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Southeastern Grocers, Inc. – ‘FWP’ on 1/25/21 re: Southeastern Grocers, Inc.

On:  Monday, 1/25/21, at 5:42pm ET   ·   As of:  1/26/21   ·   Accession #:  1104659-21-7280   ·   File #:  333-249554

1 Reference:  To:  Southeastern Grocers, Inc. – ‘S-1/A’ on 1/25/21

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 1/26/21  Southeastern Grocers, Inc.        FWP         1/25/21    1:171K Southeastern Grocers, Inc.        Toppan Merrill/FA

Document/Exhibit                   Description                      Pages   Size 

 1: FWP         Free-Writing Prospectus                             HTML     86K 

Issuer Free Writing Prospectus dated January 25, 2021

Relating to the Preliminary Prospectus dated January 21, 2021

Filed pursuant to Rule 433

Registration No. 333-249554

SOUTHEASTERN GROCERS, INC.

This free writing prospectus relates to the initial public offering of common stock of Southeastern Grocers, Inc. and updates and supplements the preliminary prospectus dated January 21, 2021 (the “Initial Preliminary Prospectus”) that was included in Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-249554) relating to this offering of our common stock. On January 25, 2021, Southeastern Grocers, Inc. filed Amendment No. 5 to the Registration Statement on Form S-1 relating to this offering of our common stock, which Amendment No. 5 includes an update to the Initial Preliminary Prospectus, which we refer to as the “Updated Preliminary Prospectus.” Amendment No. 5, including the Updated Preliminary Prospectus, may be accessed through the following link: https://www.sec.gov/Archives/edgar/data/1587205/000104746921000186/0001047469-21-000186-index.htm

The Updated Preliminary Prospectus reflects (i) certain updates to the Recent Developments, (ii) certain updates to the Principal and Selling Stockholders section and (iii) certain updates to the Certain Relationships and Related Party Transactions section. This free writing prospectus provides an overview of such changes but should be read together with the Updated Preliminary Prospectus included in the Registration Statement, including the section entitled “Risk Factors” beginning on page 25 of the Updated Preliminary Prospectus. Capitalized terms used, but not defined, herein have the meanings set forth in the Updated Preliminary Prospectus

PRINCIPAL AND SELLING STOCKHOLDERS

The following table shows information regarding the beneficial ownership of our common stock as of January 25, 2021, (i) immediately prior to the consummation of this offering and (ii) as adjusted to give effect to this offering by:

For further information regarding material transactions between us and our selling stockholders, see “Certain Relationships and Related Party Transactions.”

Beneficial ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them. Percentage of beneficial ownership is based on 43,368,294 shares of common stock outstanding as of January 25, 2021. Shares of common stock issuable upon vesting of restricted stock units within 60 days of the date of this prospectus are deemed to be outstanding and beneficially owned by the person holding the options for the purposes of computing the percentage of beneficial ownership of that person and any group of which that person is a member, but are not deemed outstanding for the purpose of computing the percentage of beneficial ownership for any other person. Except as otherwise indicated, the persons named in the table below have sole voting and investment power with respect to all shares of capital stock held by them. Unless otherwise indicated, the address for each holder listed below is 8928 Prominence Parkway #200, Jacksonville, Florida 32256.

These accounts are managed by direct or indirect subsidiaries of FMR LLC. Abigail P. Johnson is a Director, the Vice Chairman, the Chief Executive Officer and the President of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company LLC (“FMR Co LLC”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company LLC carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. The principal business address of FMR LLC is 245 Summer Street, V13H, Boston, MA 02110.

AllianceBernstein L.P. serves as the investment manager for each of the entities identified in this paragraph. Neil Ruffell, in his position as Head of Portfolio Administration of AllianceBernstein L.P., may be deemed to have voting and investment power with respect to the common stock owned by the accounts identified in this footnote. The address for the foregoing persons is 1345 Avenue of the Americas, New York, NY 10105.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Set forth below is a description of certain relationships and related person transactions between us or our subsidiaries and our directors, executive officers or holders of more than 5% of our voting securities.

Special Cash Dividend

In connection with and conditioned upon the consummation of this offering, we intend to declare and pay the Special Cash Dividend of approximately $1.386 per share of common stock outstanding prior to this offering (or $6.00 per share on a pre-split basis), to holders of record of our common stock on the dividend record date, or approximately $60.1 million in the aggregate. The Company’s RSU award agreements provide for dividend equivalent rights on all outstanding RSUs, which are credited to RSU holders as additional RSUs equal in value to the allocable amount of the Special Cash Dividend. Therefore, in connection with the Special Cash Dividend, we intend to issue 424,982 RSUs (or approximately 98,171 RSUs on a pre-split basis at the midpoint of the estimated offering range) to existing RSU holders as of the dividend record date, or approximately 0.09 RSUs for each outstanding RSU as of the dividend record date, pursuant to the terms of the RSU award agreements. Pursuant to the RSU award agreements, such RSUs will contain dividend equivalent rights in pari passu to shares of our common stock. We intend to fund the Special Cash Dividend with a combination of cash on hand and drawings under the Revolving Credit Facility. The record date for the Special Cash Dividend will precede the consummation of this offering, and investors in this offering will not be entitled to receive any payments or distributions in connection with the Special Cash Dividend on shares purchased in this offering.

