U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A No. 2
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 3, 2000
Commission File No. 0-22524
MENDOCINO BREWING COMPANY, INC.
(Exact name of small business issuer as specified in its charter)
California 68-0318293
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
13351 South Highway 101, 95449
Hopland, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (707) 744-1015
Item 2. Acquisition or Disposition of Assets
Acquisition of United Breweries International (UK) Limited
On November 3, 2000 Mendocino Brewing Company, Inc. (the "Company")
entered into a Share Purchase Agreement with Inversiones Mirabel, S.A., a
Panamanian corporation ("Inversiones") and Golden Eagle Trust, a trust formed
under the laws of the Isle of Man (part of the United Kingdom) ("Golden Eagle").
Under the terms of the Share Purchase Agreement, the Company will acquire from
Inversiones all of the outstanding shares of United Breweries International (UK)
Limited, a company organized under the laws of the United Kingdom ("UBI"). (The
Company's acquisition of UBI is referred to below as the "Acquisition").
UBI's only material asset is UBSN Ltd., a United Kingdom corporation
("UBSN") which is its wholly-owned subsidiary. UBSN markets, sells, and
distributes Kingfisher Lager beer, primarily in the United Kingdom and elsewhere
in the European Union. Currently, the Kingfisher beer is brewed for UBSN by a
third party, Shepherd Neame Limited, under a contract manufacturing agreement.
Following consummation of the Acquisition, UBI will be a wholly-owned subsidiary
of the Company and UBSN will continue to be a wholly owned subsidiary of UBI.
The Company intends to continue operating UBI and UBSN in the marketing, sale,
and distribution of beer, including Kingfisher Lager, in the United Kingdom and
elsewhere in the European Union.
The purchase price for UBI will be 5,500,000 shares of the Company's to
be issued common stock (the "Purchase Shares"). The Company will not pay any
cash or other consideration, except for the Purchase Shares, to acquire UBI. (A
copy of the Share Purchase Agreement is attached to this Current Report as
Exhibit 1) The shares of Company stock proposed to be issued to Inversiones
under the Share Purchase Agreement would constitute approximately 49.6% of the
Company's outstanding Common Stock after the Acquisition is consummated.
Under the Share Purchase Agreement, Inversiones has made a number of
representations and warranties with respect to UBI and UBSN. Each of these
representations and warranties, and the performance by Inversiones of its
indemnity obligations with respect thereto, are unconditionally indemnified and
guaranteed by Golden Eagle, which must indemnify and hold the Company harmless
against any and all losses, damages, costs, and expenses suffered or incurred by
the Company as the result of any breach by Inversiones of any of such
representations, warranties, or indemnities.
Kingfisher Lager Beer
One potential advantage of the Acquisition for the Company is that, as
a result of the Acquisition, the Company could become the distribution agent for
Kingfisher Lager beer in the United States and Canada. At present, the U.S.
distribution agent for Kingfisher Lager beer in the United States is American
United Breweries Int'l., Inc. ("AUBI"), a company which is affiliated with
Inversiones and Golden Eagle, although there is no formal distribution agreement
between UBI and AUBI for this purpose. After the proposed Acquisition is
consummated, the Company
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anticipates that UBI will terminate this relationship (as it relates to the
distribution of Kingfisher beer) and that UBI will enter into a separate
distribution agreement to grant the rights for the United States and Canada to
the Company. AUBI will, however, continue to distribute other beers in the
United States which compete with the Kingfisher brand (in the same market
niche), notably the Flying Horse and Tajmahal brands.
Approval of the Acquisition by a Special Committee of the Board; Fairness
Opinion
Because the Acquisition is considered to be a related party transaction
(see below), the Company appointed a Special Committee of its Board of
Directors, consisting of Directors who are not also Company employees or related
to Inversiones, Golden Eagle, or their affiliates (the "Special Committee") to
negotiate the Share Purchase Agreement and make a recommendation with respect to
the Acquisition to the entire Board of Directors. The Special Committee retained
Sage Capital LLC ("Sage") to act as its financial advisor in connection with the
evaluation of certain elements of the Company's acquisition strategy. Pursuant
to this engagement, Sage was asked to render an opinion as to whether the equity
consideration to be paid for UBI pursuant to the Agreement is fair to the
shareholders of the Company from a financial point of view. On November 3, 2000,
Sage delivered to the Special Committee its written opinion that, as of that
date, the consideration to be paid by the Company in exchange for all of the
equity of UBI was fair to the Company's shareholders from a financial point of
view.
Related Party Transaction
The principal trustee of Golden Eagle is CAS Nomines Ltd., a
corporation organized under the laws of the Isle of Man (part of the United
Kingdom). Because CAS Nominees Ltd. has the ability to act in favor of Dr. Vijay
Mallya, the Company's Chairman of the Board and Chief Executive Officer, Dr.
Mallya may be deemed to have a beneficial ownership interest, and therefore a
material financial interest, in Golden Eagle. Golden Eagle is the sole (100%)
owner of Inversiones, which in turn owns UBI.
