SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 30, 1997
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FAIRCOM INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-15392 87-0394057
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
333 Glen Head Road, Old Brookville, New York 11545
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 676-2644
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As of June 30, 1997, Faircom Inc. (the "Company"), through a
wholly-owned subsidiary, Faircom Mansfield Inc. ("Faircom Mansfield"),
acquired the assets and operations of two commercial radio stations, WMAN-AM
and WYHT-FM, both located in Mansfield, Ohio (the "Stations"), from Treasure
Radio Associates L.P. ("Treasure Radio") and its principals. The acquisition
was consummated pursuant to the terms of an Asset Purchase Agreement, made as
of May 20, 1997 (the "Agreement"), by and among the Company, Treasure Radio
and Harrison M. Fuerst, a principal of Treasure Radio. Under the terms of the
Agreement, Treasure Radio received aggregate consideration of $7,350,000 in
cash. In addition, the Company paid $300,000 in cash to Mr. Fuerst in
consideration of a five year non-compete agreement. The Stations were acquired
using a portion of the funds, aggregating $22,500,000, provided by the
financing activities of the Company described in Item 5 below.
ITEM 5. OTHER EVENTS
As of June 30, 1997, the Company completed the sale of $10,000,000
aggregate principal amount of its convertible subordinated promissory notes
due July 1, 2002 (the "Notes"). The Notes consist of Class A and Class B
convertible subordinated promissory notes, each in the aggregate principal
amount of $5,000,000. The Class A Notes are convertible into 7,769,500 shares
of the Company's common stock, $.01 par value (the "Common Stock"), and the
Class B Notes into 11,242,500 shares of Common Stock. The aggregate 19,012,000
of such shares on full conversion of the Notes would represent 67.1% of the
Company's outstanding Common Stock on a fully diluted and adjusted basis. The
Notes bear interest at 7% per annum, compounded quarterly, payable at the
maturity of the Notes. The Notes have not been registered under the Securities
Act of 1933, as amended, and may not be offered or sold in the United States
absent registration under the Act or an applicable exemption from
registration.
The proceeds from the sale of the Notes were used (i) to purchase for
$6,400,000 from Citicorp Venture Capital, Ltd. ("Citicorp") the Company's
8.65% Senior Convertible Note ("Convertible Note") in the principal amount of
$181,630 due December 1, 2004 and the Company's 10% Senior Exchangeable Note
("Exchangeable Note") in the principal amount of $500,000 due December 1,
2004, representing all of Citicorp's interests in the Company, and (ii) to pay
a portion of the purchase price for the acquisition of the Stations and the
legal and other fees and expenses of such acquisition. The Convertible Note
was convertible into 9,081,502 shares of Common Stock, which would have
represented 52.5% of the Company's fully diluted outstanding Common Stock
prior to the acquisition and the financing activities described in this
report. The Exchangeable Note gave Citicorp the right to request, at any time
after December 1, 1999, that $350,000 principal amount of such Note be
exchanged for a payment equal to 19.99% of the appraised value, as defined, of
the Company's subsidiary which owns and operates radio stations in Flint,
Michigan.
The Company also refinanced its existing senior secured term loan
credit facility with AT&T Commercial Finance Corporation ("AT&T"). As part of
the refinancing, the Company increased its outstanding debt to AT&T from
$7,371,000 to $12,500,000. The additional borrowing was used for the
acquisition of the Stations and related expenses. The term loan matures July
1, 2002 with optional renewal by the Company under certain circumstances for
an additional five years. Interest on the term loan initially is at the rate
of 4.50% over 90 day commercial paper rates.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
A. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
It is impracticable for the Company to provide the required financial
statements of the Stations on the date this report is being filed. The Company
intends to file these required financial statements under cover of Form 8-K/A
as soon as practicable, but not later than 60 days after the date this report
must have been filed.
B. PRO FORMA FINANCIAL INFORMATION.
It is impracticable for the Company to provide the required pro forma
financial information on the date this report is being filed. The Company
intends to file the required information under cover of Form 8-K/A as soon as
practicable, but not later than 60 days after the date this report must have
been filed.
C. EXHIBITS.
4.1 Form of Class A Convertible Subordinated Promissory Note.
4.2 Form of Class B Convertible Subordinated Promissory Note.
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.
FAIRCOM, INC.
Date: July 14, 1997 By: /s/ Joel M. Fairman
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Name: Joel M. Fairman
Title: President