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): March 2, 2005
MENDOCINO BREWING COMPANY, INC.
(Exact name of issuer as specified in its charter)
California
(State or other jurisdiction of incorporation or organization)
0-22524 68-0318293
(Commission File No.) (IRS Employer Identification Number)
1601 Airport Road, Ukiah, California 95482
(Address of principal executive offices) (Zip Code)
(707) 463 6610
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Effective as of March 2, 2005, Mendocino Brewing Company, Inc., a
California corporation (the "Company"), made a convertible promissory note (the
"Note") in principal amount of $400,000, in favor of United Breweries of
America, Inc., a Delaware corporation ("UBA"). The Note matures on September 1,
2006 (the "Maturity Date"), and bears interest at a rate equal to the lesser of
the prime rate offered from time to time by the Bank of America in San
Francisco, California plus 1.5%, or 10%.
UBA has the right, at its option, at any time on or after the Maturity
Date, to convert the principal amount of the Note and any unpaid interest into
shares of the Company's common stock at the rate of one share of common stock
per each $1.50 owed under the Note. Prior to the Maturity Date, the Company has
the right to redeem the Note, but must first give UBA the opportunity to convert
any unpaid amounts under the Note into the Company's common stock. UBA's
conversion rights under the Note are protected by both anti-dilution and
conversion rate protections. UBA's right to repayment under the Note is
subordinated to the payment of various debts to the Savings Bank of Mendocino,
Inc., the CIT Group/Credit Finance, Inc. (the "CIT Group"), and any other
lenders with which the Company refinances all or any part of the debt to the CIT
Group.
UBA is one of the Company's principal shareholders. As of the effective
date of the Note, UBA held 3,087,818 shares of the Company's common stock
outright (27.1% of the Company's outstanding common stock) and was deemed to
beneficially own an additional 1,351,243 shares based on its ability to convert
the principal and unpaid interest of thirteen outstanding promissory notes that
the Company had previously issued to UBA under a Master Line of Credit
Agreement. The additional 1,351,243 shares would give UBA beneficial ownership
of 34.8% of the Company's common stock. Sixty days prior to the maturity date of
the Note, UBA will gain beneficial ownership of an additional 266,666 shares,
which is the number of shares that would be granted to UBA upon conversion of
the principal amount of the Note. UBA would then be deemed to have beneficial
ownership of 36.2% of the Company's common stock. At that time, UBA may also be
deemed to have beneficial ownership of that number of shares that it could
acquire by conversion of any accrued and unpaid interest on the Note.
The Company's Chairman of the Board, Dr. Vijay Mallya, also acts as
Chairman and President of UBA. For a detailed discussion of Dr. Mallya's
relationship to the Company, please refer to the joint Schedule 13D filed by UBA
and Dr. Mallya with respect to their interests in the Company.
ITEM 8.01. OTHER EVENTS
As has been previously reported by the Company, on September 30, 2002,
the shareholders of United Breweries Holdings, Ltd. (formerly Kingfisher
Properties & Holdings, Ltd.), an Indian corporation ("UBHL"), adopted
resolutions authorizing UBHL's board of directors to consider a transaction by
which UBHL would purchase some or all of the Company's outstanding shares. UBHL
is an Indian corporation headquartered in Bangalore, India. Its shares are
publicly traded on the Bombay Stock Exchange (BSE Code 507458). The Company's
Chairman, Dr. Vijay Mallya, is also the Chairman of the Board of UBHL.
On March 1, 2005, UBHL formally submitted to the High Court of Karnataka
at Bangalore, India (the "High Court"), as required under Indian law, a plan of
reorganization (the "Plan") by which UBHL would, in addition to merging with a
number of its existing wholly-owned subsidiaries, acquire indirect control of
approximately 75.4% of the Company's outstanding shares. The acquisition would
take the form of a merger between UBHL and United Breweries of America, BVI, a
British Virgin Islands corporation ("UBA-BVI"), which is the corporate parent of
both Inversiones Mirabel, S.A., a Panamanian corporation which holds
approximately 48.3% of the Company's outstanding shares ("Inversiones"), and
United Breweries of America, Inc., a Delaware corporation ("UBA"), which holds
approximately 27.1% of the Company's outstanding shares.
As described elsewhere in this Current Report, UBA also holds a number
of convertible Company notes with a current aggregate principal balance of
$1,915,400. If all of these notes were converted into shares of the Company's
Common Stock, UBA would hold approximately 34.8% of the Company's Common Stock,
and the combined holdings of UBA and Inversiones would amount to approximately
78.4% of the Company's outstanding Common Stock.
Both Inversiones and UBA are currently subsidiaries of UBA-BVI. The Plan
calls for UBA-BVI to be merged with and into UBHL, so that UBHL would survive
the merger and UBA-BVI would thereafter cease to exist as a separate entity (the
"Merger"). As a result of the Merger, both Inversiones and UBA would become
direct subsidiaries of UBHL.
Consummation of the Plan, both as it affects the Company's shares and
with respect to the other entities involved, is subject to a number of
contingencies, including among others: compliance with various applicable Indian
and British Virgin Island laws and regulations; ratification by the High Court;
approval of the Indian Foreign Investment Promotion Board and/or the Reserve
Bank of India with respect to the issuance of UBHL shares under the Plan; and
the consent of UBHL's shareholders. At present, therefore, it is unclear when
the Plan and the Merger may be consummated.
ITEM 9. EXHIBITS
Exhibit No. Description
----------- -----------
10.1 Convertible Promissory Note of Mendocino Brewing
Company, Inc. in favor of United Breweries of
America, Inc., dated March 2, 2005.
2
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: March 2, 2005 By: /s/ N. MAHADEVAN
------------------------------
N. Mahadevan, Secretary and
Chief Financial Officer
3