this consent solicitation statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this consent solicitation statement/prospectus to the Glacier equityholders nor the issuance by Primo of common stock and warrants to purchase common stock in the Merger will create any implication to the contrary.

 

This consent solicitation statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a consent, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation. Information contained in this consent solicitation statement/prospectus regarding Primo has been provided by Primo and information contained in this consent solicitation statement/prospectus regarding Glacier has been provided by Glacier.

 

 

All references in this consent solicitation statement/prospectus to “Primo” refer to Primo Water Corporation, a Delaware corporation; all references in this consent solicitation statement/prospectus to “Merger Sub” refer to Primo Subsidiary, Inc., a Delaware corporation and wholly-owned subsidiary of Primo; all references in this consent solicitation statement/prospectus to “Glacier” refer to Glacier Water Services, Inc., a Delaware corporation, and (except where the context indicates otherwise) its subsidiaries; all references in this consent solicitation statement/prospectus to the “Combined Company” refer to Primo following the completion of the Merger; all references in this consent solicitation statement/prospectus to “Primo common stock” refer to the common stock, par value $0.001 per share, of Primo; all references in this consent solicitation statement/prospectus to “warrants to purchase shares of Primo common stock” refer to the warrants to be issued by Primo to Glacier equityholders in connection with the Merger to purchase shares of Primo common stock at an exercise price equal to $11.88 per share of Primo common stock; all references in this consent solicitation statement/prospectus to “Primo stockholders” refer to the holders of Primo common stock; all references in this consent solicitation statement/prospectus to “Glacier common stock” refer to the common stock, par value $0.01 per share, of Glacier; all references in this consent solicitation statement/prospectus to “Glacier stockholders” refer to the holders of Glacier common stock; all references in this consent solicitation statement/prospectus to “Glacier stock options” refer to the option to purchase shares of Glacier common stock; all references in this consent solicitation statement/prospectus to “holders of Glacier stock options” refer to the holders of options to purchase shares of Glacier common stock; all references in this consent solicitation statement/prospectus to “minority LLC common units” refer to the LLC common units of GW Services LLC, a California limited liability company and a majority-owned subsidiary of Glacier; all references in this consent solicitation statement/prospectus to “Glacier equityholders” refer to the Glacier stockholders, holders of options to purchase shares of Glacier common stock, and Glacier Water Holdings, LLC, the holder of the minority LLC common units; all references in this consent solicitation statement/prospectus to the “Merger” refer to the proposed merger of Merger Sub with and into Glacier; unless otherwise indicated or as the context requires, all references in this consent solicitation statement/prospectus to “we,” “our” and “us” refer to Primo and Glacier collectively; and, unless otherwise indicated or as the context requires, all references to the “Merger Agreement” refer to the Agreement and Plan of Merger, dated as of October 9, 2016, by and among Primo, Merger Sub, Glacier, and David Shladovsky, as Stockholder Representative.

 

 
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TABLE OF CONTENTS

 

Page

 

QUESTIONS AND ANSWERS

1

SUMMARY

8

The Companies

8

The Merger

9

Merger Consideration

9

Per Share Merger Consideration

10

Treatment of Glacier Stock Options and Minority LLC Common Units

10

Escrow

11

Certain Other Effects of the Merger

11

Exchange Procedures for Shares of Glacier Common Stock

12

Ownership of Primo Following the Merger

12

Debt Financing of the Merger

12

Risk Factors

13

Record Date; Glacier Stockholders Entitled to Consent

13

Consents; Required Consents

13

Submission of Consents

14

Signing Consents; Revocation of Consents

14

Solicitation

14

Primo’s Reasons for the Merger

14

Glacier’s Reasons for the Merger; Recommendation of the Glacier Board of Directors

14

Voting Agreements

15

Lock-up Agreements

15

Interests of Glacier Directors and Executive Officers in the Merger

15

Expected Timing of the Merger

16

Conditions to Completion of the Merger

17

Termination of the Merger Agreement

17

Termination Fees

18

Accounting Treatment

19

Appraisal Rights

19

Comparison of Rights of Stockholders

20

Listing of Primo Common Stock

20

Material U.S. Federal Income Tax Consequences of the Merger

20

Comparative Market Price and Dividend Matters

22

Comparative Historical and Unaudited Pro Forma Per Share Data

23

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PRIMO

25

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF GLACIER

27

SELECTED UNAUDITED PRO FORMA FINANCIAL DATA

29

RISK FACTORS

30

Risks Relating to the Merger

30

Risks Relating to the Combined Company Following the Merger

33

Risks Relating to Primo’s Business

38

Risks Relating to Glacier’s Business

38

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

43

SOLICITATION OF CONSENTS

45

THE COMPANIES

47

THE MERGER

49

The Merger

49

Effect of the Merger; Merger Consideration

49

 

 

Background of the Merger

50

Ownership of Primo Following the Merger

54

Board of Directors and Management of Primo Following the Merger

54

Primo’s Reasons for the Merger

55

Glacier’s Reasons for the Merger; Recommendation of the Glacier Board of Directors

57

Stock Ownership of Glacier Directors and Executive Officers

57

Interests of Glacier Directors and Executive Officers in the Merger

58

Accounting Treatment

59

Listing of Primo Common Stock

59

Appraisal Rights

60

Restrictions on Sales of Shares of Primo Common Stock Received in the Merger

64

Material U.S. Federal Income Tax Consequences of the Merger

64

THE MERGER AGREEMENT

68

Explanatory Note Regarding the Merger Agreement

68

The Merger

68

Completion and Effectiveness of the Merger

68

Directors and Officers of the Surviving Corporation

69

Merger Consideration

69

Per Share Merger Consideration

70

Treatment of Glacier Stock Options and the Minority LLC Common Units

70

Escrow

71

Certain Other Effects of the Merger

72

Exchange Procedures for Shares of Glacier Common Stock

72

Lost, Stolen and Destroyed Certificates

73

Representations and Warranties

73

Conduct of Business Before Completion of the Merger

75

Exclusivity

78

Glacier Stockholder Approval

79

Efforts to Complete the Merger

80

Other Covenants and Agreements

81

Conditions to Completion of the Merger

81

Survival and Indemnification

83

Termination of the Merger Agreement

84

Effect of Termination

85

Termination Fees

86

Miscellaneous

86

THE WARRANT AGREEMENT

88

THE VOTING AGREEMENTS

90

LOCK-UP AGREEMENTS

91

DESCRIPTION OF THE DEBT FINANCING

93

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

95

MARKET PRICE AND DIVIDEND INFORMATION

105

DESCRIPTION OF PRIMO CAPITAL STOCK

107

INFORMATION ABOUT GLACIER

113

COMPARISON OF RIGHTS OF PRIMO AND GLACIER STOCKHOLDERS

139

LEGAL MATTERS

147

EXPERTS

147

WHERE YOU CAN FIND ADDITIONAL INFORMATION

148

GLACIER WATER SERVICES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

F-1

  

 
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APPENDIX A –

AGREEMENT AND PLAN OF MERGER, DATED AS OF OCTOBER 9, 2016, BY AND AMONG PRIMO WATER CORPORATION, PRIMO SUBSIDIARY, INC., GLACIER WATER SERVICES, INC. AND DAVID SHLADOVSKY, AS STOCKHOLDER REPRESENTATIVE

 

APPENDIX B –

FORM OF WARRANT AGREEMENT

 

APPENDIX C –

VOTING AGREEMENTS BY AND AMONG PRIMO WATER CORPORATION AND EACH OF RICHARD KAYNE, BRIAN MCINERNEY AND CHARLES NORRIS

  

APPENDIX D –

EMPLOYMENT AGREEMENT, DATED AS OF OCTOBER 9, 2016, BETWEEN PRIMO WATER CORPORATION AND BRIAN MCINERNEY

 

APPENDIX E –

FORM OF LOCK-UP AGREEMENT

 

APPENDIX F –

SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW

  

 
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QUESTIONS AND ANSWERS

 

The following are brief answers to certain questions that you, as a Glacier equityholder, may have regarding the Merger and the Merger Agreement. Glacier equityholders should read carefully the remainder of this consent solicitation statement/prospectus because the information in this section may not provide all the information that might be important to you with respect to the Merger. Additional important information is also contained in the appendices and exhibits to, and the documents incorporated by reference in, this consent solicitation statement/prospectus. See “Where You Can Find Additional Information” beginning on page 148.

 

Q:

Why am I receiving this consent solicitation statement/prospectus?

 

A:

Primo has agreed to acquire Glacier under the terms of the Merger Agreement that is described in this consent solicitation statement/prospectus. See the section titled “The Merger Agreement” beginning on page 68 of this consent solicitation statement/prospectus. A copy of the Merger Agreement is attached to this consent solicitation statement/prospectus as Appendix A. It is the legal document that governs the Merger.

   
 

The board of directors of Glacier is providing these consent solicitation materials to the Glacier stockholders, and is soliciting such holders’ consent to a proposal to adopt and approve the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement. These consent solicitation materials also constitute a prospectus with respect to the shares of Primo common stock and the warrants to purchase shares of Primo common stock to be issued to Glacier equityholders in the Merger. This consent solicitation statement/prospectus contains important information about the Merger and the Merger Agreement, including the availability of appraisal rights in connection with the Merger, and you should read this consent solicitation statement/prospectus carefully.

  

Q:

What will happen to Glacier as a result of the Merger, and what will I receive in the Merger?

 

A:

As a result of the Merger, Merger Sub, a wholly-owned subsidiary of Primo, will merge with and into Glacier and outstanding shares of Glacier common stock, Glacier stock options and minority LLC common units will be cancelled. Upon the effective time of the Merger, you will be entitled to receive a combination of cash, shares of Primo common stock and warrants to purchase shares of Primo common stock.

 

Under the Merger Agreement, at the effective time of the Merger and without any action on the part of the holder thereof, the outstanding shares of Glacier common stock, Glacier stock options and minority LLC common units will be converted into or exchanged for the right to receive an aggregate of approximately $50,000,000 in cash and approximately $36,000,000 of shares of Primo common stock, each subject to adjustment pursuant to the Merger Agreement, and warrants to purchase 2,000,000 shares of Primo common stock at an exercise price equal to $11.88 per share of Primo common stock. The precise amount of the aggregate Merger consideration and the resulting Per Share Merger Consideration (as defined in this consent solicitation statement/prospectus) will not be known until shortly before the effective time of the Merger, but it is currently estimated to consist of approximately $12.17 in cash, 0.87 of a share of Primo common stock and a warrant to purchase 0.54 of a share of Primo common stock.

  

 

Q:

Why are Primo and Glacier proposing the Merger?

 

A:

Primo and Glacier believe that combining the strengths of the two companies is in the best interests of their respective companies and stockholders. The Merger of Primo and Glacier will unite two highly complementary brands and position the Combined Company with approximately 46,000 retail locations throughout the United States and Canada with the opportunity to generate significant operating scale through an expansive refill and exchange network. To review the reasons for the Merger in greater detail, see the sections titled “The Merger – Primo’s Reasons for the Merger” beginning on page 55 of this consent solicitation statement/prospectus and “The Merger – Glacier’s Reasons for the Merger; Recommendation of the Glacier Board of Directors” beginning on page 57 of this consent solicitation statement/prospectus.

 

Q:

Does the board of directors of Glacier support the Merger?

 

A:

Yes. The board of directors of Glacier has determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable, fair to and in the best interests of Glacier and its stockholders, and unanimously recommends that Glacier stockholders adopt and approve the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement by signing and delivering the consent furnished with this consent solicitation statement/prospectus.

 

Q:

What happens if the Merger is not consummated?

 

A:

If the Merger Agreement is not adopted by the Glacier stockholders or if the Merger is not completed for any other reason, you will not receive any payment for your shares of Glacier common stock, Glacier stock options or minority LLC common units in connection with the Merger. Instead, Glacier will remain an independent company. In certain circumstances, as described under “The Merger Agreement – Termination Fees”, a termination fee of $7.5 million may be payable by Glacier to Primo or by Primo to Glacier.

 

Q:

Who is soliciting my consent?

 

A:

The board of directors of Glacier is providing these consent solicitation materials to Glacier stockholders, and is soliciting such holders’ consent to adopt and approve the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement. These consent solicitation materials also constitute a prospectus with respect to the shares of Primo common stock and the warrants to purchase shares of Primo common stock to be issued to Glacier equityholders in the Merger.

 

Q:

What am I being asked to approve?

 

A:

Glacier stockholders are being asked to adopt and approve the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement.

 

Q:

What will I receive for my shares of Glacier common stock if the Merger is consummated?

 

A:

At the effective time of the Merger, each share of Glacier common stock (other than any dissenting shares or any shares held by Glacier or any of its subsidiaries) issued and outstanding immediately before the effective time of the Merger will be converted into the right to receive the following approximate consideration, which is referred to as the “Per Share Merger Consideration”:

 

 

$12.17 in cash, which is referred to as the “Per Share Cash Amount;”

  

 

 

0.87 of a share of Primo common stock, which is referred to as the “Per Share Stock Amount;” and

 

 

a warrant to purchase 0.54 of a share of Primo common stock, which is referred to as the “Per Share Warrant Amount,”

     
 

all upon the surrender of the certificate representing such share of Glacier common stock or an affidavit with respect thereto.

 

Receipt of the shares of Primo common stock in connection with the Merger is subject to the escrow provisions described below in the section titled “The Merger Agreement—Escrow” beginning on page 71 of this consent solicitation statement/prospectus. All shares so converted will no longer be outstanding and will automatically be canceled and will cease to exist.

 

The foregoing Per Share Merger Consideration calculations assume, among other things that, prior to the closing of the Merger (the “Closing Date”), Glacier:

  

 

issues approximately 63,000 shares of Glacier common stock to certain Glacier employees as bonus compensation;

 

 

incurs approximately $5.6 million in certain transaction expenses in connection with the Merger; and

 

 

does not incur additional indebtedness after October 9, 2016 other than borrowings under its credit agreement.

     
 

With respect to the foregoing assumptions, Glacier expects such $5.6 million of transaction expenses to include: (i) approximately $2.5 million payable to Glacier’s financial advisor, (ii) approximately $2.3 million payable as cash bonus compensation to certain Glacier employees, including certain executive officers of Glacier as more fully described in “The Merger—Interests of Glacier Directors and Executive Officers in the Merger” beginning on page 58, (iii) approximately $0.7 million payable to Glacier’s legal and accounting advisors, and (iv) up to approximately $0.1 million payable with respect to other transaction expenses. While the Merger Agreement does not expressly limit the amount of such transaction expenses, Glacier does not expect its actual transaction expenses to vary materially from the foregoing assumptions. In addition, since October 9, 2016, Glacier has not incurred any additional indebtedness other than under its credit agreement, and Glacier does not expect to incur any additional indebtedness prior to the closing of the Merger that would reduce the consideration payable to the Glacier equityholders. The Merger Agreement limits Glacier’s ability to incur additional indebtedness other than under its existing credit agreement. For more information, see the section titled “The Merger Agreement – Merger Consideration” beginning on page 69 of this consent solicitation statement/prospectus.

 

Q:

What will happen to my Glacier stock options (if any) if the Merger is consummated?

 

A:

At the effective time of the Merger, each outstanding Glacier stock option will be canceled and each holder of such Glacier stock option will receive, in exchange for such option, upon receipt by Primo of a signed option cancellation agreement and subject to amounts deposited into escrow pursuant to the Merger Agreement and applicable withholding, consideration based on the difference between the value of the Per Share Merger Consideration, excluding the Per Share Warrant Amount, and the per share exercise price of such Glacier stock option, which difference is referred to as the “Option Value.” The Option Value will be allocated by treating a holder of Glacier stock options as if the holder owns a number of shares of Glacier common stock determined by multiplying (x) the number of shares of Glacier common stock subject to such option by (y) the quotient obtained by dividing such Option Value by the value of the Per Share Merger Consideration, with the number of shares of Glacier common stock resulting from this allocation referred to as “Option Allocated Shares.” Each Option Allocated Share will be converted into the right to receive the Per Share Merger Consideration, as if such Option Allocated Share were a share of Glacier common stock. Receipt of the shares of Primo common stock in connection with the Merger is subject to the escrow provisions described below in the section titled “The Merger Agreement—Escrow” beginning on page 71 of this consent solicitation statement/prospectus.

