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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
September 2, 1997
(Date of Report)
BUCYRUS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-871 39-0188050
(State or other jurisdiction (Commission File Number) (IRS Employer ID Number)
of incorporation)
P.O. Box 500
1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172
(Address of principal executive offices)
(414) 768-4000
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OF ASSETS
(a) The Acquisition.
On August 26, 1997, the Registrant, Bucyrus International, Inc. (the
"Company") consummated the acquisition (the "Marion Acquisition") of certain
assets and liabilities of The Marion Power Shovel Company (a subsidiary of
Global Industrial Technologies, Inc. ("Global")), and of certain subsidiaries
and divisions of Global that represent Global's surface mining equipment
business in Australia, Canada, and South Africa (in this report, all of said
assets and the related businesses will be referred to as "Marion").
The purchase price for Marion was $40.1 million, subject to post-closing
adjustments which would have reduced the purchase price by approximately $3.7
million had the Marion Acquisition taken place on June 30, 1997. A balance sheet
will be prepared with respect to Marion as of the date of closing, on which the
actual post-closing purchase price adjustment will be based.
A copy of the Asset Purchase Agreement dated July 21, 1997, between the
Company (and certain subsidiaries) and Global (and certain subsidiaries)
relating to the Marion Acquisition is filed as Exhibit 2.1 to this Report.
Source of Funds. The Company financed the Marion Acquisition and related
expenses utilizing an unsecured bridge loan (the "Bridge Loan") provided by PPM
America Special Investments Fund, L.P. (the "PPM Fund"), an affiliate of Jackson
National Life Insurance Company, the Company's largest shareholder ("JNL"), in
the amount of $45 million.
The Company obtained a commitment dated April 14, 1997 from the PPM Fund to
provide the Bridge Loan ("Bridge Loan Commitment"). Upon execution of the Bridge
Loan Commitment, the Company paid a $550,000 Proposal and Commitment Fee to the
PPM Fund. The Bridge Loan Commitment provides for a fee of $450,000 (the
"Facility Fee") to be paid upon execution of the definitive purchase agreement
for the Marion Acquisition. The Bridge Loan Commitment provided for a closing
date of the Marion Acquisition of not later than July 15, 1997. On June 30,
1997, the Company and the PPM Fund agreed to extend the deadline for the closing
date until August 30, 1997 (the "Extension Agreement"). As a condition to the
Extension Agreement, however, the PPM Fund required the Company to pay a
$337,500 Extension Fee and to pay the $450,000 Facility Fee at the time the
Extension Agreement was signed.
The Bridge Loan matures on February 23, 1998 (180 days from funding) and
bears interest at 5% over the Adjusted Eurodollar Rate, as defined in the Bridge
Loan Agreement.
The Bridge Loan Commitment was amended as of August 20, 1997 (the "Amended
Commitment") to provide that upon consummation of the Marion Acquisition and the
funding of the Bridge Loan, the Company would pay an $800,000 Financing Fee to
the PPM Fund and a Bridge Loan Funding Fee of $1,125,000. These fees were paid
on August 26, 1997. The Amended Commitment and Bridge Loan Agreement provide for
additional fees as follows: (i) if the Bridge Loan is outstanding 30 days after
funding (on September 25, 1997), the Company will pay $800,000; (ii) if the
Bridge Loan is outstanding 90 days after funding (on November 24, 1997), the
Company will pay $3,200,000; and (iii) if the Bridge Loan is outstanding at
Maturity (February 23, 1998), the Company will pay $3,200,000.
Copies of the Bridge Loan Agreement and related documentation are
incorporated by reference as Exhibit 10.22 through Exhibit 10.29 to this Report.
As noted below under "Item 5. Other Events," the Company expects to
commence on or about August 29, 1997 a private placement offering of its
$150,000,000 Senior Notes due 2007 (the "Senior Notes Offering"). A portion of
the proceeds of the Senior Notes Offering are intended to be used to refinance
the Bridge Loan. The Company presently anticipates that the Senior Notes
Offering will be completed on or prior to September 24, 1997, and, accordingly,
that none of the additional fees relating to the Bridge Loan will be paid.
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(b) Assets and Businesses Acquired.
Prior to August 26, 1997, Marion had been in the business of manufacturing
large surface mining excavation equipment, primarily draglines and electric
mining shovels, and replacement parts therefor, and also had a significant
aftermarket parts and services business. The assets acquired by the Company from
Marion consist primarily of personal property (finished goods, work-in-process
and parts inventory, machinery, equipment, and machine tools) and intellectual
property (patents, trademarks, drawings, etc.). No real property was acquired.
