Item 7.01. Regulation FD Disclosure.
On September 9, 2020, Covetrus, Inc. (the "Company") converted a portion of its
7.50% Series A Convertible Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), issued to CD&R VFC Holdings, L.P. (the "Investor"), an
affiliate of Clayton, Dubilier & Rice, LLC, on May 19, 2020. In connection with
such conversion, the Company issued approximately 14.4 million shares of its
common stock, par value $0.01 per share (the "Common Stock"), to the Investor,
which, together with the shares of Common Stock previously owned by the
Investor, results in the Investor owning approximately 19.99% of the Company's
outstanding shares of Common Stock. Following such conversion, the Investor will
continue to own shares of Preferred Stock that are convertible into
approximately 8.2 million shares of Common Stock (as may be adjusted pursuant to
the terms governing the Preferred Stock).
The conversion of such shares of Preferred Stock on September 9, 2020 will
result in a reduction to the Company's cash dividend payments on the Preferred
Stock by approximately $12.0 million on an annualized basis. The Company may
convert additional shares of Preferred Stock into shares of Common Stock so long
as the Investor will not own shares of Common Stock in excess of 19.99% of the
Company's outstanding shares of Common Stock, and the Company expects to seek
shareholder approval to convert any remaining shares of Preferred Stock into
shares of Common Stock no later than at its next annual meeting of shareholders.
The conversion of the remaining shares of Preferred Stock into shares of Common
Stock, assuming shareholder approval is obtained, will result in an additional
reduction to the Company's cash dividend payments on the Preferred Stock by
approximately $6.8 million on an annualized basis.
The information in this Item 7.01 is being furnished and shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (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, as amended, or the Exchange Act, except as expressly
set forth by specific reference in such filing.
This report contains certain statements that are forward-looking within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. We may, in some
cases use terms such as "predicts," "believes," "potential," "continue,"
"anticipates," "estimates," "expects," "plans," "intends," "may," "could,"
"might," "likely," "will," "should" or other words that convey uncertainty of
the future events or outcomes to identify these forward-looking statements. Such
statements are subject to numerous risks and uncertainties, and actual results
could differ materially from those anticipated due to a number of factors
including, but not limited to, the Company's ability to convert the shares of
Preferred Stock and realize the cash dividend savings and the Company's ability
to obtain shareholder approval for the conversion of the remaining shares of
Preferred Stock. Our forward-looking statements are based on current beliefs and
expectations of our management team and, except as required by law, we undertake
no obligations to make any revisions to the forward-looking statements contained
in this report or to update them to reflect events or circumstances occurring
after the date of this release, whether as a result of new information, future
developments or otherwise. Investors are cautioned not to place undue reliance
on these forward-looking statements.
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