UNITED STATES
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): November 6, 2001
Northland Cranberries, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 0-16130 39-1583759
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
800 First Avenue South, P.O. Box 8020
Wisconsin Rapids, Wisconsin 54495-8020
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(Address of principal executive offices including zip code)
(715) 424-4444
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(Registrant's telephone number)
Item 1. Changes in Control of Registrant.
(a) As of the close of business on November 6, 2001, Northland Cranberries,
Inc., a Wisconsin corporation (the "Company"), and Sun Northland, LLC, a
Delaware limited liability company ("Sun Northland"), executed and consummated
the transactions contemplated by a Stock Purchase Agreement (the "Purchase
Agreement") pursuant to which, among other things, the Company issued and sold
to Sun Northland 37,122,695 shares of the Company's Class A Common Stock, par
value $.01 per share ("Common Stock"), 1,668,885 shares of the Company's Series
A Preferred Stock, par value $.01 per share ("Series A Preferred Stock") (which
will be automatically converted into 41,722,125 shares of Common Stock upon the
effectiveness of an amendment to the Company's Articles of Incorporation
increasing the number of authorized shares of Common Stock), and 100 shares of
the Company's Series B Preferred Stock, par value $.01 per share ("Series B
Preferred Stock"), for $7 million and the assignment of Sun Northland's rights
in the Assignment, Assumption and Release Agreements described below.
In connection with the consummation of the transactions contemplated by the
Purchase Agreement, the Company restructured its then outstanding bank debt
pursuant to an Assignment, Assumption and Release Agreement between Sun
Northland and U.S. Bank National Association ("US Bank"), LaSalle Bank National
Association, St. Francis Bank F.S.B.("St. Francis Bank") and ARK CLO 2000-1
Limited ("ARK") and an Assignment, Assumption and Release Agreement between Sun
Northland and Wells Fargo Bank Minnesota, National Association, Endeavour,
L.L.C., Bank One Wisconsin and M&I Marshall & Ilsley Bank (together, the
"Assignment, Assumption and Release Agreements"). Pursuant to the Assignment,
Assumption and Release Agreements, the members of the Company's then current
bank group exchanged approximately $151 million of total outstanding revolving
credit agreement indebtedness for an aggregate cash payment of $38.4 million
and, to the members of the bank group which decided to continue as lenders to
the Company, the issuance by the Company of (i) revised debt obligations in the
aggregate principal amount of $25,714,000 and (ii) a total of 7,618,987 shares
of Common Stock. The Assignment, Assumption and Release Agreements were assigned
by Sun Northland to the Company as partial consideration for the Company's
issuance of the securities noted in the immediately preceding paragraph,
resulting in the cancellation of approximately $86.8 million of the Company's
then outstanding bank indebtedness.
In connection with the assignment of the Assignment, Assumption and Release
Agreements, the Company entered into an Amended and Restated Credit Agreement,
dated as of November 6, 2001, with US Bank, as agent and lender, St. Francis
Bank and ARK, which evidences, among other things, the Company's obligation to
repay the revised term loan of $25,714,000. Pursuant to this amended credit
agreement, the revised term loan matures on November 1, 2006 and interest
accrues on the outstanding principal balance at the prime rate plus 1%. During
the first year of the term loan, the Company must make monthly interest payments
only, with a lump-sum principal payment of $1.7 million due at the end of the
first year. Thereafter, the term loan is subject to a 15-year straight
amortization schedule until maturity.
Financing for the debt restructuring, and for additional working capital
availability to the Company, was provided by Foothill Capital Corporation
("Foothill") and Ableco Finance LLC ("Ableco Finance") pursuant to a Loan and
Security Agreement, dated as of November 6, 2001. Under this loan agreement,
Foothill and Ableco Finance provided the Company with two term loans, each in
the amount of $10 million, and a new $30 million revolving credit facility. The
term loans and the credit facility mature and/or expire on November 6, 2006 and
interest accrues on the outstanding principal balance thereunder at the greater
of 7.75% or the prime rate plus 1%. Quarterly principal
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payments of $625,000, plus additional principal payments equal to (i) the
quarterly principal payments received on Cliffstar Corporation's promissory note
to the Company in excess of $625,000 and (ii) all earnout payments received
under the Asset Purchase Agreement between the Company and Cliffstar
Corporation, are due on the first term loan. Monthly principal payments of
$166,667 are due on the second term loan. As part of the consideration to
provide the new term loans and credit facility to the Company, the Company
issued to Foothill and Ableco Holding LLC ("Ableco Holding") immediately
exercisable warrants to acquire a total of 5,086,106 shares of Common Stock at
an exercise price of $.01 per share.
