UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): February 13, 2004
IONICS, INCORPORATED
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 1-7211 04-2068530
(State of incorporation) (Commission File Number) (IRS Employer Identification No.)
65 GROVE STREET, WATERTOWN, MA 02472 (617) 926-2500
(Address of principal executive offices) (Zip Code) (Registrant's telephone number,
including area code)
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Item 2. Acquisition or Disposition of Assets.
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On February 13, 2004, Ionics, Incorporated ("Ionics") acquired the stock and
membership interests of Ecolochem, Inc. and its affiliated companies
(collectively, the "Ecolochem Group") from the shareholders and members of the
Ecolochem Group (the "Sellers"). The acquisition of the Ecolochem Group (the
"Acquisition") was consummated pursuant to a Purchase Agreement dated as of
November 18, 2003, as amended as of February 13, 2004, among Ionics and the
Sellers (the "Purchase Agreement"). In connection with the Acquisition, Ionics
paid the Sellers an aggregate purchase price of $209,204,818 million in cash and
4,652,648 shares of Ionics common stock. The terms of the Acquisition and the
consideration received by the Sellers were the result of arm's-length
negotiations between Ionics and the Sellers.
The cash portion of the consideration came from Ionics' available cash resources
and from new credit facilities under the Credit Agreement dated as of February
13, 2004 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among Ionics, the Subsidiary
Guarantors (as defined therein), the Lenders (as defined therein), UBS
Securities LLC, as lead arranger, sole bookmanager and documentation agent,
Fleet Securities, Inc. and Bank of America, N.A., as syndication agents,
Wachovia Bank, N.A. and General Electric Capital Corporation, as
co-documentation agents, UBS Loan Finance LLC, as swingline lender, HSBC Bank
USA, as issuing bank, and UBS AG, Stamford Branch, as administrative agent for
the Lenders and collateral agent for the Secured Parties. The Credit Agreement
permits Ionics to borrow up to $255,000,000 under both term and revolving loans.
Under the credit facility, revolving loans mature on February 13, 2009 and term
loans mature on February 13, 2011. The credit facility is secured by liens on
certain collateral as well as the pledge of stock in certain of Ionics'
subsidiaries. In addition, certain of Ionics' subsidiaries are guarantors under
the Credit Agreement. The credit facilities contain covenants which, among other
things, require Ionics to maintain certain financial ratios and impose certain
limitations or prohibitions on Ionics with respect to the incurrence of
indebtedness, liens and capital leases; the payment of dividends on, and the
redemption or repurchase of capital stock of Ionics; investments and advances;
and certain acquisitions or asset sales.
In connection with the Acquisition, the Sellers and Ionics also entered into a
Stockholders Agreement, and two separate escrow agreements. Additionally, Ionics
and one of the Sellers, Lyman B. Dickerson, entered into an Employment
Agreement. Pursuant to the terms of the Stockholders Agreement, the Sellers were
granted the right to designate two members of the Ionics Board of Directors. In
satisfaction of this right, on February 17, 2004, Lyman B. Dickerson and
Frederick T. Stant III, the designees of the Sellers, were appointed to the
Ionics Board of Directors. Moreover, the terms of the Stockholders Agreement
provide that Lyman B. Dickerson will have the opportunity to become the Chairman
of the Ionics Board of Directors.
Pursuant to the terms of Lyman B. Dickerson's Employment Agreement with Ionics,
Mr. Dickerson was named Vice President of Ionics' Water Systems Division (which
includes, among other operations, the Ecolochem Group and its respective
subsidiaries and Ionics' Ultrapure Water and Industrial Water operations). The
term of this agreement is for two years unless sooner terminated for "cause" (as
defined therein) or under certain other circumstances.
The Ecolochem Group, consisting of Ecolochem, Inc., Ecolochem International,
Inc., Moson Holdings, L.L.C. and Ecolochem S.A.R.L., is a leading provider of
mobile water treatment services. The Ecolochem Group also offers outsourced, or
customer facility-based, long-term, water treatment services. Ionics intends to
continue the business operations of the Ecolochem Group utilizing its assets and
staff.
The Purchase Agreement (which is attached hereto as Exhibit 2.1) and certain
other agreements entered into in connection with the Acquisition (which are
attached hereto as Exhibits 2.2, 2.3, 2.4, 2.5, and 2.6) are incorporated herein
by reference.
Item 7. Financial Statements and Exhibits.
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(a) Financial Statements of Business Acquired.
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The following combined financial statements of the Ecolochem
Group, together with the report of KPMG LLP thereon, appear as
Exhibit 99.1 to this report and are incorporated herein by
this reference:
Combined balance sheets as of September 30, 2003 and 2002
Combined statements of earnings for the years ended
September 30, 2003, 2002 and 2001
Combined statements of stockholders' equity and
comprehensive income for the years ended September 30, 2003,
2002 and 2001
Combined statements of cash flows for the years ended
September 30, 2003, 2002 and 2001
Notes to combined financial statements
The following combined financial statements of the Ecolochem
Group, appear as Exhibit 99.2 to this report and are
incorporated herein by this reference:
Combined balance sheets (unaudited) as of December 31, 2003
and September 30, 2003
Combined statements of earnings (unaudited) for the three
months ended December 31, 2003 and 2002
Combined statements of stockholders' equity and
comprehensive income (unaudited) for the three months ended
December 31, 2003
Combined statements of cash flows (unaudited) for the three
months ended December 31, 2003 and 2002
Notes to combined financial statements
(b) Pro Forma Financial Information.
