SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 17, 1995
PUREPAC, INC.
(Exact name of Registrant as specified in charter)
Delaware 2-87116 04-2769995
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification Number)
incorporation)
200 Elmora Avenue, Elizabeth, New Jersey 07207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 527-9100
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Item 5. Other Events
On August 9, 1995, the Registrant executed a letter of intent
with its majority stockholder, Faulding Holdings Inc. ("Faulding"), providing
for Faulding (a) to exchange all of the capital stock of each of Faulding
Puerto Rico, Inc., a Delaware corporation, Faulding Pharmaceutical Co., a
Delaware corporation, and Faulding Medical Device Co., a Delaware corporation,
each a wholly-owned subsidiary of Faulding (collectively, the "Acquired
Companies"), for 2,253,521 shares of the Registrant's Common Stock, subject
to adjustment as a result of changes in the net asset value of the Acquired
Companies from June 30, 1995 through the closing date ("Share Exchange"),
and (b) to purchase on the closing date of the Share Exchange for an
aggregate purchase price of $15 million, 150,000 shares of a newly designated
Class B Preferred Stock, which shall accrue dividends at the rate of 4.5 %
per annum, have a liquidation preference of $100 per share, plus the amount
of any accrued but unpaid dividends, and shall be convertible after the first
anniversary of issuance, at the ratio of 10.433 for one, into shares of
Purepac Common Stock.
The proposed transactions described above are subject to a
number of conditions, including, without limitation, the execution of
definitive documentation, the approval of the Registrant's stockholders
and other conditions to closing listed in the letter of intent. It is
currently anticipated that the closing will occur on or about
December 31, 1995.
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.
Dated: August 17, 1995 PUREPAC, INC.
(registrant)
By: /s/ Richard F. Moldin
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Richard F. Moldin
President and Chief Executive Officer
INDEX TO EXHIBITS
Exhibit No. Description Page
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1 Letter of Intent dated August 9, 1995 5
between Registrant and Faulding Holdings
Inc.
EXHIBIT 1
FAULDING HOLDINGS INC.
August 9, 1995
Purepac, Inc.
200 Elmora Avenue
Elizabeth, New Jersey 07207
Attention: Richard Moldin, Chief Executive Officer
Gentlemen:
The purpose of this Letter of Intent is to set forth in principle
the terms of:
(i ) a proposed acquisition by Purepac, Inc., a Delaware corporation
("Purepac"), of all of the issued and outstanding capital shares of
the following Delaware corporations (collectively, the "Faulding
Companies"), each of which is a wholly owned subsidiary of Faulding
Holdings Inc., a Delaware corporation ("Holdings"):
(A) Faulding Puerto Rico, Inc.,
(B) Faulding Pharmaceutical Co. (formerly Faulding Hospital
Products, Inc.),
(C) Faulding Medical Device Co. (formerly DBL Inc.); and
(ii) the proposed sale by Purepac to Holdings of a newly designated
class of preferred stock of Purepac.
1. Terms of Transaction. Our current understanding of the proposed
terms of such acquisition of the Faulding Companies and the issuance and
sale of such preferred stock (collectively, the "Transaction") is set forth
in the Memorandum annexed hereto as Exhibit A (the "Memorandum").
2. Definitive Agreement. Our signatures on this Letter of Intent
will constitute our mutual consent hereto and to the outline contained in
the Memorandum. Following the signing of this Letter of Intent, we will
complete negotiation of a definitive stock purchase agreement and a
definitive preferred stock agreement (collectively, the "Definitive
Agreements") and any other collateral agreements necessary and proper to
effectuate the Transaction.
3. Exclusivity. Neither party will negotiate with any third parties
concerning the subject matter of the Transaction, or any part thereof, at
any time prior to 5:00 p.m. Eastern
Standard Time on September 30, 1995, it being understood that the parties
will use good faith efforts to execute the Definitive Agreements prior to
such date. If Holdings and Purepac are unable to negotiate and execute the
Definitive Agreements by the end of such period, either party, for any reason
whatever, may terminate negotiations by written notice to the other parties,
addressed to the address of such parties set forth herein. Notwithstanding
the foregoing, following termination, neither party will have any continuing
liability to the others hereunder, except for breaches occurring under
Paragraphs 3, 4, 5, 6 and 8 hereunder.
4. Limitation on Publicity. Purepac and Holdings will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Transaction and the matters contemplated
hereby and none of them shall issue any such press release or make any such
public statement without the prior consent of the other as to the content
thereof, except as may be required by law.
5. Expenses. Each of the parties hereto shall pay its own expenses
incident to the Transaction and the matters contemplated hereby, including
all fees of their respective attorneys, brokers or finders or financial
advisers, whether or not the Transaction shall be consummated.
6. Additional Information. Subsequent to the execution of this Letter
of Intent, and in connection with the negotiation and preparation of the
Definitive Agreements and related documents, Purepac shall have the right to
continue to undertake a thorough and complete "due diligence" examination of
the Faulding Companies. In connection therewith, Holdings shall continue to
make available to Purepac all information relating to the Faulding Companies
which Purepac may reasonably request. All non-public information so
furnished by Holdings shall be held by Purepac in strict confidence.
7. Notices. Any notice or other communication to be given hereunder
shall be in writing and either be delivered personally or be mailed,
certified or registered mail, postage prepaid, return receipt requested,
as follows:
If to Holdings, to:
Faulding Holdings Inc.
c/o Faulding Inc.