The assets acquired by the Company in the Marion Acquisition consisted of
substantially all the assets owned by Global directly or indirectly through one
or more subsidiaries (including substantially all of the assets of The Marion
Power Shovel Company) that were used to operate Global's surface mining
equipment manufacturing, replacement parts, and services business throughout the
world. The Company is engaged in a similar business and intends to continue to
operate the Marion business by consolidating it into the Company's operations.
ITEM 5. OTHER EVENTS
(a) Acquisition of the Company by American Industrial Partners.
On August 21, 1997, Bucyrus entered into an Agreement and Plan of Merger
(the "AIP Agreement") with American Industrial Partners Acquisition Company, LLC
("AIPAC"), which is wholly owned by American Industrial Partners Capital Fund
II, L.P. ("AIP"), and Bucyrus Acquisition Corp. ("BAC"), which is wholly owned
by AIPAC. Pursuant to the AIP Agreement, on August 26, 1997, BAC commenced an
offer to purchase for cash 100% of the common stock of Bucyrus (the "Common
Stock") at a price of $18.00 per share (the "AIP Tender Offer"). Consummation of
the AIP Tender Offer is conditioned upon receipt by BAC of not less than 51% of
the Common Stock in the AIP Tender Offer. The consummation of the AIP Tender
Offer is a condition to the Senior Notes Offering.
Simultaneously with the execution of the AIP Agreement, JNL, which owns
approximately 40% of the outstanding Common Stock, entered into an agreement
(the "Stockholder Agreement") with AIPAC and BAC, pursuant to which JNL agreed
to tender all of its shares of Common Stock in the AIP Tender Offer.
Following consummation of the AIP Tender Offer, subject to satisfaction of
certain conditions set forth in the AIP Agreement, BAC will merge with and into
Bucyrus, and each shareholder of Bucyrus will receive $18.00 in cash for each
share of Common Stock (the "AIP Merger"). The AIP Merger is not a condition to
the Senior Notes Offering.
AIP has advised the Company as follows. AIP is a private investment fund
headquartered in San Francisco and New York with committed capital of
approximately $574 million. AIP seeks to invest in companies with either a
protected competitive position or proprietary capability, ideally combined with
a leading market share. The firm does not seek to play a role in daily
management; rather, AIP seeks to provide its portfolio companies with access to
the management expertise of its operating partners, all of whom are former Chief
Executive Officers of Fortune 500 corporations, through active board-level
participation as well as on-call advice when desired.
Following consummation of the AIP Merger, AIP will have contributed $143
million in equity to the Company and Robert L. Purdum, an operating partner of
AIP and former Chairman, President and Chief Executive Officer of Armco Inc., is
expected to become the Company's Non-Executive Chairman of the Board. Although
no specific arrangements are in place, following the AIP Merger, AIP intends to
offer the Company's executive officers the opportunity to own up to 10% of the
Company through a combination of direct investments and option programs.
On August 26, 1997, AIPAC and BAC filed with the Securities and Exchange
Commission (the "Commission") a Tender Offer Statement on Schedule 14D-1 (the
"Tender Offer Statement") relating to the AIP Tender Offer, and the Company
filed a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9
including a Schedule containing information required by Rule 14f-1 (the
"Recommendation Statement") setting forth, among other things, the Board of
Directors' recommendation to shareholders that they tender their stock in the
AIP Tender Offer. Reference is hereby made to the Tender Offer Statement and the
Recommendation Statement for additional information concerning AIP and its
related entities, the AIP
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Merger, the AIP Tender Offer, and to the schedule filed pursuant to Rule 14f-1
attached to the Recommendation Statement for additional information about the
Company and its management.
(b) Senior Notes Offering.
On or about August 29, 1997, the Company expects to commence a private
placement transaction (the "Senior Notes Offering") of its $150,000,000 Senior
Notes due 2007 (the "Senior Notes"). The Senior Notes Offering is being made and
the Senior Notes will be sold exclusively (a) to "Qualified Institutional
Buyers" (as defined in Rule 144A under the Securities Act of 1933) in compliance
with Rule 144A, and (b) pursuant to offers and sales that occur outside the
United States within the meaning of Regulation S under the Securities Act of
1933.
The Company expects that the Senior Notes Offering will be completed on or
about September 24, 1997.
