ONE Group Hospitality Files 8-K with Major Corporate Updates

TL;DR

ONE Group Hospitality dropped an 8-K detailing acquisitions, new debt, equity sales, and exec comp changes. Big moves happening.

AI Summary

On May 1, 2024, ONE Group Hospitality, Inc. filed an 8-K detailing several material events. These include entering into a definitive agreement, the completion of an acquisition, incurring a direct financial obligation, and changes in executive compensation. The company also announced unregistered sales of equity securities and amendments to its articles of incorporation.

Why It Matters

This filing indicates significant corporate actions, including acquisitions and financial obligations, which could impact the company's future financial performance and strategic direction.

Risk Assessment

Risk Level: medium — The filing involves multiple significant corporate actions like acquisitions, debt, and equity sales, which inherently carry financial and operational risks.

Key Players & Entities

• ONE Group Hospitality, Inc. (company) — Filer
• 0001399520 (company) — Central Index Key
• 20240501 (date) — Filing Date

FAQ

Key Financial Figures

• $350.0 million — "). The Credit Agreement provides for a $350.0 million senior secured term loan facility (the
• $40.0 million — cility (the "Term Loan Facility") and a $40.0 million senior secured revolving credit facilit
• $10.0 million — Loan Facility, the "Facilities"), up to $10.0 million of which will be available in the form
• $350 million — n the Closing Date the Company borrowed $350 million under the Term Loan Facility and the Re
• $365.0 million — Corp. from Safflower Holdings LLC, for $365.0 million in cash, subject to customary adjustmen
• $150 million — nd issued to (a) HPC III Kaizen LP, for $150 million cash, subject to a 5% original issuance
• $0.01 — of the Company for an exercise price of $0.01 per share, and a warrant to purchase 1,
• $10.00 — of the Company for an exercise price of $10.00 per share and (b) to the HPS Investors,
• $10 million — share and (b) to the HPS Investors, for $10 million cash in the aggregate, subject to a 5%
• $0.0001 — y's Series A Preferred Stock, par value $0.0001 per share (the "Preferred Stock"), issu

Filing Documents

• stks-20240501x8k.htm (8-K) — 63KB
• stks-20240501xex3d1.htm (EX-3.1) — 355KB
• stks-20240501xex4d1.htm (EX-4.1) — 126KB
• stks-20240501xex4d2.htm (EX-4.2) — 126KB
• stks-20240501xex4d3.htm (EX-4.3) — 126KB
• stks-20240501xex4d4.htm (EX-4.4) — 134KB
• stks-20240501xex4d5.htm (EX-4.5) — 123KB
• stks-20240501xex4d6.htm (EX-4.6) — 138KB
• stks-20240501xex4d7.htm (EX-4.7) — 127KB
• stks-20240501xex4d8.htm (EX-4.8) — 130KB
• stks-20240501xex4d9.htm (EX-4.9) — 135KB
• stks-20240501xex4d10.htm (EX-4.10) — 125KB
• stks-20240501xex4d11.htm (EX-4.11) — 200KB
• stks-20240501xex10d1.htm (EX-10.1) — 1935KB
• stks-20240501xex10d2.htm (EX-10.2) — 29KB
• stks-20240501xex99d1.htm (EX-99.1) — 21KB
• stks-20240501xex99d1001.jpg (GRAPHIC) — 8KB
• 0001558370-24-006331.txt ( ) — 4645KB
• stks-20240501.xsd (EX-101.SCH) — 4KB
• stks-20240501_def.xml (EX-101.DEF) — 3KB
• stks-20240501_lab.xml (EX-101.LAB) — 17KB
• stks-20240501_pre.xml (EX-101.PRE) — 13KB
• stks-20240501x8k_htm.xml (XML) — 5KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement Credit Agreement. On May 1, 2024 (the "Closing Date"), The ONE Group Hospitality, Inc. (the "Company"), The ONE Group, LLC, a wholly owned subsidiary of the Company, and certain other operating subsidiaries of the Company entered into a Credit Agreement ("Credit Agreement") with Deutsche Bank AG New York Branch, HPS Investment Partners, LLC, HG Vora Capital Management, LLC and certain of their respective affiliates and subsidiaries (collectively, the "Initial Lenders"). The Credit Agreement provides for a $350.0 million senior secured term loan facility (the "Term Loan Facility") and a $40.0 million senior secured revolving credit facility (the "Revolving Facility", and together with the Term Loan Facility, the "Facilities"), up to $10.0 million of which will be available in the form of letters of credit. On the Closing Date the Company borrowed $350 million under the Term Loan Facility and the Revolving Facility was undrawn. The Term Loan Facility will not be subject to a financial covenant and the Revolving Facility's financial covenant will apply only after 35% of the Revolving Facility's capacity has been drawn. The Term Loan Facility will bear interest at a margin over a reference rate selected at the option of the borrower. The margin for the Term Loan Facility will be 6.5% per annum for SOFR borrowings and 5.5% per annum for base rate borrowings. The Term Loan Facility will mature on the fifth anniversary of the date of the related loan agreement. The Term Loan Facility is payable in quarterly installments commencing with the fiscal quarter ending September 30, 2024, and are 1% per annum for the first year (through June 30, 2025), then 2.5% per annum for the next two years (through June 30, 2027), then 5% per annum thereafter through maturity on April 30, 2029. The Revolving Facility will bear interest at a margin over a reference rate selected at the option of the borrower. The margin for the Revolvin