Lone Star Warrant

Pursuant to the Reorganization, in exchange for the cancellation of existing equity interests, we issued Lone Star Fund V (U.S.), L.P. and Lone Star Fund VII (U.S.), L.P. (together with their affiliates and associates, excluding the Company and other companies that they own as a result of their investment activities, collectively “Lone Star”), a warrant entitling the holder thereof to 2,278,422 shares of common stock (the “Warrant Shares”) with an exercise price of $12.06 per share, which is exercisable at any time through May 21, 2023. Pursuant to the adjustment provisions of the warrant, on the effective date of the Special Cash Dividend, the Warrant Shares will increase to 2,574,193 shares of common stock and the exercise price will decrease to $10.68 per share. Pursuant to the terms of the warrant, upon consummation of the IPO, Lone Star will have the right to receive upon exercise for each Warrant Share cash in the amount of the initial public offering price per-share, net of the exercise price, or a total of $11,128,672 (using the midpoint of the estimated public offering price range set forth on the cover page of this prospectus).

Advisory Agreement

Prior to the Reorganization, we were a party to an asset advisory agreement (the “Advisory Agreement”) with Hudson Americas LLC, an affiliate of Lone Star Fund V (U.S.), L.P. and Lone Star Fund VII (U.S.), L.P., our previous stockholder. The Advisory Agreement was terminated as of the Emergence Date.

We had expenses of $0.4 million and $5.2 million for the 22 weeks ended May 30, 2018 and the year ended December 27, 2017, respectively, related to the Advisory Agreement. There was no expense related to the Advisory Agreement for the year ended December 25, 2019 or the 30 weeks ended December 26, 2018.

Service Agreement

Pursuant to the Reorganization, we entered into the global settlement (the “Global Settlement”), which formed a special purpose entity, SEG II, which received certain leases from us. Pursuant to the Global Settlement, we made payments of $20.0 million, $0.0 million and $15.4 million during the year ended December 25, 2019, the 30 weeks ended December 26, 2018 and the 22 weeks ended May 30, 2018, respectively.

We are a party to a service agreement with SEG II (the “Service Agreement”). Pursuant to the Service Agreement, we agree to provide maintenance services for certain of the lease premises. We are also a party to a master sublease agreement with SEG II for certain of its operating locations for no additional rent.

Stockholders Agreement

On May 31, 2018, we entered into a stockholders agreement with certain holders of our common stock (the “Stockholders Agreement”), including with the selling stockholders in the offering (or affiliates thereof) and greater than 5% stockholders. The Stockholders Agreement includes provisions relating to the election of directors to our board of directors, customary information and registration rights, stock preemptive rights, tag-along rights and drag-long rights. The Stockholders Agreement will terminate upon consummation of the IPO.

Registration Rights Agreement

In connection with this offering, we expect to enter into a registration rights agreement (the “Registration Rights Agreement”) with affiliates of Fidelity Investments, Osterweis Capital Management and Millstreet Capital Management. The Registration Rights Agreement will provide these holders (and their permitted transferees) with the right to require us, at our expense, to register the resale of shares of our common stock held by such holders under the Securities Act and, if requested, to maintain a shelf registration statement effective with respect to such shares. Each holder that is a party to the Registration Rights Agreement will also be entitled to customary “piggyback” registration rights and entitled to participate in certain registrations of our common stock under the Securities Act that we undertake. The Registration Rights Agreement will also provide that we will pay certain expenses of such holders relating to such registration and indemnify them against certain liability that may arise under the Securities Act.

Director Nominee Proposal

Following this offering, our board intends to expand the size of the board to seven and appoint an additional independent director to be proposed by Millstreet Capital Management, one of our largest stockholders. The proposed independent director will be subject to the board’s approval, not to be unreasonably withheld, based on the board’s evaluation of the experience and qualifications of such person, as well as appropriate board composition. Together with our other directors, such director will be eligible for reelection at our first annual meeting of our stockholders following this offering.

Policies and Procedures for Related Person Transactions

Our board of directors will adopt a written related person transaction policy, to be effective upon the closing of this offering, setting forth the policies and procedures for the review and approval or ratification by our audit committee of related person transactions. This policy will cover, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 in any fiscal year and a related person had, has or will have a direct or indirect material interest, including without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction. All of the transactions described in this section occurred prior to the adoption of this policy.

Southeastern Grocers, Inc., the issuer, has filed a registration statement (including the preliminary prospectus dated January 25, 2021) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, copies of the preliminary prospectus may be obtained from: BofA Securities, 200 North College Street, 3rd Floor, Charlotte NC 28255-0001 Attn: Prospectus Department Email: dg.prospectus_requests@bofa.com or Goldman Sachs & Co. LLC, Attn: Prospectus Department, 200 West Street, New York, NY 10282, by telephone at (866) 471-2526, by facsimile at (212) 902-9316 or by email at prospectus-ny@ny.email.gs.com

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Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘FWP’ Filing		Date		Other Filings
		5/21/23
Filed as of:		1/26/21		S-1/A
Filed on:		1/25/21		S-1/A
		1/21/21		S-1/A
		12/30/20
		12/25/19
		12/26/18
		5/31/18
		5/30/18
		12/27/17
		3/16/10
				List all Filings

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1 Previous Filing that this Filing References

As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 1/25/21 Southeastern Grocers, Inc. S-1/A 4:6.5M Toppan Merrill-FA

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Filing Submission 0001104659-21-007280   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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