UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
FORM 8-K
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 31, 2016 (August 31, 2016)
 
 
 
COMPASS DIVERSIFIED HOLDINGS
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
001-34927
 
57-6218917
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
COMPASS GROUP DIVERSIFIED
HOLDINGS LLC
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
001-34926
 
20-3812051
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
Sixty One Wilton Road
Second Floor
Westport, CT 06880
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (203) 221-1703
 
 
 
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Section 1    Registrant's Business and Operations
Item 1.01    Entry into a Material Definitive Agreement

On August 31, 2016, Compass Group Diversified Holdings LLC (the “Company”), sponsor of Compass Diversified Holdings (“Holdings” and, together with the Company, collectively “CODI,” “us” or “we”), entered into a First Incremental Facility Amendment (the “Amendment”) to its existing Credit Agreement (as defined below). The Amendment was by and among the Company, the lenders party thereto (the “Lenders”), and Bank of America, N.A., as administrative agent for the Lenders (the “Administrative Agent”). Terms not defined in this Item 1.01 shall have the meanings ascribed to them in the Credit Agreement (as defined below).

The Amendment modifies the Company’s existing credit agreement, dated as of June 6, 2014, as amended, among the Company, the Lenders, the Administrative Agent and the other financial institutions party thereto (the “Credit Agreement”), to provide for (a) an increase in the aggregate revolving commitments in the amount of $150 million and (b) an additional advance of the term loan, as an Incremental Tranche B Term Facility, in the amount of $250 million (together, the “Incremental Facilities”), in connection with the Closing (as defined below). The Amendment also extends the date through which a prepayment premium would be due in connection with a Repricing Transaction to February 28, 2017 and increases the amount of the Term Loan quarterly amortization payments. The Amendment contains customary representations and warranties. All other material terms and conditions of the Credit Agreement were unchanged.

A copy of the Amendment is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the Amendment is qualified in its entirety by reference to the full text of the Amendment.

Section 2      Financial Information
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth in Item 1.01 above with respect to the Amendment is incorporated herein in its entirety.


Section 7    Regulation FD
Item 7.01    Regulation FD Disclosure

On August 31, 2016, CODI issued a press release announcing the closing, on August 31, 2016 (the “Closing”), of the previously announced transaction, whereby, 5.11 ABR Merger Corp. (“Merger Sub”), a Delaware corporation and wholly owned subsidiary of 5.11 ABR Corp. (“Parent”), a Delaware corporation and wholly owned subsidiary of the Company, merged with and into 5.11 Acquisition Corp., a Delaware corporation (“5.11 Tactical”), with 5.11 Tactical as the surviving entity (the “5.11 Merger”). The 5.11 Merger was completed pursuant to the agreement and plan of merger (the “Merger Agreement”) among Merger Sub, Parent, 5.11 Tactical, and TA Associates Management, L.P., as the agent and attorney in fact of the holders of stock and options in 5.11 Tactical. A copy of the press release is attached as Exhibit 99.1 hereto.

The foregoing description of the press release is qualified in its entirety by reference to the complete text of the press release furnished as Exhibit 99.1 hereto, which is incorporated by reference herein. The information in this Item 7.01 and Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth in such filing.


Section 8      Other Events
Item 8.01      Other Events

CODI acquires and manages small to middle market businesses in the ordinary course of its business. The following description relates to the recent acquisition of one such business.





5.11 Tactical

On August 31, 2016, Parent completed the acquisition of 5.11 Tactical pursuant to the Merger Agreement. Upon the completion of the 5.11 Merger, Merger Sub ceased to exist and 5.11 Tactical became a wholly owned subsidiary of Parent, and therefore a subsidiary of the Company. The Company paid a purchase price of approximately $400 million for 5.11 Tactical, before working capital and certain other adjustments at the Closing. The Company funded the purchase price through a draw on its revolving credit facility and by entering into the Incremental Facilities referenced in Item 1.01 of this Current Report on Form 8-K. Certain members of 5.11 Tactical’s management invested in the 5.11 Merger alongside the Company, collectively representing an approximate 2.5% non-controlling interest in Parent on a primary basis. The Company’s initial equity ownership in Parent will be approximately 97.5% on a primary and 85% on a fully diluted basis.

