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): March 6, 2020
HG Holdings, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | No. 0-14938 | 54-1272589 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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2115 E. 7th Street, Suite 101 Charlotte, North Carolina |
28204 | |
| (Address of principal executive offices) | (Zip Code) | |
| Registrant’s telephone number, including area code: (252) 355-4610 | ||
| Not Applicable | ||
| (Former name or address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered |
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
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 8.01. Other Events.
As previously reported, on October 31, 2019, HG Holdings, Inc. (the “Company”) entered into a Forbearance Agreement (the “Forbearance Agreement”) with Stanley Furniture Company LLC (the “Borrower”) and certain affiliates (together with the Borrower, the “Loan Parties”) pursuant to which the Company agreed, subject to certain conditions, to forbear until February 24, 2020 from exercising its rights and remedies under the Second Amended and Restated Subordinated Security Promissory Note, dated as of February 7, 2019 (“Second A&R Note”) issued by the Borrower to the Company.
On February 24, 2020, the Company and the Loan Parties entered into a letter agreement (the “Forbearance Extension Letter Agreement”) extending the outside termination date for the forbearance period under the Forbearance Agreement from February 24, 2020 to February 26, 2020. The other terms and conditions of the Forbearance Agreement remain the same. The forbearance period terminated on February 26, 2020 under the terms of Forbearance Extension Letter Agreement and Forbearance Agreement.
On February 28, 2020 and March 3, 2020, the Company received a prepayments of $200,000 and $350,000, respectively, of the principal amount on the Second A&R Note from the Borrower.
On March 6, 2020, the Company and the Loan Parties entered into a letter agreement (the “Second Forbearance Extension Letter Agreement”) extending, subject to certain conditions, the outside termination date from February 26, 2020 to March 17, 2020. The extension of the outside termination and the effectiveness of the Second Forbearance Extension Letter Agreement is conditioned on Borrower making payments to be applied to the outstanding principal balance of the Second A&R Note of $250,000 on or before March 12, 2020 and $750,000 on or before March 13, 2020. The Second Forbearance Extension Letter Agreement also requires the Borrower to make an additional $391,969.82 payment on or before March 17, 2020 which will be applied to the outstanding principal balance of the Second A&R Note. The other terms and conditions of the Forbearance Agreement remain the same.
The foregoing description of the Second Forbearance Extension Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the Second Forbearance Extension Letter Agreement, a copy of which is filed as Exhibit 10.1 to this report, and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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10.1* |
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* Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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HG HOLDINGS, INC. |
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Date: March 12, 2020 |
By: |
/s/ Bradley G. Garner |
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Bradley G. Garner |
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Principal Financial and Accounting Officer |
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Exhibit 10.1
HG Holdings, Inc.
2115 E. 7th Street, Suite 101
Charlotte, NC 28204
March 6, 2020
STANLEY FURNITURE COMPANY LLC
200 North Hamilton Street, No. 200
High Point, North Carolina 27260
Attention: Walter A. Blocker
Email: walter.blocker@vntrade.vn
DEXTRA PARTNERS PTE. LTD.
269A South Bridge Road
Singapore 058818
Attention: Bernhard Weber
Fax: 65 6645 0470
Email: b.weber@dextrapartners.com
Re: Second Forbearance Extension Letter Agreement
Ladies and Gentlemen:
Reference is made to that certain Forbearance Agreement, dated as of October 31, 2019 (as amended by that certain Forbearance Extension Letter Agreement dated as of February 24, 2019 and as further amended, supplemented or otherwise modified from time to time, the “Forbearance Agreement”), by and among Stanley Furniture Company LLC, f/k/a Churchill Downs LLC (the “Borrower”), Stanley Intermediate Holdings LLC, Stanley Furniture Company 2.0, LLC, Churchill Downs Holdings Ltd. and HG Holdings, Inc. (“Lender”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Forbearance Agreement or incorporated therein.
The Loan Parties have requested that the Lender agree to extend the outside termination date of the Forbearance Period from February 26, 2020 to March 17, 2020. The Lender has agreed to such an extension, subject to the terms and conditions set forth herein.
Now, therefore, for valuable consideration, the mutual receipt of which is hereby acknowledged, the Loan Parties and the Lender agree as follows:
1. Amendments to Forbearance Agreement.
a. Section 3(b)(iii) of the Forbearance Agreement is hereby amended by replacing the reference to “February 26, 2020” with “March 17, 2020”.
b. Section 4 of the Forbearance Agreement is hereby amended by: (i) deleting the “and” at the end of clause (c); (ii) replacing the “.” at the end of clause (d) with “;”; and (iii) inserting new clauses (e), (f) and (g) as follows:
(a) On or before March 17, 2020, $391,969.82.
2. No Waiver of Acknowledged Events of Default. For the avoidance of doubt, nothing herein shall waive any of the Acknowledged Events of Default, all of which continue to exist.
3. Release. In consideration of the agreements of the Lender set forth in this letter agreement, each of the Loan Parties hereby release and forever discharge the Lender and each other member of the Releasee Group from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions and causes of action of any nature whatsoever, whether arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, which any of the Loan Parties ever had or claimed to have had, now has or claims to have or, to the extent arising from or in connection with any act, omission or state of facts taken or existing on or prior to the date hereof, may have after the date hereof against any member of the Releasee Group, for, upon or by reason of any matter, cause or thing whatsoever through the date hereof. Each of the Loan Parties represents, warrants, acknowledges and confirms that, as of the date hereof, such Person has no knowledge of any action, cause of action, claim, demand, damage or liability of whatever kind or nature, in law or in equity, against any member of the Releasee Group arising from any action by any such Person, or failure of any such Person to act, under or in connection with any of the Loan Documents.
4. Effectiveness of Letter Agreement. This letter agreement shall be effective on the date hereof upon the Lender’s receipt of: (a) counterparts of this letter agreement duly executed by the Lender and each of the Loan Parties; and (b) payments of $250,000.00 on or before March 12, 2020 and $750,000.00 on or before March 13, 2020 in respect of the outstanding principal balance of the Secured Promissory Note. Delivery of executed counterparts of this letter agreement by telecopy or other secure electronic format (.pdf) shall be effective as an original.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Forbearance Agreement to be duly executed as of the date first above written.
| BORROWER: | STANLEY FURNITURE COMPANY LLC, | ||
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a Delaware limited liability company |
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By: |
/s/ Richard Ledger |
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Name: |
Richard Ledger |
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Title: |
CEO |
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| GUARANTORS: | STANLEY INTERMEDIATE HOLDINGS LLC, | ||
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a Delaware limited liability company |
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By: |
/s/ Richard Ledger |
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Name: |
Richard Ledger |
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Title: |
CEO |
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| STANLEY FURNITURE COMPANY 2.0, LLC, | |||
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a Virginia limited liability company |
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By: |
/s/ Richard Ledger |
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Name: |
Richard Ledger |
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Title: |
CEO |
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| CHURCHILL DOWNS HOLDINGS LTD., | |||
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a British Virgin Islands business company |
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By: |
/s/ Richard Ledger |
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Name: |
Richard Ledger |
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Title: |
Director |
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Signature Page
Stanley Furniture – Second Forbearance Extension
| LENDER: | HG HOLDINGS, INC. | ||
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a Delaware corporation |
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By: |
/s/ Steven A. Hale II |
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Name: |
Steven A. Hale II |
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Title: |
Chairman & CEO |
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Signature Page
Stanley Furniture – Second Forbearance Extension