  

 

Q:

What will happen to my minority LLC common units (if any) if the Merger is consummated?

 

A:

At the effective time of the Merger, Primo will deliver to Glacier Water Holdings, LLC an amount of Merger consideration that such entity would be entitled to receive if each minority LLC common unit were instead one share of Glacier common stock, and Glacier will cause Glacier Water Holdings, LLC to assign to Glacier all of its right, title and interest in and to the minority LLC common units and for such units to be cancelled and terminated in accordance with the organizational documents of GW Services, LLC. Receipt of the shares of Primo common stock in connection with the Merger is subject to the escrow provisions described below in the section titled “The Merger Agreement—Escrow” beginning on page 71 of this consent solicitation statement/prospectus.

 

Q:

What are the terms of the warrants to be used as part of the Merger consideration?

 

A:

The warrants will be issued pursuant to a warrant agreement in the form of and on the terms specified in the form of warrant agreement, a copy of which is attached to this consent solicitation statement/prospectus as Appendix B and is filed as Exhibit 4.1 to the registration statement of which this consent solicitation statement/prospectus forms a part, and is incorporated by reference. The warrants have an exercise price equal to $11.88 per share of Primo common stock. Approximately one-third of the warrants will vest six months following the Closing Date and an additional one-third will vest on each of nine months and one year following the Closing Date. The warrants will be exercisable until the fifth anniversary of the Closing Date. See “The Warrant Agreement” beginning on page 88 of this consent solicitation statement/prospectus.

 

Q:

Who is entitled to give a consent?

 

A:

The Glacier board of directors has set the close of business on October 6, 2016, which is referred to as the “Record Date,” as the record date for determining Glacier stockholders entitled to sign and deliver consents with respect to this consent solicitation. Holders of outstanding shares of Glacier common stock as of the close of business on the Record Date will be entitled to give a consent using the consent furnished with this consent solicitation statement/prospectus.

 

Q:

How many shares of Glacier common stock were outstanding on the Record Date?

 

A:

There were 3,316,916 shares of Glacier common stock outstanding at the close of business on October 6, 2016.

 

Q:

What approval is required to adopt the Merger Agreement?

 

A:

We cannot complete the Merger unless Glacier stockholders adopt and approve the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement. Adoption and approval of the Merger Agreement and the Merger require the approval of the holders of a majority of the outstanding shares of Glacier common stock entitled to vote thereon. As of the Record Date, there were 3,316,916 shares of Glacier common stock issued and outstanding.

   
 

Each of Richard Kayne, Brian McInerney and Charles Norris has entered into voting agreements with Primo with respect to a portion of their shares representing approximately 33.3% of all currently outstanding shares of Glacier common stock. Under the voting agreements, these stockholders have agreed, among other things, to vote the shares of Glacier common stock covered by the voting agreements in favor of adoption and approval of the Merger Agreement and the Merger.

  

 

 

As of the Record Date, all directors and executive officers of Glacier as a group owned and were entitled to grant consents with respect to an additional 22.0% of the shares of Glacier common stock issued and outstanding on that date. Glacier currently expects that its directors and executive officers will deliver consents in favor of the adoption and approval of the Merger Agreement and the Merger. If they do so, a total of at least 55.3% of the outstanding shares will have been consented to the adoption and approval of the Merger Agreement and the Merger, and both will be approved.

   

Q:

What options do I have with respect to the proposed Merger?

 

A:

With respect to the shares of Glacier common stock that you hold, you may sign a consent to adopt and approve the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement (which is equivalent to a vote for the proposal). If you disapprove of the proposal (which is equivalent to a vote against the proposal), you should not sign the consent. If you fail to sign and return your consent, or otherwise withhold your consent or abstain, it has the same effect as voting against the proposal.

 

Q:

Can I dissent and require appraisal of my shares?

 

A:

If you are a Glacier stockholder who does not approve the Merger by delivering a consent adopting the Merger Agreement, you will, by strictly complying with Section 262 of the DGCL, be entitled to appraisal rights. Section 262 of the DGCL is attached to this consent solicitation statement/prospectus as Appendix F. Failure to follow precisely any of the statutory procedures set forth in Appendix F may result in the loss or waiver of appraisal rights under Delaware law. Delaware law requires that, among other things, you send a demand for appraisal to the surviving corporation within 20 days from the date of the mailing of this consent solicitation statement/prospectus. THIS CONSENT SOLICITATION STATEMENT/PROSPECTUS CONSTITUTES SUCH NOTICE AND IS BEING MAILED ON [•], 2016. ACCORDINGLY, YOU MUST DELIVER YOUR APPRAISAL DEMAND BY [•], 2016. See the section titled “The Merger – Appraisal Rights” beginning on page 60 of this consent solicitation statement/prospectus.

 

Q:

How can I return my consent?

 

A:

If you hold shares of Glacier common stock as of the close of business on the Record Date and you wish to submit your consent, you must fill out the enclosed consent, date and sign it, and promptly return it to Glacier. Once you have completed, dated and signed your consent, deliver it to Glacier by faxing your consent to Glacier, Attention: Secretary, at 760-560-0225, by emailing a .pdf copy of your consent to steve.stringer@glacierwater.com or by mailing your consent to Glacier at 1385 Park Center Drive, Vista, California 92081, Attention: Secretary. Glacier does not intend to hold a stockholders’ meeting to consider the approval of the Merger Agreement, and, unless Glacier decides to hold a stockholders’ meeting for such purpose, you will be unable to vote in person by attending a stockholders’ meeting. See the section titled “Solicitation of Consents” beginning on page 45 of this consent solicitation statement/prospectus.

  

 

Q:

What is the deadline for returning my consent?

 

A:

The Glacier board of directors has set [•], on [•], 2016 as the targeted final date for the receipt of consents. Glacier reserves the right to extend the final date for receipt of consents beyond [•], on [•], 2016, provided that no consent delivered more than 60 days from the earliest dated consent will be effective. Any such extension may be made without notice to Glacier stockholders. Once a sufficient number of consents to adopt and approve the Merger Agreement and the Merger have been received, the consent solicitation will conclude.

 

Q:

Can I change or revoke my consent?

 

A:

Yes. If you are a record holder of shares of Glacier common stock at the close of business on the Record Date, you may change or revoke your consent (subject to any contractual obligations you may otherwise have) at any time before the consents of a sufficient number of shares of Glacier common stock to approve and adopt such proposal have been delivered to the Secretary of Glacier. If you wish to change or revoke your consent before that time, you may do so by delivering a notice of revocation to the Secretary of Glacier.

 

Q:

Do I need to send in my Glacier stock certificates now?

 

A:

No. You should not send in your Glacier stock certificates now. Prior to the effective time of the Merger, a letter of transmittal will be sent to Glacier stockholders informing them where to deliver their Glacier stock certificates in order to receive their share of the Merger consideration, including any cash in lieu of a fractional share of Primo common stock. You should not send in your Glacier stock certificates prior to receiving the letter of transmittal.

 

Q:

Is the Merger taxable to me?

 

A:

The exchange of shares of Glacier common stock for cash, shares of Primo common stock and warrants to purchase shares of Primo common stock pursuant to the Merger is expected to be a taxable transaction for U.S. federal income tax purposes. If you are a U.S. Holder (as defined in the section titled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 64 of this consent solicitation statement/prospectus) and your shares of Glacier common stock are converted into the right to receive the Merger consideration, you will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between (i) the sum of the amount of any cash received, plus the fair market value (determined as of the Closing Date of the Merger) of any shares of Primo common stock (including such shares held in the Escrow and not released until after the year in which the Closing Date occurs) and warrants to purchase shares of Primo common stock received, and (ii) your adjusted tax basis in your shares of Glacier common stock. You should read the section titled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 64 of this consent solicitation statement/prospectus for a more detailed discussion of the U.S. federal income tax consequences of the Merger. You should also consult your tax advisor for a complete analysis of the particular tax consequences of the Merger to you, including the applicability and effect of any U.S. federal, state and local and non-U.S. tax laws.

 

Q:

When is the Merger expected to be completed?

 

A:

Primo and Glacier expect to complete the Merger late in 2016, subject to the satisfaction or waiver of the conditions to the Merger contained in the Merger Agreement. However, it is possible that factors outside the control of Primo and Glacier could require Primo and Glacier to complete the Merger at a later time or not complete it at all.

  

 

Q:

Who can help answer my questions?

 

A:

If you have any questions about the Merger or how to return your consent, or if you need additional copies of this consent solicitation statement/prospectus or a replacement consent, you should contact Steve Stringer, Secretary of Glacier Water Services, Inc. by email at steve.stringer@glacierwater.com, by phone at 800-452-2437, by fax at 760-560-0225 or by written correspondence at 1385 Park Center Drive, Vista, California 92081, Attention: Secretary.

  

 

SUMMARY

 

This summary highlights selected information contained in this consent solicitation statement/prospectus and does not contain all the information that may be important to you. Primo and Glacier urge you to carefully read this consent solicitation statement/prospectus in its entirety, as well as all Appendices. Additional important information is also contained in the documents incorporated by reference into this consent solicitation statement/prospectus; see the section entitled “Where You Can Find Additional Information” beginning on page 148.

 

The Companies

 

Primo Water Corporation

 

Primo Water Corporation, a Delaware corporation, which is referred to as “Primo,” is headquartered in Winston-Salem, North Carolina. Primo is a leading provider of multi-gallon purified bottled water, self-service refill water and water dispensers sold through major retailers in the United States and Canada. Primo believes the market for purified water continues to grow due to evolving taste preferences, perceived health benefits and concerns regarding the quality of municipal tap water. Primo’s products provide an environmentally friendly, economical, convenient and healthy solution for consuming purified and filtered water.

 

Primo’s principal executive offices are located at 101 North Cherry Street, Suite 501, Winston-Salem, North Carolina 27101 and its telephone number is (336) 331-4000. Primo common stock is listed on the Nasdaq Global Market, trading under the symbol “PRMW.”

 

This consent solicitation statement/prospectus includes important business and financial information about Primo from other documents that are incorporated by reference; see the section entitled “Where You Can Find Additional Information” beginning on page 148.

 

Primo Subsidiary, Inc.

 

Primo Subsidiary, Inc., a wholly-owned subsidiary of Primo, is a Delaware corporation that was formed on October 5, 2016 solely for the purpose of entering into the Merger Agreement and effecting the Merger and the other transactions contemplated by the Merger Agreement. Merger Sub has not engaged, and does not expect to engage, in any other business activities.

 

Glacier Water Services, Inc.

 

Glacier Water Services, Inc. is a Delaware corporation which conducts its operations principally through GW Services, LLC, a California limited liability company, its majority-owned subsidiary. After the transactions referred to under “The Merger Agreement—Certain Other Effects of the Merger” beginning on page 72, GW Services, LLC will be a wholly-owned subsidiary of Glacier Water Services, Inc. Unless the context requires otherwise, both of these companies are referred to collectively as “Glacier.”

 

Glacier’s principal executive offices are located at 1385 Park Center Drive, Vista, California 92081, and its telephone number is 760-560-1111. Glacier common stock is not traded on an established market but is quoted in the Pink Sheets Electronic Quotation Service under the symbol “GWSV.”

 

 

The Merger

 

Primo and Glacier agreed to the acquisition of Glacier by Primo under the terms of the Merger Agreement described in this consent solicitation statement/prospectus. Pursuant to the Merger Agreement, Merger Sub will merge with and into Glacier, with Glacier continuing as the surviving corporation and a wholly-owned subsidiary of Primo. Primo and Glacier have attached the Merger Agreement as Appendix A to this consent solicitation statement/prospectus. Primo and Glacier encourage you to carefully read the Merger Agreement in its entirety because it is the legal document that governs the Merger.

 

Merger Consideration

 

Under the Merger Agreement, Primo will pay an aggregate purchase price equal to:

 

 

approximately $263.0 million, consisting of:

 

 

approximately $86.1 million in closing consideration payable to Glacier equityholders, which is allocated as follows, prior to the adjustments described below:

 

 

approximately $49,932,724 (or 58% of such closing consideration) payable in cash; and

 

 

approximately $36,158,180 (or 42% of such closing consideration) payable in shares of Primo common stock; and

 

in each case, subject to adjustment to the extent Glacier incurs certain transaction expenses or incurs additional debt in excess of its estimated indebtedness as of the date of the Merger Agreement other than debt under its credit agreement; and

 

 

approximately $177.0 million of net indebtedness and preferred interests being assumed ($81.0 million) and/or retired ($96.0 million) by Primo (the “Assumed Debt”), and

 

 

warrants to purchase 2.0 million shares of Primo common stock at an exercise price equal to $11.88 per share of Primo common stock.

 

The exact cash consideration payable to each Glacier equityholder will be calculated by reducing $49,932,724 by the amounts of the Transaction Expense Exclusion, the Transaction Expenses and any Company Debt (as defined in the Merger Agreement) (other than Assumed Debt) which, in the aggregate, the parties estimate will equal approximately $5.6 million. In addition, the exact consideration payable to each Glacier equityholder in shares of Primo common stock will be calculated by adding to $36,158,180 the Transaction Expense Exclusion, which the parties estimate will equal approximately $1.65 million, and dividing such resulting amount by $11.88 and then further dividing the resulting amount by the number of shares of Fully-Diluted Company Stock (as defined in the Merger Agreement) outstanding immediately prior to the effective time of the Merger. The exact consideration payable to each Glacier equityholder in warrants will be calculated by dividing 2.0 million by the number of Fully-Diluted Company Stock outstanding immediately prior to the effective time of the Merger.

 

The warrants have an exercise price equal to $11.88 per share of Primo common stock. Approximately one-third of the warrants will vest six months following the Closing Date and an additional one-third will vest on each of nine months and one year following the Closing Date. The warrants will be exercisable until the fifth anniversary of the Closing Date.

 

 

Primo will not issue fractional shares of Primo common stock in the Merger. As a result, Glacier equityholders will receive cash for any fractional share of Primo common stock that they would otherwise be entitled to receive in the Merger. After the Merger is completed, Glacier equityholders will have only the right to receive the Merger consideration, any cash in lieu of fractional shares of Primo common stock, and any dividends or other distributions with respect to the shares of Primo common stock and with a record date occurring after the effective time of the Merger or, in the case of Glacier stockholders that properly exercise and perfect appraisal rights, the right to receive the fair market value for such shares, and will no longer have any rights as Glacier equityholders, including voting or other rights.

 

Receipt of the shares of Primo common stock in connection with the Merger is subject to the escrow provisions described below in the section titled “The Merger Agreement—Escrow” beginning on page 71 of this consent solicitation statement/prospectus.

 

For a more complete description of the Merger consideration, see the section titled “The Merger Agreement – Merger Consideration” beginning on page 69 of this consent solicitation statement/prospectus.

 

Per Share Merger Consideration

 

The aggregate Merger consideration will be allocated among the Glacier equityholders.

 

At the effective time of the Merger, each share of Glacier common stock (other than any dissenting shares or any shares held by Glacier or any of its subsidiaries) issued and outstanding immediately before the effective time of the Merger will be converted into the right to receive the Per Share Cash Amount, the Per Share Stock Amount and the Per Share Warrant Amount. Assuming, among other things that, prior to the Closing of the Merger, Glacier (a) issues approximately 63,000 shares of Glacier common stock to certain Glacier employees as bonus compensation, (b) incurs approximately $5.6 million in certain transaction expenses in connection with the Merger and (c) does not incur additional indebtedness after October 9, 2016 other than borrowings under its credit agreement, each share of Glacier common stock would be converted into the right to receive approximately:

 

 

$12.17 in cash;

     
 

0.87 of a share of Primo common stock; and

     
 

a warrant to purchase 0.54 of a share of Primo common stock.

