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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JULY 16, 1996 (JULY 9, 1996)
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OUTDOOR SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-28256 86-0736400
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2502 NORTH BLACK CANYON HIGHWAY, PHOENIX, ARIZONA 85009
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 246-9569
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
On July 9, 1996, the Registrant entered into an Asset Purchase
Agreement (the "Asset Purchase Agreement") with Gannett Co., Inc. and certain
of its subsidiaries (collectively, "Gannett"), providing for the purchase (the
"Acquisition") by the Registrant of substantially all of the billboard
advertising, transit and shelter operations of the Outdoor Division (the
"Division") of Gannett for a purchase price of $640 million in cash, plus the
net book value of working capital and certain other specified assets of the
Division (which net book value is estimated to increase the purchase price by
approximately $50 million). In addition, pursuant to the Asset Purchase
Agreement, Gannett Outdoor Co. of Texas, Inc. ("Gannett of Texas") will grant
to the Registrant an option (the "Option"), to purchase, within 120 days after
the closing of the Acquisition, Gannett of Texas' outdoor operations in
Houston, Texas, for a purchase price of $10 million, plus a net book value
adjustment similar to the adjustment to the purchase price of the Division.
Pursuant to the Asset Purchase Agreement, the Registrant made a deposit to
Gannett consisting of $12 million cash and a promissory note in the principal
amount of $3 million payable on July 29, 1996, and guaranteed by William S.
Levine, Chairman of the Board and principal shareholder of the Registrant. The
deposit will be credited against the purchase price if the Acquisition is
consummated, returned to the Registrant if the Acquisition is not consummated
as a result of a breach by Gannett, retained by Gannett if the transaction is
not consummated because of a breach by the Registrant, and split equally
between the Registrant and Gannett if the Acquisition is not completed because
of the action of a third party outside of either party's control. Copies of
the Asset Purchase Agreement and the Option are attached as Exhibit 99.1 and
Exhibit 99.2, respectively, to this Report and are incorporated by reference
herein.
The consummation of the transactions contemplated by the Asset
Purchase Agreement is subject to certain conditions including the expiration or
early termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
The Registrant will finance the purchase price of the Acquisition, the
fees and expenses associated with the Acquisition and the related financing and
the retirement or refinancing of certain existing indebtedness through (i)
revolving credit and term loans of up to $530 million under a senior credit
facility, (ii) bridge loans of up to $240 million under a senior subordinated
facility, and (iii) up to $165 million in proceeds from a private placement of
preferred stock and warrants pursuant to the following agreements entered into
on July 9, 1996:
(1) The Registrant entered into a Second Amended and Restated
Credit Agreement (the "Restated Credit Agreement") with
Canadian Imperial Bank of Commerce ("CIBC"), as Administrative
Agent, and other financial institutions parties thereto
providing for the restructuring of the Registrant's existing
credit facility with CIBC and for revolving credit loans
(including letter of credit commitments) of up to $70 million
and term loans of up to $460 million. The revolving credit
loans and the term loans may be, at the option of the
Registrant, "Eurodollar loans," "ABR loans," or a combination
thereof. Eurodollar loans will bear annual interest at LIBOR
plus an applicable margin (initially 3.25% for revolving
credit loans and for the $160 million principal amount of term
loans designated as "Tranche A" and 3.50% for "Tranche B" and
"Tranche C" term loans). ABR loans will bear interest at an
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annual rate equal to the highest of (A) the CIBC base rate,
(B) the federal funds rate plus 1%, and (C) the lowest
three-week moving average of daily secondary market morning
offering rates for three-month CDs plus 1%, plus, in each
case, an applicable margin (initially 2.25% for revolving
credit loans and Tranche A term loans and 2.50% for Tranche B
and Tranche C loans). The Registrant's obligations under the
Restated Credit Agreement will be secured by a security
interest in substantially all of the Registrant's assets. The
revolving credit loans will mature on the earlier of December
31, 2001, or at such time as any revolving credit lender no
longer is obligated to make revolving credit loans to, and/or
issue or participate in letters of credit issued on behalf of,
the Registrant. The maturity dates for the Tranche A, Tranche
B, and Tranche C loans are December 31, 2000, 2002, and 2003,
respectively. The Registrant may at any time and from time to
time prepay any of the loans in whole or in part without
premium or penalty. The Registrant must use excess cash flow
and cash proceeds from the sale of securities or assets,
subject to certain exceptions (including exceptions for
refinancing of indebtedness under the Senior Subordinated
Credit Agreement (as defined below) and redemption of Series A
Preferred Stock (as defined below), in each case out of
proceeds of specified refinancings to prepay amounts
outstanding under this credit facility. The Restated Credit
Agreement contains customary affirmative and negative
covenants (including covenants limiting the Registrant's
ability to incur additional indebtedness or other obligations,
sell assets, pay dividends, and make capital expenditures and
certain investments) and customary event of default
provisions, including default upon a change in control of the
Registrant. A copy of the Restated Credit Agreement is
attached as Exhibit 99.3 to this Report and is incorporated by
reference herein.