In connection with the consummation of the foregoing transactions, the
Company and US Bank, St. Francis Bank, ARK, Foothill and Ableco Holding
(collectively, the "Minority Stockholders") and Sun Northland entered into a
Stockholders' Agreement and a Registration Agreement. Pursuant to the
Stockholders' Agreement, each Minority Stockholder agreed to vote its shares of
Common Stock, if any, in the manner specified by Sun Northland with respect to
all matters submitted to a vote of the shareholders of the Company, and granted
an irrevocable proxy to Sun Northland to so vote its shares. The Stockholders'
Agreement also provides for, among other things, restrictions on the
transferability of the shares of Common Stock held by the Minority Stockholders,
"tag along" rights in favor of the Minority Stockholders in the event Sun
Northland desires to transfer any of its shares of Common Stock, "drag along"
rights in favor of Sun Northland in connection with any sale of a majority of
the Company's fully-diluted equity and certain preemptive rights in favor of the
Minority Stockholders. Pursuant to the Registration Agreement, the holders of a
majority of the shares of Common Stock issued to Sun Northland may request,
subject to certain limitations, up to four "demand" registrations on Form S-1
and an unlimited number of demand registrations on Forms S-2 or S-3. The
Registration Agreement also provides for, among other things, certain
"piggyback" registration rights to the holders of shares issued to Sun Northland
and the Minority Stockholders.
In connection with the consummation of the foregoing transactions, and as
required under the Purchase Agreement, (i) the Company adopted the Northland
Cranberries, Inc. 2001 Stock Option Plan and authorized the grant of options for
shares of Common Stock equal to 4.929% of the fully-diluted post transaction
equity ownership of the Company to certain key employees of the Company (which
will vest ratably over a four-year period) and (ii) all of the previous members
of the Company's Board of Directors, except for John Swendrowski, resigned and
the following five individuals designated by Sun Northland became members of the
Company's Board of Directors: Marc J. Leder, Rodger R. Krouse, David Kreilein,
Clarence E. Terry and Kevin J. Calhoun.
In connection with the foregoing, Sun Northland agreed to transfer all 100
shares of Series B Preferred Stock it acquired pursuant to the terms of the
Purchase Agreement to an affiliate of John Swendrowski, the Chief Executive
Officer of the Company, in exchange for $10.
As also required by the Purchase Agreement, the Company and Sun Capital
Partners Management, LLC ("SCPM"), an affiliate of Sun Northland, entered into a
Management Services Agreement, dated as of November 6, 2001, pursuant to which
SCPM will provide various financial and management consulting services to the
Company in exchange for an annual fee (which is paid in quarterly installments)
equal to the greater of $400,000 or 6% of the Company's EBITDA (as defined
therein), provided that the fee may not exceed $1 million a year unless approved
by a majority of the Company's directors who are not affiliates of SCPM. This
agreement terminates on the earlier of November 6, 2008 or the date on which Sun
Northland and its affiliates no longer own at least 50% of the voting power of
the Company.
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As a result of the foregoing transactions, and assuming the conversion of
the Series A Preferred Stock into Common Stock, Sun Northland beneficially owns,
within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934,
approximately 94.4% of the shares of Common Stock currently outstanding (86.1%
directly owned and 8.3% collectively held by US Bank (5.1%), ARK (2.3%) and St.
Francis Bank (0.9%)); and the public shareholders of the Company beneficially
own approximately 5.6% of the shares of Common Stock currently outstanding.
Assuming the exercise of all options and warrants issued prior to or in
connection with the foregoing transactions and no additional issuances of
securities by the Company, Sun Northland would beneficially own approximately
90% of the shares of Common Stock then outstanding (77.5% directly owned and
12.5% collectively held by US Bank (4.6%), ARK (2.1%), St. Francis Bank (0.8%),
Foothill (2.5%) and Ableco Holding (2.5%)); certain key employees of the Company
would beneficially own approximately 5% of the shares of Common Stock then
outstanding; and the public shareholders of the Company would beneficially own
approximately 5% of the shares of Common Stock then outstanding.
As previously announced, in order to facilitate the transactions
contemplated by the Purchase Agreement, the Company effected a one-for-four
reverse stock split as of the close of business on November 5, 2001 (which was
authorized by the Company's shareholders at the January 30, 2001 annual
shareholders meeting) and voluntarily delisted its Common Stock from trading on
the Nasdaq National Market effective as of the close of business on November 5,
2001 so that its shares could begin trading on the over-the-counter bulletin
board under the new symbol "NRCNA" as of November 6, 2001.