 

With respect to the foregoing assumptions, Glacier expects such $5.6 million of transaction expenses to include: (i) approximately $2.5 million payable to Glacier’s financial advisor, (ii) approximately $2.3 million payable as cash bonus compensation to certain Glacier employees, including certain executive officers of Glacier as more fully described in “The Merger—Interests of Glacier Directors and Executive Officers in the Merger” beginning on page 58, (iii) approximately $0.7 million payable to Glacier’s legal and accounting advisors, and (iv) up to approximately $0.1 million payable with respect to other transaction expenses. While the Merger Agreement does not expressly limit the amount of such transaction expenses, Glacier does not expect its actual transaction expenses to vary materially from the foregoing assumptions. In addition, since October 9, 2016, Glacier has not incurred any additional indebtedness other than under its credit agreement, and Glacier does not expect to incur any additional indebtedness prior to the closing of the Merger that would reduce the consideration payable to the Glacier equityholders. The Merger Agreement limits Glacier’s ability to incur additional indebtedness other than under its existing credit agreement. In addition, receipt of the shares of Primo common stock in connection with the Merger is subject to the escrow provisions described below in the section titled “The Merger Agreement—Escrow” beginning on page 71 of this consent solicitation statement/prospectus.

 

For a more complete description of the per share Merger consideration, see the section titled “The Merger Agreement—Per Share Merger Consideration” beginning on page 70 of this consent solicitation statement/prospectus.

 

Treatment of Glacier Stock Options and Minority LLC Common Units

 

At the effective time of the Merger, each outstanding Glacier stock option will be canceled and each holder of Glacier stock options will receive, in exchange for such options, upon receipt by Primo of a duly signed option cancellation agreement and subject to amounts deposited into escrow pursuant to the Merger Agreement and applicable withholding, consideration based on the difference between the value of the Per Share Merger Consideration, excluding the Per Share Warrant Amount, and the per share exercise price of such Glacier stock option, which difference is referred to as the “Option Value.”

 

 

The Option Value will be allocated by treating a holder of Glacier stock options as if the holder owns a number of shares of Glacier common stock determined by multiplying (x) the number of shares of Glacier common stock subject to such option by (y) the quotient obtained by dividing such Option Value by the value of the Per Share Merger Consideration, with the number of shares of Glacier common stock resulting from this allocation referred to as “Option Allocated Shares.” Each Option Allocated Share will be converted into the right to receive the Per Share Merger Consideration, as if such Option Allocated Share were a share of Glacier common stock. As of the effective time of the Merger, the Glacier option holders will cease to have any further right or entitlement to acquire any Glacier stock or any shares of capital stock of Primo or the surviving corporation under the cancelled or terminated stock options.

 

At the effective time of the Merger, Primo will deliver to Glacier Water Holdings, LLC consideration that such entity would be entitled to receive if each minority LLC common unit were instead one share of Glacier common stock, subject to amounts deposited into escrow pursuant to the Merger Agreement, and Glacier will cause the minority LLC common units to be cancelled and terminated in accordance with the organizational documents of GW Services, LLC.

 

Escrow

 

Primo will withhold from Glacier equityholders (on a pro rata basis according to their respective interests therein) and deliver to the escrow agent 71% of the stock consideration payable to each such Glacier equityholder, to be held and distributed by the escrow agent pursuant to the terms of the Merger Agreement and the escrow agreement. Subject to any claims for indemnification, the escrow will be released to the stockholder representative, on behalf of and for distribution to the Glacier equityholders, as follows: twenty-five percent (25%) of the escrow will be released on the date that is six (6) months following the Closing Date; an additional twenty-five percent (25%) will be released on the date that is nine (9) months following the Closing Date, and the remaining fifty percent (50%) will be released on the “Final Escrow Release Date”, which means (i) if the Closing Date is on or prior to December 31, 2016, the date that is the first anniversary of the Closing Date or (ii) if the Closing Date is after December 31, 2016, the date that is thirty (30) days following the completion of an independent audit of Primo and its subsidiaries on a consolidated basis following the Merger for the fiscal year ending December 31, 2017. For more information, see the section titled “The Merger Agreement—Escrow” beginning on page 71 of this consent solicitation statement/prospectus.

 

Certain Other Effects of the Merger

 

At the closing, concurrent with the effective time of the Merger, the following additional events will occur:

 

 

the LLC common units of GW Services, LLC held by Glacier or any other subsidiaries of Glacier will remain outstanding at and immediately following the effective time of the Merger and without any consideration or other payment to Glacier or any other affiliate of Glacier therefor;

 

 

Glacier will cause its subsidiary GW Services, LLC to acquire all outstanding preferred interests of such subsidiary in consideration for the payment of 135% of the principal amount of such preferred interests (not to exceed $39.2 million) and any accrued but unpaid preferred return on such interests, and Primo will fund the acquisition of these interests;

 

  

 

Glacier will redeem its Series B Junior Subordinated Debentures in an aggregate principal amount of $12.5 million in accordance with their terms, and Primo will fund such redemption, and if any Series B Junior Subordinated Debentures have been converted prior to the closing into Trust Preferred Securities of Glacier Water Trust I, such Trust Preferred Securities will be repurchased at their principal amounts; and

 

 

Primo will, on behalf of GW Services, LLC, pay all amounts required to repay in full the indebtedness of GW Services, LLC under its Amended and Restated Credit Agreement with City National Bank.

 

Exchange Procedures for Shares of Glacier Common Stock

 

As soon as practicable after the effective time of the Merger, Primo will cause its transfer agent, Wells Fargo Shareowner Services, which will serve as its exchange agent, to distribute to the record holders of shares of Glacier common stock a form of letter of transmittal and instructions, each in substantially the form attached to the Merger Agreement. Upon surrender of a certificate or certificates representing any shares of Glacier common stock held of record by such holder to the exchange agent, together with a properly signed letter of transmittal and such other documents as may reasonably be required by the exchange agent, the exchange agent will deliver to the holder of such certificate or certificates in exchange, subject to the shares of Primo common stock deposited into escrow pursuant to the terms of the Merger Agreement and escrow agreement, (a) one or more shares of Primo common stock (which will be in uncertificated book-entry form unless a physical certificate is requested) such holder has the right to receive (subject to the escrow provisions), (b) a check for the portion of the cash consideration such holder has the right to receive and cash in lieu of any fractional shares of Primo common stock, and (c) warrants to purchase shares of Primo common stock representing the aggregate Per Share Warrant Amount that such holder has the right to receive. No interest will be paid or will accrue on any cash payable to such holder. Primo will be entitled to deduct and withhold from the aggregate Merger consideration otherwise payable to such holder such amounts as it is required to deduct and withhold with respect to making required tax payments. For more information, see the section titled “The Merger Agreement—Exchange Procedures for Shares of Glacier Common Stock” beginning on page 72 of this consent solicitation statement/prospectus.

 

Ownership of Primo Following the Merger

 

The Glacier equityholders will own in the aggregate approximately 10.9% of the outstanding shares of Primo common stock immediately following consummation of the Merger. For more information, see the section titled “The Merger—Ownership of Primo Following the Merger” beginning on page 54 of this consent solicitation statement/prospectus.

  

Debt Financing of the Merger

 

On October 11, 2016, Primo entered into a commitment letter with Goldman Sachs Bank USA (“Goldman”), in which Goldman committed to lend Primo up to $186.0 million in term loans and to provide a $10.0 million revolving credit facility (the “Commitment Letter”). Primo plans to use the proceeds of the term loans to:

 

 

pay the cash portion of the Merger consideration;

 

 

repay the outstanding principal amount and accrued interest under Glacier’s Amended and Restated Credit Agreement with City National Bank;

  

 

 

pay for GW Services, LLC to acquire all of its outstanding preferred interests and pay the outstanding preferred return on such preferred interests as provided under their terms;

 

 

pay for Glacier to redeem its Series B Junior Subordinated Debentures in an aggregate principal amount of up to $12.5 million, plus accrued interest, in accordance with their terms; and

 

 

pay transaction-related fees and expenses.

 

For more information, see the section titled “Description of the Debt Financing” beginning on page 93 of this consent solicitation statement/prospectus.
 

Risk Factors

 

In evaluating the Merger Agreement and the Merger, you should carefully read this consent solicitation statement/prospectus and especially consider the factors discussed in the section titled “Risk Factors” beginning on page 30 of this consent solicitation statement/prospectus.

  

Record Date; Glacier Stockholders Entitled to Consent

 

The Glacier board of directors has set the close of business on October 6, 2016 as the Record Date for determining the Glacier stockholders entitled to sign and deliver consents with respect to this consent solicitation.

 

Only Glacier stockholders of record holding shares of Glacier common stock as of the close of business on the Record Date are entitled to sign and deliver consents with respect to the adoption and approval of the Merger Agreement and the Merger. As of the close of business on the Record Date, there were 3,316,916 shares of Glacier common stock outstanding and entitled to sign and deliver consents with respect to the adoption and approval of the Merger Agreement and the Merger. Each share of Glacier common stock is entitled to one vote. You are urged to return a completed, dated and signed consent by 12:00 noon, New York City time, on [•], 2016.

 

Consents; Required Consents

 

Adoption and approval of the Merger Agreement and the Merger require the consent of the holders of a majority of the outstanding shares of Glacier common stock entitled to vote thereon.

 

Each of Richard Kayne, Brian McInerney and Charles Norris, who currently serve as directors of Glacier, has entered into voting agreements with Primo with respect to a portion of their shares representing approximately 33.3% of all currently outstanding shares of Glacier common stock. Under the voting agreements, such stockholders have agreed, among other things, to deliver consents with respect to the shares covered by the voting agreements in favor of the Merger Agreement and the Merger.

 

As of the Record Date, all directors and executive officers of Glacier as a group owned and were entitled to grant consents with respect to an additional 728,722 shares of Glacier common stock, or approximately 22.0% of the issued and outstanding shares of Glacier common stock on that date. Glacier currently expects that its directors and executive officers will deliver consents in favor of the adoption and approval of the Merger Agreement and the Merger. If they do so, a total of at least 55.3% of the outstanding shares of Glacier common stock will have consented to the adoption and approval of the Merger Agreement and the Merger, and both will be approved.

 

 

Submission of Consents

 

If you hold shares of Glacier common stock as of the close of business on the Record Date and you wish to submit your consent, you must fill out the enclosed consent, date and sign it, and promptly return it to Glacier. Once you have completed, dated and signed your consent, deliver it to Glacier by faxing your consent to Glacier, Attention: Secretary, at 760-560-0225, by emailing a .pdf copy of your consent to steve.stringer@glacierwater.com or by mailing your consent to Glacier at 1385 Park Center Drive, Vista, California 92081, Attention: Secretary. Glacier does not intend to hold a stockholders’ meeting to consider the adoption and approval of the Merger Agreement and the Merger, and, unless Glacier decides to hold a stockholders’ meeting for such purpose, you will be unable to vote in person by attending a stockholders’ meeting. See the section titled “Solicitation of Consents” beginning on page 45 of this consent solicitation statement/prospectus.

  

The Glacier board of directors has set [•], on [•], 2016 as the targeted final date for the receipt of consents. Glacier reserves the right to extend the final date for receipt of consents beyond [•], on [•], 2016, but no later than the date that is 60 days after the date of the receipt of the first consent. Any such extension may be made without notice to Glacier stockholders. Once a sufficient number of consents to adopt and approve the Merger Agreement and the Merger have been received, the consent solicitation will conclude.

 

Signing Consents; Revocation of Consents

 

If you are a record holder of shares of Glacier common stock at the close of business on the Record Date, you may change or revoke your consent (subject to any contractual obligations you may otherwise have) at any time before the consents of a sufficient number of shares to approve and adopt the Merger Agreement and the Merger have been delivered to the Secretary of Glacier. If you wish to change or revoke your consent before that time, you may do so by delivering a notice of revocation to the Secretary of Glacier.

 

Solicitation

 

The board of directors of Glacier is soliciting consents by sending this consent solicitation statement/prospectus to Glacier stockholders. Glacier does not expect to solicit consents in any other manner or to incur solicitation fees or other solicitation expenses.

 

Primo’s Reasons for the Merger

 

The Primo board of directors has unanimously approved and declared advisable the Merger and the Merger Agreement. The Primo board of directors reviewed several factors in reaching its decision to approve the Merger and the Merger Agreement and believes that the Merger is advisable and fair to and in the best interests of Primo and its stockholders. For more information, see the section titled “The Merger—Primo’s Reasons for the Merger” beginning on page 55 of this consent solicitation statement/prospectus.

  

Glacier’s Reasons for the Merger; Recommendation of the Glacier Board of Directors

 

The Glacier board of directors has unanimously approved the Merger and the Merger Agreement, has concluded that the Merger is advisable and fair to and in the best interest of Glacier and its stockholders and is recommending that Glacier’s stockholders adopt and approve the Merger Agreement and the Merger. In doing so, it has relied on several factors, including the fact that the Merger provides liquidity to the Glacier stockholders. For more information, see “The Merger—Glacier’s Reasons for the Merger; Recommendation of the Glacier Board of Directors” beginning on page 57 of this consent solicitation statement/prospectus.

  

 

Voting Agreements

 

Concurrently with the execution of the Merger Agreement, Primo entered into voting agreements with each of Richard Kayne, Brian McInerney and Charles Norris, who currently serve as directors of Glacier, with respect to 1,105,639 shares of Glacier common stock, or approximately 33.3% of all currently outstanding shares of Glacier common stock, each of which is attached as Appendix C to this consent solicitation statement/prospectus. Pursuant to the terms of the voting agreements, each of Mr. Kayne, Mr. McInerney and Mr. Norris agreed, among other things, to vote the shares covered by the voting agreements in favor of adoption and approval of the Merger Agreement and the Merger. For more information, see the section titled “The Voting Agreements” beginning on page 90 of this consent solicitation statement/prospectus.

  

Lock-up Agreements

 

Concurrently with the closing of the Merger, Primo will enter into lock-up agreements, the form of which is attached to this consent solicitation statement/prospectus as Appendix E, with each of the Principal Stockholders with respect to the shares of Primo common stock received by each Principal Stockholder pursuant to the Merger Agreement. The lock-up agreements provide that the Principal Stockholders receiving shares of Primo common stock pursuant to the Merger Agreement will not transfer such shares during the period beginning on the Closing Date and ending on the earlier of the date that (a) is 365 days following the Closing Date and (b) Primo consummates a liquidation, merger, stock exchange or other similar transaction that results in all of the holders of Primo common stock having the right to exchange their shares for cash, securities or other property. Notwithstanding the foregoing, (x) on the date that is 180 days following the date of the lock-up agreement, the stockholder may transfer up to one-third (1/3) of the shares subject to the lock-up agreement and (y) on the date that is 270 days following the date of the lock-up agreement, the stockholder may transfer an additional one-third (1/3) of the shares subject to the lock-up agreement, in each case, to the extent such shares are not then subject to the escrow described under “The Merger Agreement—Escrow” beginning on page 71 of this consent solicitation statement/prospectus. For more information, see the section titled “Lock-up Agreements” beginning on page 91 of this consent solicitation statement/prospectus.

 

Interests of Glacier Directors and Executive Officers in the Merger

 

Glacier’s directors and executive officers own a total of approximately 55.3% of the outstanding shares of Glacier common stock and have the right to receive the Merger consideration with respect to those shares.

 

In addition, Richard Kayne and Peter Neuwirth, two of Glacier’s directors are members of Glacier Water Holdings, LLC, the holder of the minority LLC common units, and own 48.6% and 3.5%, respectively of the interests in that entity. As such, they will receive, indirectly, a total of approximately 52% of the amounts payable on account of the following transactions, each of which will happen concurrently with the Merger:

 

 

the purchase by Primo of the 214,129 minority LLC common units for per unit consideration equal to the Merger consideration to be paid for each share of Glacier common stock, and

 

 

the acquisition by Glacier, with funds provided by Primo, of $29.0 million of preferred interests in GW Services, LLC, in consideration of the payment of 135% of the principal amount thereof (or a total of approximately $39.2 million), plus the accrued preferred return thereon.