(2) The Registrant and its subsidiaries entered into a Senior
Subordinated Credit Agreement (the "Senior Subordinated Credit
Agreement") with CIBC, as Agent, and the lenders named
therein, providing for a bridge loan to the Registrant in the
aggregate principal amount of $240 million. The bridge loan
will bear interest at LIBOR plus 6% per annum increasing by 1%
if the bridge loan remains outstanding six months after the
closing of the financing and by .5% every three months
thereafter up to a maximum of 20% per annum. Any interest due
and payable in excess of 15% per annum may be paid by the
Registrant in additional senior subordinated indebtedness.
Bridge indebtedness remaining outstanding one year following
the closing of the financing will be converted into term loans
maturing on the tenth anniversary of the closing of the
financing and will initially bear interest at the same rate as
the bridge loan plus .5%, subject to increase by .5% every
three months thereafter up to a maximum of 20% per annum. The
term loans may be exchanged by any lender holding in excess of
$5 million principal amount thereof for Senior Subordinated
Notes due 2006 (the "Exchange Notes") to be issued under an
Indenture (the "Indenture") to be entered into by the
Registrant, the subsidiary guarantors named therein, and a
trustee to be selected by the Registrant. The Exchange Notes
will bear interest at the same rate as the term loans and,
like the term loans, will mature on the tenth anniversary of
the closing of the financing. The Registrant may prepay the
bridge loan in whole or in part (provided that, in the case of
prepayment in part, at least $100 million in principal amount
remains outstanding) without penalty or premium. Term loans
and Exchange Notes may be prepaid in whole or in part
(provided that, in the case
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of prepayment in part, at least $100 million in principal
amount remains outstanding) at a premium as set forth in the
Senior Subordinated Credit Agreement and the Indenture, as
applicable. The Registrant must use excess cash flow and cash
proceeds from sales of securities and assets, subject to
prepayment of senior indebtedness under certain circumstances
and certain other exceptions, to prepay amounts outstanding
under this facility and must offer to repay or repurchase the
bridge loan or the term loans, as appropriate, upon a change
in control. The Senior Subordinated Credit Agreement contains
customary affirmative and negative covenants, including
covenants limiting the Registrant's ability to incur
additional indebtedness or other obligations, sell assets, pay
dividends, and make capital expenditures and certain other
investments. Copies of the Senior Subordinated Credit
Agreement and the form of Indenture are attached as Exhibit
99.4 and Exhibit 99.5, respectively, to this Report and are
incorporated by reference herein.
(3) The Registrant entered into a Securities Purchase Agreement
(the "Securities Purchase Agreement") with CIBC WG Argosy
Merchant Fund 2, L.L.C. (the "Purchaser"), providing for the
issuance and sale by the Registrant of up to $165 million
liquidation value of Senior Increasing Rate Cumulative
Preferred Stock, Series A (the "Series A Preferred Stock"),
and warrants to purchase up to 284,000 shares of Common Stock
of the Registrant (not adjusted for the stock split to be
effected as a stock dividend payable on July 22, 1996 to
shareholders of record on July 8, 1996) (the "Warrants"). In
addition, the Registrant and the Purchaser have agreed that
the Registrant may sell to Purchaser up to an additional $60
million liquidation value of Series A Preferred Stock solely
to enable the Registrant to maintain, as of the date of the
closing of the financing, a total leverage ratio (as defined
in the Restated Credit Agreement) no greater than 6.5 to 1.