Concurrent with the Closing, the Company provided a credit facility to 5.11 TA, Inc., a Delaware corporation and wholly owned subsidiary of 5.11 Tactical, as co-borrower (“5.11 Co-Borrower”), and 5.11, Inc., a California corporation and wholly owned subsidiary of 5.11 TA, as borrower (“5.11 Borrower), pursuant to which a secured revolving loan commitment and secured term loan were made available to 5.11 Borrower and 5.11 Co-Borrower (the “5.11 Credit Agreement”). The initial amount outstanding under these facilities at Closing was $177.5 million. The loans advanced under the 5.11 Credit Agreement to 5.11 Co-Borrower and 5.11 Borrower are guaranteed by Parent, 5.11 Tactical, 5.11 Co-Borrower, 5.11 Borrower and certain other subsidiaries of 5.11 Borrower (collectively, the “Guarantors”) and are secured by security interests in substantially all the assets and properties of the Guarantors, including a pledge by 5.11 Co-Borrower of all the equity interests in 5.11 Borrower, the primary operating subsidiary of Parent. In addition to being similar to the terms and conditions of the credit facilities in place with its existing subsidiary businesses, the Company believes that the agreed terms of the loans are fair and reasonable given the leverage and risk profile of Parent and its subsidiaries.

The foregoing brief description of the 5.11 Merger is not meant to be exhaustive and is qualified in its entirety by, the full text of the Merger Agreement, which is incorporated herein by reference to Exhibit 99.1 to Holdings’ Current Report on Form 8-K filed on August 1, 2016 and the Company’s Current Report on Form 8-K filed on August 1, 2016.


Section 9    Financial Statements and Exhibits
Item 9.01    Financial Statements and Exhibits

(a)     Financial statements of the businesses acquired

To the extent required by this item, historical financial statements for the 5.11 Merger referenced in Item 8.01 above will be filed in an amendment to this Current Report on Form 8-K no later than 71 calendar days after the date of this report is due.

(b)     Pro forma financial information

To the extent required by this item, pro forma financial information relating to the 5.11 Merger referenced in Item 8.01 above will be filed in an amendment to this Current Report on Form 8-K no later than 71 calendar days after the date of this report is due.

(d)     Exhibits.

10.1
First Incremental Facility Amendment, dated August 31, 2016, by and among Compass Diversified Holdings LLC, Bank of America, N.A., and the lenders thereto.
99.1
Press Release of CODI dated August 31, 2016 announcing the Closing of the 5.11 Merger.






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.

Date: August 31, 2016
COMPASS DIVERSIFIED HOLDINGS
 
 
 
 
By:
 
/s/ Ryan J. Faulkingham
 
 
 
 
 
 
Ryan J. Faulkingham
 
 
 
Regular Trustee

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.

Date: August 31, 2016
COMPASS GROUP DIVERSIFIED HOLDINGS LLC
 
 
 
 
By:
 
/s/ Ryan J. Faulkingham
 
 
 
 
 
 
Ryan J. Faulkingham
 
 
 
Chief Financial Officer





Exhibit 10.1





FIRST INCREMENTAL FACILITY AMENDMENT

Dated as of August 31, 2016

to the

CREDIT AGREEMENT

Dated as of June 6, 2014

among

COMPASS GROUP DIVERSIFIED HOLDINGS LLC,
as the Borrower,

BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender and L/C Issuer,

and

THE OTHER LENDERS PARTY HERETO

TD BANK, N.A.
and
U.S. BANK NATIONAL ASSOCIATION,
as Co-Documentation Agents



Arranged By:

BANK OF AMERICA MERRILL LYNCH,
SUNTRUST ROBINSON HUMPHREY, INC.,
TD SECURITIES (USA) LLC
and
U.S. BANK NATIONAL ASSOCIATION,
as Joint Lead Arrangers,

and

BANK OF AMERICA MERRILL LYNCH,
and
SUNTRUST ROBINSON HUMPHREY, INC.,
as Joint Bookrunners





FIRST INCREMENTAL FACILITY AMENDMENT

THIS FIRST INCREMENTAL FACILITY AMENDMENT (this “ Amendment ”) dated as of August 31, 2016 to the Credit Agreement referenced below is by and among Compass Group Diversified Holdings LLC, a Delaware limited liability company (the “ Borrower ”), the Incremental Revolving Lenders (defined below), the Incremental Term Loan Lenders (defined below) and Bank of America, N.A., in its capacity as Administrative Agent (in such capacity, the “ Administrative Agent ”).