  

 

Moreover, Mr. Kayne, Mr. Neuwirth, Mr. Norris, William Bell, and Heidi Yodowitz, each a director of Glacier, own $3,166,650, $125,000, $468,750, $25,000 and $25,000, respectively, of principal amount of Glacier’s Series B Junior Subordinated Debentures, which will also be redeemed concurrently with the Merger. For more information, see the section titled “The Merger—Interests of Glacier Directors and Executive Officers in the Merger” beginning on page 58 of this consent solicitation statement/prospectus.

 

Glacier intends to pay transaction bonuses to the following Glacier executive officers in the following amounts: (i) to Brian McInerney, Chief Executive Officer of Glacier, $880,000 in cash and 48,696 shares of Glacier common stock and (ii) to Steve Stringer, Chief Financial Officer of Glacier, $500,000 in cash.

  

Primo has agreed, if the Merger is consummated, to use reasonable best efforts to cause its Board of Directors to appoint Charles Norris, the Chairman of the Board of Glacier, as a member of Class III of Primo’s board of directors for a term that would expire in 2019.

 

On October 9, 2016, concurrently with the execution of the Merger Agreement, Primo and Brian H. McInerney, Glacier’s President and Chief Executive Officer, signed an Employment Agreement (the “Employment Agreement”), effective as of and conditioned upon the closing of the Merger, whereby Mr. McInerney will be appointed Executive Vice President of Primo and President of Primo’s self-service refill drinking water business in the United States and Canada. Mr. McInerney will receive an annual base salary of $412,000, with a target bonus equal to 50% of his base salary. The Employment Agreement also provides Mr. McInerney the right to participate in Primo’s Value Creation Plan and the right to receive at least 3.5% of the bonus pool awarded to all participants under the Value Creation Plan beginning in fiscal year 2017. Additionally, when the Employment Agreement becomes effective, Mr. McInerney will be granted a long term incentive equity award under Primo’s 2010 Omnibus Long-Term Incentive Plan in the form of a stock option to purchase 50,000 shares of Primo common stock, which will vest in four equal annual installments. The material terms of the Employment Agreement were negotiated after Primo and Glacier agreed in principle on the aggregate Merger consideration payable to Glacier equityholders in connection with the Merger. A copy of the Employment Agreement is attached to this consent solicitation statement/prospectus as Appendix D and is filed as Exhibit 10.4 to the registration statement of which this consent solicitation statement/prospectus forms a part, and is incorporated herein by reference.

 

Primo entered into voting agreements with each of Glacier directors Richard Kayne, Brian McInerney and Charles Norris with respect to a portion of their shares representing approximately 33.3% of all currently outstanding shares of Glacier common stock, each of which is attached as Appendix C to this consent solicitation statement/prospectus. In addition, concurrently with the closing of the Merger, each of the Glacier directors will enter into lock-up agreements with Primo, the form of which is attached to this consent solicitation statement/prospectus as Appendix E.

 

For more information, see the section titled “The Merger—Interests of Glacier Directors and Executive Officers in the Merger” beginning on page 58 of this consent solicitation statement/prospectus.

 

Expected Timing of the Merger

 

Primo and Glacier currently expect the closing of the Merger to occur late in 2016. However, the Merger is subject to the satisfaction or waiver of certain conditions as described in the Merger Agreement, and it is possible that factors outside the control of Primo and Glacier could result in the Merger being completed at a later time or not at all.

 

 

Conditions to Completion of the Merger

 

The obligations of the parties to complete the Merger are conditioned upon satisfaction or waiver, on or prior to the Closing Date, of a number of customary conditions, including, among others:

 

 

receipt of the requisite Glacier stockholder approval;

 

 

absence of any action or proceeding before a court or other governmental body or by any public authority, or any claim, to restrain or prohibit any of the transactions contemplated by the Merger Agreement;

  

 

since the date of the Merger Agreement, absence of any event, fact, change, condition, circumstance or other development that has occurred or that has had, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect on the other party or its subsidiaries;

  

 

effectiveness of the registration statement of which this consent solicitation statement/prospectus is a part and the absence of a stop order or proceedings threatened or initiated by the SEC for that purpose;

  

 

the accuracy of the representations and warranties made in the Merger Agreement by Primo or Glacier, as applicable, subject to certain materiality thresholds;

  

 

each party having performed, in all material respects, all agreements required to be performed by it under the Merger Agreement on or before the Closing Date; and

  

 

receipt of all governmental authority consents and approvals, if any, necessary to permit the consummation of the transactions contemplated by the Merger Agreement.

  

Neither Primo nor Glacier can give any assurance that all of the conditions to the Merger will either be satisfied or waived or when or if the Merger will occur. For more information, see the section titled “The Merger Agreement – Conditions to Completion of the Merger” beginning on page 81 of this consent solicitation statement/prospectus.

  

Termination of the Merger Agreement

 

Primo and Glacier may mutually agree to terminate the Merger Agreement at any time. In addition, either Primo or Glacier may terminate the Merger Agreement if:

 

 

the Merger is not completed by June 30, 2017;

 

 

the other party breaches in any material respect any representation, warranty, covenant or agreement contained in the Merger Agreement and, if curable, fails to cure the breach within ten days after written notice; or

 

 

any court or other governmental instrumentality of competent jurisdiction issues an order or takes any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement.

  

 

Primo may terminate the Merger Agreement if:

 

 

the requisite Glacier stockholder consents are not delivered on the third business day following the date on which this registration statement is declared effective by the SEC;

 

 

the board of directors of Glacier fails to make the Company Recommendation (as defined in the Merger Agreement) or makes a Change of Recommendation (as defined in the Merger Agreement), or approves, recommends or endorses an Acquisition Proposal (as defined in the Merger Agreement) or resolves or publicly proposes to do the foregoing;

 

 

Glacier fails to publicly reaffirm the Company Recommendation upon written request of Primo within ten business days of the request;

 

 

prior to the time the requisite Glacier stockholder approval is obtained, Glacier provides Primo with notice of intent to terminate the Merger Agreement or effect a Change of Recommendation; or

 

 

Glacier fails or is deemed to have failed to comply with its non-solicitation and certain other obligations under the Merger Agreement.

     
   

Glacier may terminate the Merger Agreement if:

  

 

at any time prior to obtaining the stockholder consent:

 

 

the board of directors of Glacier authorizes Glacier to enter into definitive transaction documentation providing for a Superior Proposal (as defined in the Merger Agreement);

 

 

substantially concurrently with the termination of the Merger Agreement, Glacier enters into an Alternative Acquisition Agreement with respect to such Superior Proposal;

 

 

immediately prior to or substantially concurrently with, and as a condition to, such termination, Glacier pays to Primo any fees required pursuant to the Merger Agreement; and

 

 

Glacier has not breached, and is not deemed to have breached, its non-solicitation and certain other obligations under the Merger Agreement; or

 

 

the conditions to closing are satisfied or waived, and Primo has not, within five business days after the date on which all such conditions will have been satisfied or waived, deposited with the exchange agent, at or prior to the closing, the Merger consideration in accordance with the terms of the Merger Agreement (provided that if such failure to deposit the Merger consideration is caused by or otherwise related to Primo’s failure to receive the proceeds of the financing, then Glacier may terminate the Merger Agreement in this manner only if Primo has not obtained alternative financing within 90 days after the date on which all such conditions have been satisfied or waived).

 

Termination Fees

 

Glacier will be obligated to pay Primo a termination fee of $7.5 million in the event that the Merger Agreement is terminated:

 

 

by Primo because (i) of Glacier’s willful breach in any material respect of any representation, warranty, covenant or agreement contained in the Merger Agreement and, if curable, Glacier fails to cure the same after 10 days written notice; (ii) any person has made a bona fide Acquisition Proposal prior to such termination; and (iii) within 12 months after such termination, Glacier enters into an agreement with respect to any Acquisition Proposal or completed any Acquisition Proposal, provided that for purposes of the foregoing, references to “20%” in the definition of Acquisition Proposal shall be deemed to be references to “50%”;

  


 

by Primo because the requisite Glacier stockholder consent is not delivered when due;

  

 

by Glacier because prior to the time the requisite Glacier stockholder consent is obtained Glacier enters into an Alternative Acquisition Agreement with respect to a Superior Proposal; or

  

 

by Primo because Glacier takes certain actions with respect to a Company Recommendation or a Change of Recommendation or fails to comply with its non-solicitation and certain other obligations under the Merger Agreement.

  

Primo will be obligated to pay Glacier a termination fee of $7.5 million in the event that Glacier terminates the Merger Agreement because the conditions to its completion of the Merger have been satisfied or waived and Primo has not, within five business days after all such conditions will have been satisfied or waived, deposited with the exchange agent at or prior to the closing the Merger consideration (provided that if such failure is caused by or otherwise related to Primo’s failure to receive the proceeds of the financing, then Glacier may terminate the Merger Agreement only if Primo has not obtained alternative financing within 90 days after the date on which all such conditions have been satisfied or waived).

 

Accounting Treatment

 

Primo and Glacier prepare their financial statements in accordance with GAAP. The Merger will be accounted for in accordance with FASB ASC Topic 805, Business Combinations, with Primo considered as the accounting acquirer and Glacier as the accounting acquiree. Accordingly, consideration to be given by Primo to complete the Merger with Glacier will be allocated to assets and liabilities of Glacier based on their estimated fair values as of the completion date of the Merger, with any excess Merger consideration being recorded as goodwill.

 

Appraisal Rights

 

Under Delaware law, Glacier stockholders are entitled to appraisal rights in connection with the Merger, with respect to shares of Glacier common stock, in lieu of the Merger consideration offered by Primo.

 

If you comply with the requirements of Section 262 of the DGCL, you will have the right under Delaware law to receive, in lieu of the Merger consideration, the fair value of your shares of Glacier common stock as determined by the Delaware Court of Chancery. Section 262 of the DGCL is attached to this consent solicitation statement/prospectus as Appendix F. The amount determined by the Delaware Court of Chancery to be the fair value of Glacier common stock as of the effective time of the Merger could be more than, the same as or less than the Merger consideration a stockholder would be entitled to receive under the terms of the Merger Agreement. Your appraisal rights are subject to a number of restrictions and technical requirements. Generally, in order to demand and perfect your appraisal rights, you must comply with the procedures set forth in Section 262, including but not limited to the following:

 

 

you must submit your demand for appraisal that complies with the applicable statutory requirements within 20 days of the date of the mailing of this notice of appraisal rights;

  

 

 

you must not consent to the Merger;

 

 

you must continue to hold your shares of Glacier common stock through the effective time of the Merger;

 

 

if the Merger Agreement is adopted and the Merger is approved by the consent of Glacier stockholders, you must not exchange your shares of Glacier common stock for payment of the Merger consideration; and

 

 

within 120 days after the effective time of the Merger, you must file a petition in the Court of Chancery of the State of Delaware, requesting a determination of the fair market value of your shares of Glacier common stock as of the effective time of the Merger.

 

Merely withholding your consent to the Merger will not perfect your appraisal rights. Any demands delivered prior to the mailing of this consent solicitation statement/prospectus will not be treated by Glacier as satisfying the demand requirement. If you delivered to Glacier a written demand for appraisal of your shares prior to the mailing of this consent solicitation statement/prospectus (including prior to the date of the Merger Agreement), you must again demand appraisal for your shares to perfect your appraisal rights. Requirements under Delaware law for exercising appraisal rights are described in further detail under “The Merger—Appraisal Rights beginning on page 60 of this consent solicitation statement/prospectus. If you wish to avail yourself of your appraisal rights, you should consider consulting your legal advisor.

  

Comparison of Rights of Stockholders

 

The rights of Primo stockholders are governed by Primo’s sixth amended and restated certificate of incorporation, which we refer to as the “Primo charter,” by Primo’s amended and restated bylaws, which we refer to as “Primo’s bylaws,” and by the DGCL. The rights of Glacier stockholders are governed by Glacier’s certificate of incorporation, which we refer to as “Glacier’s charter,” by Glacier’s bylaws, which we refer to as “Glacier’s bylaws,” and by the DGCL. The rights of Primo’s stockholders are different in some respects from the rights of Glacier’s stockholders. Therefore, Glacier stockholders will have different rights once they become Primo stockholders. These differences are described in detail under the section titled “Comparison of Rights of Stockholders” beginning on page 139 of this consent solicitation statement/prospectus.

  

Listing of Primo Common Stock

 

Shares of Primo common stock are listed on the Nasdaq Global Market under the symbol “PRMW.” Primo intends to submit a supplemental listing application to list on the Nasdaq Global Market the shares of Primo common stock and the shares of Primo common stock underlying the warrants that Primo will issue in the Merger as part of the Merger consideration. Primo has agreed to use its reasonable efforts to submit such supplemental listing application as a condition to completion of the Merger. The warrants to purchase shares of Primo common stock will not be listed on the Nasdaq Global Market or any other exchange.

  

Material United States Federal Income Tax Consequences of the Merger

 

The exchange of shares of Glacier common stock for cash, shares of Primo common stock and warrants to purchase shares of Primo common stock pursuant to the Merger is expected to be a taxable transaction for U.S. federal income tax purposes. For U.S. federal income tax purposes, if you are a U.S. Holder (as defined in “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 64 of this consent solicitation statement/prospectus), generally you will recognize capital gain or loss as a result of the Merger measured by the difference, if any, between the fair market value of the Merger consideration and your adjusted tax basis in your shares of Glacier common stock exchanged for the Merger consideration.

  

 

You should read the section titled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 64 of this consent solicitation statement/prospectus for a more complete discussion of the U.S. federal income tax consequences of the Merger. Tax matters can be complicated, and the tax consequences of the Merger to you will depend on your particular tax circumstances. Primo and Glacier urge you to consult your tax advisor to determine the tax consequences of the Merger to you.

 

 

Comparative Market Price and Dividend Matters 

 

Primo common stock is listed on the Nasdaq Global Market under the symbol “PRMW,” and Glacier common stock is not listed on an exchange but is quoted in the Pink Sheets Electronic Quotation Service under the symbol “GWSV.” The following table sets forth the closing price per share of Primo common stock and of Glacier common stock as of October 7, 2016, the last trading day prior to the public announcement of the Merger, and November 25, 2016, the most recent practicable trading day prior to the filing of this consent solicitation statement/prospectus. The table also shows the implied value of the Merger consideration for each share of Glacier common stock as of the same two dates. This implied value was calculated by adding (1) the estimated Per Share Cash Amount of $12.17 and (2) the product of the estimated exchange ratio of 0.87 multiplied by the closing price of Primo common stock on such date, in each case, assuming that, prior to the Closing of the Merger, Glacier (x) issues approximately 63,000 shares of Glacier common stock to certain Glacier employees as bonus compensation, (y) incurs approximately $5.6 million in transaction expenses related to the Merger and (z) does not incur additional indebtedness after October 9, 2016 other than borrowings under its credit agreement. This implied value also excludes the value associated with the warrants to purchase shares of Primo common stock to be issued in connection with the Merger.

 

 

   

Primo
Common
Stock

   

Glacier
Common
Stock

   

Estimated

Implied Per
Share Value
of Merger
Consideration

 

October 7, 2016

  $ 11.85     $ 11.00     $ 22.48  

November 25, 2016

  $ 13.35     $ 23.10     $ 23.78  

 

The market prices of shares of Primo common stock and Glacier common stock have fluctuated since the date of the announcement of the Merger and will continue to fluctuate from the date of this consent solicitation statement/prospectus to the date the Merger is completed, and the market price of shares of Primo common stock after the Merger will continue to fluctuate after the completion of the Merger. No assurance can be given concerning the market prices of Primo common stock or Glacier common stock before the completion of the Merger or Primo common stock after the completion of the Merger. Accordingly, Glacier stockholders are advised to obtain current stock price quotations for Primo common stock and Glacier common stock when considering whether to consent to adoption of the Merger Agreement.