The required financial statements will be filed not later than
75 days from the date of the event reported herein.
(c) Exhibits.
Exhibit Number Description
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Exhibit 2.1 Purchase Agreement between the individuals
and entities listed on Exhibit A and Ionics,
Incorporated dated as of November 18, 2003.
Exhibit 2.2 Stockholders Agreement dated as of February
13, 2004 among Ionics, Incorporated and the
individuals and entities listed on Exhibit
A.
Exhibit 2.3 Amendment No. 1 dated as of February 13,
2004 to the Purchase Agreement between the
individuals and entities listed on Exhibit A
and Ionics, Incorporated dated as of
November 18, 2003.
Exhibit 2.4 Escrow Agreement among Ionics, Incorporated,
the entities and persons listed on Annex A,
Lyman B. Dickerson and Douglas G. Dickerson
(as Sellers' Representatives) and Citibank,
N.A. (as escrow agent) dated as of February
13, 2004.
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Exhibit 2.5 Section 338 Escrow Agreement among Ionics,
Incorporated, the entities listed on Annex
A, Lyman B. Dickerson and Douglas G.
Dickerson (as Sellers' Representatives) and
Citibank, N.A. (as escrow agent) dated as of
February 13, 2004.
Exhibit 2.6 Employment Agreement by and between Ionics,
Incorporated and Lyman B. Dickerson dated as
of February 13, 2004.
Exhibit 23.1 Consent of KPMG LLP.
Exhibit 99.1 The following combined financial statements
of the Ecolochem Group, together with the
report of KPMG LLP thereon:
Combined balance sheets as of September
30, 2003 and 2002
Combined statements of earnings for the
years ended September 30, 2003, 2002 and
2001
Combined statements of stockholders'
equity and comprehensive income for the
years ended September 30, 2003, 2002 and
2001
Combined statements of cash flows for
the years ended September 30, 2003, 2002
and 2001
Notes to combined financial statements
Exhibit 99.2 The following combined financial statements
of the Ecolochem Group:
Combined balance sheets (unaudited) as
of December 31, 2003 and September 30,
2003
Combined statements of earnings
(unaudited)for the three months ended
December 31, 2003 and 2002
Combined statements of stockholders'
equity and comprehensive income
(unaudited) for the three months ended
December 31, 2003
Combined statements of cash flows
(unaudited) for the three months ended
December 31, 2003 and 2002 Notes to
combined financial statements
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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.
IONICS, INCORPORATED
February 27, 2004 By: /s/Stephen Korn
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Name: Stephen Korn
Title: Vice President and General Counsel
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EXHIBIT INDEX
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Exhibit Number Description
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Exhibit 2.1 Purchase Agreement between the individuals and entities
listed on Exhibit A and Ionics, Incorporated dated as of
November 18, 2003.
Exhibit 2.2 Stockholders Agreement dated as of February 13, 2004 among
Ionics, Incorporated and the individuals and entities listed
on Exhibit A.
Exhibit 2.3 Amendment No. 1 dated as of February 13, 2004 to the
Purchase Agreement between the individuals and entities
listed on Exhibit A and Ionics, Incorporated dated as of
November 18, 2003.
Exhibit 2.4 Escrow Agreement among Ionics, Incorporated, the entities
and persons listed on Annex A, Lyman B. Dickerson and
Douglas G. Dickerson (as Sellers' Representatives) and
Citibank, N.A. (as escrow agent) dated as of February 13,
2004.
Exhibit 2.5 Section 338 Escrow Agreement among Ionics, Incorporated, the
entities listed on Annex A, Lyman B. Dickerson and Douglas
G. Dickerson (as Sellers' Representatives) and Citibank,
N.A. (as escrow agent) dated as of February 13, 2004.
Exhibit 2.6 Employment Agreement by and between Ionics, Incorporated and
Lyman B. Dickerson dated as of February 13, 2004.
Exhibit 23.1 Consent of KPMG LLP.
Exhibit 99.1 The following combined financial statements of the Ecolochem
Group, together with the report of KPMG LLP thereon:
Combined balance sheets as of September 30, 2003 and
2002
Combined statements of earnings for the years ended
September 30, 2003, 2002 and 2001
Combined statements of stockholders' equity and
comprehensive income for the years ended September 30,
2003, 2002 and 2001
Combined statements of cash flows for the years ended
September 30, 2003, 2002 and 2001
Notes to combined financial statements
Exhibit 99.2 The following combined financial statements of the Ecolochem
Group:
Combined balance sheets (unaudited) as of December 31,
2003 and September 30, 2003
Combined statements of earnings (unaudited) for the
three months ended December 31, 2003 and 2002 Combined
statements of stockholders' equity and comprehensive
income (unaudited) for the three months ended December
31, 2003
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Combined statements of cash flows (unaudited) for the
three months ended December 31, 2003 and 2002 Notes to
combined financial statements