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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 EXCHANGE ACT OF 1934
December 20, 1999
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(Date of earliest event reported)
CAPTEC NET LEASE REALTY, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 1045281 38-3368333
(State of Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
24 FRANK LLOYD WRIGHT DRIVE, ANN ARBOR, MICHIGAN 48106
(Address of Principal Executive Offices)
(734) 994-5505
(Registrant's Telephone Number)
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ITEM 5. OTHER EVENTS.
On December 20, 1999, Captec Net Lease Realty, Inc. (the "Company")
executed an Omnibus Agreement and Plan of Merger (the "Merger Agreement") by and
among the Company, Captec Acquisition, Inc., a Michigan corporation
("Acquisition"), Captec Financial Group, Inc., a Michigan corporation
("Financial Group") and Captec Net Lease Realty Advisors, Inc., a Delaware
corporation ("Advisors"). The Merger Agreement provides for the merger of
Acquisition with and into Financial Group and of Advisors with and into the
Company (collectively, the "Merger"). Upon consummation of the Merger, Financial
Group will be a wholly-owned subsidiary of the Company and the separate
corporate existence of Advisors will terminate. Financial Group and Advisors are
affiliates of the Company and the Board of Directors established a special
committee of its board of directors (the "Special Committee") consisting
entirely of all independent, disinterested directors to consider and negotiate
the Merger. Acquisition is a wholly-owned subsidiary of the Company created for
the sole purpose of effectuating the Merger.
In consideration of the Merger, the Company will issue an aggregate
2,189,505 shares of its common stock, par value $.01 (the "Common Stock") to the
common stockholders, the preferred stockholder, option holders and certain
warrant holders of Financial Group and an aggregate 560,000 shares of the Common
Stock to the stockholders of Advisors and will make an aggregate cash payment of
approximately $2.5 million to holders of warrants to acquire shares of Financial
Group common stock in consideration of the termination of those warrants. The
common stockholders and option holders of Financial Group may earn up to an
additional 2,000,000 shares of Common Stock based upon the consolidated
performance of the Company in 2000 and 2001 (the "Earnout Shares") and a cash
payment with respect to any such additional shares of Common Stock which may be
issued. The Special Committee has received an opinion from its financial
advisor, J.C. Bradford & Co., that the consideration to be paid by the Company
in the Merger, including the Earnout Shares, is fair to the Company from a
financial point of view.
The Merger Agreement contains numerous customary and transaction
specific representations, warranties, covenants and conditions to closing.
Although the Delaware General Corporation Law does not require that the Merger
be approved by stockholders of the Company, because the Merger is among
affiliates and members of the Company's management and board of directors have
interests which are in addition to, or differ from, those of the Company, the
Merger Agreement provides that the Merger is subject to the affirmative vote of
a majority of the shares of the Common Stock, excluding shares of the Common
Stock owned by officers, directors or affiliates of the Company who or that are
also officers, directors or affiliates of Financial Group or Advisors.
ITEM 7. EXHIBITS.
EXHIBIT NO.
2 Omnibus Agreement and Plan of Merger, dated as of December 20, 1999,
by and among Captec Net Lease Realty, Inc., Captec Acquisition, Inc.,
Captec Financial Group, Inc. and Captec Net Lease Realty Advisors,
Inc. (without exhibits)
99 Press Release dated December 20, 1999.
FORWARD-LOOKING STATEMENTS
This Form 8-K contains certain "forward-looking statements" which
represent the Company's expectations or beliefs, including, but not limited to,
statements concerning industry performance and the
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Company's operations, performance, financial condition, plans, growth and
strategies. Any statements contained in this Form 8-K which are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the generality of the foregoing, words such as "may," "will," "expect,"
"anticipate," "intent," "could," "estimate" or "continue" or the negative or
other variations thereof or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, certain of which are beyond the Company's control, and
actual results may differ materially depending on a variety of important factors
many of which are beyond the control of the Company.
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.
Date: December 30, 1999
/s/ W. Ross Martin
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Captec Net Lease Realty, Inc.
W. Ross Martin
Executive Vice President and Chief Financial Officer