 

 

Comparative Historical and Unaudited Pro Forma Per Share Data 

 

The following table sets forth for the periods presented certain historical per share data for Primo common stock and Glacier common stock on a historical basis and on an unaudited pro forma and pro forma equivalent bases after giving effect to the Merger under the acquisition method of accounting. The historical per share data of Primo and Glacier has been derived from, and should be read in conjunction with, the historical financial statements of Primo incorporated by reference into this consent solicitation statement/prospectus and the historical financial statements of Glacier and notes thereto included elsewhere in this consent solicitation statement/prospectus. The unaudited pro forma per share data has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information provided in the section titled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 95 of this consent solicitation statement/prospectus. The unaudited pro forma and pro forma equivalent income and dividend per share data for the nine months ended September 30, 2016 were prepared based on the unaudited condensed consolidated financial statements of Primo for the nine month period ended September 30, 2016 and the unaudited consolidated financial statements of Glacier for the nine month period ended October 2, 2016. The unaudited pro forma and pro forma equivalent income and dividend per share data for the year ended December 31, 2015 were prepared based on the audited consolidated financial statements of Primo for the year ended December 31, 2015 and on the audited consolidated financial statements of Glacier for the year ended January 3, 2016. The pro forma and pro forma equivalent net book value per share reflect the Merger as if it had been effective on September 30, 2016 and were prepared based on the unaudited condensed consolidated balance sheet of Primo as of September 30, 2016 and the unaudited consolidated balance sheet of Glacier as of October 2, 2016.

  

The unaudited pro forma equivalent data of Glacier was calculated by multiplying the corresponding unaudited pro forma consolidated data of Primo by the exchange ratio of 0.87, as detailed in the section titled “The Merger—Effect of the Merger; Merger Consideration” beginning on page 49 of this consent solicitation statement/prospectus. These computations exclude the benefit to Glacier equityholders from receiving the cash portion of the Merger consideration. The exchange ratio is fixed in the Merger Agreement, but the market price of Primo’s common stock (and therefore the value of the Merger consideration) when received by Glacier equityholders after the completion of the Merger could be greater than, less than or the same as shown in the table above. This data shows how each share of Glacier common stock would have participated in net income and book value of Primo if the companies had always been consolidated for accounting and financial reporting purposes for all periods presented. These amounts, however, are not intended to reflect future per share levels of net income and book value of Primo, and Glacier equityholders should not rely on this information as being indicative of the historical results that would have been achieved during the periods presented had Primo and Glacier always been combined or the future results that the Combined Company will achieve after the consummation of the Merger.

  

 

 

   

Nine Months Ended 

September 30, 2016

   

Year Ended December 31, 2015

 

Primo – Historical

               

Per common share data:

               

Net income from continuing operations:

               

Basic

  $ 0.21     $ 0.08  

Diluted

    0.19       0.08  

Book value (1)

    1.26       1.01  

Cash dividends declared

    0       0  
                 

Glacier – Historical

               

Per common share data:

               

Net (loss) from continuing operations:

               

Basic

  $ (1.34 )   $ (1.88 )

Diluted

    (1.34 )     (1.88 )

Book value (1) (2)

    (25.29 )     (24.06 )

Cash dividends declared

    0       0  
                 

Primo – Unaudited Pro Forma Combined with Glacier (3)

               

Per common share data:

               

Net (loss) from continuing operations:

               

Basic

  $ (0.55 )   $ (1.03 )

Diluted

    (0.55 )     (1.03 )

Book value (1)

    2.62       N/A  

Cash dividends declared

    0       N/A  
                 

Glacier – Unaudited Pro Forma Equivalents

               

Per common share data:

               

Net (loss) from continuing operations:

               

Basic (4) (5)

  $ (0.48 )   $ (0.91 )

Diluted (4) (5)

    (0.48 )     (0.91 )

Book value (1) (5)

    2.29       N/A  

Cash dividends declared

    0       N/A  

 

(1)

Amount is calculated by dividing shareholders’ equity (deficit) by common shares outstanding.

(2)

Reflects shareholders’ equity excluding the noncontrolling interest.

(3)

Amounts calculated based on pro forma financial statements giving effect to the Merger.

(4)

Amounts calculated by multiplying unaudited pro forma combined per share amounts by the exchange ratio in the acquisition of 0.87 shares of Primo common stock for each share of Glacier common stock. The exchange ratio excludes the cash portion of the Merger consideration.

(5)

The information shows how each share of Glacier common stock would have participated in Primo’s net income (loss) from continuing operations and book value if the Merger had occurred on January 1, 2015, in the case of net loss from continuing operations per share data, and at September 30, 2016, in the case of book value per share data.

 

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PRIMO

 

The following consolidated statements of operations data for the years ended December 31, 2015, 2014, 2013, 2012, and 2011 and the balance sheet data as of December 31, 2015, 2014, 2013, 2012 and 2011 have been derived from the audited consolidated financial statements of Primo. Primo’s historical audited consolidated financial statements for the fiscal years ended December 31, 2015, 2014 and 2013 are contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which is incorporated by reference into this consent solicitation statement/prospectus. Primo’s historical audited consolidated financial statements for the fiscal years ended December 31, 2012 and 2011 are not incorporated by reference into this consent solicitation statement/prospectus.

 

The selected historical consolidated financial data of Primo for the nine month periods ended September 30, 2016 and 2015 and as of September 30, 2016 have been derived from Primo’s historical unaudited interim consolidated financial statements contained in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, which is incorporated by reference into this consent solicitation statement/prospectus. These financial statements are unaudited, but, in the opinion of Primo’s management, contain all adjustments considered necessary for a fair presentation of Primo’s financial condition, results of operations and cash flows for the periods presented.

 

Historical results are not necessarily indicative of results to be expected for any future periods. This selected historical consolidated financial data should be read in conjunction with Primo’s Annual Report on Form 10-K for the year ended December 31, 2015 and Primo’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016. See the section entitled “Where You Can Find Additional Information” beginning on page 148.

  

 

 

    (Unaudited)                                          
   

Nine months ended September 30,

   

Years ended December 31,

 
   

2016

   

2015

   

2015

   

2014

   

2013

   

2012

   

2011

 
   

(in thousands, except per share data)

 

Consolidated statements of operations data:

                                                       

Net sales

  $ 102,185     $ 95,475     $ 126,951     $ 106,322     $ 91,209     $ 91,479     $ 83,062  

Operating costs and expenses:

                                                       

Cost of sales

    71,351       70,120       92,476       78,452       68,367       70,081       63,201  

Selling, general and administrative expenses

    14,715       13,991       19,128       18,969       15,025       17,651       18,081  

Non-recurring costs

    1,094       109       275       2,881       777       743       2,091  

Depreciation and amortization

    7,225       7,424       10,432       10,655       11,333       11,102       8,863  

Loss on disposal and impairment of property and equipment

    570       417       500       2,104       126       57       125  

Goodwill and other impairments

                                  82,013        

Total operating costs and expenses

    94,955       92,061       122,811       113,061       95,628       181,647       92,361  

Income (loss) from operations

    7,230       3,414       4,140       (6,739 )     (4,419 )     (90,168 )     (9,299 )

Interest expense, net

    1,436       1,514       1,987       6,325       4,425       4,043       1,690  

Income (loss) from continuing operations before taxes

    5,794       1,900       2,153       (13,064 )     (8,844 )     (94,211 )     (10,989 )

Income tax (benefit) provision

                                  (961 )     961  

Loss from continuing operations

    5,794       1,900       2,153       (13,064 )     (8,844 )     (93,250 )     (11,950 )

Loss from discontinued operations

    (43 )     (87 )     (296 )     (403 )     (1,862 )     (17,779 )     (2,429 )

Net income (loss)

  $ 5,751     $ 1,813     $ 1,857     $ (13,467 )   $ (10,706 )   $ (111,029 )   $ (14,379 )
                                                         

Basic earnings (loss) per common share:

                                                       

Income (loss) from continuing operations

  $ 0.21     $ 0.08     $ 0.08     $ (0.54 )   $ (0.37 )   $ (3.93 )   $ (0.55 )

Loss from discontinued operations

    (0.01 )     (0.01 )     (0.01 )     (0.01 )     (0.08 )     (0.75 )     (0.11 )

Net income (loss)

  $ 0.20     $ 0.07     $ 0.07     $ (0.55 )   $ (0.45 )   $ (4.68 )   $ (0.66 )
                                                         

Diluted earnings (loss) per common share:

                                                       

Income (loss) from continuing operations

  $ 0.19     $ 0.07     $ 0.08     $ (0.54 )   $ (0.37 )   $ (3.93 )   $ (0.55 )

Loss from discontinued operations

    (0.00 )     (0.00 )     (0.01 )     (0.01 )     (0.08 )     (0.75 )     (0.11 )

Net income (loss)

  $ 0.19     $ 0.07     $ 0.07     $ (0.55 )   $ (0.45 )   $ (4.68 )   $ (0.66 )
                                                         

Weighted average shares used in computing earnings (loss) per share:

                                                       

Basic

    28,066       24,992       25,190       24,339       23,935       23,725       21,652  

Diluted

    29,843       26,508       27,001       24,339       23,935       23,725       21,652  

 

   

As of September 30,

           

As of December 31,

 
   

2016

(unaudited)

           

2015

   

2014

   

2013

   

2012

   

2011

 

Consolidated balance sheet data:

                                                       

Cash and cash equivalents

  $ 2,302             $ 1,826     $ 495     $ 394     $ 234     $ 751  

Total assets (1)

    73,767               64,487       65,252       69,833       80,134       183,435  

Current portion of capital leases, notes payable and long-term debt (1)

    4,271               172       106       16       15       13,500  

Long-term debt, capital leases and notes payable, net of current portion and debt issuance costs (1)

    16,024               19,903       23,714       21,516       19,610       44  

Liabilities of disposal group, net of current portion, and other long-term liabilities

    2,502               2,535       2,316       2,330       352       4,710  

 

(1) reflects reclassification of debt issuance costs from other assets to long-term debt, capital leases and notes payable, net of current portion and debt issuance costs and current portion of capital leases, notes payable and long-term debt, based on updated FASB guidance requiring retrospective application.

  

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF GLACIER

 

The following consolidated statement of operations data for the fiscal years ended January 3, 2016, December 28, 2014, December 29, 2013, December 30, 2012 and January 1, 2012 and consolidated balance sheet data as of January 3, 2016, December 28, 2014, December 29, 2013, December 30, 2012 and January 1, 2012 have been derived from the audited consolidated financial statements of Glacier. Glacier has included elsewhere in this consent solicitation statement/prospectus the audited consolidated financial statements as of and for the fiscal years ended January 3, 2016 and December 28, 2014. Glacier has not included elsewhere in this consent solicitation statement/prospectus the audited consolidated financial statements as of and for the fiscal years ended December 29, 2013, December 30, 2012 and January 1, 2012.

 

The selected historical consolidated financial data of Glacier for the fiscal year-to-date periods ended October 2, 2016 and September 27, 2015 and as of October 2, 2016 have been derived from Glacier’s historical unaudited interim consolidated financial statements included elsewhere in this consent solicitation statement/prospectus. Glacier utilizes a fiscal year of 52 or 53 weeks ending on the Sunday closest to December 31. Fiscal year 2015 ended on January 3, 2016 and consisted of 53 weeks. Fiscal years 2014 and 2013 ended on December 28, 2014 and December 29, 2013, respectively, and each consisted of 52 weeks. These interim financial statements are not audited, but, in the opinion of Glacier’s management, contain all adjustments considered necessary for a fair presentation of Glacier’s financial condition, results of operations and cash flows for the periods presented.

 

Historical results are not necessarily indicative of results to be expected for any future periods. This selected historical consolidated financial data should be read in conjunction with Glacier’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and consolidated financial statements and the related notes thereto included elsewhere in this consent solicitation statement/prospectus.

 

 

 

 

   

(Unaudited)

Nine Months ended

   

Fiscal Year ended

 
   

October 2,

   

September 27,

   

January 3,

   

December 28,

   

December 29,

   

December 30,

   

January 1,

 
   

2016

   

2015

   

2016

   

2014

   

2013

   

2012

   

2012

 

(in thousands, except per share data)

                                                       

Summary Consolidated Statements of Operations Data:

                                                       
                                                         

Net Sales

  $ 105,956     $ 104,199     $ 138,328     $ 132,921     $ 124,995     $ 111,874     $ 103,796  

Operating costs and expenses:

                                                       

Cost of sales

    73,083       71,437       95,331       91,427       85,848       76,390       70,223  

Selling, general and administrative expenses

    14,511       14,028       18,884       18,829       18,269       17,559       17,513  

Depreciation and amortization

    12,513       12,498       16,878       17,207       16,525       13,521       12,630  

Loss on disposal and impairment of property and equipment

    -       -       -       -       1,539       -       -  

Total operating costs and expenses

    100,107       97,963       131,093       127,463       122,181       107,470       100,366  

Income from operations

    5,849       6,236       7,235       5,458       2,814       4,404       3,430  

Other expenses:

                                                       

Other expense

    1,553       2,002       2,371       1,859       1,490       335       -  

Interest expense

    8,479       8,232       11,191       10,790       10,718       10,255       9,244  

Total other expense

    10,032       10,234       13,562       12,649       12,208       10,590       9,244  

Loss before income taxes

    (4,183 )     (3,998 )     (6,327 )     (7,191 )     (9,394 )     (6,186 )     (5,814 )

Income taxes expense

    270       245       320       400       398       45       41  

Net loss

    (4,453 )     (4,243 )     (6,647 )     (7,591 )     (9,792 )     (6,231 )     (5,855 )

Net loss attributable to noncontrolling interest

    (270 )     (258 )     (403 )     (462 )     (393 )     (88 )     -  

Net loss attributable to Glacier Water Services, Inc.

  $ (4,183 )   $ (3,985 )   $ (6,244 )   $ (7,129 )   $ (9,399 )   $ (6,143 )   $ (5,855 )
                                                         

Basic and diluted net loss per common share:

  $ (1.26 )   $ (1.20 )   $ (1.88 )   $ (2.15 )   $ (2.84 )   $ (1.88 )   $ (2.15 )

Weighted average shares used in computing net loss per share:

    3,317       3,316       3,315       3,310       3,310       3,277       2,726  

 

   

As of

           

As of

 
   

October 2,

2016

(unaudited)

           

January 3,

2016

   

December 28,

2014

   

December 29,

2013

   

December 30,

2012

   

January 1,

2012

 

(in thousands)

                                                       

Summary Consolidated Balance Sheet data:

                                                       

Cash and cash equivalents

  $ 5,843             $ 5,340     $ 4,519     $ 4,264     $ 5,229     $ 3,425  

Total assets (1)

    111,238               112,624       114,739       118,437       113,211       89,728  

Long-term debt (1)

    98,369               98,253       98,095       97,940       97,786       97,631  

Line of credit

    51,000               50,000       46,500       43,500       41,500       32,056  

Total liabilities

    167,931               164,972       160,147       156,218       155,503       140,230  

Total stockholders' deficit - Glacier Water Services, Inc.

    (83,888 )             (79,813 )     (73,276 )     (66,111 )     (57,055 )     (50,502 )

Noncontrolling interest equity

    27,195               27,465       27,868       28,330       14,763       -  

Total stockholders' deficit

    (56,693 )             (52,348 )     (45,408 )     (37,781 )     (42,292 )     (50,502 )

 

(1)

We have a beneficial interest in $6.3 million of the Junior Subordinated Debentures included as long-term debt on our consolidated balance sheet. The beneficial interest is reflected as a long-term investment on our consolidated balance sheet and is included in total assets. See "Management's Discussion and analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Indebtedness" and Notes 1(g) and 3(a) to Consolidated Financial Statements.

 

 

SELECTED UNAUDITED PRO FORMA FINANCIAL DATA

 

The following table presents summary unaudited pro forma condensed combined financial information about the financial condition and results of operations of Primo after giving effect to the Merger. The summary unaudited pro forma condensed combined statement of operations data for the nine months ended September 30, 2016 and the year ended December 31, 2015 give effect to the Merger as if the Merger had taken place on January 1, 2015. The summary unaudited pro forma condensed combined balance sheet data gives effect to the Merger as if it had taken place on September 30, 2016. Primo and Glacier have different fiscal year ends, with Primo’s most recent annual period ended on December 31, 2015 and Glacier’s most recent annual period for which audited financial statements are available ended on January 3, 2016. Certain line items of the balance sheet and income statements were combined or reclassified in order to make the information comparable.

