Kelly Services Enters Material Definitive Agreement

TL;DR

Kelly Services just signed a big deal, could be an acquisition or asset sale. Watch this space.

AI Summary

On May 29, 2024, Kelly Services, Inc. entered into a material definitive agreement related to the completion of an acquisition or disposition of assets. This also triggered a direct financial obligation or an off-balance sheet arrangement for the registrant. The filing also includes Regulation FD Disclosure and Financial Statements and Exhibits.

Why It Matters

This filing indicates a significant corporate action, such as an acquisition or asset disposition, which could impact Kelly Services' future financial performance and strategic direction.

Risk Assessment

Risk Level: medium — Material definitive agreements and acquisitions/dispositions inherently carry risks related to integration, financing, and market reception.

Key Players & Entities

• Kelly Services, Inc. (company) — Registrant
• May 29, 2024 (date) — Date of earliest event reported

FAQ

Key Financial Figures

• $200 m — nders to amend and restate its existing $200 million, five-year revolving credit facil
• $150 m — eased the current borrowing capacity to $150 million, (ii) added the ability to increa
• $300 million — e borrowing capacity to an aggregate of $300 million and (iii) changed certain of the terms
• $150 million — ables Purchase Agreement related to the $150 million securitization facility. The amendment
• $250 m — eased the current borrowing capacity to $250 million, (ii) added the ability to increa
• $350 million — e borrowing capacity to an aggregate of $350 million and (iii) changed certain of the terms
• $203.0 million — n Item 2.01 below, the Company borrowed $203.0 million under the securitization facility and $
• $87.0 million — n under the securitization facility and $87.0 million on the revolving credit facility. As of
• $263.0 million — the close of business on May 31, 2024, $263.0 million of borrowings were outstanding under ou
• $0.9 million — ng borrowings and letters of credit, is $0.9 million on the securitization facility and $87.
• $425.0 m — h the terms of the Merger Agreement for $425.0 million, subject to customary adjustments
• $60 million — es. Further cash consideration of up to $60 million may be due in the second quarter of 202

Filing Documents

• kelya-20240529.htm (8-K) — 38KB
• kelya-20240603xexh106.htm (EX-10.6) — 1324KB
• kelya-20240603xexh1014.htm (EX-10.14) — 580KB
• kelya-20240603xexh1015.htm (EX-10.15) — 1061KB
• pressrelease6324.htm (EX-99.1) — 16KB
• logo.jpg (GRAPHIC) — 45KB
• picture1.jpg (GRAPHIC) — 9KB
• picture2.jpg (GRAPHIC) — 4KB
• picture3.jpg (GRAPHIC) — 5KB
• picture4.jpg (GRAPHIC) — 6KB
• picture5.jpg (GRAPHIC) — 44KB
• 0000055135-24-000021.txt ( ) — 3746KB
• kelya-20240529.xsd (EX-101.SCH) — 2KB
• kelya-20240529_def.xml (EX-101.DEF) — 17KB
• kelya-20240529_lab.xml (EX-101.LAB) — 29KB
• kelya-20240529_pre.xml (EX-101.PRE) — 17KB
• kelya-20240529_htm.xml (XML) — 4KB

01. Entry into a Material Definitive Agreement

Item 1.01. Entry into a Material Definitive Agreement. On May 29, 2024, Kelly Services, Inc. (the "Company") entered into an agreement with its lenders to amend and restate its existing $200 million, five-year revolving credit facility. The amendment (i) decreased the current borrowing capacity to $150 million, (ii) added the ability to increase the borrowing capacity to an aggregate of $300 million and (iii) changed certain of the terms and conditions, with a new maturity date of May 29, 2029. On May 29, 2024, the Company also entered into an Amended and Restated Pledge and Security Agreement under which the Company pledges certain assets as security for this credit facility. On May 29, 2024, the Company and Kelly Receivables Funding, LLC, a wholly owned bankruptcy remote special purpose subsidiary of the Company, amended the Receivables Purchase Agreement related to the $150 million securitization facility. The amendment (i) increased the current borrowing capacity to $250 million, (ii) added the ability to increase the borrowing capacity to an aggregate of $350 million and (iii) changed certain of the terms and conditions, with a new maturity date of May 28, 2027. On May 30, 2024, in connection with the acquisition of Motion Recruitment Partners, LLC, as described in Item 2.01 below, the Company borrowed $203.0 million under the securitization facility and $87.0 million on the revolving credit facility. As of the close of business on May 31, 2024, $263.0 million of borrowings were outstanding under our securitization and revolver facilities. Following these draw downs, the remaining available capacity, net of outstanding borrowings and letters of credit, is $0.9 million on the securitization facility and $87.0 million on the revolving credit facility. The foregoing description of the amendments to the Company's revolving credit facility, pledge and security agreement and receivables purchase agreement does not purport to be complete and is qualified in it

