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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): January 12, 1996
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DDL ELECTRONICS, INC.
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(Exact name of Registrant as Specified in Charter)
Delaware 1-8101 33-0213512
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2151 Anchor Court, Newbury, California 91320
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (805) 376-2596
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7320 SW Hunziker Road, Suite 300, Tigard, Oregon 97006
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 12, 1996, DDL Electronics, Inc. (the "Company") acquired
100% of the issued and outstanding capital stock of SMTEK, Inc., a California
corporation ("SMTEK"), pursuant to an Agreement for Purchase of Shares dated
October 6, 1995 (the "Agreement") between the Company, as buyer, and the
shareholders of SMTEK who include George Brimhall, Lynn Stratford, Stratford
Freedom Trust, Stratford Investments, Thomas F. Clark, Leland Buttle, Bayview
Construction, Stuart Siegel and Gregory L. Horton, as sellers (collectively,
the "Sellers"). In exchange for their SMTEK stock, the Sellers, not including
Mr. Horton, received $6,798,738 in the aggregate from the Company. Mr. Horton
received 1,000,000 unregistered shares of the Company's common stock, par value
$.01 per share ("Common Stock"), in exchange for his SMTEK stock. The amount
of consideration paid by the Company was determined on the basis of SMTEK as a
going concern including its customer base and business backlog, by a comparison
with the valuations placed upon other companies in the industry in recent
business combinations, and by strategic considerations.
In a separate agreement with the Company, Mr. Horton has agreed to
become the President of the Company. In addition, the Company's principal
corporate office has been relocated from Tigard, Oregon to SMTEK's corporate
offices at 2151 Anchor Court, Newbury, California 91320. Telephone No. (805)
376-2595.
The acquisition of SMTEK has been financed by short-term, bridge loans
in an aggregate principal amount of $7.0 million arranged by Rickel &
Associates, Inc. The bridge loans include $1.0 million in aggregate prinicpal
amount of 10% Senior Bridge Notes executed on November 10, 1995, and $6.0
million in aggregate principal amount of unsecured loans bearing interest at
10% that were advanced by Rickel & Associates, Inc. to the Company on January 5
and 12, 1996.
The Company expects to consummate longer term financing, and to retire
the $7.0 million in bridge loans, though the issuance and private placement of
its 10% Senior Secured Notes in aggregate principal amount of $5 million due in
1997 (the "Notes") that are to be issued pursuant to a Securities Purchase
Agreement among the Company and the various purchasers of the Notes and placed
by Rickel & Associates, Inc., and through the issuance and private placement of
its 10% Cumulative Convertible Debentures in an aggregate principal amount not
to exceed $5 million due in 1997 (the "Debentures") and placed by
Intercontinental Holding Company, Ltd. The Notes are to be secured by warrants
to purchase shares of Common Stock and by shares of Common Stock pledged by
Rickel & Associates, Inc. The Debentures are to be convertible into shares of
Common Stock.
Neither the placement of the Notes nor the placement of the Debentures
have been consummated and the terms and conditions thereof are still being
negotiated between the parties. The Company will file an amendment to this
report on Form 8-K setting forth the details of the Notes and the Debentures
following completion their placement.
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SMTEK will continue its present operations as an operating subsidiary
of the Company. SMTEK is a nine-year old private manufacturing concern based
in Southern California that specializes in full production implementation of
circuit boards, from analysis and design to complex manufacture of the product,
ready for market. Areas of particular specialization include: (i) mechanical
thermal engineering analysis and design of printed circuit boards; (ii) full
procurement of all materials, components and up-screening; (iii) a
state-of-the-art production facility featuring computer integration and
robotics; and (iv) full in-circuit and functional testing capabilities.
The acquisition of SMTEK is expected to be an important step in the
expansion of the technical capabilities and marketing force of the Company in
Europe and the United States. The SMTEK acquisition will bring to the Company
a fully automated robotic assembly line, mechanical engineer program managers,
and a team with experience in printed wiring board and mechanical design
technology. SMTEK also has substantial experience in the design and production
of printed circuit boards to be used in wireless communication products.
For additional information concerning the transaction, reference is
made to the Agreement and to a press release issued as of January 12, 1996,
copies of which are attached as exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired. It is impractical to
provide the required financial statements for SMTEK at the time of the filing
of this report on Form 8-K. Such required financial statements will be filed
as an amendment to this report on Form 8-K on or before March 27, 1996.
(b) Pro Forma Financial Information. It is impractical to provide the
required pro forma financial information for the Company at the time of the
filing of this report on Form 8-K. Such pro forma financial information will
be filed as an amendment to this report on Form 8-K on or before March 27,
1996.
(c) Exhibits.
Exhibit Number Description
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99.1 Agreement for Purchase of Shares dated October 6, 1995 between DDL
Electronics, Inc., as buyer, and the shareholders of SMTEK.
99.2 Employment Agreement and Letter of Understanding and Agreement dated
October 15, 1995 between DDL Electronics, Inc. and Gregory L. Horton.
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Exhibit Number Description
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99.3 Note Purchase Agreement dated as of November 10, 1995 among DDL Electronics,
Inc. and the various purchasers of 10% Senior Bridge Notes.
99.4 Press Release dated January 12, 1996.
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.
DDL ELECTRONICS, INC.
Date: January 29, 1996 By: /s/ Gregory L. Horton
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Gregory L. Horton
President
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