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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): MARCH 15, 1998
NORWOOD PROMOTIONAL PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-21800 74-2553074
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
106 E. SIXTH STREET, SUITE 300
AUSTIN, TEXAS 78701
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE, INCLUDING ZIP CODE)
(512) 476-7100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS.
On March 15, 1998, Norwood Promotional Products, Inc. (the "Company")
entered into an Agreement and Plan of Merger (the "Merger Agreement") with FPK,
LLC, a limited liability company formed by Frank P. Krasovec. Mr. Krasovec is
the Chairman, President and Chief Executive Officer of the Company. Under the
Merger Agreement, FPK, LLC will form a wholly-owned subsidiary ("Newco") which
will be merged with and into the Company, with the Company being the surviving
corporation (the "Merger"). At the effective time of the Merger, each share of
issued and outstanding common stock of the Company (other than shares held by
certain executive officers and employees of the Company and certain other
holders of Company common stock) will be exchanged for $20.70 per share in cash.
The Merger is subject to, among other things, the approval of the
holders of at least two-thirds of the outstanding common stock of the Company,
the consummation of debt and equity financing to finance the transaction, the
expiration or termination of any applicable waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 and the compliance with Article
2.38 of the Texas Business Corporation Act. Financing for the transaction,
which is being arranged by FPK, LLC, includes (i) a $50 million senior secured
credit facility to be provided to the Company pursuant to a commitment letter
from Merrill Lynch Capital Corporation ("Merrill Lynch") and NationsBank, N.A.
("NationsBank") (of which $30 million will be provided by Merrill Lynch and $20
million by NationsBank), consisting of (A) a $25 million senior secured term
loan, which will be fully drawn at the Closing of the transaction ("Closing")
and (B) a $25 million senior secured revolving credit facility, of which no
more than $10 million will be drawn at closing, (ii) up to $100 million from
the issuance by the Company of unsecured senior subordinated notes due 2008,
which notes will be sold or placed pursuant to a highly confident letter by
Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates and will
be issued simultaneous with the Closing and (iii) $20 million from the issuance
by the Company of pay-in-kind preferred stock which will be provided pursuant
to a commitment letter from Ares Leveraged Investment Fund, L.P., an affiliate
of Ares Management, L.P. Conditions to the consummation of the financing
include, among other things, the execution and delivery of definitive
documents, the satisfactory completion of due diligence by the financing
sources and the absence of any material adverse change with respect to the
Company. The Company anticipates that the Merger will close not later than
June 30, 1998.
A special committee of independent directors of the Company (the "Special
Committee") was created to receive, review, evaluate, negotiate and make a
recommendation regarding the fairness of the proposed Merger. The Special
Committee retained the investment banking firm J. C. Bradford & Company, L.L.C.
("Bradford") as its financial advisor to assist and advise the Special Committee
in its review and consideration of the Merger proposal. Bradford has advised the
Special Committee and the Board of Directors of the Company that the terms of
the Merger are fair to the shareholders of the Company from a financial point of
view, and the Special Committee and the Board of Directors anticipate receiving
a written confirmation of that opinion from Bradford prior to the time a
definitive proxy statement is mailed to the shareholders of the Company. Based
on the recommendation of the Special
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Committee, the Board of Directors of the Company authorized the Merger Agreement
and will recommend that the shareholders of the Company approve the Merger
Agreement.
Under the Merger Agreement, the Company may not initiate, solicit,
participate in or encourage, directly or indirectly, any other Acquisition
Proposal (as defined in the Merger Agreement) or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal. Reference is
made to Sections 6.1, 8.1(f) and 8.2(b) of the Merger Agreement for provisions
relating to consideration of unsolicited written proposals and offers by the
Company and the Board.
The description of the terms and provisions of the Merger Agreement in
this report is qualified in its entirety by reference to the Merger Agreement
that is filed as an exhibit hereto and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
2.1 - Agreement and Plan of Merger by and between FPK, LLC and Norwood
Promotional Products, Inc. dated as of March 15, 1998.
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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.
Norwood Promotional Products, Inc.
Date: March 20, 1998 By: /s/ JAMES P. GUNNING, JR.
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James P. Gunning, Jr.,
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
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2.1 Agreement and Plan of Merger by and between FPK, LLC and Norwood
Promotional Products, Inc. dated as of March 15, 1998.