Item 2.01 Completion of Acquisition or Disposition of Assets.
On August 27, 2018, Norstan Communications, Inc. (“Seller”), a direct wholly-owned subsidiary of Black Box Corporation (the “Company”), completed the sale of all of the issued and outstanding membership interests of NextiraOne Federal, LLC (“NextiraOne”) to NXOF Intermediate Holdings, Inc. (“Buyer”), an affiliate of Arlington Capital Partners, a leading private equity firm with a focus on businesses in government services and other adjacent markets, for a cash purchase price of $75 million. NextiraOne, together with its direct wholly-owned subsidiary Mutual Telecom Services Inc., operate the Company’s federal government IT services business (the “Federal Business”).
As the Company previously disclosed in a Form 8-K, filed with the Securities and Exchanges Commission (“SEC”) on August 20, 2018, which is incorporated herein by reference in its entirety, the Company, Seller and Buyer entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) wherein Seller agreed to sell to Buyer 100% of the issued and outstanding membership interests of NextiraOne. As the Company previously disclosed in a Form 8-K, filed with the SEC on July 2, 2018, which is incorporated herein by reference in its entirety, the Company and certain direct and indirect wholly-owned subsidiaries of the Company entered into a Second Amendment, dated June 29, 2018, with PNC Bank, National Association, as administrative agent (the “Agent”), and certain other lenders party thereto (together with the Agent, the “Lenders”), to amend the Credit Agreement entered into among the Loan Parties, the Agent and the Lenders on May 9, 2016 (as amended by the Amendment and Joinder Agreement, dated August 9, 2017, and the Second Amendment, the “Amended Credit Agreement”). The Amended Credit Agreement established a new “last in first out” senior revolving credit facility in an amount not to exceed $10,000,000 (the “LIFO Facility”) to finance the Company’s budgeted cash flow needs. The Credit Agreement required the Company to satisfy certain milestones related to the sale of the Federal Business, including the execution of the Purchase Agreement on or prior to July 31, 2018 (which deadline was extended by the Agent, as disclosed by the Company in a Form 8-K filed with the SEC on August 6, 2018) and the consummation of the sale of the Federal Business by August 31, 2018 (subject to extension by the Agent under the Amended Credit Facility).
The net cash proceeds from the sale of the Federal Business, after purchase price adjustments of $5.6 million, transaction fees and expenses of $3.2 million as well as $3.0 million of funds deposited into escrow for the finalization of certain closing items as well as certain indemnifications, were used to pay Agent and Lender fees, interest on bank debt and indebtedness under the Amended Credit Agreement. After fees and interest, the LIFO Facility was paid first and the Term Loan under the Amended Credit Facility was paid in full, with the remaining funds reducing the original Revolving Credit Line under the Amended Credit Agreement. The LIFO Facility is available for future borrowings (subject to continued compliance with the Credit Agreement).