 

The summary unaudited pro forma condensed combined financial information is derived from, and should be read in conjunction with, the consolidated financial statements and related notes of Primo incorporated by reference into this consent solicitation statement/prospectus, and the consolidated financial statements and related notes of Glacier included elsewhere in this consent solicitation statement/prospectus, together with the more detailed unaudited pro forma condensed combined financial information provided in the section titled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 95 of this consent solicitation statement/prospectus. The summary unaudited pro forma condensed combined financial information set forth below has been presented for informational purposes only and is not necessarily indicative of what the combined financial condition or results of operations actually would have been had the Merger been completed as of the dates indicated. In addition, the summary unaudited pro forma condensed combined financial information presented below does not purport to project the combined financial condition or operating results for any future period.

 

 

   

Nine months

ended September 30,

2016

   

Year ended

December 31,

2015

 
   

(in thousands)

 

Unaudited Pro Forma Condensed Combined Statements of Operations Data:

               

Net sales

    208,141       265,279  

Cost of sales

    145,572       189,343  

Selling, general and administrative expenses

    29,226       38,012  

Depreciation and amortization

    31,017       42,171  

Loss from continuing operations

    (17,056 )     (29,102 )

Net income (loss) attributable to parent company

    (17,099 )     (29,398 )

 

 

   

As of September 30,

 
   

2016

 
   

(in thousands)

 

Unaudited Pro Forma Condensed Combined Balance Sheet Data:

       

Cash and cash equivalents

    6,440  

Total assets

    378,252  

Current portion of long-term debt and capital leases

    4,271  

Long-term debt and capital leases, net of current portion and debt issuance costs

    168,752  

Junior subordinated debentures

    89,557  

Liabilities of disposal group, net of current portion, and other long-term liabilities

    2,502  

 

 

RISK FACTORS

 

In addition to general investment risks and the other information included in and incorporated by reference in this consent solicitation statement/prospectus, including the matters addressed in the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 43, Glacier stockholders should carefully consider the following risks in determining whether to adopt and approve the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement. In addition, Glacier equityholders are encouraged to read and consider the risks associated with an investment in Primo common stock. These risks can be found in Primo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as updated by subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this consent solicitation statement/prospectus. For further information regarding the documents incorporated into this consent solicitation statement/prospectus by reference, see the section titled “Where You Can Find Additional Information” beginning on page 148.

  

Risks Relating to the Merger

 

There is no assurance when or if the Merger will be completed. Any delay in completing the Merger may substantially reduce the benefits that Primo and Glacier expect to obtain from the Merger.

 

The completion of the Merger is subject to the satisfaction or waiver of a number of conditions, including without limitation, the approval of Glacier stockholders, the effectiveness of the registration statement on Form S-4 of which this consent solicitation statement/prospectus forms a part, and other customary conditions as set forth in the Merger Agreement. There can be no assurance that Primo and Glacier will be able to satisfy the closing conditions or that closing conditions beyond their control will be satisfied or waived. For a discussion of the conditions to the completion of the Merger, see the section titled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 81 of this consent solicitation statement/prospectus. If the Merger and the integration of the companies’ respective businesses are not completed within the expected timeframe, such delay may materially and adversely affect the synergies and other benefits that Primo and Glacier expect to achieve as a result of the Merger and could result in additional transaction costs, loss of revenue, a negative impact on the market price of Primo common stock or other effects associated with uncertainty about the Merger.

  

Primo and Glacier can mutually agree at any time to terminate the Merger Agreement, even if Glacier stockholders have already adopted and approved the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement. Primo and Glacier can also terminate the Merger Agreement under other specified circumstances. See the section titled “The Merger Agreement—Termination of the Merger Agreement” beginning on page 84 of this consent solicitation statement/prospectus.

  

Consummation of the Merger will require Primo to incur significant additional indebtedness, which could adversely impact Primo’s financial condition and may hinder Primo’s ability to obtain additional financing and pursue other business and investment opportunities.

 

Primo intends to finance the cash required in connection with the Merger, including for expenses incurred in connection with the Merger, with debt financing. On October 11, 2016, Primo entered into a debt commitment letter with Goldman, pursuant to which Goldman committed to lend Primo up to $186.0 million in term loans and a $10.0 million revolving credit facility on the Closing Date of the Merger to fund the Merger consideration, refinance certain indebtedness of Glacier and pay related fees and expenses, subject to the conditions set forth therein.

 

 

The incurrence of additional indebtedness could have negative consequences, including increasing Primo’s vulnerability to adverse economic and industry conditions, and limiting Primo’s ability to obtain additional financing and implement and pursue strategic initiatives and opportunities. Additionally, if Primo does not achieve the expected benefits and cost savings from the Merger with Glacier, or if the financial performance of Primo, as the Combined Company, does not meet current expectations, then Primo’s ability to service the debt may be adversely impacted. Primo’s credit ratings may also be impacted as a result of the incurrence of additional acquisition-related indebtedness.

 

The debt financing commitment is subject to various conditions, including the absence of a material adverse change on the condition, business, performance, operations or property of Primo or Glacier, the execution of satisfactory documentation, completion of the Merger in accordance with the terms and conditions of the Merger Agreement, and other customary closing conditions as set forth in the Commitment Letter. There is a risk that these conditions will not be satisfied and that the debt financing may not be funded when required. If the financing is not funded when required and Primo is unable to obtain alternate financing within the time periods permitted under the Merger Agreement, Glacier will have the right to terminate the Merger Agreement and collect a $7.5 million termination fee from Primo. For a description of the debt financing, please refer to “Description of the Debt Financing” beginning on page 93 of this consent solicitation statement/prospectus.

  

Primo is expected to incur substantial transactional expenses related to the Merger and the integration of Glacier.

 

Primo is expected to incur substantial expenses in connection with the Merger, the integration of Glacier and the achievement of the desired synergies. Non-recurring transaction expenses include, but are not limited to, fees paid to financing sources and to legal, financial and accounting advisors. Additionally, there are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including information technology, purchasing, accounting and finance, sales, billing, marketing and human resources, including payroll and employee benefits. While Primo has attempted to estimate the after-tax integration and other costs incurred to execute the transaction following completion of the Merger, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that Primo expects to achieve from elimination of duplicative expenses and the realization of economies of scale and cost savings. Although Primo and Glacier expect that the realization of efficiencies related to the integration of the businesses may offset incremental costs over time, Primo and Glacier cannot give any assurance that this net benefit will be achieved in the near term, the long term or at all.

 

Covenants in the Merger Agreement place certain restrictions on Glacier’s conduct of business prior to the closing of the Merger, including entering into a business combination with another party.

 

The Merger Agreement restricts Glacier from taking certain specified actions with respect to the conduct of its business, with limited exceptions, until the Merger occurs or the Merger Agreement terminates, including prohibition on initiating, soliciting or knowingly encouraging any inquiries or making any proposals or offers that constitute or that could reasonably be expected to lead to a merger, reorganization, share exchange, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving Glacier or any purchase or sale of 20% or more of the consolidated assets of Glacier, taken as a whole, or any purchase or sale of, or tender or exchange offer for, its voting securities that, if consummated, would result in any person (or the stockholders of such person) beneficially owning securities representing 20% or more of Glacier’s total voting power (or of the surviving parent entity in such transaction) (collectively, an “Acquisition Proposal”), or engaging in or otherwise participating in any discussions or negotiations regarding, or providing any non-public information or data concerning Glacier to any person relating to, or that could reasonably be expected to lead to, any Acquisition Proposal. These restrictions may prevent Glacier from pursuing otherwise attractive business opportunities or other capital structure alternatives and making other changes to its business or executing certain of its business strategies prior to the completion of the Merger or termination of the Merger Agreement, which could otherwise be favorable to Glacier stockholders. See the section entitled “The Merger Agreement—Conduct of Business Before Completion of the Merger” beginning on page 75 of this consent solicitation statement/prospectus.

  

 

The announcement and pendency of the Merger could have an adverse effect on Primo’s and/or Glacier’s business, financial condition, results of operations or business prospects.

 

The announcement and pendency of the Merger could disrupt Primo’s and/or Glacier’s businesses in the following ways, among others:

 

 

Primo’s and/or Glacier’s employees may experience uncertainty regarding their future roles in the Combined Company, which might adversely affect Primo’s and/or Glacier’s ability to retain, recruit and motivate key personnel;

 

 

the attention of Primo’s and/or Glacier’s management may be directed towards the completion of the Merger and other transaction-related considerations and may be diverted from the day-to-day business operations of Primo and/or Glacier, as applicable, and matters related to the Merger may require commitments of time and resources that could otherwise have been devoted to other opportunities that might have been beneficial to Primo and/or Glacier, as applicable; and

 

 

customers, suppliers, business partners and other third parties with whom Primo or Glacier has a business relationship may decide not to renew or may decide to delay or defer business decisions, seek to terminate, change and/or renegotiate their relationships with Primo and/or Glacier as a result of the Merger, whether pursuant to the terms of their existing agreements with Primo and/or Glacier or otherwise.

 

Any of these matters could adversely affect the businesses of, or harm the financial condition, results of operations or business prospects of, Primo and/or Glacier.

 

Because the market price of Primo common stock will fluctuate, Glacier equityholders cannot be sure of the market value of the Primo common stock that they will receive in the Merger.

 

When we complete the Merger, each share of Glacier common stock, Option Allocated Share and minority LLC common unit will be converted into the right to receive the Per Share Cash Amount, the Per Share Stock Amount and the Per Share Warrant Amount. The amount of the Per Share Stock Amount and the exercise price of the Warrants included in the Per Share Warrant Amount are based on a fixed share price and will not be adjusted for changes in the market price of either Primo common stock or Glacier common stock between the date of signing the Merger Agreement and completion of the Merger. The market value of Primo common stock will continue to fluctuate until the completion of the Merger. For example, during the third quarter of 2016, the closing sales price of Primo common stock ranged from a low of $11.13 to a high of $12.59, as reported on the Nasdaq Global Market. On November 25, 2016, the closing sales price of Primo common stock was $13.35. The Merger Agreement does not provide for any price-based termination right for either party. Accordingly, the market value of the shares of Primo common stock that Primo issues and for which the Warrants are exercisable and each of which Glacier equityholders will be entitled to receive when the parties complete the Merger will depend on the market value of shares of Primo common stock at the time that the parties complete the Merger and could vary significantly from the market value on the date of this consent solicitation statement/prospectus or the date of the approval of the proposal to adopt the Merger Agreement by Glacier stockholders.

 

 

Changes in the market value of Primo common stock could result from a variety of factors, many of which are beyond Primo’s control, including general market and economic conditions, actual or expected variations in results of operations, changes in recommendations by securities analysts, changes in Primo’s business, operations and prospects and regulatory considerations and significant acquisitions or strategic alliances by competitors. Glacier stockholders should obtain current market quotations for shares of Primo common stock.

 

Glacier equityholders may not receive the stock consideration to be held in the escrow account, and even if they do receive the shares, the value of the escrowed shares may decline.

 

To secure the indemnification obligations of the Glacier equityholders under the Merger Agreement, Primo will withhold from such Glacier equityholders (on a pro rata basis according to their respective interests therein) and deliver to the escrow agent, 71% of the stock consideration payable to each such Glacier equityholder, to be held and distributed by the escrow agent pursuant to the terms of the Merger Agreement and the escrow agreement. Glacier equityholders may not receive the stock consideration to be held in the escrow account by the escrow agent, and even if they do receive the shares of Primo common stock subject to the escrow agreement, the value of the escrowed shares may decline.

 

The shares of Primo common stock delivered by Primo to the escrow agent upon the closing of the Merger will be available to compensate Primo, the post-closing surviving corporation and their affiliates with respect to breaches, violations or non-fulfillment of covenants or agreements and breaches of or inaccuracies in representations or warranties, in each case, by Glacier or Glacier equityholders. The shares of Primo common stock will be held in escrow beginning on the closing date of the Merger and will be released to the stockholder representative, on behalf of and for distribution to the Glacier equityholders as follows: 25% of the escrow will be released on the date that is 6 months following the Closing Date, an additional 25% of the escrow will be released on the date that is 9 months following of the Closing Date and the remaining 50% of the escrow will be released on the “Final Escrow Release Date”, which means (i) if the Closing Date is on or prior to December 31, 2016, the date that is the first anniversary of the Closing Date or (ii) if the Closing Date is after December 31, 2016, the date that is 30 days following the completion of an independent audit of Primo and its subsidiaries on a consolidated basis following the Merger for the fiscal year ending December 31, 2017.

 

In the event shares of Primo common stock are withdrawn from the escrow to satisfy an indemnification claim by Primo, the post-closing surviving corporation or their affiliates, the number of shares will be determined on the basis of the market price per share of Primo common stock at the time it is to be released from the escrow to satisfy a claim. As a result, if the market price for Primo common stock falls between the closing of the Merger and the time that shares of Primo common stock are released from the escrow, the Glacier equityholders may be required to forego more shares of Primo common stock to satisfy the claim than would have been necessary had the price of Primo common stock remained unchanged. If the total amount of claims paid pursuant to the terms of the Merger Agreement and the escrow agreement exceeds the market value of the escrowed shares, the Glacier equityholders may not receive any of the escrowed shares. In addition, except in cases of fraud, intentional misrepresentation or willfull misconduct, the shares deposited into escrow will be the sole and exclusive source of satisfaction of any indemnification claim made by Primo, the post-closing surviving corporation or their affiliates. To the extent the losses associated with any such indemnification claims exceed the value of the shares deposited into escrow, Primo, the post-closing surviving corporation and their affiliates will have no other means of recovering against the Glacier equityholders.

 

Finally, the market value of the shares of Primo common stock deposited in the escrow account may fluctuate or decrease between the time of such deposit and the time at which any escrowed amount is distributed to the Glacier equityholders. Glacier equityholders will not be compensated for fluctuations in value of the shares of Primo common stock.

 

Glacier stockholders will have a reduced ownership and voting interest in Primo after the Merger relative to their current ownership and voting interest in Glacier and, as a result, will be able to exert less influence over management.

 

Glacier stockholders currently have the right to vote in the election of the Glacier board of directors and on other matters affecting Glacier. In the Merger, each Glacier stockholder will receive shares of Primo common stock as a portion of the Merger consideration, which will result in such Glacier stockholder becoming a stockholder of Primo with a percentage ownership of Primo after the Merger that is smaller than such stockholder’s current percentage ownership of Glacier. Based on the assumptions described in “The Merger—Effect of the Merger; Merger Consideration” beginning on page 49, it is currently expected that Glacier equityholders immediately prior to the Merger will own, in the aggregate, approximately 10.9% of the outstanding shares of Primo common stock immediately after the completion of the Merger. Accordingly, Glacier stockholders will have substantially less influence on the management and policies of Primo after the Merger than they now have with respect to the management and policies of Glacier.

  

Because certain directors and executive officers of Glacier, as the case may be, are parties to agreements or are participants in other arrangements that give them interests that may be different from, or in addition to, the interests of a stockholder of Glacier, these persons may have conflicts of interest in recommending that Glacier stockholders vote to adopt the Merger Agreement and approve the Merger.

 

Certain directors and executive officers of Glacier have interests in the Merger that may be different from, or in addition to, your interests as a stockholder of Glacier. The Glacier board of directors was aware of these interests at the time it approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger. These interests may cause these persons to view the proposal to adopt the Merger Agreement differently and more favorably than you may view it. The interests of directors and executive officers of Glacier in the Merger that are different from those of the Glacier stockholders are described under “The Merger—Interests of Glacier Directors and Executive Officers in the Merger” beginning on page 58 of this consent solicitation statement/prospectus.

  

Risks Relating to the Combined Company Following the Merger

 

If the Merger is completed, Primo and Glacier will operate as a combined company in a competitive market environment that is difficult to predict and involves significant risks, many of which will be beyond the control of the Combined Company. In determining whether you should consent to the Merger proposal, Glacier stockholders should carefully read and consider the following risk factors. If any of the events, contingencies, circumstances or conditions described in the following risks actually occurs, the Combined Company’s business, financial condition or results of operations could be adversely affected.

