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): SEPTEMBER 30, 1996
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GRAY COMMUNICATIONS SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
GEORGIA 1-13796 58-0285030
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
126 N. WASHINGTON STREET, ALBANY, GA 31701
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(Address of principal (Zip Code)
Executive offices)
Registrant's telephone number, including area code (912) 888-9390
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Item 2. Acquisition or Disposition of Assets
(a) On September 30, 1996, Gray Communications Systems, Inc. (the
"Company") purchased from First American Media, Inc. substantially all of the
assets used in the operation of television stations WCTV-TV, Channel 6, the
CBS affiliate in Tallahassee, Florida/Thomasville, Georgia, and WKXT-TV,
Channel 8, the CBS affiliate in Knoxville, Tennessee, as well as those assets
used in the operations of a satellite production services business and a
communications and paging business. The consideration paid at closing was
approximately $182.6 million, consisting of $175.5 million cash and the
assumption of approximately $7.1 million of liabilities. The transaction was
recorded on September 30, 1996 and the results of operations of the acquired
businesses will be included in the Company's financial statements beginning
October 1, 1996.
The terms of the acquisition, including the consideration paid by the Company
therefor, were determined in arms-length negotiations between the Company and
the seller. The source of funds for the transaction was: net proceeds of
$67.1 million from the sale of 3,500,000 shares of Class B Common Stock of
the Company; net proceeds of $155.2 million from the sale of $160 million
principal amount of the Company's 10 5/8% Senior Subordinated Notes due 2006;
$16.9 million drawn down under a senior credit facility with KeyBank National
Association, NationsBank, N.A. (South), CIBC, Inc., CoreStates Bank, N.A.,
and the Bank of New York; and $10 million net proceeds from the sale of 1,000
shares of the Company's Series B Preferred Stock and warrants to purchase
500,000 shares of the Company's Class A Common Stock at $24 per share. Such
shares of Series B Preferred Stock were issued to Bull Run Corporation, a
principal shareholder of the Company, and to J. Mack Robinson, Chairman of
the Board of Bull Run Corporation and Interim President of the Company, and
certain of his affiliates. The Robinson-Humphrey Company, Inc. provided an
opinion as to the fairness of the terms of the sale of such Series B
Preferred Stock and warrants.
For additional information with respect to the foregoing acquisition,
offerings, bank credit facility and related matters, including the repayment
by the Company of certain of its indebtedness, reference is made to the
Company's prospectus, dated September 24, 1996, relating to the public
offering by the Company of its Class B Common Stock (the "Equity
Prospectus"), as filed with the Securities and Exchange Commission pursuant
to Rule 424(b) under the Securities Act of 1933, particularly under the
caption, "The Phipps Acquisition, the KTVE Sale and the Financing," which is
incorporated herein by reference.
Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED AND PRO FORMA FINANCIAL
INFORMATION
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The financial statements and pro forma financial information required by this
item are set forth under "Pro Forma Financial Data" and "Consolidated
Financial Statements" in the Equity Prospectus and are incorporated herein by
reference.
Exhibits:
(4)(i) Loan Agreement dated September 23, 1996 by and among Gray
Communications Systems, Inc., as the borrower, KeyBank
National Association as agent, NationsBank, N.A. (South)
as C0-Agent and CIBC, Inc., CoreStates Bank, N.A., and
the Bank of New York.
(ii) Borrower Security Agreement dated September 30, 1996 by
and between Gray Communications Systems, Inc., and
KeyBank National Association.
(iii) Subsidiary Security Agreement dated September 30, 1996
between Gray Communications Systems, Inc., its
subsidiaries and Keybank National Association.
(iv) Borrower Pledge Agreement dated September 30, 1996
between Gray Communications Systems, Inc., and Keybank
National Association.
(v) Subsidiary Pledge Agreement dated September 30, 1996 by
and among WRDW-TV, Inc., WJHG-TV, Inc., WALB-TV, Inc., Gray
Kentucky Television, Inc. and Keybank National
Association.
(vi) Subsidiary Guarantee dated September 30, 1996 between
Gray Communications Systems, Inc., its subsidiaries and
Keybank National Association.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GRAY COMMUNICATIONS SYSTEMS, INC.
Date: October 15, 1996
By: /s/ William A. Fielder, III
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WILLIAM A. FIELDER, III
Vice President and Chief Financial Officer