The Purchase Agreement and the other agreements and documents described
above are filed as exhibits to this Current Report on Form 8-K and are
incorporated herein by reference. The brief summaries of the material provisions
of such agreements and documents set forth above are qualified in their entirety
by reference to each respective agreement and/or document filed as an exhibit
hereto.
The following information about the ownership of Sun Northland is based on
information contained in a Schedule 13D filed with the Securities and Exchange
Commission on November 16, 2001. Sun Northland is majority owned by Sun Capital
Partners II, LP, a Delaware limited partnership. The general partner of Sun
Capital Partners II, LP is Sun Capital Advisors II, LP, a Delaware limited
partnership. The general partner of Sun Capital Advisors II, LP is Sun Capital
Partners, LLC, a Delaware limited liability company. Each of Marc J. Leder and
Rodger R. Krouse own 50% of the membership interests in Sun Capital Partners,
LLC.
(b) Except as described above, there are no arrangements known to the
Company, the operation of which may at a subsequent date result in a change in
control of the Company.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The exhibits listed in the accompanying Exhibit Index are filed
as part of this Current Report on Form 8-K.
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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.
NORTHLAND CRANBERRIES, INC.
Date: November 21, 2001 By: /s/ John Swendroski
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John Swendrowski
Chairman and Chief Executive Officer
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NORTHLAND CRANBERRIES, INC.
EXHIBIT INDEX TO FORM 8-K
Report Dated November 6, 2001
Exhibit Number Description
(2.1) Stock Purchase Agreement, dated as of November 6,
2001, by and between Sun Northland, LLC and
Northland Cranberries, Inc.*
(2.2) Assignment, Assumption and Release Agreement, dated
as of November 6, 2001, by and among Sun Northland,
LLC, LaSalle Bank National Association, St. Francis
Bank, F.S.B., ARK CLO 2000-1 Limited and U.S. Bank
National Association
(2.3) Assignment Agreement, dated as of November 6, 2001,
by and between Sun Northland, LLC and Northland
Cranberries, Inc. (assigning Exhibit (2.2) above to
Northland Cranberries, Inc.)
(2.4) Assignment, Assumption and Release Agreement, dated
as of November 6, 2001, by and among Sun Northland,
LLC, Wells Fargo Bank Minnesota, National
Association, Endeavor, L.L.C., Bank One Wisconsin
and M&I Marshall & Ilsley Bank
(2.5) Assignment Agreement, dated as of November 6, 2001,
by and between Sun Northland, LLC and Northland
Cranberries, Inc. (assigning Exhibit (2.4) above to
Northland Cranberries, Inc.)
(4.1) Loan and Security Agreement, dated as of November 6,
2001, by and among Northland Cranberries, Inc.,
Foothill Capital Corporation and Ableco Finance LLC,
as lenders, and Foothill Capital Corporation, as
arranger and administrative agent*
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Exhibit Number Description
(4.2) Amended and Restated Credit Agreement, dated as of
November 6, 2001, by and among Northland
Cranberries, Inc., St. Francis Bank, F.S.B., ARK
CLO 2000-1 Limited and U.S. Bank National
Association, as lenders, and U.S. Bank National
Association, as agent*
(4.3) Stockholders' Agreement, dated as of November 6,
2001, by and among Sun Northland, LLC, the minority
shareholders listed therein and Northland
Cranberries, Inc.
(4.4) Registration Agreement, dated as of November 6,
2001, by and among Northland Cranberries, Inc., Sun
Northland, LLC and the other investors signatory
thereto
(4.5) Common Stock Purchase Warrant, dated as of November
6, 2001, issued to Foothill Capital Corporation
(4.6) Common Stock Purchase Warrant, dated as of November
6, 2001, issued to Ableco Holding LLC
(4.7) Articles of Amendment to the Articles of
Incorporation of Northland Cranberries, Inc.
effecting the one-for-four reverse stock split
(4.8) Articles of Amendment to the Articles of
Incorporation of Northland Cranberries, Inc.
creating the Series A Preferred Stock
(4.9) Articles of Amendment to the Articles of
Incorporation of Northland Cranberries, Inc.
creating the Series B Preferred Stock
(99.1) Management Services Agreement, dated as of November
6, 2001, by and between Northland Cranberries, Inc.
and Sun Capital Partners Management, LLC
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Exhibit Number Description
(99.2) Northland Cranberries, Inc. 2001 Stock Option Plan
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* The schedules and exhibits to this document are not being filed herewith. The
registrant agrees to furnish supplementally a copy of any such schedule or
exhibit to the Securities and Exchange Commission upon request.
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