W I T N E S S E T H

WHEREAS, revolving credit and term loan facilities have been extended to the Borrower pursuant to that certain Credit Agreement dated as of June 6, 2014 (as amended, modified, supplemented, increased and extended from time to time, the “ Credit Agreement ”) by and among the Borrower, the Lenders identified therein and the Administrative Agent;

WHEREAS, the Borrower has notified the Administrative Agent that pursuant to Section 2.01(c)(i)(B) of the Credit Agreement (x) certain Lenders identified on the signature pages hereto (collectively, the “ Incremental Revolving Lenders ”) have agreed to provide an increase in the Aggregate Revolving Commitments in the amount of $150,000,000 which increase shall constitute an Incremental Revolving Increase (the “ Incremental Revolving Facility ”) and (y) certain Lenders identified on the signature pages hereto (collectively, the “ Incremental Term Loan Lenders ”) have agreed to provide an additional advance of the Term Loan in the amount of $250,000,000 which advance shall constitute an Incremental Tranche B Term Facility (the “ Incremental Term Loan ”).

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.
Defined Terms . Capitalized terms used herein but not otherwise defined herein shall have the meanings provided to such terms in the Credit Agreement (as amended by this Amendment).

2.
Establishment of Incremental Facilities .

2.1      Incremental Facility Amendment . This Amendment is an Incremental Facility Amendment.

2.2      Incremental Revolving Increase .     

(a)      The Incremental Revolving Facility is an Incremental Revolving Increase incurred pursuant to Section 2.01(c) of the Credit Agreement.

(b)      Each Incremental Revolving Lender agrees that its Revolving Commitment is increased by the amount set forth on Schedule 1 hereto.

(c)      Immediately after giving effect to the Incremental Revolving Facility, the participations in L/C Obligations and Swing Line Loans shall be reallocated among the Lenders with Revolving Commitments such that each Lender with a Revolving Commitment holds its Applicable Percentage of outstanding participation interests in L/C Obligations and Swing Line Loans.


(d)      The Incremental Revolving Facility is incurred utilizing the basket set forth in Section 2.01(c)(i)(B) of the Credit Agreement and does not reduce the maximum principal amount of Incremental Facilities available under Section 2.01(c)(i)(A).

2.3      Incremental Term Loan .

(a)      The Incremental Term Loan is an Incremental Tranche B Term Facility incurred pursuant to Section 2.01(c) of the Credit Agreement.





(b)      Subject to the terms and conditions set forth herein and the Credit Agreement (as amended by this Amendment), each Incremental Term Loan Lender severally agrees to make its portion of the Incremental Term Loan to the Borrower in Dollars in a single advance on the date hereof in an amount not to exceed such Lender’s commitment to the Incremental Term Loan set forth on Schedule 1 hereto. The Incremental Term Loan is an addition of the Term Loan. The advance of the Term Loan made on the Closing Date and the Incremental Term Loan shall be deemed one term loan constituting the Term Loan and shall be subject to all of the terms and conditions applicable to the Term Loan.

(c)      The Incremental Term Loan is incurred utilizing the basket set forth in Section 2.01(c)(i)(B) of the Credit Agreement and does not reduce the maximum principal amount of Incremental Facilities available under Section 2.01(c)(i)(A).

2.4      New Lenders . From and after the date hereof, each Person identified on the signature pages hereto as an “Incremental Revolving Lender” and “Incremental Term Loan Lender” that is not a party to the Credit Agreement immediately prior to giving effect to this Amendment (each, a “ New Lender ”) shall be deemed to be a party to the Credit Agreement and a “Lender” for all purposes of the Credit Agreement and the other Loan Documents.

3.
Amendments to the Credit Agreement .

3.1      Section 2.05(a)(iii) of the Credit Agreement is amended by replacing “June 6, 2015” with      “February 28, 2017”.
 
