8-KAcquisitions & DispositionsMaterial AgreementsFinancial Events+1

CINTAS CORP 8-K Report, Material Agreement (Mar 21, 2017)

Filed March 21, 2017For Securities:CTAS

Summary

This Form 8-K filing by Cintas Corporation (CTAS) on March 21, 2017, primarily announces the completion of its acquisition of G&K Services, Inc. The transaction, previously agreed upon in August 2016, involved Cintas acquiring G&K Services for $97.50 in cash per share. This marks a significant strategic move for Cintas, expanding its market presence and operations. In conjunction with the acquisition, Cintas, through its subsidiary G&K Services, entered into an Amended and Restated Note Purchase Agreement. This agreement amends and restates existing senior notes, with Cintas providing a guarantee for G&K Services' obligations. The agreement includes specific financial covenants for G&K Services, such as maintaining a leverage ratio not exceeding 3.50 to 1.0 (extendable to 3.75 for acquisitions) and an interest coverage ratio of at least 3.00 to 1.0. These covenants are important for understanding the ongoing financial health and debt management of the combined entity.

Key Highlights

  • 1Cintas Corporation has officially completed its acquisition of G&K Services, Inc. for $97.50 per share in cash.
  • 2The acquisition was finalized on March 21, 2017, as per the Merger Agreement dated August 15, 2016.
  • 3G&K Services has become a wholly owned indirect subsidiary of Cintas.
  • 4An Amended and Restated Note Purchase Agreement was entered into for G&K Services' senior notes.
  • 5Cintas Corporation provides a guarantee for G&K Services' obligations under the new Note Purchase Agreement.
  • 6The Amended and Restated Note Purchase Agreement includes key financial covenants: a maximum leverage ratio of 3.50:1.0 (or 3.75:1.0 post-acquisition) and a minimum interest coverage ratio of 3.00:1.0.
  • 7The original Note Purchase Agreement dated April 15, 2013, for G&K Services was terminated and replaced by the new agreement.

Frequently Asked Questions

The primary purpose of this Form 8-K filing is to announce the completion of Cintas Corporation's acquisition of G&K Services, Inc. and to detail related financing arrangements through an Amended and Restated Note Purchase Agreement.

Cintas paid $97.50 in cash, without interest, for each share of G&K Services common stock outstanding at the time of the merger's effective date.

G&K Services is required to maintain a leverage ratio of consolidated total indebtedness to consolidated EBITDA of no greater than 3.50 to 1.0 (which can be increased to 3.75 to 1.0 following certain permitted acquisitions). Additionally, G&K Services must maintain a consolidated EBITDA to consolidated interest expense ratio of at least 3.00 to 1.00.

The existing Note Purchase Agreement for G&K Services, dated April 15, 2013, was terminated and replaced by an Amended and Restated Note Purchase Agreement. Cintas has provided a guarantee for G&K Services' obligations under this new agreement.