Acquisition Financing Details From SEC 13-D
ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION
The total of funds required by Purchaser to purchase all of the Shares pursuant to the Offer, fund payments for cancellation of options and pay fees and expenses related to the Offer and the Merger is estimated to be approximately $27 million. Purchaser plans to obtain= all funds needed for the Offer and the Merger through a capital contribution from Parent.
Parent plans to obtain a portion of the funds for such capital contribution through a new credit facility (the "Credit Facility"). The Credit Facility will provide a term loan of $20 million to finance the acquisition. The Credit Facility will initially bear interest at LIBOR plus 120 basis points. The Credit Facility will contain customer covenants that include maintenance of certain financial ratios. The remainder of the funds for the capital contribution will be provided from the Parent's cash holdings.
Although no definitive plan or arrangement for repayment of borrowings under the Credit Facility has been made, Parent anticipates such borrowings will be repaid with internally generated funds (including, if the Merger is accomplished, those of the Company) and form other sources which may include the proceeds of future refinancings. No decision has been made concerning the method Parent will use to repay the borrowings under the Credit Facility. Such decision will be made based on Parent's review from time to time of the advisability of particular actions, as well as prevailing interest rates, financial and other economic conditions and such other factors Parent may deem appropriate. See Item 4.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of the Offer and the Merger is to enable Parent to acquire control of, and the entire equity interest in, the Company. The Offer, as the first step in the acquisition of the Company, is intended to facilitate the acquisition of all the Shares. The offer was made pursuant to the terms of a Merger Agreement dated September 21, 1998 (the "Merger Agreement"), among Purchaser, Parent and the Company. The Merger Agreement provides among other things, for the merger of Purchaser with and into the Company (the "Merger") following the purchase of Shares pursuant to the Offer. The purpose of the Merger is to acquire all Shares not purchased pursuant to the Offer or otherwise. Pursuant to the Merger, each then outstanding Share (other than Shares owned by the Parent or any of its subsidiaries) will be converted into the right to receive an amount in cash equal to the price per Share paid by the Purchaser pursuant to the Offer. In connection with the Merger Agreement, the Purchaser, the Parent and the Company entered into that certain Stock Option Agreement dated September 21, 1998, pursuant to which the Company granted to Purchaser an option to purchase up to 19.9% of the outstanding stock of the Company for $5.40 per share (the "Company Option"). In addition, on September 21, 1998, the Purchaser, the Parent and certain of the Company's stockholders entered into that certain Shareholders Agreement of even date pursuant to which stockholders holding approximately 15.6% of the outstanding shares of the Company (giving effect to the exercise of all options held by such stockholders) granted to Purchaser a proxy and an option to purchase all of their shares of Company stock for $5.40 per share (the "Shareholders Agreement"). If Parent acquires 90% or more of the Shares in the Offer, it will be able to consummate the Merger without having to hold a meeting of the Company's shareholders. If Parent does not acquire 90% of the Shares in the Offer, it may exercise the Company Option to increase its holdings to 90%. |