3.2      Section 2.07(c) of the Credit Agreement is amended and restated in its entirety to read as      follows:

(c)      Term Loan . The Borrower shall repay the outstanding principal amount of the Term Loan in equal quarterly installments of $1,421,250 each (as such installments may hereafter be adjusted as a result of prepayments made pursuant to Section 2.05 ) on the last Business Day of each March, June, September and December, commencing September 30, 2016, unless accelerated sooner pursuant to Section 8.02 , with the outstanding principal balance of the Term Loan due and payable in full on the Maturity Date.

4.
Conditions Precedent . This Amendment shall become effective as of the date hereof upon satisfaction of each of the following conditions precedent in each case in a manner satisfactory to the Administrative Agent:

1. Amendment . Receipt by the Administrative Agent of executed counterparts of this Amendment properly executed by a Responsible Officer of the Borrower, each Incremental Revolving Lender, each Incremental Term Loan Lender and the Administrative Agent.

2. Opinions of Counsel . Receipt by the Administrative Agent of favorable opinions of legal counsel to the Borrower, addressed to the Administrative Agent and each Lender, dated as of the date of this Amendment.

3. Resolutions . Receipt by the Administrative Agent of such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of the Borrower as the Administrative Agent may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment.

4. 5.11 Acquisition . (a) The Agreement and Plan of Merger dated as of July 29, 2016 among 5.11 ABR Corp., 5.11 ABR Merger Corp., 5.11 Acquisition Corp. and TA Associates Management, L.P. (the “ 5.11 Acquisition Agreement ”) shall not have been altered, amended, supplemented or otherwise changed in a manner materially adverse to the Lenders without the consent of the Administrative Agent and (b) the transactions contemplated by the 5.11 Acquisition Agreement shall have been consummated substantially in accordance with the 5.11 Acquisition Agreement.





5. Pro Forma Compliance Certificate . The Administrative Agent shall have received a Pro Forma Compliance Certificate demonstrating that after giving effect to the Incremental Facilities contemplated herein (and assuming that the entire amount of the Incremental Revolving Facility has been funded) the Borrower is incompliance with the financial covenants in Section 7.11 of the Credit Agreement on a Pro Forma Basis.

6. Notes . Receipt by the Administrative Agent of Notes dated as of the date of the First Incremental Facility Amendment executed by a Responsible Officer of the Borrower in favor of each New Lender requesting a Note from the Borrower.

7. Fees . Receipt by the Administrative Agent, each lead arranger for the transactions contemplated by this Amendment and the Lenders of any fees required to be paid on or before the date of this Amendment.

8. Attorney Costs . The Borrower shall have paid all reasonable and documented fees, charges and disbursements of counsel to the Administrative Agent to the extent invoiced prior to or on the date hereof.

5.      Reaffirmation . The Borrower acknowledges and reaffirms that (a) it is bound by all of the terms of the Loan Documents to which it is a party and (b) it is responsible for the observance and full performance of all Obligations, including, without limitation, the repayment of the Loans and reimbursement of any drawings on any Letter of Credit. Furthermore, the Borrower acknowledges and confirms that (a) the Administrative Agent, the Lenders and the L/C Issuers have performed fully all of their obligations under the Credit Agreement and the other Loan Documents and (b) by entering into this Amendment, the Administrative Agent, the Lenders and the L/C Issuers do not waive or release any term or condition of the Credit Agreement or any of the other Loan Documents or any of their rights or remedies under such Loan Documents or any applicable law or any of the obligations of the Borrower thereunder.

6.      Miscellaneous .

6.1      The Credit Agreement (as amended hereby) and the obligations of the Borrower thereunder and under the other Loan Documents are hereby ratified and confirmed and shall remain in full force and effect according to their terms. This Amendment shall not be deemed or construed to be a satisfaction, reinstatement, novation or release of any Loan Document or a waiver by the Administrative Agent, any Lender or any L/C Issuer of any rights and remedies under the Loan Documents, at law or in equity.

6.2      The Borrower hereby represents and warrants to the Administrative Agent, the Lenders and the L/C Issuers as follows:

(a)      The Borrower has taken all necessary action to authorize the execution, delivery and performance of this Amendment. This Amendment and the execution and performance hereof by the Borrower do not conflict with the Borrower’s Organization Documents or any law, agreement or obligation by which the Borrower is bound.

(b)      This Amendment has been duly executed and delivered by the Borrower and constitutes the Borrower’s legal, valid and binding obligations, enforceable in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity.

(c)      No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Borrower of this Amendment.

