8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 6, 2017

hhgregg, Inc.

(Exact name of registrant as specified in its charter)

Commission File Number: 001-33600

Indiana	47-4850538
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

4151 East 96th Street

Indianapolis, Indiana 46240

(Address of principal executive offices, including zip code)

(317) 848-8710

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

hhgregg, Inc. (the “Company”), as parent, Gregg Appliances, Inc., as borrower (the “Borrower”), HHG Distributing LLC (“HHG”), and each existing and future domestic subsidiary of the Borrower (together with the Company, the Borrower, and HHG, the “Debtors”) entered into a Senior Secured Superpriority Debtor-In-Possession Credit Facility (the “DIP Credit Agreement”) with Wells Fargo Bank, National Association, as administrative and collateral agent (the “Agent”), GACP Finance Co., LLC, as FILO agent (the “FILO Agent”), and certain other lenders (the “Lenders”) consisting of (i) a $50,000,000 senior secured superpriority revolving credit facility (the “Revolving Loans”) and (ii) a $30,000,000 senior secured superpriority “first-in, last-out” term loan facility (the “FILO Loans”).

Prior to the issuance of a final order from the United States Bankruptcy Court for the Southern District of Indiana (the “Bankruptcy Court”) reasonably satisfactory in form and substance to Agent (the “Final Order”), authorizing the DIP Credit Agreement, the proceeds of (a) the Revolving Loans shall be used (i) to fund certain expenses related to the bankruptcy proceedings discussed in Item 1.03 below (the “Chapter 11 Cases”), and (ii) subject to the budget required by the DIP Credit Agreement, for general corporate purposes of the Borrower not otherwise prohibited by the terms of the DIP Credit Agreement and (b) the FILO Loans shall be used for the repayment of a portion of the outstanding “Loans” under the Amended and Restated Loan and Security Agreement, dated March 29, 2011, with Wells Fargo Bank, N.A., as administrative agent and collateral agent for the lenders and the lenders party thereto as amended by Amendments No. 1, No. 2 and No. 3 (the “Prior Facility”) in accordance with the terms thereof. Upon entry of the Final Order, in addition to the above, the proceeds of the Revolving Loans shall be used for the repayment of any remaining outstanding “Loans” under the Prior Facility.

The Borrower’s obligations under the DIP Credit Agreement are guaranteed by the Company and each of the other Debtors and are secured by substantially all of the real and personal property of the Debtors, subject to certain exceptions. The Revolving Loans bear interest at a rate per annum equal to the Base Rate (as defined in the Prior Facility and described in Item 1.02 below) plus 3.00%. The FILO Loans bear interest at a rate per annum equal to one-month LIBOR (as a reference rate, adjusted monthly) plus 10.00%. Upon the occurrence and during the continuance of an event of default under the DIP Credit Agreement, the interest rate increases by 2% per annum. All obligations under the DIP Credit Agreement, accrued or otherwise, shall be due and payable in full on the earliest of (i) the date that is 12 months after March 6, 2017, (ii) a sale of all or substantially all of the assets of any Debtor under Section 363 of the Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) or otherwise, (iii) 35 calendar days after March 6, 2017 if the Final Order is not entered, (iv) the effective date of substantial consummation of any plan of reorganization, (v) the date of acceleration of the Obligations (as defined in the DIP Credit Agreement) and the termination of the Aggregate Commitments (as defined in the DIP Credit Agreement) upon the occurrence of an Event of Default (as defined in the DIP Credit Agreement), or (iv) the filing of a motion by any Debtor seeking dismissal of the Chapter 11 Cases, the actual dismissal of the Chapter 11 Cases, the filing of a motion by any Debtor seeking to convert the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code, the conversion of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code, or the appointment of a trustee or examiner with expanded powers in the Chapter 11 Cases.

The DIP Credit Agreement includes representations from the Borrower and the Company that are customary for debtor-in-possession financing. The DIP Credit Agreement also includes various affirmative and negative covenants applicable to the Debtors, including a covenant to adhere to a budget delivered satisfactory to the Agent and the FILO Agent and other customary covenants for debtor-in-possession financings of this type, including restrictions on the incurrence of indebtedness, capital expenditures, mergers, sales and other dispositions of property and other fundamental changes. The DIP Credit Agreement provides for customary events of default, including defaults resulting from non-payment of principal, interest or other amounts when due, failure to perform or observe covenants, and the failure to achieve certain milestones in the bankruptcy proceedings.

