Subsequent Events

3 Months Ended

Dec. 31, 2019

5	Subsequent Events

Organizational Transactions

In connection with the Offering and the related reorganization, OneWater Inc and OneWater LLC completed the following transactions (collectively, the “Organizational Transactions”):

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OneWater LLC amended and restated its limited liability company agreement to, among other things, provide for a single class of common units representing ownership interests in OneWater LLC and provide a mechanism pursuant to which LLC Unitholders may exchange LLC Units, together with an equal number of shares of Class B common stock of OneWater Inc, for shares of Class A common stock of OneWater Inc on a one-for-one basis or, at OneWater LLC’s elections, cash;

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OneWater Inc amended and restated its certificate of incorporation and bylaws to, among other things, provide for Class A and Class B common stock and Preferred stock;

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Legacy Owners (references made herein to “Legacy Owners” refer to the owners of OneWater LLC as they existed immediately prior to OneWater Inc’s public offering) exchanged their existing membership interests in OneWater LLC for LLC Units;

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Certain Legacy Owners contributed, directly or indirectly, their OneWater LLC Units to OneWater Inc in exchange for 780,213 shares of Class A common stock;

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OneWater Inc issued 5,307,693 shares of Class A common stock (including the full exercise of the underwriters’ option to purchase additional shares of Class A common stock) to purchasers in the Offering in exchange for $59.2 million, net of underwriting discounts and commissions;

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OneWater Inc contributed the $59.2 million of net proceeds of the Offering to OneWater LLC in exchange for an additional number of OneWater LLC Units such that OneWater Inc holds a total number of OneWater LLC Units equal to the number of shares of Class A common stock outstanding following the Offering;

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OneWater LLC used the net proceeds, cash on hand and borrowings under the Amended and Restated Credit and Guaranty Agreement (the “Term and Revolver Credit Facility”) by and among OneWater Inc, OneWater LLC and its subsidiaries, with Goldman Sachs Specialty Lending Group, L.P. (i) to pay $3.2 million to one Legacy Owner in exchange for the surrender of a preferred distribution right and (ii) to contribute cash to OWAO in exchange for additional units therein, and OWAO used such cash to fully redeem the preferred interest in subsidiary held by Goldman Sachs & Co. LLC and certain of its affiliates (collectively, “Goldman”) and affiliates of The Beekman Group (“Beekman”).

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OneWater Inc entered into a tax receivable agreement (the ‘‘Tax Receivable Agreement”) with certain of the Legacy Owners that will continue to be LLC Unitholders. The Tax Receivable Agreement generally provides for the payment by OneWater Inc to such LLC Unitholders of 85% of the net cash savings, if any, in U.S. federal, state and local income and franchise tax (computed using the estimated impact of state and local taxes) that OneWater Inc actually realizes (or is deemed to realize in certain circumstances) in periods after the Offering as a result of, as applicable to each such LLC Unitholder, (i) certain increases in tax basis that occur as a result of OneWater Inc’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such LLC Unitholder’s LLC Units pursuant to the exercise of the Redemption Right or the Call Right (each as defined in the Tax Receivable Agreement) or that relate to prior transfers of such LLC Units that will be available to OneWater Inc as a result of its acquisitions of those units and (ii) imputed interest deemed to be paid by OneWater Inc as a result of, and additional tax basis arising from, any payments OneWater Inc makes under the Tax Receivable Agreement. OneWater Inc will retain the benefit of the remaining 15% of these net cash savings;

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In connection with the Offering, the Board of Directors of OneWater Inc (the “Board”) adopted a long-term incentive plan (the “LTIP”) to incentivize individuals providing services to OneWater Inc and its subsidiaries and affiliates. The total number of shares reserved for issuance under the LTIP that may be issued pursuant to incentive stock options (which generally are stock options that meet the requirements of Section 422 of the code) is 1,385,799. The LTIP will be administered by the Board, except to the extent the Board elects a committee of directors to administer the LTIP;

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In connection with the consummation of the Offering, OneWater Inc granted to its named executive officers equity-based awards under the LTIP, which consist of (i) 17,333 restricted stock units subject to time-based vesting (“RSUs”) for each of Messrs. Singleton (Chief Executive Officer) and Aisquith (Chief Operating Officer), and (ii) 10,000 RSUs for Mr. Ezzell (Chief Financial Officer).

As a result of the Organizational Transactions and the Offering:

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OneWater Inc’s shareholders purchasing in the Offering collectively own approximately 5.3 million shares of the Class A common stock;

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Legacy Owners collectively own approximately 0.8 million shares of the Class A common stock;

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LLC Unitholders own approximately 8.5 million LLC Units and approximately 8.5 million shares of Class B common stock;

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the Class A common stock collectively represents 100% of the economic interest and approximately 42% of the voting power in OneWater Inc; and

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the Class B common stock collectively represents approximately 58% of the voting power in OneWater Inc.

OneWater LLC [Member]

Subsequent Events [Abstract]

Subsequent Events

13.	Subsequent events

On February 11, 2020, in connection with the Offering, the members of OneWater LLC entered into the Fourth Amended and Restated Limited Liability Company Agreement of OneWater LLC (the “OneWater LLC Agreement”). The OneWater LLC Agreement, among other things, (i) converted all of the membership interests of OneWater LLC into a single class of units in OneWater LLC and (ii) admitted OneWater Marine Inc. as the sole managing member of OneWater LLC. In accordance with the terms of the OneWater LLC Agreement, the holders of OneWater LLC Units generally have the right, subject to certain limitations, to redeem their OneWater LLC Units for, at OneWater LLC’s election, (i) shares of Class A common stock at a redemption ratio of one share of Class A common stock for each OneWater LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassifications or (ii) an equivalent amount of cash.

