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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 20, 2000
Sheldahl, Inc.
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(Exact name of Registrant as specified in its charter)
Minnesota 0-45 41-0758073
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1150 Sheldahl Road
Northfield, Minnesota 55057
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (507) 663-8000
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Item 5. Other Information
On November 10, 2000, Sheldahl announced that it had entered into
various agreements for a series of transactions (the "Transactions") that if
consummated will result in an issuance of Sheldahl's securities that will both
result in a change of control of Sheldahl and will be equal to more than 20% of
Sheldahl's common stock currently outstanding. The Transactions include (i) a
merger whereby Sheldahl will acquire all of the outstanding securities of
International Flex Technologies, Inc. ("IFT") for shares of Sheldahl's common
stock (the "Merger"), (ii) an equity investment whereby Morgenthaler Venture
Partners V, L.P. ("Morgenthaler V"), and Ampersand IV Limited Partnership and
Ampersand IV Companion Fund Limited Partnership (collectively the "Ampersand
Funds") will invest an aggregate of $25 million of equity capital in exchange
for shares of Sheldahl common stock and shares of a Series G Convertible
Preferred Stock ("Series G Stock") (the "Equity Investment"), and (iii) a debt
investment whereby Morgenthaler V, the Ampersand Funds and Molex Incorporated
("Molex") will collectively purchase $6.5 million of 12% senior subordinated
notes ("Notes") and warrants ("Warrants") to purchase shares of Sheldahl's
common stock (the "Debt Investment").
Under the Rules of the Nasdaq Stock Market, consummation of the
Transactions would require either shareholder approval or an exception
therefrom. If Sheldahl were to seek shareholder approval for the Transactions,
Sheldahl estimates that a shareholder meeting for such would occur in late March
2001. Given Sheldahl's current financial condition, Sheldahl believes that its
financial viability would be seriously jeopardized if it were to seek
shareholder approval of the Transactions. For that reason, Sheldahl's Audit
Committee of its Board of Directors determined that Sheldahl should apply to
Nasdaq to seek an exception to its shareholder approval requirement. On November
22, 2000, after having filed such application, Sheldahl was notified by Nasdaq
that it had been granted the exception and could consummate the Transactions
provided that Sheldahl mails to all of its shareholders, not later than ten days
before completion of the Transactions, a letter alerting the shareholders of
Sheldahl's omission to seek shareholder approval that would otherwise be
required and indicating that Sheldahl's Audit Committee had expressly approved
the exception (the "Nasdaq Shareholder Notice"). Sheldahl provided such mailing
on December 1, 2000 with a summary of the Transactions.
Due to certain developments, the parties to the Transactions and
Sheldahl agreed to new terms and conditions on which the Transactions would be
completed and are making appropriate revisions to the Transaction documents. In
addition, the parties are negotiating with the Company's current lender
regarding satisfactory post-closing financial covenants and an extension of the
expiration date of the current credit facility.
Sheldahl has informed Nasdaq of the revised terms of the Transactions
and requested that Nasdaq reaffirm the shareholder approval exception it had
previously granted as well as agree that the Company did not have to complete a
second mailing and provide another ten-day notice to Sheldahl's shareholders
provided the Company issue a press release and file a Form 8-K with the SEC
describing the revised terms. On December 19, 2000, Nasdaq informed the Company
that it would reaffirm the shareholder approval exception and permit Sheldahl to
disseminate information regarding the revised Transactions to the Company's
shareholders through a press release and Form 8-K filing. On December 19, 2000,
the Company issued the required press release and the Company is hereby filing
its Form 8-K with a summary of the revised terms of the Transactions. This Form
8-K, the Company's press release and all subsequent SEC filings related to the
Transactions will be available on the Company's website at www.sheldahl.com.
