UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
Acquisition of the fire and rescue business of LHD Group
On April 2, 2024, Lakeland Global Safety, Ltd. (“Lakeland Global”), a wholly-owned subsidiary of Lakeland Industries, Inc. (the “Company”), entered into a Share Sale and Purchase Agreement (the “Purchase Agreement”), by and between Kantaras Investments Pte. Ltd., Lakeland Global, and the Company, pursuant to which Lakeland Global acquired all of the shares of the fire and rescue business of LHD Group Deutschland GmbH, LHD Group Australia Pty Ltd and LHD Group Hong Kong Ltd., wholly-owned entities of Kantaras Investments Pte. Ltd. (collectively, the “LHD Group”) for a purchase price of EUR 15,400,000.00 (approximately USD $16.7 million), subject to post-closing adjustments and customary holdback provisions. The LHD Group is a leader in firefighter turnout gear, accessories, and Total Care services, including laundry, repair, and maintenance. The transaction was funded through the Company’s credit facility.
The acquisition is expected to close in May subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals.
Amendment to Credit Agreement
On March 28, 2024, the Company entered into Amendment No. 4 to Loan Agreement by and between Bank of America, N.A. (the “Lender”) and the Company (the “Fourth Amendment”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Fourth Amendment.
Pursuant to the Fourth Amendment, the Lender and the Company agreed to, among other things, (i) extend the expiration date of the credit facility to March 28, 2029, (ii) increase the availability under the revolving credit facility to $40.0 million with an accordion feature providing for the potential funding of an additional $10.0 million, (iii) remove the borrowing base component of the credit facility; and (iv) modify the interest rate based on Daily SOFR plus the Applicable Rate. The Applicable Rate is based upon a Funded Debt to EBITDA Ratio and includes four (4) different levels constituting a SOFR margin range from 1.25% to 2.00%.
In addition, the Fourth Amendment (i) modified the Funded Debt to EBITDA Ratio covenant so as not to exceed 3.5x (with step-downs to 3.25 and 3.0 in 2025 and 2026), (ii) modified the Basic Fixed Charge Coverage Ratio covenant to a minimum of 1.20x, (iii) includes a springing Asset Coverage Ratio covenant of at least 1.10x, but only to the extent that the maximum Total Leverage Ratio exceeds 3.00x at any reporting period, (iv) increases the sublimit for letters of credit to $10.0 million, and (v) imposes a floor to Daily SOFR of one percent (1.00%). The Fourth Amendment provides for additional indebtedness or the assumption of existing indebtedness for acquisitions of foreign subsidiaries (not to exceed $10.0 million in USD) and increased the size of Permitted Acquisitions, without prior approval from the Lender, to $17.5 million per occurrence and $35.0 million in the aggregate.
The Fourth Amendment also provided for the reaffirmation of representations, warranties and covenants under the Loan Agreement as are customary in connection with similar amendments of credit documents.
The above descriptions of the Purchase Agreement and the Fourth Amendment are summaries and are not complete. They are qualified in their entirety by reference to the Purchase Agreement and the Fourth Amendment, which will be filed by the Company with the Company’s Quarterly Report on Form 10-Q for the quarter ending April 30, 2024.
Item 7.01. Regulation FD Disclosure.
On April 2, 2024, the Company issued a press release, attached hereto as Exhibit 99.1, announcing the entry into the Purchase Agreement.
The information contained in this Item 7.01 and in the accompanying Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
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Item 9.01. Financial Statements and Exhibits.
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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.
LAKELAND INDUSTRIES, INC. | |||
| /s/Roger D. Shannon | |||
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| Roger D. Shannon Chief Financial Officer | |
Date: April 2, 2024 | |||
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EXHIBIT 99.1
Lakeland Industries Announces the Acquisition of the Fire and Rescue Business of the LHD Group
April 2, 2024
Strategic Acquisition Expands Lakeland’s Global Fire Footprint with Premium Fire Services Products
Adds Total Care Maintenance, Cleaning and Repair Services to Offering
HUNTSVILLE, AL / April 2, 2024 / Lakeland Industries, Inc. (NASDAQ:LAKE) (the "Company" or "Lakeland"), a leading global manufacturer of protective clothing for industry, healthcare and first responders on the federal, state and local levels, announced today that it has entered into a definitive agreement to acquire the fire and rescue business of LHD Group Deutschland GmbH (LHD) and its Hong Kong and Australian subsidiaries in an all-cash transaction valued at approximately $16.7 million.