274 Riverside Drive
Westport, Connecticut 06880
Attention: Michael R. D. Ashton
Chief Executive Officer
With a copy to:
F. H. Faulding & Co. Limited
160 Greenhill Road
Parkside, South Australia 5063
Attention: Company Secretary
If to Purepac:
Purepac, Inc.
200 Elmora Avenue
Elizabeth, New Jersey 07207
Attention: Richard F. Moldin, Chief Executive Officer
8. Intent of Parties. The agreements set forth in Paragraphs 3, 4, 5,
6 and 8 of this Letter of Intent shall be binding legal obligations of the
parties hereto. The remaining portions of this Letter of Intent and the
Memorandum are intended only as guidelines for the future negotiation of
binding enforceable agreements and are not intended to and shall not
constitute a binding legal obligation, which shall only arise upon the
execution and delivery of the Definitive Agreements. While the concepts
expressed in the Memorandum represent the mutual understanding of the parties
to date, it is not intended that the specific language of those provisions
shall not be negotiable, and the specific terms of the Definitive Agreements
are finally subject to the mutual approval of all parties thereto.
Nevertheless, this Letter of Intent and the Memorandum have been entered
into in good faith and it is contemplated that the parties will continue to
negotiate in good faith. This Letter of Intent shall be governed and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed solely within such State.
If the foregoing accurately reflects your understanding, please execute
where indicated below and return to the undersigned.
Very truly yours,
Faulding Holdings Inc.
By: /s/Michael R.D. Ashton
----------------------
Michael R. D. Ashton
Chief Executive Officer
Agreed and Accepted:
Purepac, Inc.
By: /s/Richard F. Moldin
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Richard F. Moldin
Chief Executive Officer
EXHIBIT A
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to
Letter of Intent
Purepac, Inc
Faulding Holdings Inc.
MEMORANDUM OF PROVISIONS OF DEFINITIVE AGREEMENTS
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The following is an outline of the provisions intended to be included in
the Definitive Agreements. Defined terms in this Memorandum shall have the
meanings ascribed in the Letter of Intent except as otherwise provided in
this Memorandum.
1. The Transaction. At the closing (the "Closing") of the Transaction:
(a) Purepac will acquire from Holdings all of the issued and
outstanding shares of the capital stock of each of the Faulding
Companies.
(b) Holdings will purchase from Purepac for an aggregate of Fifteen
Million Dollars ($15,000,000) One Hundred Fifty Thousand (150,000)
shares of New Preferred Stock.
It is anticipated that the Closing will occur on December 31, 1995.
2. Preferred Stock. As used herein, the term " New Preferred Stock"
shall mean a newly designated class of preferred stock of Purepac with rights
and preferences substantially similar to the Class A Preferred Stock of
Purepac, except that such New Preferred Stock:
(a) shall have a stated and liquidation value of One Hundred
Dollars ($100) per share,
(b) shall bear dividends, cumulatively, at the rate of 4.5% per
annum of the stated value, to be paid quarterly, and
(c) at the option of the holder thereof, shall be convertible into
shares of the common stock of Purepac, at a conversion rate bearing
a premium of 8% over the share closing price described in paragraph
3 below.
3. Purchase Price.
(a) The purchase price (the " Share Purchase Price") for the shares
of the Faulding Companies shall be Twenty Million Dollars
($20,000,000), subject to adjustment at Closing for any variation
in the Net Asset Value (excluding tax loss carryforwards) of the
Faulding Companies between June 30, 1995 and the Closing Date.
As of June 30, 1995, such estimated Net Asset Value (excluding tax
loss carryforwards) is Seventeen Million Seven Hundred Thousand
Dollars ($17,700,000). The Share Purchase Price shall be payable
to Holdings at Closing by delivery of shares of the common stock
of Purepac, valued at $8.875 per share, which represents the
closing price of the common stock of Purepac as reported on the
NASDAQ National Market at the close of business on the date of this
Letter of Intent. Such shares shall not be registered under the
Securities Act of 1933, as amended, provided, however, that Holdings
shall be granted the right to request such registration, at
Purepac's expense, at any time after one year following the issuance
of such shares.
(b) The purchase price for each share of the New Preferred Stock
shall be the stated value thereof and shall be payable in full in
cash by Holdings to Purepac against the issuance of such shares
to Holdings at the Closing.
4. Additional Provisions. The Stock Purchase Agreement, the
Preferred Stock Agreement, and all collateral documents shall contain, among
other things, such terms, covenants, representations, warranties, disclosure
provisions, conditions to Closing and indemnification provisions as are
customary for a transaction of this size and type and as shall be negotiated
and agreed upon between the parties, including, without limitation, the
following conditions to Closing:
(a) there shall be no material changes in the assets, business or
financial condition of the Faulding Companies between the date of
execution of the Definitive Agreements and Closing, without the
consent of Purchaser;
(b) all material and necessary approvals and consents of
governmental authorities and other third parties to the
transaction shall have been obtained;
(c) the stockholders of Purepac, at a meeting of such stockholders
to be held not later than January 6, 1996, shall have consented to
and approved the Transaction in all material respects;
(d) unless waived by Australian Stock Exchange Ltd., the
stockholders of F.H. Faulding & Co. Limited, an Australian company,
the sole stockholder of Holdings, prior to January 6, 1996, shall
have consented to and approved the Transaction in all material
respects; and
(e) as of the date of Closing, all intercompany loans or other
indebtedness of the Faulding Companies to Holdings shall have been
converted by Holdings to equity in the Faulding Companies and there
shall be no outstanding debt due and owing by any of the Faulding
Companies to Holdings or any affiliate of Holdings.