THE SENIOR NOTES WILL NOT BE REGISTERED UNDER THE SECURITIES ACT, OR ANY
STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD IN
THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS. THIS CURRENT REPORT ON FORM 8-K, AND ANY
REFERENCE TO THE SENIOR NOTES HEREIN, SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THE SENIOR
NOTES IN ANY STATE OR JURISDICTION WHERE SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE OR JURISDICTION.
The Company has prepared a Preliminary Confidential Offering Memorandum
(the "Preliminary Offering Memorandum") dated August 27, 1997 for use in
connection with the Senior Notes Offering. Exhibit 99.3 to this Report is a copy
of selected excerpts from the Preliminary Offering Memorandum under the captions
"Summary of Offering Memorandum -- Sources and Uses," "Risk Factors" (except for
certain sections pertinent only to potential purchasers of Senior Notes),
"Business," and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Reference is hereby made to Exhibit 99.3 for additional
information about the Company and the anticipated sources and uses of funds to
be derived from the Senior Notes Offering and the AIP Merger.
There can be no assurance that the Senior Notes Offering will be
consummated.
(c) Joint Prosecution Agreement
Contemporaneously with the execution of the Stockholder Agreement referred
to in (a) above, the Company and JNL entered into a joint prosecution agreement
(the "Joint Prosecution Agreement") relating to various claims the Company and
JNL have or may have resulting from the Company's reorganization in 1994 under
Chapter 11 of the United States Bankruptcy Code (the "Chapter 11
Reorganization") against the law firm of Milbank, Tweed, Hadley & McCloy
("Milbank") for disgorgement of fees (the "Disgorgement Claim") and other claims
(collectively, the "Milbank Claims"). All proceeds of the Milbank Claims will be
allocated as follows: (i) first, to pay, or to reimburse the prior payment of,
all bona fide third-party costs, expenses and liabilities incurred on or after
September 1, 1997 in connection with prosecuting the Milbank Claims (the "Joint
Prosecution") including, without limitation, the reasonable fees and
disbursements of counsel and other professional advisors, which are to be
advanced by JNL; (ii) the next $8.675 million of proceeds from the Milbank
Claims, if any, will be paid to JNL, provided that the Company will retain ten
percent of the proceeds of the Disgorgement Claim, if any, and will direct
payment to JNL of the balance of such proceeds; and (iii) all additional
proceeds of the Milbank Claims will be divided equally between JNL and the
Company. Notwithstanding the foregoing, the Company shall also receive the
benefit of any reduction of any obligation it may have to pay Milbank's
outstanding fees, if any. JNL will indemnify the Company in respect of any
liability resulting from the Joint Prosecution other than in respect of legal
fees and expenses incurred prior to September 1, 1997. The Joint Prosecution
Agreement will continue in force irrespective of whether the Merger is
consummated. The Joint Prosecution may involve lengthy and complex litigation
and there can be no assurance whether or when any recovery may be obtained or,
if obtained, whether it will be in
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an amount sufficient to result in the Company receiving any portion thereof
under the formula described above.
(d) Settlement Agreement
During the pendency of the Chapter 11 Reorganization, JNL filed a claim
(the "503(b) Claim") against the Company with the United States Bankruptcy
Court, Eastern District of Wisconsin ("Bankruptcy Court") for reimbursement of
approximately $3.3 million of professional fees and disbursements incurred in
connection with the Chapter 11 Reorganization pursuant to Section 503(b) of the
Bankruptcy Code. By order dated June 3, 1996, the Bankruptcy Court awarded JNL
the sum of $500. JNL appealed the decision to the United States District Court
for the Eastern District of Wisconsin. On June 26, 1997, the District Court
denied the appeal as moot but returned the matter to the Bankruptcy Court for
further proceedings with leave to appeal again after further determination of
the Bankruptcy Court. On July 11, 1997, JNL moved the Bankruptcy Court for
relief from the final judgment entered on the 503(b) Claim. Pursuant to a
Settlement Agreement between the Company and JNL dated as of August 21, 1997,
subject to Bankruptcy Court approval, JNL will settle and release the Company
from the 503(b) Claim in consideration of a payment to JNL by the Company of
$200,000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of the Business Acquired.