Item 1.02. Termination of a Material Definitive Agreement

On March 6, 2017, the Debtors entered into the DIP Credit Agreement as described in Item 1.01 above. The DIP Credit Agreement succeeds and subsumes the Prior Facility.

The Prior Facility was comprised of a $20 million first-in last-out revolving tranche (the “Prior FILO”) and a $280 million revolver, subject to borrowing availability. The Prior Facility had a maturity date of June 28, 2021. Under the Prior Facility, the first $20 million of borrowings are applied to the Prior FILO, subject to a borrowing base equal to the sum of (i) 5% of the eligible credit card A/R and (ii) 10% of the net orderly liquidation value of eligible inventory, in each case subject to customary reserves and eligibility criteria. Under the Prior FILO, the inventory advance rate is reduced by 0.5% per quarter to 6.0% and remains at 6.0% unless the fixed charge coverage ratio is less than 1.0x, then it reduces by 0.5% each quarter to 5.0%.

If the fixed charge coverage ratio is less than 1.0x at that time, the inventory advance rate is reduced to 0.25% each quarter. Interest on the borrowings under the Prior FILO are payable at a fluctuating rate based on LIBOR plus an applicable margin of 450-500 bps based on the average quarterly excess availability.

Borrowings greater than $20 million were subject to similar terms and rates under the Prior Facility. As defined, under the Prior Facility, the defined borrowing base is equal to the sum of (i) 90.0% of the net orderly liquidation value of all eligible inventories and (ii) 90% of all commercial and credit card receivables, in each case subject to customary reserves and eligibility criteria. Interest on the Prior Facility was payable at a fluctuating rate based on LIBOR plus an applicable margin of 150-200 bps based on the average quarterly excess availability.

Item 1.03. Bankruptcy or Receivership

On March 6, 2017, the Company and each of its subsidiaries filed voluntary petitions for reorganization relief under the Bankruptcy Code in the Bankruptcy Court. The Debtors will continue to manage their properties and operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

On March 6, 2017, the Company issued a press release with respect to the foregoing events. A copy of the press release is being filed as Exhibit 99.1 to this current report on Form 8-K and incorporated by reference into this Item 1.03.

In connection with the filing for relief under the Bankruptcy Code, the Company and its subsidiaries entered into the DIP Credit Agreement on March 6, 2017, as described in Item 1.01 above.

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

On March 6, 2017, the Company and its subsidiaries entered into the DIP Credit Agreement. The information provided in Item 1.01 above is incorporated by reference into this Item 2.03.

Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

On March 6, 2017, the Company and each of its subsidiaries filed voluntary petitions for reorganization relief under the Bankruptcy Code in Bankruptcy Court as described in Item 1.03 above. The filing of the bankruptcy petitions constituted an event of default under the Prior Facility, which is described in Item 1.02 above. As a result of such event of default, all obligations under the Prior Facility became automatically and immediately due and payable. The total amount of such obligations was $56.2 million as of March 6, 2017.

While the Company believes that any efforts to enforce such payment obligations under the Prior Facility are stayed as a result of the filing of the bankruptcy petitions, the obligations of all parties to the Prior Facility under such agreement have been subsumed by the DIP Credit Agreement, as described in Item 1.01 above.

Item 9.01. Financial Statements and Exhibits

Exhibit No.	Description
99.1	Press release of hhgregg, Inc. dated March 6, 2017.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		hhgregg, Inc.
Date: March 6, 2017	By:	/s/ Kevin J. Kovacs
		Kevin J. Kovacs
		SVP, Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	Press release of hhgregg, Inc. dated March 6, 2017.

EX-99.1

Exhibit 99.1

hhgregg Files for Chapter 11 Reorganization

Strategic decisions allow the Company to move forward as a stronger, debt free and customer-focused business

INDIANAPOLIS (March 6, 2017) – hhgregg, Inc.("hhgregg" or the "Company") today announced that the Company has taken action to restructure its balance sheet and better position itself for future success by filing voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. The petitions were filed in the U.S. Bankruptcy Court for the Southern District of Indiana (the “Court”). The restructuring is intended to facilitate the Company’s long-term, strategic goals of enhancing profitability and reaffirming its commitment to its associates, vendors and the communities it serves.

“We’ve given it a valiant effort over the past 12 months,” said Robert J. Riesbeck, hhgregg's President and CEO. “We have conducted an extensive review of alternatives and believe pursuing a restructuring through Chapter 11 is the best path forward to ensure hhgregg’s long-term success. We are thankful for the continued support of our dedicated employees, valued customers, vendors and business partners as we navigate this process, and look forward to becoming a stronger company in the coming months.”

