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): December 11, 1998
Eagle Pacific Industries, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Minnesota
(State or Other Jurisdiction of Incorporation)
0-18050 41-1642846
(Commission File Number) (I.R.S. Employer Identification Number)
2430 Metropolitan Centre
333 South Seventh Street
Minneapolis, Minnesota 55402
(Address of Principal Executive Offices) (Zip Code)
(612) 371-9650
(Registrant's Telephone Number, Including Area Code)
--------------------------
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
A. Eagle Pacific Industries, Inc. Executes an Agreement to acquire the
Polyvinyl Chloride Pipe Business of The Lamson & Sessions Co.
On December 11, 1998, Eagle Pacific Industries, Inc. (the "Company")
executed an agreement to acquire substantially all of the polyvinyl chloride
("PVC") pipe business assets and certain liabilities (the "PVC Pipe Business")
of The Lamson & Sessions Co. of Cleveland, Ohio ("Lamson"). The Company will pay
$45.0 million in cash, issue $6.0 million of its notes and issue 785,000 shares
of its common stock to Lamson in consideration for the PVC Pipe Business.
The Lamson PVC Pipe Business has three distinct product lines:
electrical conduit, communications duct and large diameter waste water pipe.
Collectively, the products of the PVC Pipe Business collectively contributed
approximately $130 million in sales to Lamson in 1997. Pro forma net sales for
the PVC Pipe Business for the nine months ended September 30, 1998 was
approximately $98.0 million. All of the products of the PVC Pipe Business are
national in scope. The Company will acquire four production facilities located
in Pennsylvania, Florida, Oklahoma and California.
Closing of the purchase is conditioned upon, amongst other things, the
Company receiving antitrust clearance and the approval by the Company's
shareholders of its proposed merger with Eagle Pacific Holdings, Inc., a wholly
owned subsidiary of CONDEA Vista Company that operates a PVC resin manufacturing
facility. The purchase will be consummated immediately before the Company's
merger with Eagle Pacific Holdings, Inc. which is expected to by the end of the
first quarter of 1999.
In connection with the Company's purchase of the PVC Pipe Business, the
Company will enter into a manufacturing agreement with Lamson to serve as
Lamson's exclusive supplier of certain products retained by Lamson, including
flexible electrical, fittings and enclosures.
B. Eagle Pacific Industries, Inc. Executes Merger Agreement to acquire CONDEA
Vista Company's Oklahoma City PVC Resin Manufacturing Facility.
The Company entered into a merger agreement with CONDEA Vista Company
("CONDEA Vista"), a wholly owned company of RWE-DEA AG of Hamburg, Germany,
whereby CONDEA Vista's Oklahoma City PVC Resin Manufacturing Facility ("Oklahoma
Resin Business") will be merged into the Company. The merger will be consummated
immediately after the Company completes its purchase of the PVC Pipe Business of
the Lamson & Sessions Co. As a result of the merger, the Company will operate
the combined businesses of the Company, Lamson's PVC Pipe Business and the
Oklahoma Resin Business as a wholly owned subsidiary of Eagle Pacific Holdings,
Inc. ("Eagle Holdings"). Eagle Holdings is currently a wholly owned subsidiary
of CONDEA Vista. The Company's shareholders will become shareholders of Eagle
Holdings. Shares of Company common stock will exchanged one for one for shares
of Eagle Holdings common stock and shares of Company preferred stock will be
exchanged one for one for shares of Eagle Holdings preferred stock. It is
anticipated that Eagle Holdings' common stock will be traded on the Nasdaq
National Market System.
Several of the Company's board of directors and shareholders, William
H. Spell, Harry W. Spell, Richard W. Perkins and Bruce A. Richard (collectively
the "Spell Group") will control the affairs of Eagle Holdings following the
merger. The Company anticipates that CONDEA Vista will own more than 50% of the
outstanding shares of Eagle Holdings common stock but less than 50% of the
outstanding shares on a fully diluted basis immediately following the merger.
The Merger Agreement provides that the four members of the Spell Group will
serve as directors on Eagle Holdings' five member board of directors and William
Spell will serve as Chief Executive Officer of Eagle Holdings.
