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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 (Date of earliest event
reported):
December 31, 1998
KTI, INC.
(Exact name of Registrant as specified in Charter)
New Jersey 33-85234 22-2665282
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification
Number)
7000 Boulevard East, Guttenberg, New Jersey 07093
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(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code- (201) 854-7777
Not Applicable
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(Former name and former address, as changed since last report)
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ITEM 5. OTHER ITEMS.
On December 31, 1998, KTI, Inc., a New Jersey corporation (the
"Company" or the "Registrant") announced that it had purchased 1,730,056 shares
of common stock (the "Shares") in Oakhurst Company, Inc., a Delaware corporation
("OCI"). In consideration for the Shares, the Company paid approximately
$865,000 to OCI and transferred to Oakhurst Technology, Inc., a newly formed
subsidiary of OCI ("OTI"), certain of its rights and obligations under various
agreements with New Heights Recovery & Power, LLC., a Delaware limited liability
company ("New Heights"), including the Company's right to receive 50% of the
membership interests in New Heights. OTI assumed the Company's obligations to
invest up to $17 million in New Heights as equity. The Company agreed to loan up
to $1.8 million to New Heights to repay certain secured debts of New Heights and
contribute the paper recycling business and physical assets, other than real
estate, of the Company's Franklin Park, Illinois facility to New Heights.
Pending the actual transfer of the business and physical assets to the New
Heights facility, the Company has assigned the cash flow of its Franklin Park,
Illinois to New Heights, effective as of January 1, 1999. KTI Recycling, Inc., a
subsidiary of the Company, entered into a License to Use Technology Agreement
with OTI whereby OTI is obligated to pay KTI Recycling, Inc. a fee of $0.007 per
pound of tire processed by OTI, using KTI Recycling, Inc.'s cryogenic
technology.
The Company remains liable to New Heights to the extent that OCI and
OTI fail to meet OTI's obligations to New Heights. The Company also retained its
obligation to provide a $700,000 letter of credit to Browning Ferris Industries
to secure New Heights' obligation to remove a specified quantity of shredded
tires from the New Heights facility.
In connection with the acquisition of the Shares, the Company also
agreed to loan up to $11.5 million to OCI, which may be increased to $17 million
under certain circumstances specified in the agreements with New Heights. Such
funds, together with the proceeds of the sale of the shares to the Company, must
be invested in OTI in the form of equity. The loan to OCI is secured by the
pledge of the stock of OTI and of the membership interest of OTI in New Heights.
Under the terms of the loan, OCI and OTI may not enter into any new lines of
business without the Company's prior written consent, which consent may not be
unreasonably withheld.
OCI has a loan with Finova Capital Corporation ("Finova"), a finance
company, for approximately $4.5 million. The Company has entered into an
intercreditor agreement with Finova whereby Finova recognizes the priority of
the Company's liens on OTI and the membership interests in New Heights and the
Company recognizes the priority of Finova's liens on OCI's other business units
(which have annual sales of $30 million.) Finova and the Company will have
access to the cash flow of the other party's collateral if no default exists
under the other party's loan documents.
The shares of OCI purchased by the Company, which are unregistered,
represent approximately 35% of the total shares outstanding after such issuance.
OCI has given the Company demand registration rights.
KTI will be entitled to elect three of nine directors of OCI and two of
five directors of OTI.
New Heights has entered into an Operating and Maintenance Agreement
(the "Operating Agreement") with KTI Operations, Inc., a subsidiary of the
Company. Under the Operating Agreement, KTI Operations, Inc. will receive a
management fee of $400,000 per annum plus reimbursement of expenses incurred in
the operation of the New Heights Facility.
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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.
KTI, Inc.
(the Registrant)
Dated: January 15, 1999 By: /s/ Martin J. Sergi
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Name: Martin J. Sergi
Title: President
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Exhibits.
Exhibit Number Description
4.1 Investment Agreement dated as of December 29, 1998 between and
among KTI, Inc., Oakhurst Company, Inc. and Oakhurst
Technology, Inc.
4.2 Letter Loan Agreement between KTI, Inc. and CNA Realty Corp,
Inc. dated as of December 29, 1998 between and among KTI,
Inc., Oakhurst Company, Inc. and Oakhurst Technology, Inc..
The exhibits to this Exhibit do not contain information which
is material to an investment decision. The Company hereby
agrees to furnish a copy of any omitted exhibit to the
Commission upon request.
4.3 Pledge Agreement dated as of December 29, 1998 between and
among KTI, Inc., Oakhurst Company, Inc. and Oakhurst
Technology, Inc.
4.4 Intercreditor Agreement between KTI, Inc. and Finova Capital
Corporation
4.5 Non-Exclusive License to Use Technology
10.1 Operating and Maintenance Agreement, dated as of December 29,
1998 by and between New Heights Recovery & Power, LLC and KTI
Operations, Inc.
99.1 News release dated December 31, 1998.