If the filing person has
previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.
¨
The information required on the remainder of this cover page shall not be
deemed to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934 (Act) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
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CUSIP No. 83083J104
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13D
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Page
2
of 10 Pages
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1.
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Names of
Reporting Persons.
Mill Road Capital II, L.P.
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2.
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Check the Appropriate Box if a Member
of a Group (See Instructions)
(a)
¨
(b)
¨
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3.
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SEC Use Only
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4.
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Source of Funds (See Instructions)
WC
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5.
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Check if Disclosure of Legal
Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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6.
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Citizenship or Place of
Organization
Delaware
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Number of
Shares
Beneficially
Owned by
Each
Reporting
Person
With
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7.
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Sole Voting Power
2,805,320
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8.
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Shared Voting Power
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9.
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Sole Dispositive Power
2,805,320
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10.
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Shared Dispositive Power
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11.
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Aggregate Amount Beneficially Owned by Each Reporting Person
2,805,320
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12.
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Check if the Aggregate Amount in Row
(11) Excludes Certain Shares (See Instructions)
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13.
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Percent of Class Represented by Amount
in Row (11)
9.8%
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14.
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Type of Reporting Person (See
Instructions)
PN
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CUSIP No. 83083J104
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13D
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Page
3
of 10 Pages
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1.
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Names of
Reporting Persons
Mill Road Capital II GP LLC
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2.
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Check the Appropriate Box if a Member
of a Group (See Instructions)
(a)
¨
(b)
¨
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3.
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SEC Use Only
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4.
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Source of Funds (See Instructions)
AF
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5.
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Check if Disclosure of Legal
Proceedings Is Required Pursuant to Items 2(d) or 2(e)
¨
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6.
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Citizenship or Place of
Organization
Delaware
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Number of
Shares
Beneficially
Owned by
Each
Reporting
Person
With
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7.
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Sole Voting Power
2,805,320
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8.
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Shared Voting Power
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9.
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Sole Dispositive Power
2,805,320
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10.
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Shared Dispositive Power
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11.
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Aggregate Amount Beneficially Owned by Each Reporting Person
2,805,320
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12.
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Check if the Aggregate Amount in Row
(11) Excludes Certain Shares (See Instructions)
¨
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13.
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Percent of Class Represented by Amount
in Row (11)
9.8%
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14.
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Type of Reporting Person (See
Instructions)
HC; OO
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CUSIP No. 83083J104
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13D
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Page
4
of 10 Pages
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1.
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Names of
Reporting Persons.
Thomas E. Lynch
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2.
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Check the Appropriate Box if a Member
of a Group (See Instructions)
(a)
¨
(b)
¨
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3.
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SEC Use Only
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4.
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Source of Funds (See Instructions)
AF
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5.
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Check if Disclosure of Legal
Proceedings Is Required Pursuant to Items 2(d) or 2(e)
¨
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6.
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Citizenship or Place of
Organization
USA
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Number of
Shares
Beneficially
Owned by
Each
Reporting
Person
With
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7.
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Sole Voting Power
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8.
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Shared Voting Power
2,805,320
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9.
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Sole Dispositive Power
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10.
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Shared Dispositive Power
2,805,320
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11.
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Aggregate Amount Beneficially Owned by Each Reporting Person
2,805,320
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12.
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Check if the Aggregate Amount in Row
(11) Excludes Certain Shares (See Instructions)
¨
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13.
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Percent of Class Represented by Amount
in Row (11)
9.8%
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14.
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Type of Reporting Person (See
Instructions)
HC; IN
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CUSIP No. 83083J104
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13D
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Page
5
of 10 Pages
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1.
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Names of
Reporting Persons.
Scott P. Scharfman
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2.
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Check the Appropriate Box if a Member
of a Group (See Instructions)
(a)
¨
(b)
¨
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3.
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SEC Use Only
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4.
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Source of Funds (See Instructions)
AF
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5.
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Check if Disclosure of Legal
Proceedings Is Required Pursuant to Items 2(d) or 2(e)
¨
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6.
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Citizenship or Place of
Organization
USA
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Number of
Shares
Beneficially
Owned by
Each
Reporting
Person
With
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7.
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Sole Voting Power
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8.
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Shared Voting Power
2,805,320
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9.
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Sole Dispositive Power
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10.
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Shared Dispositive Power
2,805,320
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11.
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Aggregate Amount Beneficially Owned by Each Reporting Person
2,805,320
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12.
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Check if the Aggregate Amount in Row
(11) Excludes Certain Shares (See Instructions)
¨
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13.
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Percent of Class Represented by Amount
in Row (11)
9.8%
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14.
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Type of Reporting Person (See
Instructions)
HC; IN
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CUSIP No. 83083J104
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Page
6
of 10 Pages
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This Amendment No. 2 to the joint statement on Schedule 13D with respect to the common
stock, $0.0001 par value (the
Common Stock
), of Skullcandy, Inc., a Delaware corporation (the
Issuer
), filed by Thomas E. Lynch, Scott P. Scharfman, Mill Road Capital II GP LLC, a Delaware limited liability
company, and Mill Road Capital II, L.P., a Delaware limited partnership (collectively, the
Reporting Persons
), on June 24, 2016, as amended by Amendment No. 1 on Schedule 13D with respect to the Common Stock filed by the
Reporting Persons on July 25, 2016 (such joint statement, as so amended and as amended herein, the
Schedule 13D
), amends the Schedule 13D as follows.
Introduction
This Amendment No. 2
relates to the letter dated August 15, 2016 from Mill Road Capital Management LLC (the
Management Company
) to the members of the Issuers board of directors (the
August 15 Proposal
), proposing to
acquire 100% of the fully diluted stock of the Issuer for cash consideration of $6.25 per share, payable at closing (the
Merger
), pursuant to a proposed form of Agreement and Plan of Merger (the
Merger
Agreement
) by and among MRSK Hold Co., a Delaware corporation (
Parent
), MRSL Merger Co., a Delaware corporation and wholly owned subsidiary of Parent (
Merger Sub
), and the Issuer.
The foregoing description of the August 15 Proposal does not purport to be complete and is qualified in its entirety by reference to the
terms and conditions of the August 15 Proposal, a copy of which is filed as
Exhibit 10
to this Schedule 13D and is incorporated by reference in its entirety into this Introduction.
1. Item 3 of the Schedule 13D is hereby amended and restated as follows:
The Reporting Persons acquired beneficial ownership of an aggregate of 2,805,320 shares of Common Stock for $15,148,207.74 using working
capital from the Fund and the proceeds of margin loans under margin loan facilities maintained in the ordinary course of business by the Fund with a broker on customary terms and conditions.
The Debt Commitment Letter
Pursuant to a commitment letter dated as of August 12, 2016 (the
Debt Commitment Letter
) provided by Cerberus Business
Finance, LLC and PNC Bank, National Association (together, the
Lenders
) to the Fund, the Lenders have committed, in connection with consummation of the Merger and subject to certain terms and conditions, to provide a senior
secured financing facility in the maximum aggregate amount of $125 million, consisting of (i) a revolving credit facility of up to $40 million outstanding at any time and (ii) a term loan facility of up to $85 million. The foregoing
description of the Debt Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the terms and conditions of the Debt Commitment Letter, a copy of which is filed as
Exhibit 11
to this Schedule
13D and is incorporated by reference in its entirety into this Item 3.
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CUSIP No. 83083J104
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Page
7
of 10 Pages
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The Equity Commitment Letter
Pursuant to a commitment letter (the
Equity Commitment Letter
) to be provided by the Fund to Parent, the Fund will agree,
subject to certain terms and conditions, to purchase equity interests of Parent for an aggregate amount equal to (i) the aggregate amount of merger consideration payable to holders of Common Stock, and holders of certain equity awards granted
by the Issuer under its long-term and equity incentive plans, pursuant to the Merger Agreement,
plus
(ii) certain payment obligations of the surviving corporation under the Merger Agreement,
minus
(iii) $75 million
(representing a portion of anticipated debt financing),
minus
(iv) $10.4 million (representing a portion of the Companys anticipated cash and short term marketable securities as of the effective time of the Merger). The Fund may
meet this funding obligation, in its discretion, directly or indirectly through its affiliates and/or with other accredited investors selected by the Fund. The foregoing description of the Equity Commitment Letter does not purport to be complete and
is qualified in its entirety by reference to the terms and conditions of the Equity Commitment Letter, a copy of which is filed as
Exhibit 12
to this Schedule 13D and is incorporated by reference in its entirety into this Item 3.
The Sponsor Guarantee
Concurrently with the execution of the Merger Agreement, and in order to induce the Issuer to enter into the Merger Agreement, the Fund will
provide the Issuer a guarantee of (i) Parents obligation to pay the equity portion of the financing for the Merger, if and when such payments are applicable, or (ii) the payment of any and all damages incurred by the Issuer or its
stockholders as a result of a breach by Parent or Merger Sub of any of their obligations under the Merger Agreement (the
Sponsor Guarantee
). The foregoing description of the Sponsor Guarantee does not purport to be complete and is
qualified in its entirety by reference to the terms and conditions of the Sponsor Guarantee, a copy of which is filed as
Exhibit
13
to this Schedule 13D and is incorporated by reference in its entirety into this Item 3.
2. Item 4 of the Schedule 13D is amended by deleting its second and third paragraphs and replacing them with the following:
On July 24, 2016, the Management Company sent an unsolicited proposal to the members of the Issuers board of directors,
proposing to acquire 100% of the fully diluted stock of the Issuer for cash consideration of $6.05 per share, a copy of which is filed as
Exhibit 5
to this Schedule 13D.
On August 15, 2016, the Management Company sent the August 15 Proposal to the members of the Issuers board of directors,
proposing to acquire 100% of the fully diluted stock of the Issuer for cash consideration of $6.25 per share, payable at closing, pursuant to the Merger Agreement. The Management Company anticipates that the Merger will be structured as a tender
offer followed promptly by a merger effected pursuant to Section 251(h) of the Delaware General Corporation Law, identical to the current structure agreed to by the Issuer pursuant to its existing June 23, 2016 Agreement and Plan of Merger
with Incipio, LLC and Powder Merger Sub, Inc. (as amended to date, the
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CUSIP No. 83083J104
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Page
8
of 10 Pages
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Existing Merger Agreement
). Parent and Merger Sub are prepared to sign a definitive merger agreement in the form of the Merger Agreement, including terms and conditions
substantially identical to the Existing Merger Agreement. The foregoing descriptions of the August 15 Proposal and the Merger Agreement do not purport to be complete and are qualified in their entirety by reference to the terms and conditions
of the August 15 Proposal and the Merger Agreement, copies of which are filed as
Exhibit 10
and
Exhibit 14
, respectively, to this Schedule 13D and are incorporated by reference in their entirety into this Item 4.
Item 3 of this Schedule 13D, which contains descriptions of the Debt Commitment Letter, the Equity Commitment Letter and the Sponsor
Guarantee, and the copies of the Debt Commitment Letter, the Equity Commitment Letter and the Sponsor Guarantee filed as
Exhibit 11
,
Exhibit 12
and
Exhibit 13
, respectively, to this Schedule 13D,
are incorporated by reference in their entirety into this Item 4.
3. Paragraph (a, b) of Item 5 of the Schedule 13D is amended by
deleting its first paragraph and replacing it with the following:
The percentages of beneficial ownership reported in this
Item 5, and on each Reporting Persons cover page to this Schedule 13D, are based on a total of 28,746,664 shares of the Common Stock issued and outstanding as of July 29, 2016, as reported in the most recent quarterly report of the
Issuer on Form 10-Q for the quarter ended June 30, 2016. All of the share numbers reported below, and on each Reporting Persons cover page to this Schedule 13D, are as of August 15, 2016, unless otherwise indicated. The cover page to
this Schedule 13D for each Reporting Person is incorporated by reference in its entirety into this Item 5(a, b).
4. Paragraph (c) of
Item 5 of the Schedule 13D is amended by inserting the following at its end:
No Reporting Person has effected any transaction
in shares of the Common Stock since July 25, 2016 (the date of the filing of Amendment No. 1 to the Schedule 13D).
5. Item 7 of the
Schedule 13D is amended by inserting the following at its end:
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Exhibit 10
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Letter from Mill Road Capital Management LLC to the Members of the Board of Directors of Skullcandy, Inc. dated August 15, 2016.
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Exhibit 11
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Commitment Letter dated as of August 12, 2016 by and among Cerberus Business Finance, LLC, PNC Bank, National Association and Mill Road Capital II, L.P.
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Exhibit 12
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Form of Commitment Letter by and between Mill Road Capital II, L.P. and MRSK Hold Co attached to the August 15 Proposal.
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Exhibit 13
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Form of Sponsor Guarantee by Mill Road Capital II, L.P. in favor of Skullcandy, Inc. attached to the August 15 Proposal.
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CUSIP No. 83083J104
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Page
9
of 10 Pages
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Exhibit 14
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Form of Agreement and Plan of Merger by and among MRSK Hold Co., a Delaware corporation, MRSL Merger Co., a Delaware corporation and wholly owned subsidiary of Parent, and Skullcandy, Inc. attached to the August 15
Proposal.
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6. Except as amended hereby, the Schedule 13D remains in full force and effect.
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CUSIP No. 83083J104
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Page
10
of 10 Pages
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true,
complete and correct.
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DATE:
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August 15, 2016
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MILL ROAD CAPITAL II, L.P.
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By:
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Mill Road Capital II GP LLC,
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its General Partner
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By:
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/s/ Scott P. Scharfman
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Scott P. Scharfman
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Management Committee Director
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MILL ROAD CAPITAL II GP LLC
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By:
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/s/ Scott P. Scharfman
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Scott P. Scharfman
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Management Committee Director
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THOMAS E. LYNCH
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By:
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/s/ Scott P. Scharfman
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Scott P. Scharfman, attorney-in-fact
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SCOTT P. SCHARFMAN
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/s/ Scott P. Scharfman
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Scott P. Scharfman
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