In addition, in connection with the merger, Eagle Holdings will enter
into a Stockholders' Agreement with the Spell Group and CONDEA Vista which
limits CONDEA Vista's ability to control the affairs Eagle Holdings for a period
of five years. The Stockholders' Agreement provides that with respect to
elections of Eagle Holdings' board of directors, CONDEA Vista will vote all of
its Eagle Holdings shares in favor of the four individuals designated by the
Spell Group, and each member of the Spell group will vote all of his respective
shares in favor of the individual designated by CONDEA Vista. The Stockholders'
Agreement also provides that such CONDEA Vista designee will be a member of each
committee of the board of directors. Further, with respect to any matter
submitted to the stockholders of Eagle Holdings other than the election of
directors, CONDEA Vista must vote its Eagle Holdings shares either as
recommended by Eagle Holdings' board of directors or in the same proportion as
the votes cast in favor of and against such matter (abstentions not counted) by
Eagle Holdings' stockholders. The Stockholders' Agreement also gives CONDEA
Vista the right to appoint one person to be a non-participating observer at
Eagle Holdings board meetings.
The Stockholders' Agreement further provides that if Eagle Holdings'
board of directors approves a proposed sale or transfer of control of Eagle
Holdings to another entity (the "Proposed Sale"), Eagle Holdings will give
CONDEA Vista notice of the proposed sale and will promptly enter into good faith
negotiations with CONDEA Vista for CONDEA Vista to be the purchaser in such
proposed sale. If Eagle Holdings and CONDEA Vista have not reached agreement in
principal on the terms of such acquisition within thirty days or final agreement
within forty-five days, then Eagle Holdings may enter in to a proposed sale with
another party.
The Stockholders' Agreement terminates on the fifth anniversary of the
effective date of the merger unless earlier terminated by mutual consent of the
parties. However, the Spell Group can elect to terminate the Stockholders'
Agreement immediately if CONDEA Vista transfers any of its Eagle Holdings shares
to ten or more persons (not including subsidiary or parent entities of CONDEA
Vista).
Finally, the Stockholders' Agreement provides that the number of shares
of Eagle Holdings common stock held by CONDEA Vista shall be decreased if any
warrants or options to purchase Eagle Holdings' common stock outstanding on the
effective date of the merger are terminated, extinguished or expire prior to
exercise. CONDEA Vista will return to Eagle Holdings 0.82 shares of Eagle
Holdings common stock for each share of Eagle Holdings common stock covered by
such warrants or options. Such mandatory contribution obligation survives the
termination of the Stockholders' Agreement unless the Stockholders Agreement is
terminated at the election of the Spell Group as described above in which case
upon termination of the Stockholders Agreement CONDEA Vista shall return to
Eagle Holdings 0.82 shares of Eagle Common Stock for each share of Eagle
Holdings Common Stock covered by then outstanding warrants or options to
purchase Eagle Holdings' Common Stock that were outstanding on the effective
date of the merger.
Upon consummation of the merger, CONDEA Vista and the Company, which
becomes a wholly owned subsidiary of Eagle Holdings pursuant to the merger, will
enter into a VCM Supply Agreement. The VCM Supply Agreement provides that the
Company shall purchase at a formula price 100% of its vinyl chloride monomer
requirements, estimated to be from 320 to 450 million pounds per year, from
CONDEA Vista. The VCM Supply Agreement terminates five years from its effective
date but may be extended for an additional five years by either CONDEA Vista or
the Company, provided that the Company may only elect to extend the agreement if
both at the time of such election and at the end of the initial five year term,
one or more of Harry W. Spell, William H. Spell, Bruce A. Richard or Richard W.
Perkins is on Eagle Holdings board of directors.
Consummation of the merger is conditioned upon, amongst other things:
(i) the approval of the merger by the Company's shareholders; (ii) the Eagle
Holdings Registration Statement being declared effective by the Securities
Exchange Commission; (iii) the Company's purchase of the Lamson PVC Pipe
Business; (iv) the listing of Eagle Holdings' Common Stock on Nasdaq or the New
York Stock Exchange; and (v) antitrust clearance.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired
None
(b) Pro forma financial information
None
(c) Exhibits
20.1 Press Release dated December 14, 1998
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.
Eagle Pacific Industries, Inc.
Date: December 15, 1998 By /s/ William H. Spell
------------------------------------
Chief Executive Officer
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
EXHIBIT INDEX
to
FORM 8-K
Eagle Pacific Industries, Inc.
20.1 Press Release dated December 14, 1998.