01 Completion of Acquisition or Disposition of Assets

Item 2.01 Completion of Acquisition or Disposition of Assets. On the Closing Date, the Company acquired 100% of the issued and outstanding equity interests of Safflower Holdings Corp. from Safflower Holdings LLC, for $365.0 million in cash, subject to customary adjustments for indebtedness, cash, net working capital and seller transaction expenses (the "Acquisition"). Safflower Holdings Corp. beneficially owns most of the Benihana restaurants, as well as all of the RA Sushi restaurants, in the United States. It also franchises Benihana locations in the U.S., Latin America (excluding Mexico) and the Caribbean. On April 29, 2024, the Stock Purchase Agreement for the Acquisition was amended to eliminate the requirement that the Benihana Restaurant Employees 401(k) Plan and the Benihana 401(k) Plan be terminated prior to close. A copy of the amendment is filed as Exhibit 10.2 to this Current Report on Form 8-K. Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. The disclosures under Item 1.01 are incorporated into this item.

02 Unregistered Sales of Equity Securities

Item 3.02 Unregistered Sales of Equity Securities. On the Closing Date, pursuant to the Investment Agreement, the Company sold and issued to (a) HPC III Kaizen LP, for $150 million cash, subject to a 5% original issuance discount, 150 shares of Preferred Stock (as defined below) in book-entry form, a warrant to purchase 1,786,582 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 1,000,000 shares of Common Stock of the Company for an exercise price of $10.00 per share and (b) to the HPS Investors, for $10 million cash in the aggregate, subject to a 5% original issuance discount, securities allocated among the HPS Investors as follows: (i) to HPS Special Situations Opportunity Fund II, L.P., 4,309 shares of such Preferred Stock in book-entry form, a warrant to purchase 51,236 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 28,729 shares of Common Stock of the Company for an exercise price of $10.00 per share, (ii) to SSOF II BH US Subsidiary, L.P., 3,961 shares of such Preferred Stock in book-entry form, a warrant to purchase 43,957 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 24,604 shares of Common Stock of the Company for an exercise price of $10.00 per share, (iii) to HPS Corporate Lending Fund, 1,000 shares of such Preferred Stock in book-entry form, a warrant to purchase 11,911 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 6,667 shares of Common Stock of the Company for an exercise price of $10.00 per share, and (iv) to HPS Corporate Capital Solutions Fund, 1,000 shares of such Preferred Stock in book-entry form, a warrant to purchase 11,911 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 6,667 shares of Common Stock of the Company for an exercise price of $10.00 per share

03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. Certificate of Designations. On April 30, 2024, the Company filed a Certificate of Designations of Series A Preferred Stock (the "Certificate of Designations") with the Secretary of State of the State of Delaware in connection with the closing of the Acquisition, designating the rights and preferences of 160,000 shares of the Company's Series A Preferred Stock, par value $0.0001 per share (the "Preferred Stock"), issued on the Closing Date to the Preferred Investors under that certain Investment Agreement, dated March 26, 2024, between the Company and the Preferred Investors. The description of the Certificate of Designations contained in Item 1.01 of the Company's Current Report on Form 8-K filed March 26, 2024 is incorporated by reference into this Item 5.03. The foregoing description of the Certificate of Designations is a summary only and is qualified in its entirety by reference to the full text of the Certificate of Designations, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

01 Regulation FD Disclosure

Item 7.01 Regulation FD Disclosure. On May 1, 2024, the Company issued a press release announcing the closing of the acquisition of 100% of the issued and outstanding equity interests of Safflower Holdings Corp. A copy of the press release is furnished as Exhibit 99.1 and incorporated by reference into this Item 7.01. The information provided pursuant to this Item 7.01, including Exhibit 99.1 in Item 9.01, is "furnished" and shall not be deemed to be "filed" with the SEC or incorporated by reference in any filing under the Exchange Act or the Securities Act, except as shall be expressly set forth by specific reference in any such filings.

01 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits. (a) Financial statements of business acquired. The financial statements required to be filed by this item will be filed by amendment not later than July 17, 2024. (b) Pro forma financial information. The pro forma financial information required to be filed by this item will be filed by amendment not later than July 17, 2024. (d) Exhibits . 3.1 Certificate of Designations of Series A Preferred Stock of the Company filed with the Delaware Secretary of State on April 30, 2024. 4.1 Warrant Certificate No. A-1, dated May 1, 2024, issued by the Company to HPC III Kaizen LP 4.2 Warrant Certificate No. A-2, dated May 1, 2024, issued by the Company to HPS Special Situations Opportunity Fund II, L.P. 4.3 Warrant Certificate No. A-3, dated May 1, 2024, issued by the Company to SSOF II BH US Subsidiary, L.P. 4.4 Warrant Certificate No. A-4, dated May 1, 2024, issued by the Company to HPS Corporate Lending Fund 4.5 Warrant Certificate No. A-5, dated May 1, 2024, issued by the Company to HPS Corporate Capital Solutions Fund 4.6 Warrant Certificate No. B-1, dated May 1, 2024, issued by the Company to HPC III Kaizen LP 4.7 Warrant Certificate No. B-2, dated May 1, 2024, issued by the Company to HPS Special Situations Opportunity Fund II, L.P 4.8 Warrant Certificate No. B-3, dated May 1, 2024, issued by the Company to SSOF II BH US Subsidiary, L.P. 4.9 Warrant Certificate No. B-4, dated May 1, 2024, issued by the Company to HPS Corporate Lending Fund 4.10 Warrant Certificate No. B-5, dated May 1, 2024, issued by the Company to HPS Corporate Capital Solutions Fund 4.11 Registration Rights Agreement dated May 1, 2024 by and among the Company, HPC III Kaizen LP, HPS Special Situations Opportunity Fund II, L.P., SSOF II BH US Subsidiary, L.P., HPS Corporate Lending Fund and HPS Corporate Capital Solutions Fund. 10.1 Credit Agreement dated May 1 2024 with Deutsche Bank AG New York Branch, HPS Invest

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. Dated: May 1, 2024 THE ONE GROUP HOSPITALITY, INC. By: /s/ Tyler Loy Name: Tyler Loy Title: Chief Financial Officer

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View this 8-K filing on SEC EDGAR