 

The Combined Company may not fully realize the anticipated synergies and related benefits of the Merger or do so within the anticipated time frame. Also, integrating Glacier’s business with that of Primo may divert the attention of management away from operations.

 

 

Currently, Primo and Glacier operate as two independent companies. Achieving the anticipated benefits of the Merger will depend in large part upon how successfully the two companies are able to integrate their businesses in an efficient and effective manner. Primo and Glacier have been able to conduct only limited planning regarding the integration of the two companies after the completion of the Merger, and they have not yet determined the exact nature of how the businesses and operations of the two companies will be combined thereafter. The companies may not be able to accomplish the integration process smoothly, successfully or on a timely basis.

 

The companies may have to address potential differences in business backgrounds, corporate cultures and management philosophies to achieve successful integration. Employee uncertainty during the integration process may also disrupt the business of the Combined Company. Regulatory agencies may impose terms and conditions on their approvals, which may adversely impact the ability of the Combined Company to realize the synergies that are projected to occur in connection with the Merger. In addition, management of Primo and Glacier will be required to devote significant attention and resources prior to the closing of the Merger to prepare for the post-closing operations of the Combined Company, and this process may disrupt the businesses and, if ineffective, could limit the anticipated benefits of the Merger. Many of these factors will be outside of the control of the Combined Company and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact the business, financial condition and results of operations of the Combined Company. In addition, even if the operations of the businesses of Primo and Glacier are integrated successfully, the full benefits of the transaction may not be realized, including the synergies, cost savings, sales or growth opportunities and operational efficiencies that are expected. These benefits may not be achieved within the anticipated time frame, or at all. Further, additional unanticipated costs may be incurred in the integration of the businesses of Primo and Glacier. All of these factors could negatively impact the earnings per share of the Combined Company, decrease or delay the expected accretive effect of the Merger and negatively impact the price of the Combined Company’s shares. As a result, there is no assurance that the combination of Primo and Glacier will result in the realization of the full benefits anticipated from the Merger.

 

The future results of the Combined Company will suffer if the Combined Company does not effectively manage its expanded operations following the completion of the Merger.

 

Following the completion of the Merger, the size of the business of the Combined Company will increase significantly beyond the current size of either Primo’s or Glacier’s business. The Combined Company’s future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. If the Combined Company is unsuccessful in managing its integrated operations, or if it does not realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Merger, the operations and financial condition of the Combined Company could be adversely affected and the Combined Company may not be able to take advantage of business development opportunities.

 

The Merger will result in changes to the Primo board of directors and management that may affect the Combined Company’s strategy.

 

If the parties complete the Merger, the composition of the Primo board of directors and management team will change in accordance with the Merger Agreement. Pursuant to the terms of the Merger Agreement, Primo will use reasonable efforts to cause its board of directors to appoint Charles Norris to serve as a Class III director on the Primo board of directors for a term that would expire at Primo’s 2019 annual meeting of stockholders. In addition, the Combined Company’s management will include Mr. McInerney and is expected to include members of the existing Primo and Glacier management teams. This new composition of the Primo board of directors and management may affect the business strategy and operating decisions of the Combined Company upon the completion of the Merger. In addition, the composition of the Primo board of directors and management as contemplated by the Merger Agreement may change following the Merger.

 

 

The loss of key personnel could have a material adverse effect on the Combined Company’s financial condition, results of operations and growth prospects and could diminish the anticipated benefits of the Merger.

 

The success of the Merger will depend in part on the attraction, retention and motivation of certain key personnel critical to the business and operations of the Combined Company after the Merger due to, for example, their technical skills or industry or management expertise. Employees may experience uncertainty about their future roles with the Combined Company during the pendency of the Merger or after its completion, and it is possible that certain key employees might decide not to remain with the Combined Company after the Merger is completed. In addition, competitors may recruit key employees during the pendency of the Merger and during the integration of the two companies. If Primo and Glacier are unable to attract and retain key personnel, or if the companies lose certain key employees during the pendency of the Merger or after its completion, the Combined Company could face disruptions in its operations, loss of existing customers, failure to engage new customers, the diversion of management’s attention from successful integration of Primo’s and Glacier’s operations and unanticipated recruiting and training costs. This may result in adverse effects on the Combined Company’s business, financial condition, results of operation and growth prospects. In addition, the Combined Company might not be able to locate suitable replacements for any key personnel who terminate their employment with Combined Company, and the loss of key personnel may diminish the anticipated benefits of the Merger.

 

The Merger could trigger certain change-of-control or similar provisions contained in Glacier’s agreements with third parties that could permit such parties to terminate or renegotiate those agreements.

 

Glacier may be a party to agreements that permit the counterparty to terminate the agreement or receive payments because the Merger would cause a default or violate an anti-assignment, change-of-control or similar clause in such agreement. If this happens, the Combined Company may have to seek replacement of that agreement with a new agreement or make additional payments under such agreement. However, the Combined Company may be unable to replace a terminated agreement on comparable terms, if at all. Depending on the importance of such agreement to Glacier’s business, the failure to replace a terminated agreement on similar terms, if at all, and requirements to pay additional amounts or other adverse terms, may decrease the expected benefits of the Merger to the Combined Company.

 

Future results of the Combined Company may differ materially from the unaudited pro forma financial statements presented in this consent solicitation statement/prospectus and the financial forecasts prepared by Primo and Glacier in connection with discussions concerning the Merger.

 

The unaudited pro forma combined financial information contained in this consent solicitation statement/prospectus is presented for illustrative purposes only and may differ materially from what the Combined Company’s actual financial position or results of operation would have been had the Merger been completed on the dates indicated. The unaudited pro forma financial information has been derived from the audited and unaudited historical financial statements of Primo and Glacier, and certain adjustments and assumptions have been made regarding the Combined Company after giving effect to the Merger. The process for estimating the fair value of acquired assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. These estimates may vary significantly as additional information becomes available and as additional analyses are performed. Differences between preliminary estimates in the unaudited pro forma combined financial information and the final acquisition accounting may occur and are not necessarily indicative of the financial position or results of operations in future periods or that would have been realized in historical periods presented.

 

 

In addition, the assumptions used in preparing the unaudited pro forma financial information may not prove to be accurate, and other factors may affect the Combined Company’s financial condition or results of operation following the closing. Any potential decline in the Combined Company’s financial condition or results of operations may cause significant variations in the market price of Primo’s common stock following the Merger. See “Unaudited Pro Forma Condensed Combined Financial Statements” on page 95.

  

If the Combined Company fails to maintain proper and effective internal controls, its ability to produce accurate financial statements could be impaired, which could adversely affect its operating results, its ability to operate its business and investors’ view of the Combined Company.

 

Ensuring that the Combined Company has adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Glacier has not historically evaluated and developed its internal controls and procedures in compliance with Section 404 of the Sarbanes-Oxley Act, and its internal controls and procedures are not expected to be fully compliant with Section 404 of the Sarbanes-Oxley Act at the time of the Merger. Implementing appropriate changes to the internal controls of the Combined Company may take a significant period of time to complete, may distract directors, officers and employees, and may entail substantial costs in order to modify existing accounting systems. Further, the Combined Company may encounter difficulties assimilating or integrating the internal controls, disclosure controls and information technology infrastructure of Primo and Glacier. The Combined Company’s efforts to assimilate and integrate the internal controls of Primo and Glacier may not be effective in maintaining the adequacy of internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase the Combined Company’s operating costs and could materially impair its ability to operate its business. In addition, investors’ perceptions that the Combined Company’s internal controls are inadequate or that it is unable to produce accurate financial statements may adversely affect its stock price.

 

Turbulence in the U.S. and global economies and financial markets may lead to a decrease in discretionary consumer and corporate spending and could adversely impact the Combined Company’s business, financial condition and results of operations.

 

The U.S. economy has presented challenges to the businesses of Primo and Glacier in recent years, including discretionary consumer and corporate spending. These continued challenges and potential turbulence in the U.S. market and economy may lead to reduced consumer confidence and a decrease in spending in the water industry. The Combined Company’s business depends significantly on discretionary consumer spending. Economic conditions affecting disposable consumer income such as employment, fuel prices, interest and tax rates, consumer debt levels, lack of available credit and inflation may significantly impact the operating results of the Combined Company. Business conditions, as well as various industry conditions, can also significantly impact the Combined Company’s operating results. Any material decline in the amount of discretionary consumer spending could hurt the Combined Company’s revenues, results of operations, business and financial condition. In addition, the current global economic uncertainty, the impact of recessions, and the potential for failures or realignments of financial institutions and the related impact on available credit may impact the Combined Company’s suppliers, distributors, retail customers, and operations in an adverse manner including, but not limited to, the inability of retail customers to timely pay their obligations to the Combined Company, thus reducing its cash flow, increased costs related to our distribution channels and the inability of the Combined Company’s vendors to timely supply materials.

 

 

Currently pending or future litigation or governmental proceedings could result in adverse effects, including injunctions, judgments or settlements.

 

Primo and Glacier are and from time to time become involved in lawsuits, regulatory inquiries and governmental and other legal proceedings arising out of the ordinary course of their businesses. Many of these matters raise difficult and complicated factual and legal issues and are subject to uncertainties and complexities. The timing of the final resolutions to these types of matters is often uncertain. Additionally, the possible outcomes or resolutions to these matters could include adverse judgments or settlements, either of which could require substantial payments, adversely affecting the Combined Company’s business, financial condition, results of operations and liquidity.

 

The market price of the Combined Company common stock after the Merger may be subject to significant fluctuations and may be affected by factors different from those currently affecting the market price of Primo common stock.

 

Upon completion of the Merger, each Glacier stockholder, holder of Glacier stock options and holder of minority LLC common units will become a Primo stockholder. While Primo common stock has an observable trading history, Primo common stock on a post-Merger basis may trade differently from its pre-Merger trading history, and the market price of Primo common stock could be subject to significant fluctuations following the Merger.

 

In addition, the businesses of Primo differ from those of Glacier in important respects and, accordingly, the results of operations of the Combined Company and the market price of Primo common stock following the Merger may be affected by factors different from those currently affecting the independent results of operations of Primo and Glacier. For a discussion of the business of Primo and of certain factors to consider in connection with Primo’s business, see the documents incorporated by reference into this consent solicitation statement/prospectus referred to in the section titled “Where You Can Find Additional Information” beginning on page 150. For a discussion of the business of Glacier and of certain factors to consider in connection with Glacier’s business, see the sections titled “Risk Factors—Risks Relating to Glacier’s Business” beginning on page 38 and “Information about Glacier” beginning on page 113.

  

The Combined Company may require additional capital in the future, which may not be available to it on satisfactory terms, if at all.

 

The Combined Company will require liquidity to fund its operating expenses and interest on its debt. To the extent that the funds generated by the Combined Company’s ongoing operations are insufficient to cover its liquidity requirements, it may need to raise additional funds through financings. If the Combined Company cannot obtain adequate capital or sources of credit on favorable terms, or at all, its business, operating results and financial condition could be adversely affected.

 

The rights of Glacier stockholders who become Primo stockholders in the Merger will be governed by the Primo certificate of incorporation and the Primo by-laws.

 

Glacier stockholders who receive shares of Primo common stock in the Merger will become Primo stockholders and will be governed by the Primo certificate of incorporation and the Primo by-laws, rather than the Glacier certificate of incorporation and the Glacier by-laws. There may be material differences between the current rights of Glacier stockholders, as compared to the rights they will have as Primo stockholders. For more information, see the section titled “Comparison of Rights of Stockholders” beginning on page 139.

 

 

Risks Relating to Primo’s Business

 

Glacier equityholders are encouraged to read and consider the risks associated with an investment in Primo common stock. These risks can be found in Primo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as updated by subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this consent solicitation statement/prospectus.

 

Risks Relating to Glacier’s Business

 

Glacier equityholders are urged to read and consider the following risks related to Glacier’s business.

 

Glacier depends on retailer and consumer acceptance of its vended water machines.

 

Glacier is a consumer products company operating in the highly-competitive water market and relies on consumer demand for its filtered water. Because potential customers may not be familiar with Glacier’s water machines and because Glacier undertakes limited marketing, there can be no assurance that consumer acceptance of Glacier’s product will continue to grow, or that newly installed machines will attract enough customers to be profitable. In addition, if Glacier is unable to respond effectively to the trends affecting the water market, consumer acceptance of Glacier’s products may suffer. A failure to grow or maintain consumer acceptance for Glacier’s water machines could reduce the profitability of Glacier’s machines, and could adversely affect Glacier’s ability to install new machines with existing or potential retail partners. In addition, if consumers have a negative experience with any brand of vended water, including the water of Glacier’s competitors, vended water may lose acceptance and Glacier’s business could be adversely affected.

 

Glacier’s industry is highly competitive, and Glacier might encounter significant competition from new or existing companies entering into the vended water market.

 

The bottled water industry is highly competitive. If Glacier is unable to respond effectively to competitive threats, Glacier’s margins and results of operations could be adversely affected.

 

Glacier’s primary competitors in the bottled water market include Nestlé, The Coca-Cola Company, PepsiCo, Dr. Pepper Snapple Group and Cott Corporation. These leading consumer products companies have strong brand presence with consumers, established relationships with retailers and significantly greater financial and other resources than Glacier has. Glacier could lose market share if they, or other large companies, successfully enter the vended water market or if Glacier’s consumers prefer pre-packaged water over its vended water.

 

 Glacier also faces competition within the vended water market from small- to medium-sized operators. If a competitor develops, or seeks to develop, a service model similar to Glacier’s, Glacier could face increased competition to attract retail partners. In addition to competition within the bottled water industry, the industry itself faces significant competition from other non-alcoholic beverages, including soft drinks, carbonated waters, juices, sport and energy drinks, coffees, teas and spring and municipal tap water.

 

 

The loss of a major retail partner would adversely affect Glacier.

 

Glacier distributes its vended water to consumers through relationships with third-party retailers. Most of Glacier’s arrangements with Glacier’s retail partners are evidenced by written contracts which have terms that generally range from two to five years and contain termination clauses as well as automatic renewal clauses. During the term of these agreements, Glacier has the exclusive right to place water vending machines at specified locations. Glacier competes to maintain existing retail accounts and to establish new retail relationships, but it can give no assurance of renewals of any existing contracts or of its ability to enter into new contracts. If Glacier is unable to redeploy machines from lost locations on a timely basis to equally desirable locations, Glacier’s business will be adversely affected.

 

Continued positive relations with Glacier’s retail partners depend on various factors, including commission rates, customer service, consumer demand and competition. Disruptions in relationships with retailers, including the reduction, termination or adverse modification of a retail relationship, could have a negative effect on Glacier’s ability to sell its vended water and to maintain its consumer base, which would in turn adversely affect its business and results of operations.

 

Increased use of “point-of-use” home filtration devices could adversely affect Glacier.

 

An increase in the use of in-home filtration devices, such as those that attach to faucets or are installed under the sink, could adversely affect demand for Glacier’s vended water, particularly if such devices are improved to provide enhanced filtration.

 

If Glacier is unable to build and maintain its brand image and corporate reputation, its business may suffer. 

 

As a direct marketer of consumables to consumers, Glacier’s future success depends on Glacier’s ability to build and maintain its brand image. If Glacier is not able to maintain and enhance its brand to consumers and to new retail partners where it may have limited brand recognition, it may be unable to place additional machines at retail locations or attract sufficient numbers of consumers to its machines. Given the nature of Glacier’s product, its ability to maintain its reputation for product quality is also critical to its brand image. Any negative publicity, or any actual or perceived product quality issues, even if false or unfounded, could tarnish the image of Glacier’s brand and may cause consumers to choose other products.

 

If any vended water became contaminated, Glacier’s business could be seriously harmed.

 

Glacier has adopted quality, environmental, health and safety standards. However, Glacier’s water vending machines may not meet these standards or its products could otherwise become contaminated. A failure to meet such standards could result in expensive business interruptions and liability claims. Any of these failures or occurrences, or any allegation of these occurrences, even if unfounded, could negatively affect Glacier’s business and financial performance. Even if Glacier’s water does not ever become contaminated, a contamination of any vended water, including the water of its competitors, would be detrimental to the vended water business as a whole.