The following audited and unaudited combined financial statements of the
Surface Mining and Equipment Business of Global Industrial Technologies, Inc.
are set forth as Exhibit 99.1 to this report:
Audited Financial Statements:
Report of Independent Public Accountants
Combined Balance Sheet at October 31, 1996
Combined Statement of Operations for the Year Ended October 31, 1996
Combined Statement of Equity for the Year Ended October 31, 1996
Combined Statement of Cash Flows for the Year Ended October 31, 1996
Notes to Combined Financial Statements
Unaudited Financial Statements:
Combined Balance Sheets at June 30, 1997 and October 31, 1996
Combined Statements of Operations for the Eight Months Ended June 30,
1997 and 1996
Combined Statements of Cash Flows for the Eight Months Ended June 30,
1997 and 1996
Notes to Combined Financial Statements
(b) Pro Forma Financial Information
The Unaudited Pro Forma Combined Condensed Statements of Operations of the
Company for the year ended December 31, 1996, and the six months ended June 30,
1997 (the "Pro Forma Statements of Operations"), and the Unaudited Pro Forma
Combined Condensed Balance Sheet of the Company at June 30, 1997 (the "Pro Forma
Balance Sheet" and, together with the Pro Forma Statements of Operations, the
"Pro Forma Financial Statements") are presented as Exhibit 99.2 to this report.
The Pro Forma Financial Statements give effect to the Marion Acquisition and the
Bridge Loan (both defined in Item 2(a) of this Report) but do not give effect to
the Senior Notes Offering or the acquisition of the Company by American
Industrial Partners (identified in Item 5 of this Report).
Basis of Presentation. The Pro Forma Financial Statements have been
prepared to illustrate the estimated effect of the Marion Acquisition and the
financing (the Bridge Loan) incurred to finance the
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Marion Acquisition. The Pro Forma Financial Statements are based on certain
estimates and assumptions made by the management of the Company as to the
combined operations of the Company and Marion which the Company believes to be
reasonable. The Pro Forma Financial Statements do not purport to be indicative
of the results of operations or financial position of the Company and Marion
that actually would have been obtained had the Marion Acquisition been completed
as of the assumed dates, or to project the results of operations or financial
position of the Company for any future date or period.
The Pro Forma Balance Sheet gives pro forma effect to the Marion
Acquisition as if it had occurred on June 30, 1997. The Pro Forma Statements of
Operations give pro forma effect to the Marion Acquisition as if it had occurred
on January 1, 1996. In each case, effect is given to the consummation of the
Bridge Loan as if the Bridge Loan had been consummated immediately prior to
consummation of the Marion Acquisition.
For purposes of the Pro Forma Statements of Operations for the year ended
December 31, 1996, Marion's historical Statement of Operations for the fiscal
year ended October 31, 1996, was combined with the Company's historical
Statement of Operations for the year ended December 31, 1996. For purposes of
the Pro Forma Statement of Operations for the six months ended June 30, 1997,
Marion's historical Statement of Operations for the six months ended June 30,
1997, was combined with the Company's historical Statement of Operations for the
six months ended June 30, 1997. Marion's results for the months of November and
December 1996 are not included in these Pro Forma Statements of Operations.
Marion's net sales and net loss for these two months were $9.5 million and $1.6
million, respectively. The Pro Forma Statements of Operations have been prepared
assuming retention of all of the Company's and Marion's net sales.
The Marion Acquisition will be accounted for by the purchase method of
accounting. Under purchase accounting, the total purchase price will be
allocated to the tangible and intangible assets and liabilities assumed based
upon their respective fair values as of the closing of the Marion Acquisition
based on valuations and studies which are not yet available. A preliminary
allocation of the purchase price has been made to major categories of assets and
liabilities in the accompanying Pro Forma Financial Statements based on
available information. The actual allocation of purchase price and resulting
effect on income from operations may differ significantly from the pro forma
amounts included herein. These pro forma adjustments represent management's
preliminary determination of purchase accounting adjustments and are based upon
available information and certain assumptions that management believes to be
reasonable. A balance sheet will be prepared with respect to Marion's balance
sheet as of the date of such closing, on which the post-closing purchase price
adjustment will be based. Management does not expect that differences between
the preliminary and final purchase price allocation will have a material impact
on the Company's financial position and/or results of operations.
(c) Exhibits.
See Exhibit Index.
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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.
BUCYRUS INTERNATIONAL, INC.
(Registrant)
By: /s/ C. R. Mackus
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Name: C. R. Mackus
Title: Secretary and Controller
Date: September 2, 1997
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BUCYRUS INTERNATIONAL, INC.
EXHIBIT INDEX
TO
CURRENT REPORT ON FORM 8-K
EXHIBIT FILED
NUMBER DESCRIPTION INCORPORATED HEREIN BY REFERENCE FROM HEREWITH
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2.1 Asset Purchase Agreement dated July X
21, 1997, by and among The Marion
Power Shovel Company, Marion Power
Shovel Pty Ltd, Intool International
B.V., Global-GIX Canada Inc., and
Global Industrial Technologies, Inc.