On February 11, 2020, OneWater Inc completed its Offering of 5,307,693 shares of OneWater Inc’s Class A common stock, par value $0.01 per share, which includes the exercise in full of the underwriters’ option to purchase up to 692,308 additional shares of Class A common stock pursuant to the Underwriting Agreement, at a price to the public of $12.00 per share. After deducting underwriting discounts and commissions, OneWater Inc received net proceeds of approximately $59.2 million. OneWater Inc contributed all of the net proceeds of the Offering received to the Company in exchange for limited liability company interests in OneWater LLC (“LLC Units”). The Company used the net proceeds, cash on hand and borrowings under the refinanced Term and Revolver Credit Facility (as defined below) (i) to pay $3.2 million to one Legacy Owner in exchange for the surrender of a preferred distribution right and (ii) to contribute cash to OWAO in exchange for additional units therein, and OWAO used such cash to fully redeem the preferred interest in subsidiary held by Goldman and Beekman. Additionally, the Company provided certain of the existing owners of OneWater LLC, including Goldman and Beekman and certain members of the Company’s management team, the right to receive a tax distribution to cover taxable income arising as a result of OneWater LLC’s operating income through the period ending on the date of the closing of the Offering.

On February 11, 2020, in connection with the Offering, OneWater Inc entered into an Amended and Restated Credit and Guaranty Agreement (the “Term and Revolver Credit Facility”) by and among OneWater Inc, OneWater LLC and its subsidiaries, with Goldman Sachs Specialty Lending Group, L.P. The amendment, among other things, modified the terms to (i) increase the Revolving Facility from $5.0 million to $10.0 million, (ii) increase the maximum available under the Multi-Draw Term Loan from $60.0 Million to $100.0 million, (iii) provide an uncommitted and discretionary multi-draw term loan accordion feature of up to $20.0 million, (iv) amend the repayment schedule of the Multi-Draw Term Loan to commence on March 31, 2022 and (iv) amend the scheduled maturity date of the Revolving Facility and Multi-Draw Term Loan to be February 11, 2025. The Term and Revolver Credit Facility will bear interest at a rate that is equal to, at OneWater’s option, (a) LIBOR for such interest period (subject to a 1.50% floor) plus an applicable margin of up to 7.00%, subject to step-downs to be determined based on certain financial leverage ratio measures, or (b) a base rate (subject to a 4.50% floor) plus an applicable margin of up to 6.00%, subject to step-downs to be determined based on certain financial leverage ratio measures. Interest will be payable quarterly for base rate borrowings and up to quarterly for LIBOR borrowings. The Company immediately upon closing of the agreement borrowed an additional $35.3 million on the Multi-Draw Term Loan.

Effective February 11, 2020, the Company and certain of its subsidiaries entered into the Sixth Amended and Restated Inventory Financing Facility with Wells Fargo. The Inventory Financing Facility amends and restates the Fifth Amended and Restated Inventory Financing Agreement, dated as of November 26, 2019, to, among other things, permit certain payments and transactions contemplated by or in connection with the Offering, including payments under the Tax Receivable Agreement. The maximum amount of borrowing available, interest rates and the termination date of the agreement remained unchanged.

In connection with the Offering (i) Goldman and Beekman received an aggregate of 2,148,806 OneWater LLC Units upon exercise of certain previously held warrants, (ii) previously issued Profit in Interests awards to select members of executive management for Class B units which represented non-voting units were exchanged for 32,754 OneWater LLC Units, and (iii) certain Legacy Owners contributed, directly or indirectly, their OneWater LLC Units to the Company in exchange for 780,213 shares of Class A common stock. With this exchange, the Company’s ownership interest over BAO and SSAO was increased to 100% and the non-controlling interest associated with these subsidiaries was removed.

OneWater Inc entered into a tax receivable agreement (the ‘‘Tax Receivable Agreement”) with certain of the Legacy Owners that will continue to be a LLC Unitholder. The Tax Receivable Agreement generally provides for the payment by OneWater Inc to such LLC Unitholders of 85% of the net cash savings, if any, in U.S. federal, state and local income and franchise tax (computed using the estimated impact of state and local taxes) that OneWater Inc actually realizes (or is deemed to realize in certain circumstances) in periods after the Offering as a result of, as applicable to each such LLC Unitholder, (i) certain increases in tax basis that occur as a result of OneWater Inc’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such LLC Unitholder’s LLC Units pursuant to the exercise of the Redemption Right or the Call Right (each as defined in the Tax Receivable Agreement) or that relate to prior transfers of such LLC Units that will be available to OneWater Inc as a result of its acquisitions of those units and (ii) imputed interest deemed to be paid by OneWater Inc as a result of, and additional tax basis arising from, any payments OneWater Inc makes under the Tax Receivable Agreement. OneWater Inc will retain the benefit of the remaining 15% of these net cash savings.

The spreading of a novel strain of coronavirus, COVID-19, that is impacting global economic activity and market conditions could lead to changes in consumer purchasing patterns, cancellations of boat shows and other events, disruptions to supply chains, including our ability to obtain boats and parts from our suppliers, quarantines, labor shortages, and overall economic and market instability. While we are monitoring the impact of COVID-19 on our business and financial results at this time, we are unable to accurately predict the impact that the coronavirus will have due to various uncertainties, including the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and actions that may be taken by governmental authorities and other third-parties.