SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 3, 1999
SIGNAL APPAREL COMPANY, INC.
(Exact name of Registrant as specified in its charter)
Indiana 1-2782 62-0641635
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Indentification No.)
34 Englehard Avenue, Avenel, New Jersey 07001
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (732) 382-2882
200 Manufacturers Road, Chattanooga, Tennessee 37405
(Former name or former address, if changed since last report.)
Item 5. Other Events.
Effective March 3, 1999 (the "Closing Date"), Signal Apparel Company, Inc.
(the "Company") reached an agreement (the "Purchase Agreement") with two
institutional investors concerning the private placement of $5 million of 5%
Convertible Debentures due March 3, 2002 (the "Debentures"). In connection with
this private placement, the Company paid $50,000 of the purchasers' expenses.
The Company also issued warrants to the two institutional purchasers for the
purchase of up to 2,500,000 shares of the Company's Common Stock at an exercise
price of $1.00 per share, with a term of five years. Proceeds from issuance of
the Debentures were used to redeem all of the remaining outstanding shares of
the Company's 5% Series G1 Convertible Preferred Stock (following the conversion
of $260,772.92 stated value (including accrued dividends) of such stock into
248,355 shares of the Company's Common Stock effective February 26, 1999, by two
other institutional investors).
The Debentures are junior in priority of payment to all of the Company's
other outstanding indebtedness, and will be pari passu with any future series of
convertible debentures. The Debentures will bear interest at the rate of 5% per
year, payable quarterly in arrears commencing July 1, 1999. Interest on any
amounts in default will accrue at the rate of 20% per annum. Interest on the
Debentures is payable, at the option of the Company, either in cash or in shares
of the Company's Common Stock (valued for such purpose at the average of the
closing bid prices for the Common Stock on the NYSE over the ten (10) trading
days prior to the applicable interest payment date, disregarding the highest and
lowest such prices).
The Debentures, including any accrued and unpaid interest thereon, are
convertible at the option of the purchasers (subject to certain limitations)
into shares of Common Stock at a fixed conversion price of $2.00 per share of
Common Stock. The conversion price is subject to adjustment in the event of
certain stock dividends, stock splits, reverse stock splits, or other
transactions affecting the Company's outstanding Common Stock; provided,
however, that no adjustment shall be made to the conversion price for any
reverse stock split occurring prior to December 31, 1999.
Following March 3, 2000, the Company will have the right to force the
conversion of the outstanding Debentures into Common Stock, in whole or in part,
upon 30 days advance written notice, provided that: (i) the closing bid price
for the Company's Common Stock on the NYSE is $4.00 or more for at least 20 out
of 30 trading days prior to the date of the Company's notice of its exercise of
such right and (ii) the Company issues to the Debenture holders additional
warrants to acquire a number of shares of Common Stock equal to (A) the amount
of remaining interest that would have been paid to such holders had the
Debentures remained outstanding for their full term divided by (B) the average
of the closing bid prices for the Common Stock on the NYSE over the ten (10)
trading days prior to the date of the redemption notice (disregarding the
highest and lowest such prices). Such warrants would have an exercise price
equal to 120% of such average price over the applicable 10-day period and
additional terms equivalent to the warrants issued in connection with the
Purchase Agreement.
The Purchase Agreement and an accompanying Registration Rights Agreement
require the Company to register the shares of Common Stock into which the
Debentures are convertible, plus any shares of Common Stock which may be issued
in payment of interest on the Debentures and the shares of Common Stock issuable
upon exercise of the purchaser's warrants, for resale by the institutional
purchasers under the Securities Act of 1933, as amended. In order to satisfy
these requirements, the Company is required to register for resale a number of
shares equal to at least the sum of (i) 120% of the number of shares of Common
Stock issuable upon conversion of the Debentures plus (ii) the 2,500,000 shares
of Common Stock issuable upon exercise of the purchaser's warrants.
Item 7. Financial Statements and Exhibits.
(a) None.
(b) None.
(c) Exhibits.
(4.1) Form of 5% Convertible Debentures, due March 3, 2003, of Signal
Apparel Company, Inc.
(10.1) Securities Purchase Agreement dated March 3, 1999.
(10.2) Registration Rights Agreement dated March 3, 1999.
(10.3) Form of Warrants to purchase Common Stock issued to purchasers
of 5% Convertible Debentures, dated March 3, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 5, 1999 SIGNAL APPAREL COMPANY, INC.
By: /s/ Robert J. Powell
-----------------------------
Robert J. Powell
Vice President,
General Counsel & Secretary