If any such additional Series A Preferred Stock is issued, the
number of Warrants and Additional Warrants (as defined below)
issuable pursuant to the Securities Purchase Agreement will be
proportionately increased, and the term loan commitments under
the Restated Credit Agreement will be proportionately
decreased. The holders of the Series A Preferred Stock will
be entitled to receive dividends payable in additional shares
of Series A Preferred Stock at a rate per annum equal to the
three-month LIBOR rate plus 7%. If the Series A Preferred
Stock remains outstanding six months after the date such stock
was first issued, the dividend rate will increase by 1% and
for each 90-day period thereafter that such stock remains
outstanding, the dividend rate will increase by an additional
.5% up to a maximum of 20%. The Warrants will have an
exercise price per share equal to 110% of the average market
price of the Registrant's Common Stock for the 20 business day
period prior to the announcement of the Acquisition, may be
exercised for a period of five years from the date of the
closing of the financing and may be called by the Registrant
at a nominal call price after three years from the date of the
closing of the Acquisition. The Securities Purchase Agreement
provides that additional warrants ("Additional Warrants") are
to be issued to the holders of the Series A Preferred Stock if
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stock continues to be outstanding 60 days following the
closing of the Acquisition at the rate of 4,100 Additional
Warrants per day for the period commencing on the 61st and
ending on the 90th day following the closing, at the rate of
5,235 Additional Warrants for the period commencing on the
91st day and ending on the 120th day, and at the rate of
455,000 Additional Warrants per quarter thereafter. The
exercise price of the Additional Warrants, if any, issued
during the period between 60 and 120 days following the
closing of the Acquisition, the period during which such
Additional Warrants may be exercised and the call period
thereof will be the same as those of the initial Warrants.
The exercise price of the remaining Additional Warrants, if
any, will be 110% of the average market price of the
Registrant's Common Stock for the 20 business day period prior
to the date of issuance thereof and such Additional Warrants
will be exercisable for a period of five years, and may be
called after three years, from the date of issuance thereof.
The Series A Preferred Stock may be redeemed at any time in
whole or in part at a redemption price equal to the
liquidation value plus accrued and unpaid dividends. In
addition, the Registrant must use proceeds of certain asset
sales that are not used to retire indebtedness or to make
certain permitted investments to offer to repurchase shares of
Series A Preferred Stock and must offer to repurchase the
Series A Preferred Stock upon a change in control. A copy of
the Securities Purchase Agreement is attached as Exhibit 99.6
to this Report and is incorporated by reference herein. The
form of Certificate of Designations setting forth the terms of
the Series A Preferred Stock and the form of Warrant Agreement
pursuant to which the Warrants and the Additional Warrants
will be issued are attached as Exhibit 99.7 and Exhibit 99.8,
respectively, to this Report and are incorporated by reference
herein.
The holders of the Series A Preferred Stock and Exchange Notes will be
granted certain registration rights pursuant to a Registration Rights Agreement
to be entered into by and among the Registrant, the guarantors named therein,
and the holders named therein. The holders of the Warrants will also be
granted certain registration rights with respect to shares of Common Stock
issuable upon the exercise thereof pursuant to a Common Stock Registration
Rights Agreement to be entered into between the Registrant and the Purchaser.
The form of Registration Rights Agreement and the form of Common Stock
Registration Rights Agreement are attached as Exhibit 9 and Exhibit 10,
respectively, to this Report and are incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1. Asset Purchase Agreement dated July 9, 1996, by and
among the Registrant, Gannett Co., Inc., Combined
Communications Corporation, Gannett Transit, Inc.,
Shelter Media Communications, Inc., and Gannett
International Communications, Inc., together with
forms of Promissory Note and related Guaranty. The
Exhibit contains a list briefly identifying the
contents of Schedules and Exhibits, some of which
have been omitted. The Registrant
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agrees to furnish supplementally a copy of any
omitted Schedule or Exhibit to the Commission upon
request.
99.2. Form of Option by Gannett Outdoor Co. of Texas, Inc.,
in favor of the Registrant together with the form of
Asset Purchase Agreement by and between the
Registrant Gannett Outdoor Co. of Texas, Inc.
99.3. Second Amended and Restated Credit Agreement dated
July 9, 1996, as amended, by and among the
Registrant, Canadian Imperial Bank of Commerce, as
Administrative Agent, and the other financial
institution parties thereto, together with forms of
Revolving Credit Note, Tranche A Term Note, Tranche B
Term Note, Tranche C Term Note, and Guarantee and
Collateral Agreement. The Exhibit contains a list
briefly identifying the contents of Schedules and
Exhibits, some of which have been omitted. The
Registrant agrees to furnish supplementally a copy of
any omitted Schedule or Exhibit to the Commission
upon request.