(d)      Before and after giving effect to the Incremental Facilities contemplated herein, the representations and warranties of the Borrower contained in Article V of the Credit Agreement or in any other Loan Document, or which are contained in any document furnished at any time under or in connection therewith, are true and correct in all material respects (or, in the case of any such representations and warranties qualified




by materiality or Material Adverse Effect, in all respects as drafted) as of the date hereof with the same effect as if made on and as of the date hereof, except to the extent such representations and warranties specifically refer to an earlier date, in which case such representations and warranties are true and correct in all material respects (or, in the case of any such representations and warranties qualified by materiality or Material Adverse Effect, in all respects as drafted) as of such earlier date.

(e)      Before and after giving effect to the Incremental Facilities contemplated herein, no event has occurred and is continuing which constitutes a Default or an Event of Default.

6.3      This Amendment shall constitute a Loan Document for all purposes. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by telecopy or other electronic means (such as by email in “pdf” or “tif” format) shall be effective as an original and shall constitute a representation that an executed original shall be delivered. This Amendment constitutes the entire contract among the parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Amendment will inure to the benefit of and bind the respective successors and permitted assigns of the parties hereto.

6.4      THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE TERMS OF SECTIONS 10.14 AND 10.15 OF THE CREDIT AGREEMENT ARE INCORPORATED HEREIN BY REFERENCE, MUTATIS MUTANDIS .

[SIGNATURE PAGES FOLLOW]





IN WITNESS WHEREOF , each of the parties hereto has caused a counterpart of this First Incremental Facility Amendment to be duly executed and delivered as of the date first above written.


BORROWER:                  COMPASS GROUP DIVERSIFIED HOLDINGS LLC,
a Delaware limited liability company

By: /s/ Ryan J. Faulkingham         
Name: Ryan J. Faulkingham
Title: Chief Financial Officer




ADMINISTRATIVE
AGENT:                  BANK OF AMERICA, N.A.,
as Administrative Agent
    
By: /s/ Christine Trotter             
Name: Christine Trotter
Title: Assistance Vice President

INCREMENTAL REVOLVING
LENDERS:                  BANK OF AMERICA, N.A.,
as a Lender, L/C Issuer and Swing Line Lender
    
By: /s/ Christopher T. Phelan         
Name: Christopher T. Phelan
Title: Senior Vice President


SUNTRUST BANK
                        
By: /s/ Mary K. Lundin         
Name: Mary K. Lundin
Title: Vice President


U.S. BANK NATIONAL ASSOCIATION

By: /s/ Jason Nadler         
Name: Jason Nadler
Title: Managing Director


TD BANK, N.A.
                        
By: /s/ Todd Antico         
Name: Todd Antico
Title: Senior Vice President


FIFTH THIRD BANK

By: /s/ Eric Bunselmeyer         
Name: Eric Bunselmeyer
Title: Assistant Vice President









THE PRIVATEBANK AND TRUST COMPANY

By: /s/ Sam L. Dendrinos         
Name: Sam L. Dendrinos
Title: Managing Director


SIEMENS FINANCIAL SERVICES, INC.

By: /s/ Melissa J. Brown     
Name: Melissa J. Brown
Title: Sr. Transaction Coordinator


FIRST TENNESSEE BANK NATIONAL ASSOCIATION,
as a Lender

By: /s/ Alex K. Turner         
Name: Alex K. Turner
Title: Senior Vice President



INCREMENTAL TERM
LOAN LENDERS:             
BANK OF AMERICA, N.A.
                        
By: /s/ Christopher T. Phelan         
Name: Christopher T. Phelan
Title: Senior Vice President







SCHEDULE I


AGGREGATE REVOLVING COMMITMENTS

Lender
 
Commitment to Incremental Borrowing Increase
Bank of America, N.A.
 
$34,616,250.00
Sun Trust Bank
 
$34,616,250.00
TD Bank, N.A.
 
$22,500,000.00
U.S. Bank National Association
 
$22,500,000.00
Fifth Third Bank
 
$13,125,000.00
The PrivateBank and Trust Company
 
$11,080,000.00
Siemens Financial Services, Inc.
 
$6,562,500.00
First Tennessee Bank National Association
 
$5,000,000.00
Total
 
$150,000,000.00


AGGREGSTE INCREMENTAL TERM LOAN COMMITMENTS

Lender
 
Commitment to Incremental Term Loan
Bank of America, N.A.
 