Through one of its subsidiaries, United Breweries of America, BVI, a
British Virgin Islands corporation, Golden Eagle also holds a controlling
interest in United Breweries of America, Inc., a Delaware corporation ("UBA")
which is also the Company's principal shareholder. UBA owns 3,087,818 shares, or
55.3%, of the Company's currently outstanding voting Common Stock. (UBA also has
an agreement with certain of the Company's original founders which grants to UBA
a right of first refusal to purchase an additional 882,547 shares.) Dr. Mallya
is the Chairman of the Board and Chief Executive Officer of UBA. Through
Inversiones and UBA, therefore, Golden Eagle owns or controls a majority of the
voting stock of both of the principal parties to the Agreement. In addition, Dr.
Mallya is a member of the board of directors of UBSN.
In addition to the relationship of Dr. Mallya to both the Company and
Golden Eagle, another of the Company's Directors, Mr. R.H.B. Neame, may also be
deemed to have an interest in the Acquisition. Mr. Neame has served as the
Chairman and Chief Executive Officer of Shepherd Neame Ltd. for over twenty-five
years. Shepherd Neame Ltd. is a distributor of Kingfisher Lager, and has an
agreement with UBSN to provide distribution and other services to UBSN.
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Because the Acquisition would be a related-party transaction, a Special
Committee of the Board of Directors was created to review and approve the
proposed Acquisition. The members of the Special Committee are Kent Price
(Chairman), Sury Palamand and Michael Laybourn. The Special Committee engaged
the law firm of Baker & McKenzie to act as its independent counsel and to advise
it with respect to the terms and conditions of the Share Purchase Agreement. As
discussed above, the Company has obtained, from Sage Capital, L.L.C., an
independent opinion as to the fairness of the Acquisition, from a financial
point of view, to the Company's shareholders (including shareholders other than
UBA).
Consummation of the Acquisition
The Company anticipates that the Acquisition will be consummated during
the late spring or early summer of 2001. The primary contingency affecting
consummation of the Acquisition is that the Company must obtain approval of a
majority of its shareholders. The Company intends to submit the Acquisition to
its shareholders for approval at its next Annual Meeting, which is scheduled to
be held in the spring of 2001. Even if the Acquisition does receive the approval
of a majority of the Company's shareholders, however, under the terms of the
Share Purchase Agreement the Company may elect not to consummate the Acquisition
if the holders of more than 123,457 shares of Company stock (about 2.2% of the
currently outstanding shares) elect to exercise their dissenters' rights under
California law.
Item 7. Exhibits
Exhibit No. Description
- ----------- -----------
99.1 Share Purchase Agreement among Inversiones Mirabel, S.A.,
Mendocino Brewing Company, Inc., and Golden Eagle Trust,
dated November 3, 2000. Incorporated by reference to
Supplement A in Definitive Proxy Statement filed November
22, 2000.
99.2 Press release dated March 29, 2000 announcing the Company's
acquisition of UBSN and the U.S. distribution rights to
Kingfisher Premium Lager Beer from UBI. Incorporated by
reference to EX-4.1 in 8-K filed March 29, 2000.
99.3 Mendocino Brewing Company, Inc. and United Breweries
International (UK) Limited Pro Forma Balance Sheet and Income
Statement for the years ended December 31, 1999 and 2000.
99.4 United Breweries International (UK) Limited December 31, 2000
Consolidated Financial Statements Conversion Table
99.5 United Breweries International (UK) Limited Balance Sheet,
Statement of Income and Stockholder's Equity, and Statement
of Cash Flows for the years ended December 31, 1999 and 2000.
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SIGNATURES
Pursuant to the requirements on 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.
MENDOCINO BREWING COMPANY, INC.
(Registrant)
Date: April __, 2001 By /s/ N. Mahadevan
---------------------------------------
N. Mahadevan
Chief Financial Officer and
Corporate Secretary
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Description Page
- ----------- ----------- ------------
99.1 Share Purchase Agreement among Inversiones
Mirabel, S.A., Mendocino Brewing Company, Inc.,
and Golden Eagle Trust, dated November 3, 2000
Incorporated by reference to Definitive Proxy
Statement filed November 22, 2000.
99.2 Press release dated March 29, 2000 announcing
the Company's acquisition of UBSN and the U.S.
distribution rights to Kingfisher Premium
Lager Beer from UBI. Incorporated by reference
to EX-4.1 in 8K filed March 29, 2000.
99.3 Mendocino Brewing Company, Inc. and United 7
Breweries International (UK) Limited Pro Forma
Balance Sheet and Income Statement for the
years ended December 31, 1999 and 2000
99.4 United Breweries International (UK) Limited 12
December 31, 2000 Consolidated Financial
Statements Conversion Table
99.5 United Breweries International (UK) Limited 18
Balance Sheet, Statement of Income and
Stockholder's Equity, and Statement of Cash
Flows for the years ended December 31, 1999
and 2000
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