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)
MAY 9, 2000 (MAY 1, 2000)
ML MACADAMIA ORCHARDS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 1-9145 99-0248088
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
828 FORT STREET, HONOLULU, HAWAII 96813
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(Address of Principal Executive Offices) (Zip Code)
808-532-4130
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Registrant's telephone number, including area code
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 1, 2000, the Partnership completed the purchase of 142 acres of
mature macadamia trees and substantially all of the assets used in the macadamia
farming business from Ka'u Agribusiness Company, Inc., Ka'u Sugar, Inc., Mauna
Kea Macadamia Orchards, Inc., and Mauna Kea Agribusiness Company, Inc., all
Hawaii corporations (collectively referred to herein as "Seller").
The acquired assets consist primarily of farming equipment, vehicles, a
husking plant, a well, office buildings, garages and warehouses, office
furniture and equipment and inventories related to macadamia farming. In
addition, the Seller assigned to the Partnership its interest in approximately
16 farm service contracts to farm macadamia orchards owned by other growers. The
Partnership also purchased from Seller approximately 142 tree acres of mature
macadamia orchards, which consist of an ownership interest in the trees and a 45
year leasehold interest in the underlying land. The orchards are all located in
the Ka'u region on the island of Hawaii. The purchase price for all the assets
to be acquired is $9 million in cash. The Partnership used $5 million of its
working capital for the purchase and borrowed the balance of $4 million from
Pacific Coast Farm Credit and Farm Credit Services of Hawaii under a new Credit
Agreement.
The entities comprising the Seller are subsidiaries or affiliates of C.
Brewer and Company, Ltd. ("CBCL"), a Hawaii company. The Partnership's general
partner, ML Resources, Inc. ("MLR" or "Managing Partner"), a Hawaii company, is
also a subsidiary of CBCL. The agreement to purchase the assets of Seller was
negotiated by the Conflicts Committee, independent of the MLR's Board of
Directors. The Conflicts Committee is composed of two persons who are
independent of CBCL and its affiliates. Those directors of the Managing Partner
with conflicts of interest also recused themselves from involvement in
negotiations for Seller.
Prior to the acquisition, Seller was in the business of farming
macadamia orchards mostly for other orchard owners and partly for themselves.
Seller farmed approximately 7,195 acres of macadamia orchards, including 4,027
acres owned by the Partnership. The Partnership will use all the assets involved
in the purchase for the same purpose.
In connection with the acquisition, the Partnership and Seller entered
into various contracts to provide specific services to the other. The
Partnership will provide macadamia farming services to Seller for approximately
700 acres at cost plus 15%. The Partnership will also provide accounting
services to certain subsidiaries and affiliates of Seller for cost plus 15%.
Seller will provide certain management services for Partnership, such as
executive management, legal, land management, human relations and insurance
services for approximately $100,000 per year.
The Credit Agreement consists of long-term debt of $4 million and a $5
million line of credit for short-term working capital needs, replacing a
previous line of credit. The Credit Agreement permits additional borrowings of
up to 10% of the Partnership's net worth and contains certain covenants that
affect the Partnership. Generally, the Credit Agreement (a) limits outstanding
indebtedness of the Partnership, (b) requires the Partnership to maintain a
minimum net worth and minimum working capital, and (c) limits cumulative cash
distributions to cumulative cash flow plus $3 million.
ITEM 7. EXHIBITS
(c) Exhibits.
2.1 Asset Purchase Agreement including Exhibits dated March 14, 2000
5.1 Legal Opinion of Counsel dated May 1, 2000
10.1 Credit Agreement between Registrant and Pacific Coast Farm Credit
Services, PCA dated May 1, 2000
10.2 Security Agreement between Registrant and Pacific Coast Farm Credit
Services, PCA dated May 1, 2000
10.3 Orchards Farming Lease between Registrant and Ka'u Agribusiness Co.,
Inc.
99.1 Press Release dated May 1, 2000
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 thereunto duly authorized.
ML MACADAMIA ORCHARDS, L.P.
(Registrant)
By ML RESOURCES, INC.
Managing General Partner
DATED: May 8, 2000 By /s/ Gregory A. Sprecher
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GREGORY A. SPRECHER
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Page
Number Description Number
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2.1 Asset Purchase Agreement dated March 14, 2000 5-45
Exhibit O - Farming Services Contract between Registrant and
Ka'u Agribusiness Co. et al 46-56
Exhibit Q - Management Services Agreement between
Registrant and C. Brewer & Company, LTD. 57-59
Exhibit R - Memorandum of Agreement between
Registrant and ILWU Local 142 60-61
5.1 Legal Opinion of Counsel dated May 1, 2000 62-64
10.1 Credit Agreement between Registrant and Pacific Coast Farm
Credit Services, PCA dated May 1, 2000 65-113
10.2 Security Agreement between Registrant and Pacific Coast
Farm Credit Services, PCA dated May 1, 2000 114-135
10.3 Orchards Farming Lease between Registrant and Ka'u
Agribusiness Co., Inc. dated May 1, 2000 136-152
99.1 Press Release dated May 1, 2000 153