$250,000,000.00





Exhibit 99.1
VIEWA18.GIF



Compass Diversified Holdings
Ryan J. Faulkingham
Chief Financial Officer
203.221.1703
ryan@compassequity.com  


Investor Relations and Media Contact:
The IGB Group
Leon Berman / Scott Eckstein
212.477.8438 / 212.477.8261
lberman@igbir.com / seckstein@igbir.com


Compass Diversified Holdings Closes Acquisition of 5.11 Tactical ®  

Westport, Conn., August 31, 2016 - Compass Diversified Holdings (NYSE: CODI) (“CODI” or the “Company”), an owner of leading middle market businesses, announced the closing of the acquisition of 5.11 Tactical ® (“5.11”), pursuant to an agreement entered into on July 29, 2016.

The acquisition was completed for a purchase price of $400 million (excluding working capital and other customary adjustments) and funded through a draw on the Company’s revolving credit facility as well as $250 million in additional term loan debt issued under the Company's existing credit facility in connection with the closing of the 5.11 acquisition. Acquisition related costs were $1.9 million. As part of the transaction, CODI acquired a substantial tax asset, the positive effect of which will be meaningful for CODI’s annual cash flow. The acquisition of 5.11 is expected to provide thirty to thirty-five cents per share of cash flow accretion to CODI on an annualized basis.

CODI's initial equity ownership in 5.11 as a result of this transaction is approximately 97.5%. 5.11’s management team invested alongside CODI and own the remaining 2.5%.

5.11 is a leading designer and marketer of purpose-built tactical apparel and gear serving a wide range of global customers including law enforcement, military special operations and firefighters, as well as outdoor enthusiasts. 5.11 is headquartered in Irvine, CA and Modesto, CA, and operates international sales offices in Sweden, Mexico, Australia, China and UAE.

Additional information on the acquisition will be available on the Company’s current report on Form 8-K that will be filed with the Securities and Exchange Commission.


About Compass Diversified Holdings (“CODI”)
CODI owns and manages a diverse family of established North American middle market businesses. Each of its current subsidiaries is a leader in its niche market.

CODI maintains controlling ownership interests in each of its subsidiaries in order to maximize its ability to impact long term cash flow generation and value. The Company provides both debt and equity capital for




its subsidiaries, contributing to their financial and operating flexibility. CODI utilizes the cash flows generated by its subsidiaries to invest in the long-term growth of the Company and to make cash distributions to its shareholders.

Our nine majority-owned subsidiaries are engaged in the following lines of business:

•
The design and marketing of purpose-built tactical apparel and gear serving a wide range of global customers ( 5.11 );

•
The manufacture of quick-turn, small-run and production rigid printed circuit boards ( Advanced Circuits );

•
The design and manufacture of medical therapeutic support surfaces and other wound treatment devices ( Anodyne Medical Device , also doing business and known as  Tridien Medical );

•
The manufacture of engineered magnetic solutions for a wide range of specialty applications and end-markets ( Arnold Magnetic Technologies );

•
Environmental services for a variety of contaminated materials including soils, dredged material, hazardous waste and drill cuttings ( Clean Earth ); 

•
The design and marketing of wearable baby carriers, strollers and related products ( Ergobaby ); 

•
The design and manufacture of premium home and gun safes ( Liberty Safe ); 

•
The manufacture and marketing of branded, hemp-based food products ( Manitoba Harvest ); and 

•
The manufacture and marketing of portable food warming fuels and creative ambience solutions for the hospitality and consumer markets ( Sterno Products ).

In addition, we own approximately 23% of the common stock of Fox Factory Holding Corp. (“FOX”, Nasdaq: FOXF), a former subsidiary business that completed its initial public offering in August 2013. FOX designs and manufactures high-performance suspension products primarily for mountain bikes, side-by-side vehicles, on-road and off-road vehicles and trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles. 

This press release may contain certain forward-looking statements, including statements with regard to the future performance of CODI. Words such as "believes," "expects," "projects," and "future" or similar expressions, are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in the risk factor discussion in the Form 10-K filed by CODI with the SEC for the year ended December 31, 2015 and other filings with the SEC. Except as required by law, CODI undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

###