Headquartered in Wesseling, Germany, LHD is a leader in firefighter turnout gear, accessories, and Total Care services, including laundry, repair, and maintenance, with an annual revenue of approximately $27 million. LHD has established a significant market presence with premium fire services products across Germany and Australia, two of the largest firefighter markets in the world, and the leading position in Hong Kong. LHD’s offerings include a range of structural, wildland and industrial fire and rescue gear, technical rescue equipment, and station wear, among other products, with an emphasis on safety, innovation, and practicality to cater to the diverse needs of firefighters. LHD’s customer-focused structure supports a holistic approach to protective clothing through LHD CARE, which provides sample production, repairs, and laundry services to ensure the longevity and effectiveness of its gear. LHD has 111 employees across operations in Germany, Australia, and Hong Kong. The existing staff and management team will remain in place and continue serving customer needs.
"The acquisition of LHD accelerates our long-term growth strategy to expand our fire service market share," said Jim Jenkins, Acting CEO and Executive Chairman of Lakeland. "With a premium product portfolio, complementary geographic footprint, and Total Care service offerings, LHD provides access to attractive geographies while aligning remarkably well with Lakeland’s portfolio of leading fire services brands. Additionally, the Total Care service offering provides us with an attractive recurring revenue stream that Lakeland will work to expand and leverage. We expect LHD to be immediately accretive to Lakeland following the completion of the transaction.”
The transaction is expected to close in May, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals.
ABOUT LAKELAND
We manufacture and sell a comprehensive line of industrial protective clothing and accessories for the industrial and public protective clothing market under the "Lakeland," "Eagle," "Pacific Helmets," "Jolly," and "Cosmas" family of global brands. Our products are sold globally by our in-house sales teams, our customer service group, and authorized independent sales representatives to a network of over 2,000 global safety and industrial supply distributors. Our authorized distributors supply end users, such as integrated oil, chemical/petrochemical, automobile, transportation, steel, glass, construction, smelting, cleanroom, janitorial, pharmaceutical, and high technology electronics manufacturers, as well as scientific, medical laboratories and the utilities industry. In addition, we supply federal, state and local governmental agencies and departments, such as fire and law enforcement, airport crash rescue units, the Department of Defense, the Department of Homeland Security and the Centers for Disease Control. Internationally, we sell directly to a mixture of end-users and industrial distributors, depending on the particular country and market. In addition to the United States, sales are made into more than 50 foreign countries, the majority of which were into China, the European Economic Community ("EEC"), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Uruguay, Middle East and Southeast Asia. For more information concerning Lakeland, please visit the Company online at www.lakeland.com.
ABOUT LHD
LHD is a leading designer and provider of fire rescue protective apparel and total care services. LHD products and services are used by firefighters and first responders on three continents. LHD has 111 employees and is headquartered in Wesseling, Germany, with operations in Hong Kong and Australia.
SAFE HARBOR STATEMENT
This press release contains "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, which address Lakeland's expectations of sources or uses for capital, or which express the Company's expectation for the future with respect to financial performance or operating strategies, including statements regarding the anticipated synergies and opportunities relating to the acquisition, can be identified as forward-looking statements. Forward-looking statements involve risks, uncertainties and assumptions as described from time to time in Press Releases and Forms 8-K, registration statements, quarterly and annual reports and other reports and filings filed with the Securities and Exchange Commission or made by management. As a result, there can be no assurance that Lakeland's future results will not be materially different from those described herein as "believed," "projected," "planned," "intended," "anticipated," "can," "estimated" or "expected," or other words which reflect the current view of the Company with respect to future events. We caution readers that these forward-looking statements speak only as of the date hereof. The Company hereby expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which such statement is based, except as may be required by law.
CONTACT
Lakeland Industries, Inc.
256-600-1390
Roger Shannon, CFO
rdshannon@lakeland.com
SOURCE: Lakeland Industries, Inc.
Cover |
Mar. 28, 2024 |
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| Cover [Abstract] | |
| Entity Registrant Name | Lakeland Industries, Inc. |
| Entity Central Index Key | 0000798081 |
| Document Type | 8-K |
| Amendment Flag | false |
| Entity Emerging Growth Company | false |
| Document Period End Date | Mar. 28, 2024 |
| Entity File Number | 0-15535 |
| Entity Incorporation State Country Code | DE |
| Entity Tax Identification Number | 13-3115216 |
| Entity Address Address Line 1 | 1525 Perimeter Parkway |
| Entity Address Address Line 2 | Suite 325 |
| Entity Address City Or Town | Huntsville |
| Entity Address State Or Province | AL |
| Entity Address Postal Zip Code | 35806 |
| City Area Code | 256 |
| Local Phone Number | 350-3873 |
| Security 12b Title | Common Stock, $0.01 Par Value |
| Trading Symbol | LAKE |
| Security Exchange Name | NASDAQ |
| Written Communications | false |
| Soliciting Material | false |
| Pre Commencement Tender Offer | false |
| Pre Commencement Issuer Tender Offer | false |
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