99.4. Senior Subordinated Credit Agreement dated July 9,
1996, by and among the Registrant, the guarantors
named therein, the lenders named therein, and
Canadian Imperial Bank of Commerce, as Agent,
together with forms of Bridge Note and Term Note.
The Exhibit contains a list briefly identifying the
contents of Schedules and Exhibits, some of which
have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or
Exhibit to the Commission upon request.
99.5. Form of Indenture by and among the Registrant, the
subsidiary guarantors named therein, and a trustee to
be selected by the Registrant.
99.6. Securities Purchase Agreement dated July 9, 1996, by
and between the Registrant and CIBC WG Argosy
Merchant Fund 2, L.L.C. The Exhibit contains a list
briefly identifying the contents of Schedules and
Exhibits which have been omitted. The Registrant
agrees to furnish supplementally a copy of any
omitted Schedule or Exhibit to the Commission upon
request.
99.7. Form of Certificate of Designations of Senior
Increasing Rate Cumulative Preferred Stock, Series A.
99.8. Form of Warrant Agreement by and between the
Registrant and a Warrant Agent to be selected by the
Registrant.
99.9. Form of Registration Rights Agreement by and among
the Registrant, the guarantors names therein, and the
holders named therein.
99.10. Form of Common Stock Registration Rights Agreement by
and between the Registrant and CIBC WG Argosy
Merchant Fund 2, L.L.C.
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SIGNATURE
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: July 16, 1996 OUTDOOR SYSTEMS, INC.
By: /s/ BILL M. BEVERAGE
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Name: Bill M. Beverage
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Title: Chief Financial Officer,
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Treasurer and Secretary
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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99.1. Asset Purchase Agreement dated July 9, 1996, by and among the
Registrant, Gannett Co., Inc., Combined Communications Corporation,
Gannett Transit, Inc., Shelter Media Communications, Inc., and Gannett
International Communications, Inc., together with forms of Promissory
Note and related Guaranty. The Exhibit contains a list briefly
identifying the contents of Schedules and Exhibits, some of which have
been omitted. The Registrant agrees to furnish supplementally a copy
of any omitted Schedule or Exhibit to the Commission upon request.
99.2. Form of Option by Gannett Outdoor Co. of Texas, Inc., in favor of the
Registrant together with the form of Asset Purchase Agreement by and
between the Registrant Gannett Outdoor Co. of Texas, Inc.
99.3. Second Amended and Restated Credit Agreement dated July 9, 1996, as
amended, by and among the Registrant, Canadian Imperial Bank of
Commerce, as Administrative Agent, and the other financial institution
parties thereto, together with forms of Revolving Credit Note, Tranche
A Term Note, Tranche B Term Note, Tranche C Term Note, and Guarantee
and Collateral Agreement. The Exhibit contains a list briefly
identifying the contents of Schedules and Exhibits, some of which have
been omitted. The Registrant agrees to furnish supplementally a copy
of any omitted Schedule or Exhibit to the Commission upon request.
99.4. Senior Subordinated Credit Agreement dated July 9, 1996, by and among
the Registrant, the guarantors named therein, the lenders named
therein, and Canadian Imperial Bank of Commerce, as Agent, together
with forms of Bridge Note and Term Note. The Exhibit contains a list
briefly identifying the contents of Schedules and Exhibits, some of
which have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or Exhibit to the
Commission upon request.
99.5. Form of Indenture by and among the Registrant, the subsidiary
guarantors named therein, and a trustee to be selected by the
Registrant.
99.6. Securities Purchase Agreement dated July 9, 1996, by and between the
Registrant and CIBC WG Argosy Merchant Fund 2, L.L.C. The Exhibit
contains a list briefly identifying the contents of Schedules and
Exhibits which have been omitted. The Registrant agrees to furnish
supplementally a copy of any omitted Schedule or Exhibit to the
Commission upon request.
99.7. Form of Certificate of Designations of Senior Increasing Rate
Cumulative Preferred Stock, Series A.
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99.8. Form of Warrant Agreement by and between the Registrant and a Warrant
Agent to be selected by the Registrant.
99.9. Form of Registration Rights Agreement by and among the Registrant, the
guarantors names therein, and the holders named therein.
99.10. Form of Common Stock Registration Rights Agreement by and between the
Registrant and CIBC WG Argosy Merchant Fund 2, L.L.C.
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