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The Transactions are expected to be completed by the end of the
calendar year. The Transactions continue to be subject to customary closing
conditions, further negotiations and execution of amendments to definitive
agreements acceptable to the parties. Therefore, there can be no assurance that
the Transactions will be completed by the end of the calendar year, or at all.
In the event the Transactions do not close, the financial viability of Sheldahl
would be seriously jeopardized.
Summary
Each of the Transactions as originally contemplated is unchanged with
the exception of the price and number of underlying securities to be issued in
each Transaction. A comparison is provided below with respect to each
Transaction.
Merger
The number of shares of Sheldahl common stock to be issued in the
Merger in exchange for the outstanding equity securities of IFT has increased by
approximately 2.1 million to 9.7 million shares.
Common Stock and Series G Investment
In connection with the Equity Investment, the number of shares of
Sheldahl Common Stock to be issued has increased by approximately 4.8 million to
approximately 9.8 million shares and the aggregate number of shares of Sheldahl
common stock issuable upon conversion of the shares of Series G Stock to be
issued has increased by approximately 4.0 million to approximately 8.1 million
shares. Additionally, the Conversion Price of the Series G Stock has decreased
from approximately $2.77 per share to $1.40 per share and the Dividend
Conversion Price has decreased from approximately $3.54 per share to $1.625 per
share. The dividend coupon of 11.06% for the Series G Stock has not changed.
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Subordinated Notes and Warrant Purchase Investment
In connection with the Debt Investment, the maximum principal amount of
Notes to be issued has decreased from $15 million to $6.5 million and the
purchase of such Notes will occur in one closing concurrent with the closing of
the Merger and Equity Investment. The number of shares of Sheldahl common stock
underlying the Warrants to be issued at closing has increased by approximately
500,000 to 1.5 million shares.
Registration Rights
No substantive changes from the November 10, 2000 form of registration
rights agreement, except to reflect changes in the securities to be issued under
the three main Transaction Documents, have been made.
Governance Agreement
No substantive changes from the November 10, 2000 form of governance
agreement, except to reflect changes in the securities to be issued under the
three main Transaction Documents, have been made.
Amended Molex Agreements
No substantive changes from the November 10, 2000 amendments to the
Agreement Relating to Sheldahl and the Limited Liability Company Agreement of
Modular Interconnect Systems, L.L.C. have been made. The effectiveness of each
of these amendments will be confirmed by Molex.
Post Transactions Ownership
After completion of all the Transactions, the parties acquiring
securities in the Transactions (the "Parties") will collectively hold securities
representing ownership of approximately 60%, instead of 49%, of Sheldahl on a
fully diluted basis (assuming conversion of all Sheldahl convertible
securities).
On a beneficial basis, calculated in conformance with Rule 13d-1 of the
Securities Exchange Act of 1934, as amended, and based on the revised terms of
the Transactions, the Parties will have the approximate ownership as follows:
- Morgenthaler V will own or have the right to acquire
18,968,549 shares of Sheldahl Common Stock, representing
51.75% of Sheldahl.
- The Ampersand Funds will own or have the right to acquire
5,533,314 shares of Sheldahl Common Stock, representing 16.67%
of Sheldahl.
- Molex will own or have the right to acquire 3,835,020 shares
of Sheldahl Common Stock, representing 11.32% of Sheldahl.
- Sound Beach will own or have the right to acquire 2,679,405
shares of Sheldahl Common Stock, representing 8.76% of
Sheldahl.
- Other former Stockholders of Holdings will collectively own or
have the right to acquire 955,088 shares of Sheldahl Common
Stock, representing 3.08% of Sheldahl.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(A) Financial Statements of Business Acquired
Not applicable.
(B) Pro Forma Financial Information
Not applicable.
(C) Exhibits
Exhibit 99 Press Release issued December 19, 2000.
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SIGNATURE
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.
Sheldahl, Inc.
By /s/ Edward L. Lundstrom
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Edward L. Lundstrom, President and
Chief Executive Officer
Dated: December 20, 2000
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