01. Completion of Acquisition or Disposition of Assets

Item 2.01. Completion of Acquisition or Disposition of Assets. As previously announced, on May 2, 2024, the Company, MRP Merger Sub, Inc. ("Merger Sub"), a newly-formed, wholly-owned subsidiary of the Company, MRP Topco Inc. ("Topco"), the indirect parent company of Motion Recruitment Partners, LLC ("Motion"), and Littlejohn Fund V, L.P. ("Littlejohn"), in its capacity as the securityholders' representative, entered into an Agreement and Plan of Merger (the "Merger Agreement") whereby the Company agreed to indirectly acquire 100% of the equity interests in Motion by way of a merger of Merger Sub with and into Topco, with Topco surviving the merger (the "Merger"). Motion is parent company to a group of leading global talent solution providers, including Motion Consulting Group, Motion Telco, Tech in Motion, TG Federal, and Sevenstep. Littlejohn is the majority owner of Topco. Littlejohn & Co., LLC is a Greenwich, Connecticut-based investment firm focused on private equity and debt investments. On May 31, 2024, the Company completed the transaction and acquired all of the outstanding equity interests of Motion in accordance with the terms of the Merger Agreement for $425.0 million, subject to customary adjustments for cash, indebtedness, working capital and transaction expenses. The acquisition was funded with cash on hand and available credit facilities. Further cash consideration of up to $60 million may be due in the second quarter of 2025 if certain conditions are satisfied during an earn-out period ending on March 31, 2025. The earn-out payment is based on a multiple of gross profit in excess of an agreed-upon amount during the earn-out period. The Merger Agreement contains representations and warranties and covenants customary for a transaction of this nature. The transaction will significantly build upon the Company's market-leading solutions portfolio, which includes Kelly Science, Engineering & Technology (SET); KellyOCG; Kelly Professional & Industrial

01. Regulation FD Disclosure

Item 7.01. Regulation FD Disclosure. On June 3, 2024, the Company issued a press release announcing the closing of the acquisition of Motion. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. 2 In accordance with General Instruction B.2. of Form 8-K, the information contained or incorporated in this Item 7.01, including the press release furnished herewith as Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

01. Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits. (a) Financial Statements of Business or Funds Acquired. The financial statements required in accordance with Item 9.01(a) of Form 8-K will be filed by amendment within the period permitted in accordance with Item 9.01(a)(3) of Form 8-K. (b) Pro Forma Financial Information. The pro forma financial information required in accordance with Item 9.01(b) of Form 8-K will be filed by amendment within the period permitted in accordance with Item 9.01(b)(2) of Form 8-K. (d) Exhibits Exhibit No. Description 10.6 Third Amendment to the Third Amended and Restated Credit Agreement, dated May 29, 2024. 10.14 Amendment to Amended and Restated Pledge and Security Agreement, dated May 29, 2024. 10.15 First Amended and Restated Receivables Purchase Agreement Amendment No. 4, dated May 29, 2024. 99.1 Press Release dated June 3, 2024. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 3

SIGNATURES

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. June 3, 2024 /s/ Olivier G. Thirot Olivier G. Thirot Executive Vice President and Chief Financial Officer (Principal Financial Officer) 4

View Full Filing

View this 8-K filing on SEC EDGAR