(Sellers) and Bucyrus International,
Inc., Bucyrus (Australia) Proprietary
Ltd., Bucyrus (Africa) (Proprietary)
Limited, and Bucyrus Canada Limited
(Buyers)
[REDACTED PORTIONS ARE SUBJECT TO A
REQUEST FOR CONFIDENTIAL TREATMENT ON
FILE WITH THE SECURITIES AND EXCHANGE
COMMISSION]
2.2 Agreement and Plan of Merger dated Exhibit 1 to Registrant's Tender
August 21, 1997, between Registrant, Offer Solicitation/Recommendation
American Industrial Partners Statement on Schedule 14D-9 filed
Acquisition Company, LLC and Bucyrus with the Commission on August 26,
Acquisition Corp. 1997
10.15 Letter Agreement dated July 30, 1997 Exhibit 10.15 to Registrant's
between Jefferies & Company, Inc. and Quarterly Report on Form 10-Q for the
Registrant quarter ended June 30, 1997
10.22 Bridge Loan Agreement dated as of Exhibit 5.4 to Registrant's Tender
August 26, 1997 by and among PPM Offer Solicitation/Recommendation
America Special Investments Fund, Statement on Schedule 14D-9 filed
L.P. as Agent and Lender and the with the Commission on August 26,
other lenders party thereto, the 1997
Company, Bucyrus (Australia)
Proprietary Ltd., and Bucyrus Canada
Limited
10.23 Letter of Intent dated July 30, 1997 Exhibit 99.4 to Registrant's Current
between Registrant and American Report on Form 8-K dated August 4,
Industrial Partners, providing for 1997
the acquisition of Registrant by
American Industrial Partners or one
of its affiliates
10.24 Bridge Loan Commitment issued by PPM Exhibit 5.1 to Registrant's Tender
America Special Investments Fund, Offer Solicitation/Recommendation
L.P. as of April 14, 1997 Statement on Schedule 14D-1 filed
with the Commission on August 26,
1997
10.25 Extension Agreement dated June 30, Exhibit 5.2 to Registrant's Tender
1997 by and between PPM America Offer Solicitation/Recommendation
Special Investments Fund L.P. and Statement on Schedule 14D-1 filed
Bucyrus International, Inc. with the Commission on August 26,
1997
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EXHIBIT FILED
NUMBER DESCRIPTION INCORPORATED HEREIN BY REFERENCE FROM HEREWITH
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10.26 Amendment to Bridge Loan Commitment Exhibit 5.3 to Registrant's Tender
dated as of August 20, 1997 by and Offer Solicitation/Recommendation
between PPM America Special Statement on Schedule 14D-1 filed
Investments Fund, L.P. and Bucyrus with the Commission on August 26,
International, Inc. 1997
10.27 Bridge Loan Agreement dated as of Exhibit 5.4 to Registrant's Tender
August 26, 1997 by and between PPM Offer Solicitation/Recommendation
America Special Investments Fund, Statement on Schedule 14D-1 filed
L.P., Bank of Montreal, Bucyrus with the Commission on August 26,
(Australia) Proprietary Ltd., Bucyrus 1997
Canada Limited and Bucyrus
International, Inc.
10.28 Joint Prosecution Agreement dated as Exhibit 9 to Registrant's Tender
of August 21, 1997 by and between Offer Solicitation/Recommendation
Jackson National Life Insurance Statement on Schedule 14D-1 filed
Company and Bucyrus International, with the Commission on August 26,
Inc. 1997
10.29 Settlement Agreement dated as of Exhibit 10 to Registrant's Tender
August 21, 1997 by and between Offer Solicitation/Recommendation
Jackson National Life Insurance Statement on Schedule 14D-1 filed
Company and Bucyrus International, with the Commission on August 26,
Inc. 1997
99.1 Audited and unaudited combined X
financial statements of the Surface
Mining and Equipment Business of
Global Industrial Technologies, Inc.
99.2 Unaudited Pro Forma Combined X
Condensed Financial Statements of the
Company for the year ended December
31, 1996, and the six months ended
June 30, 1997
99.3 Excerpts from Registrant's X
Preliminary Confidential Offering
Memorandum dated August 27, 1997 for
use in connection with the Senior
Notes Offering under the captions
"Summary of Offering Memorandum --
Sources and Uses of Funds," "Risk
Factors" (except for certain Sections
pertinent only to potential purchasers
of Senior Notes), "Management's Discussion
and Analysis of Financial Condition
and Results of Operations," and "Business."