The Company has signed a term sheet with an anonymous party to purchase the assets of the Company, which is intended to allow the Company to exit Chapter 11 debt free with significant improvement in liquidity for the future stability of the business. The Company expects a quick and smooth process through Chapter 11 with emergence in approximately 60 days.

“We have streamlined our store footprint and remain fully committed to the 132 remaining stores, and the associates supporting those locations. We have solidified our senior management team and everyone is dedicated to restructuring our business model for future profitability and growth,” continued Riesbeck. “Through these strategic steps, we plan to come out of this debt free and more agile as we serve our valued customers and vendor partners, and continue to be a dominant force in appliances, electronics and home furnishings.”

hhgregg's 132 store locations will operate in the ordinary course of business throughout the restructuring process. The 88 stores affected by the Company’s announcement on March 3, 2017 will continue to operate as previously disclosed in the coming weeks.

As it navigates the Chapter 11 process, hhgregg intends to continue:

• Providing superior delivery, installation and customer service;

• Providing wages, healthcare and other benefits to its associates without interruption; and

• Paying suppliers and vendors for the goods and services it receives in the ordinary course of business throughout the restructuring process.

The Company has obtained a committed $80 million debtor-in-possession (“DIP”) financing facility underwritten by Wells Fargo Bank, National Association and GACP Finance Co., LLC. Subject to Court approval, this DIP financing, combined with the acquiring party’s investment and the Company’s cash from operations, is expected to provide sufficient liquidity during the Chapter 11 case to support its continuing normal business operations and minimize disruption.

Morgan, Lewis and Bockius LLP and Ice Miller are serving as hhgregg’s legal advisors in the restructuring and Stifel, Nicolaus & Company, Incorporated, Miller Buckfire & Co., and Berkeley Research Group, LLC are serving as financial and restructuring advisors.

About hhgregg

hhgregg is an appliance, electronics and furniture retailer that is committed to providing customers with a truly differentiated purchase experience through superior customer service, knowledgeable sales associates and the highest

quality product selections. Founded in 1955, hhgregg is a multi-regional retailer currently with 220 stores in 19 states that also offers market-leading global and local brands at value prices nationwide via hhgregg.com.

Forward Looking Statements

The following is a Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release includes forward-looking statements, including with respect to hhgregg's intentions and plans to restructure hhgregg and the conduct of its business during and after such restructuring. hhgregg has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While hhgregg believes these expectations, assumptions, estimates and projections are reasonable, these forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. These and other important factors may cause hhgregg's actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the key factors that could cause actual results to differ from hhgregg's expectations are: the ability to successfully execute the Company's strategies and initiatives, particularly in returning the Company to profitable growth; the Company’s ability to successfully navigate a Chapter 11 bankruptcy; the Company's ability to increase customer traffic and conversion; competition in the retail industry; the Company's ability to maintain a positive brand perception and recognition; the Company's ability to attract and retain qualified personnel; the Company's ability to maintain the security of customer, associate and Company information; rules, regulations, contractual obligations, compliance requirements and fees associated with accepting a variety of payment methods; the Company's ability to effectively achieve cost cutting initiatives; the Company's ability to generate strong cash flows to support its operating activities; the Company's relationships and operations of its key suppliers; the Company's ability to generate sufficient cash flows to recover the fair value of long-lived assets; the Company's ability to maintain and upgrade its information technology systems; the fluctuation of the Company's comparable store sales; the effect of general and regional economic and employment conditions on the Company's net sales; the Company's ability to meet financial performance guidance; disruption in the Company's supply chain; changes in trade regulation, currency fluctuations and prevailing interest rates; and the potential for litigation.

Other factors that could cause actual results to differ from those implied by the forward-looking statements in this press release are more fully described in the "Risk Factors" section in the Company's Annual Report on Form 10-K for fiscal year 2016 filed May 19, 2016 and the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2016 filed on January 26, 2017. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. hhgregg does not undertake, and specifically declines, any obligation to update any of these statements or to publicly announce the results of any revisions to any of these statements to reflect future events or developments.

Media Contacts:

hhgregg, Inc.

Lance Peterson, 317-848-8710

Vice President, Finance and Planning

investorrelations@hhgregg.com

Chantal Kowalski, 317-561-7022

Communications Manager

chantal.kowalski@hhgregg.com