| Item 1.01. |
Entry into a Material Definitive Agreement. |
On June 17, 2024, Composite Solutions, Inc. (“CSI”), a direct wholly-owned subsidiary of TPI Composites, Inc. (the “Company”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with CCI Global Water Fund LP (“CCI”) pursuant to which CSI will divest 100% of the issued and outstanding shares of the capital stock of its direct wholly-owned subsidiary, TPI, Inc. (the “Automotive Subsidiary”) to CCI for an aggregate cash purchase price of $1.00 (the “Divestiture”). The Automotive Subsidiary is engaged in the development, commercialization and implementation of the Company’s automotive industry related products (the “Business”). The Purchase Agreement also contemplates that the parties will enter into a transition services agreement that will provide for additional compensation to the Company based on services rendered. The Purchase Agreement contains customary representations, warranties and covenants related to the Business, CSI, the Automotive Subsidiary and the Company and mutual indemnification obligations. The completion of the Divestiture is subject to customary closing conditions and the Divestiture is expected to close on June 30, 2024 (such date, the “Closing Date”).
| Item 2.06. |
Material Impairment. |
The Automotive Subsidiary was classified as held for sale in the Company’s consolidated balance sheets as of December 31, 2023 and March 31, 2024. The Company has previously disclosed it was exploring strategic alternatives for the Automotive Subsidiary, which could result in a material impairment of the business’s assets. As a result of the divestiture, the Company expects to recognize a non-cash, pre-tax impairment charge of approximately $20 million during the second quarter of fiscal 2024. The impairment charge will not result in any cash expenditures. As the Company has not yet finalized its analysis and the transaction is not expected to close until June 30, 2024, the impairment charge recorded in the second quarter of fiscal 2024 could differ materially from the Company’s preliminary estimate.
| Item 5.02. |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
In connection with the Divestiture and the sale of the Business to CCI as described in the Purchase Agreement, effective as of the Closing Date, Jerry Lavine, the Company’s current President, Automotive and a named executive officer accepted an offer of employment from CCI and in connection therewith will be deemed to have resigned effective as of the Closing Date and is discharged from his duties with the Company effective as of the Closing Date.
| Item 7.01. |
Regulation FD Disclosure. |
On June 17, 2024 the Company issued a press release announcing the Divestiture. A copy of this press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information furnished in Item 7.01 and Exhibit 99.1 are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements, among other things, concerning: the sale of the Company’s automotive business, including the anticipated closing date of the Divestiture, and the material financial impairments associated with the Divestiture, as well as the entry into future revenue generating ancillary agreements in connection with the Divestiture. These forward-looking statements are often characterized by the use of words such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “seek,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” “could,” “predict,” “continue” and the negative or plural of these words and other comparable terminology. Forward-looking statements are only predictions based on our current expectations and our projections about future events. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. These factors include, but are not limited to, the matters discussed in “Risk Factors,” in our Annual Report on Form 10-K and other reports that we will file with the SEC.
| Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits