8-K: Atlantic International Corp. Amends Merger Agreement with Staffing 360 Solutions, Inc.

Atlantic International Corp. modifies its merger agreement with Staffing 360 Solutions, Inc., primarily to adjust share considerations and extend the termination date.

Summary

• Atlantic International Corp. has amended its merger agreement with Staffing 360 Solutions, Inc.
• The amendment, dated January 7, 2025, modifies the original agreement from November 1, 2024.
• Key changes include the elimination of dissenters' rights, as the merger is now a share-for-share exchange.
• The merger consideration now includes the conversion of Staffing 360 Solutions Inc.'s Series H and Series I Preferred Shares into Atlantic's Common Stock at specified exchange ratios.
• Debt owed to Jackson Investment Group will be converted into 5,600,000 shares of Series I Preferred Stock.
• Earned contingent cash payments will be converted into 5,000,000 shares of Series H Preferred Stock, which in turn are converted into 3,500,000 shares of Atlantic Common Stock.
• The exclusivity period for the merger has been removed.
• The number of Atlantic Common Stock shares increased from 50,146,738 to 57,338,135, and restricted stock units increased from 1,803,583 to 4,903,052, resulting in an aggregate of 62,241,187 shares of Common Stock.
• The termination date for the merger has been extended from December 31, 2024, to March 31, 2025.
• The exchange ratio has been expanded to include 0.25 for Series H Preferred Stock and 1.00 for Series I Preferred Stock, in addition to the existing 1.202 for STAF 360 Common Stock.

Sentiment

Score: 7

Explanation: The sentiment is neutral to slightly positive. The amendment addresses key aspects of the merger, but also highlights potential risks and uncertainties. The extension of the termination date could be seen as a minor setback, but overall, the document reflects progress towards completing the merger.

Positives

• The restructuring of the merger as a share-for-share exchange simplifies the transaction and eliminates the need for cash consideration.
• The extension of the termination date to March 31, 2025, provides additional time to finalize the merger.
• The conversion of debt and contingent cash payments into preferred stock and common stock streamlines the balance sheet and aligns interests.

Risks

• The forward-looking statements included in the report are subject to risks and uncertainties that could cause actual results to differ materially.
• These risks include potential termination of the merger, legal proceedings, failure to realize anticipated benefits, and volatility in the price of shares post-merger.
• The inability to implement business plans and forecasts after the merger is also a risk factor.

Future Outlook

The document contains forward-looking statements regarding the benefits and timing of the merger, as well as Atlantic's future services, markets, competitive positioning, and growth plans, all of which are subject to risks and uncertainties.

Management Comments

• Jeffrey Jagid, Chief Executive Officer of Atlantic International Corp., signed the report on behalf of the company.
• Brendan Flood, Chief Executive Officer of Staffing 360 Solutions, Inc., signed the amendment on behalf of the company.

Industry Context

This announcement reflects ongoing consolidation activity within the staffing and human capital solutions industry, as companies seek to expand their service offerings and market reach through strategic mergers and acquisitions.

Comparison to Industry Standards

• Merger agreements and amendments are common in the industry, especially when dealing with complex financial structures and regulatory requirements.
• The share-for-share exchange is a typical structure used in mergers to align the interests of both companies' shareholders.
• The lock-up agreements for shares are standard practice to ensure stability and prevent significant stock dilution immediately following the merger.

Stakeholder Impact

• Shareholders of both Atlantic International Corp. and Staffing 360 Solutions, Inc. will be impacted by the merger and the changes to the share consideration.
• Employees of both companies may experience changes as a result of the integration of the two businesses.
• Customers and suppliers of both companies may see changes in service offerings and business relationships.

Next Steps

• The companies need to finalize the settlement agreement with Jackson Investment Group.
• The companies need to finalize the agreements to convert Earned Contingent Cash Payments into Series H Preferred Shares.
• The companies need to obtain final approvals and satisfy all closing conditions by March 31, 2025.

Key Dates