 

Electrical outages, localized municipal tap water system shut-downs, “boil water” directives or increases in the cost of electricity or municipal tap water could adversely affect Glacier’s business.

 

Glacier’s machines depend on a supply of electricity and water to operate. Any electrical outages or cut-off of municipal tap water supplies to Glacier’s machines or a directive to boil municipal tap water sources for Glacier’s machines, in each case, whether due to national disasters or otherwise, would cause Glacier to lose all revenue from the affected machines during that period and could, in addition, lower subsequent revenues if consumers perceive that there is a risk of contamination in Glacier’s vended water. Additionally, if electricity or municipal water costs were to increase significantly, Glacier’s retail partners may request that Glacier pay them a higher commission, which, if granted, would adversely affect Glacier’s results of operations.

 

 

Glacier depends on the expertise of key personnel. If these individuals leave without replacement, Glacier’s ability to implement its business strategies could be delayed or hindered.

 

Glacier is dependent on the services of its senior management because of their experience, industry relationships and knowledge of the business. The loss of one or more of Glacier’s key employees could seriously harm its business, and it may be difficult to find any replacement with the same or similar level of experience or expertise. Competition for these types of personnel is high, and Glacier can give no assurance that Glacier will be able to attract and retain qualified personnel on acceptable terms. Failure to recruit and retain such personnel could adversely affect Glacier’s business, financial condition, results of operations and planned growth. Glacier does not have employment agreements with any employees and does not maintain key person insurance on any employee. On October 9, 2016, concurrently with the execution of the Merger Agreement, Primo and Brian H. McInerney signed an Employment Agreement, effective as of and conditioned upon the closing of the Merger, whereby Mr. McInerney will be appointed Executive Vice President of Primo and President of Primo’s self-service filtered drinking water business in the United States and Canada, a copy of which is attached to this consent solicitation statement/prospectus as Appendix D.

 

The distribution of Glacier’s water and ice to consumers relies on the existence and financial health of its retail partners.

 

Glacier’s retail partners, such as food, drug, convenience, mass and other retailers, have faced significant consolidation in recent years, and these conditions may continue. Glacier relies on its retail partners in order to access its consumers. If Glacier’s retail partners close sites or experience disruptions such as strikes or lock-outs, Glacier could lose access to some consumers, and its results of operations could be adversely affected.

 

Adverse weather conditions could negatively impact Glacier’s business.

 

Glacier’s business is subject to seasonal fluctuations, with decreased revenues during rainy or cold weather months and increased revenues during dry or hot weather months. In addition, unseasonable or unusual weather may reduce demand and revenues for its products. Variations in demand and revenues could negatively impact the timing of its cash flows and therefore limit its ability to timely service its obligations and pay its indebtedness.

 

 Glacier depends on key management information systems.

 

Glacier processes orders, manages inventory and accounts receivable, maintains customer information and maintains cost-efficient operations through a management information systems (“MIS”) network connecting each of Glacier’s water vending machines with a central computing system located at its headquarters. Any disruption in the operation of its MIS tools, the loss of employees knowledgeable about such systems, or Glacier’s failure to continue to effectively modify such systems to accommodate changes in its business could require it to expend significant additional resources or to invest additional capital to continue to manage its business effectively. Additionally, Glacier’s MIS tools are vulnerable to interruptions or other failures resulting from, among other things, natural disasters, terrorist attacks, software, equipment or telecommunications failures, processing errors, computer viruses, hackers, other security issues or supplier defaults. Security, backup and disaster recovery measures may not be adequate or implemented properly to avoid such disruptions or failures. Any disruption or failure of these systems or services could cause substantial errors, processing inefficiencies, security breaches, inability to use the systems or process transactions, loss of consumers, loss of retail partners or other business disruptions, all of which could negatively affect Glacier’s business and financial performance.

 

 

Disruption in Glacier’s supply chain could adversely affect it.

 

A disruption in Glacier’s supply chain could adversely affect Glacier’s ability to assemble new machines and repair, maintain and retrofit existing machines. If Glacier cannot retain alternative sources of supply or effectively manage a disruption if it occurs, Glacier’s sales and profitability could be adversely affected, and additional resources could be necessary to restore its supply chain.

 

Introductions of new products may not prove successful, which could disrupt Glacier’s business.

 

Glacier recently entered the packaged ice business by installing in-store ice bagging machines in retail stores. Glacier expects that it may acquire or invest in new product lines, businesses or technologies that it believes would provide a strategic fit with its business or expand its business. Product development and investments are accompanied by potential risks and challenges that could disrupt Glacier’s business operations, increase its operating costs or capital expenditure requirements and reduce the value of the new product line, business or technology.

 

 Increases in the price of fuel could have an adverse effect on Glacier’s results of operations.

 

While Glacier does not incur fuel costs to transport water, its field service personnel use substantial amounts of fuel in making service visits to its machines. As a result, a meaningful increase in fuel prices could negatively affect Glacier’s margins and operating cash flows.

 

Adverse economic conditions in the regions in which Glacier operates could negatively impact its financial results.

 

High levels of unemployment or underemployment, or the effects of higher fuel and food prices on Glacier’s customers’ shopping budgets could have a number of different effects on Glacier’s business, including (i) a reduction in consumer spending, which could result in a reduction in Glacier’s sales volume and (ii) a shift in the purchase habits of Glacier’s target customers. Other events or conditions that may arise directly or indirectly from global financial events could negatively impact Glacier’s business.

 

Glacier has incurred net losses in the past and may incur net losses in the future.

 

Glacier has incurred net losses in the past and may incur net losses in the future. It has not been profitable in recent years, and it may not become profitable in the future. Its losses may continue as it incurs additional costs and expenses related to branding and marketing, expansion of operations, product development and development of relationships with retail partners. If Glacier’s expenses exceed its expectations, its financial performance will be adversely affected. If Glacier does not achieve sustained profitability, it may need to raise additional capital in order to continue operations.

 

Glacier’s operations are subject to regulation at both the state and federal level.

 

Glacier is subject to various federal, state and local laws and regulations which require Glacier, among other things, to obtain licenses for its business and machines, to pay annual license and inspection fees, to comply with certain detailed design and quality standards regarding the vending machines and the vended water and ice, and to continuously control the quality of the vended water and ice. Glacier’s machines are subject to routine and random regulatory quality inspections. The enactment of additional or more stringent laws or regulations may cause a disruption in Glacier’s operations in the future. Failure to comply with such current or future laws and regulations could result in fines against Glacier, a temporary shutdown of its operations or the loss of certification to sell its product.

 

 

 Licensing or inspection fees payable by Glacier could increase.

 

Glacier currently pays annual licensing fees and inspection fees to a number of states. Increases in such licensing or inspection fees payable by Glacier could adversely affect its financial results.

 

Glacier’s inability to protect its intellectual property could adversely affect its business and results of operations.

 

 The trade name and trademarks “Glacier Water” and “Glacier Water & Penguin Design” used by Glacier contain the word “Glacier,” which is commonly used and has been registered in connection with other marks and designs by a number of other entities for water and related services. The mark “Glacier Water,” by itself, is considered by the United States Patent and Trademark Office to be generic in relation to water and related services. Glacier believes that no party can claim exclusive rights to “Glacier Water,” and Glacier may claim rights only to stylized forms of the mark or the mark with design elements. Glacier can, however, give no assurance that other entities might assert superior or exclusive rights to the marks and seek to obtain damages from the injunctive relief against it. Therefore, there can be no assurance that Glacier’s use of the trade name and trademarks “Glacier Water” and “Glacier Water & Penguin Design” will not violate the claimed proprietary rights of others, which could adversely affect its business and results of operations.

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This consent solicitation statement/prospectus, including information included or incorporated by reference in this consent solicitation statement/prospectus, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can typically identify forward-looking statements by the use of forward-looking words such as “expect,” “anticipate,” “target,” “goal,” “project,” “intend,” “plan,” “believe,” “budget,” “should,” “continue,” “could,” “forecast,” “may,” “might,” “potential,” “strategy,” “will,” “would,” “seek,” “estimate,” or variations of such words and similar expressions, although the absence of any such words or expressions does not mean that a particular statement is not a forward-looking statement. It is important to note that Primo’s and Glacier’s goals and expectations are not predictions of actual performance. Any statements regarding the benefits of the Merger, or Primo’s or Glacier’s future financial condition, results of operations and business are also forward-looking statements. Without limiting the generality of the preceding sentence, certain statements contained in the sections entitled “The Merger— Glacier’s Reasons for the Merger; Recommendation of the Glacier Board of Directors,” “The Merger—Primo’s Reasons for the Merger” and “The Merger—Background of the Merger” may constitute forward-looking statements.

 

These forward-looking statements represent Primo’s and Glacier’s intentions, plans, expectations, assumptions and beliefs about future events, including the completion of the Merger, and are subject to risks, uncertainties and other factors. Many of these factors are outside the control of Primo and Glacier and could cause actual results to differ materially from the results expressed or implied by these forward-looking statements. In addition to the risk factors described in the section entitled “Risk Factors” beginning on page 30, these factors include:

 

 

those identified and disclosed in public filings with the SEC made by Primo;

 

 

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

 

the inability to complete the Merger due to the failure to obtain Glacier stockholder approval or governmental or regulatory clearances or the failure to satisfy other conditions to the closing of the Merger;

 

 

the failure of the Merger to be completed for any other reason, including the failure of Primo to obtain the debt financing;

 

 

the length of time necessary to complete the Merger;

 

 

the risk that the proposed Merger disrupts current plans and operations;

 

 

fluctuations in the market value of Primo common stock;

 

 

the effects of the Merger on Primo’s financial results;

 

 

disruption from the Merger making it difficult to maintain business and operational relationships;

 

 

successfully integrating the Primo and Glacier businesses, and avoiding problems which may result in the Combined Company not operating as effectively and efficiently as expected;

   

 

 

the possibility that the expected benefits of the Merger will not be realized within the expected timeframe or at all;

 

 

the direct and indirect costs incurred and that will be incurred by each of Primo and Glacier in connection with the Merger;

 

 

the diversion of management time on Merger-related issues;

 

 

prevailing economic, market and business conditions;

 

 

the cost and availability of capital and any restrictions imposed by lenders or creditors;

 

 

changes in the industries in which Primo and Glacier operate;

 

 

the effects on the businesses of the companies resulting from uncertainty surrounding the Merger, including with respect to customers, employees or suppliers or the diversion of management’s time and attention;

 

 

the volatility and unpredictability of the stock market and credit market conditions;

 

 

conditions beyond Primo’s and Glacier’s control, such as disaster, acts of war or terrorism;

 

 

variations between the stated assumptions on which forward-looking statements are based and Primo’s and Glacier’s actual experience; and

 

 

other economic, business, and/or competitive factors.

 

For any forward-looking statements made in this consent solicitation statement/prospectus or in any documents incorporated by reference into this consent solicitation statement/prospectus, Primo claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this consent solicitation statement/prospectus and should be read in conjunction with the risk factors and other disclosures contained or incorporated by reference into this consent solicitation statement/prospectus. The areas of risk and uncertainty described above, which are not exclusive, should be considered in connection with any written or oral forward-looking statements that may be made in this consent solicitation statement/prospectus or on, before or after the date of this consent solicitation statement/prospectus by Primo or Glacier or anyone acting for any or both of them. Except as required by applicable law or regulation, neither Primo nor Glacier undertake any obligation to release publicly or otherwise make any revisions to any forward-looking statements, to report events or circumstances after the date of this consent solicitation statement/prospectus or to report the occurrence of unanticipated events. All subsequent written and oral forward-looking statements concerning the Merger or other matters addressed in this consent solicitation statement/prospectus and attributable to Primo, Glacier or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this consent solicitation statement/prospectus.

 

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in reports filed with the SEC by Primo. For a list of the documents incorporated by reference, see the section entitled “Where You Can Find Additional Information” beginning on page 148.

 

 

 

 SOLICITATION OF CONSENTS

 

This consent solicitation statement/prospectus is being provided to Glacier stockholders as part of a solicitation of consents by the Glacier board of directors. This consent solicitation statement/prospectus provides stockholders of Glacier with the information they need to know to be able to deliver a consent with respect to adoption and approval of the Merger and the Merger Agreement.

 

Purpose of the Consent Solicitation

 

Glacier stockholders are being asked to consent to the adoption and approval of the Merger Agreement and the Merger. The Glacier board of directors has unanimously approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and has determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable and in the best interests of Glacier and its stockholders. The Glacier board of directors recommends that Glacier stockholders consent to adoption and approval of the Merger Agreement and the Merger.

 

Record Date

 

The Glacier board of directors has set October 6, 2016 as the Record Date for determining Glacier stockholders entitled to sign and deliver consents with respect to the adoption and approval of the Merger Agreement and the Merger.

 

Glacier Stockholders Entitled to Consent

 

Only Glacier stockholders of record as of the close of business on the Record Date are entitled to sign and deliver consents with respect to the adoption and approval of the Merger Agreement and the Merger. As of the close of business on the Record Date, there were 3,316,916 shares of Glacier common stock issued and outstanding and entitled to sign and deliver consents with respect to adoption and approval of the Merger Agreement and the Merger. Each share of Glacier common stock is entitled to one vote. Each Glacier stockholder is urged to return a completed, dated and signed consent on or before [•], on [•], 2016.

 

Consents; Required Consents

 

The delivery of the consent of the holders of a majority of the outstanding shares of Glacier common stock entitled to vote on the proposal is required under Delaware law and the Merger Agreement to consummate the Merger. In connection with the execution of the Merger Agreement, Primo and each of Glacier directors Richard Kayne, Brian McInerney and Charles Norris entered into voting agreements with respect to a portion of the outstanding shares of Glacier common stock held by them totaling approximately 33.3% of the issued and outstanding shares of Glacier common stock at the time of the execution of the Merger Agreement. Pursuant to the terms of the voting agreements, each of Mr. Kayne, Mr. McInerney and Mr. Norris agreed, among other things, to deliver consents with respect to the shares covered by the voting agreement in favor of adoption and approval of the Merger Agreement and the Merger, and against any Acquisition Proposal (as such term is defined in the Merger Agreement) or other action that could prevent, delay, impair, discourage, adversely affect or inhibit the timely consummation of the Merger. Glacier equityholders are urged to read the description of the voting agreements under the heading “The Voting Agreements” beginning on page 90 of this consent solicitation statement/prospectus.

 

In addition, as of the Record Date, all directors and executive officers of Glacier as a group owned and were entitled to deliver consents with respect to an additional 22.0% of the shares of Glacier common stock issued and outstanding on that date. Glacier currently expects that its directors and executive officers will deliver consents in favor of the adoption and approval of the Merger Agreement and the Merger. If they do so, a total of at least 55.3% of the outstanding shares of Glacier common stock will have consented to the adoption and approval of the Merger Agreement and the Merger, and both will be approved.

 

 

Submission of Consents

 

Glacier stockholders may consent to the adoption and approval of the Merger Agreement and the Merger by completing, dating and signing the consent enclosed with this consent solicitation statement/prospectus and returning it to Glacier.

 

If you hold shares of Glacier common stock as of the close of business on the Record Date and you wish to give your consent, you must complete the enclosed consent, date and sign it, and promptly return it to Glacier. Once you have completed, dated and signed the consent, you may deliver it to Glacier by faxing your consent to Glacier, Attention: Secretary, at 760-560-0225, by emailing a .pdf copy of your consent to steve.stringer@glacierwater.com or by mailing your consent to Glacier at 1385 Park Center Drive, Vista, California 92081, Attention: Secretary.

 

Glacier has set [•], on [•], 2016 as the target date for the receipt of consents. Glacier reserves the right to extend the final date for the receipt of consents beyond [•], 2016, provided that no consent delivered more than 60 days from the earliest dated consent will be effective. Any such extension may be made without notice to Glacier stockholders. Once a sufficient number of consents to adopt and approve the Merger Agreement and the Merger have been received, the consent soli