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) February 15, 1999
ERLY Industries Inc.
(Exact Name of Registrant as Specified in Charter)
California 001-07894 95-231-2900
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No)
8641 United Plaza Boulevard
Baton Rouge, Louisiana 70809
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code (225) 922-4664
10900 Wilshire Boulevard, #1800
Los Angeles, California 90024
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
Sale of Chemonics
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On February 15, 1999, Watch-Edge International, Inc., formerly known as
Chemonics Industries, Inc. ("Watch-Edge"), and Chemonics International, Inc.
("Chemonics"), a wholly owned subsidiary of Watch-Edge, entered into an
Agreement of Purchase and Sale of Assets with FIA Investment Company L.L.C.
pursuant to which Watch-Edge and Chemonics agreed to sell all of the assets of
Chemonics for an aggregate purchase price that is expected to be $30.4 million,
consisting of $8.25 million in cash and the assumption by the buyer of
liabilities of Watch-Edge and Chemonics. The transaction remains subject to the
satisfaction of certain conditions, including the expiration of the applicable
waiting period under the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976.
The transaction is expected to close on or about March 31, 1999.
Item 3. Bankruptcy or Receivership.
Action by ERLY Creditors Committee
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On March 1, 1999, the Official Committee of Unsecured Creditors of ERLY
Industries, Inc. filed a motion in the Chapter 11 bankruptcy case of the Company
pending in the United States Bankruptcy Court for the Southern District of Texas
(Corpus Christi Division Case No. 98-21515-C-11), seeking to convert the
bankruptcy case from a Chapter 11 (reorganization) case to a Chapter 7
(liquidation) case on the basis that following the Chemonics transaction, the
Company no longer owns any operating assets to reorganize. The Company is
considering its response at this time and will be holding a meeting of the Board
of Directors on March 11, 1999 to review its options.
Item 5. Other Events.
Settlement of Tenzer Litigation
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On February 17, 1999, ERLY Industries Inc. (the "Company") and Watch-Edge
entered into a Joint Compromise and Settlement Agreement (the "Settlement
Agreement") with Kingwood Lakes South, L.P., Anthony M. Frank, Tenzer Company,
Inc. and Michael L. Tenzer (collectively, the "Tenzer Group") to settle certain
disputes arising in connection with a prior settlement agreement entered into
between the Tenzer Group, the Company, Watch-Edge and others as of August 20,
1998 (the "August Settlement"). Pursuant to the August Settlement, Watch-Edge
issued a note to certain members of the Tenzer Group in the principal amount of
$3,800,000, which was payable by its terms on the earlier of February 13, 1999
and the occurrence of a sale of the assets or stock of Chemonics. The Company
and Watch-Edge took the position that they had the right to set aside the
obligations incurred in the August Settlement in the Company's current Chapter
11 case.
Pursuant to the Settlement Agreement, (i) the Company and Watch-Edge
released any and all claims against the Tenzer Group and others relating to the
August Settlement, (ii)
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Watch-Edge agreed to pay to certain members of the Tenzer Group the sum of
$2,500,000 on the earlier of February 26, 1999 and the occurrence of a sale of
the stock or assets of Chemonics and (iii) the Company agreed that the claim of
the Tenzer Group presently filed in the Company's Chapter 11 case would be
reduced and allowed in full as a general unsecured claim in the amount of
$5,000,000 (the "Tenzer claim"). Pursuant to the Settlement Agreement, the
Tenzer Group released any remaining claims against the Company and Watch-Edge
and each of the current directors of the Company and Watch-Edge.
Watch-Edge made the $2,500,000 payment to the Tenzer Group on February 26,
1999. Pursuant to the Settlement Agreement, the Company has the right, but is
not obligated, to redeem the remaining $5 million Tenzer claim in full by paying
to the Tenzer Group in good and valid funds an amount equal to $650,000 on or
before June 26, 1999. If such a redemption does not occur, the Company will
have the right, but will not be obligated, to redeem the Tenzer claim in whole
or in part according to the following schedule by paying such amounts on or
before October 26, 1999.
Face amount of Tenzer Claim
Subject to Redemption Payment to Tenzer due
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$1.0 million $ 150,000
$2.0 million $ 300,000
$3.0 million $ 500,000
$4.0 million $ 750,000
$5.0 million $1,050,000
Item 7. Financial Statements and Exhibits.
The following exhibits are filed with this report:
Exhibit Description
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2.1 Agreement of Purchase and Sale of Assets, by and among Chemonics
International, Inc., Watch-Edge International, Inc., FIA Investment
Company L.L.C., and Mike Boudloche, dated February 15, 1999.
99.1 Joint Compromise and Settlement Agreement, by and between ERLY
Industries Inc., Watch-Edge International, Inc., Kingwood Lakes South,
L.P., Anthony M. Frank, Tenzer Company, Inc., and Michael L. Tenzer,
dated February 17, 1999.
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99.2 Expedited Motion of the Official Committee of Unsecured Creditors for
Conversion of the Case to one under Chapter 7 and Points and
Authorities in Support Thereof, dated March 1, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ERLY INDUSTRIES, INC.
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(Registrant)
Date: March 10, 1999 By: /s/ NANETTE N. KELLEY
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Nanette N. Kelley
Chairman, President and
Chief Executive Officer
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