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): December 16, 1999
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GT INTERACTIVE SOFTWARE CORP.
(Exact name of registrant as specified in its charter)
Delaware 0-27338 13-3689915
(State or other (Commission file number) (I.R.S. employer
jurisdiction of incorporation identification no.)
or organization)
417 Fifth Avenue, New York, NY 10016
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 726-6500
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Item 1. Change in Control of Registrant.
On December 16, 1999, pursuant to a Securities Purchase
Agreement (the "GT Purchase Agreement"), dated as of November 15, 1999, by and
among the Registrant, Infogrames Entertainment S.A. ("Infogrames") and
California U.S. Holdings, Inc., a California corporation and a wholly-owned
subsidiary of Infogrames ("Purchaser"), which was filed as an exhibit to the
Registrant's Current Report on Form 8-K filed on November 19, 1999, the
Registrant issued to Purchaser and Purchaser acquired from the Registrant: (i)
28,571,429 shares of the Registrant's common stock, par value $0.01 per share
("Common Stock"), at a purchase price of $1.75 per share and (ii) a 5%
subordinated convertible note in the aggregate principal amount of
$60,587,206.72 (the "Infogrames Note"), which is convertible into an aggregate
of 32,749,841 shares of Common Stock at a conversion price of $1.85 per share,
subject to antidilution adjustments (such transaction, the "GT Purchase").
Concurrently with the consummation of the GT Purchase,
Purchaser acquired (i) an aggregate of 33,558,531 shares of Common Stock from
Joseph J. Cayre, Kenneth Cayre, Stanley Cayre, Jack J. Cayre, their children and
various associated trusts (together, the "Cayre family") for an aggregate
purchase price of $25 million and (ii) subordinated notes of the Registrant in
the principal amount of $10 million, plus accrued interest, held by the Cayre
family.
Also concurrently with the consummation of the GT Purchase,
Purchaser acquired from General Atlantic Partners 54, L.P. and GAP Coinvestment
Partners II, L.P. (together, "GAP") warrants to purchase 4,500,000 shares of
Common Stock, at an exercise price of $0.01 per share, for nominal
consideration.
In addition, pursuant to a Securities Exchange Agreement,
dated as of November 15, 1999, by and among the Registrant and GAP, which was
filed as an exhibit to the Registrant's Current Report on Form 8-K filed on
November 19, 1999, the Registrant issued to GAP non-interest-bearing
subordinated convertible notes in the aggregate principal amount of $50 million,
which are convertible into an aggregate of 12,500,000 shares of Common Stock at
a conversion price of $4.00 per share, subject to antidilution adjustments (the
"GAP Notes"), in exchange for 600,000 shares of the Registrant's Series A
Convertible Preferred Stock with a liquidation preference of $30 million and
subordinated notes of the Registrant in the principal amount of $20 million,
plus accrued interest, held by GAP.
Based on Infogrames' Schedule 13D, filed on December 14, 1999,
Infogrames and Purchaser may now be deemed to beneficially own an aggregate of
approximately 100.7 million shares of Common Stock, or 71.7% of the voting
securities of the Registrant. Infogrames and Purchaser acquired these securities
using funds from its working capital.
Effective as of December 16, 1999, pursuant to the GT Purchase
Agreement, all current members of the Registrant's Board of Directors, other
than Mr. Thomas A. Heymann and Mr. Steven A. Denning, resigned as directors of
the Registrant, and Mr. Bruno Bonnell, President and Chief Executive Officer of
Purchaser, and Mr. Thomas Schmider, the Managing Director of Purchaser, were
elected as new directors of the Registrant. In addition, on December 17, 1999,
the reconstituted Board of Directors of the Registrant set the number of
directors on the Board of Directors at five and appointed Mr. Herve Liagre, the
Mergers and Acquisitions Director of Purchaser, as a director of the Company.
Reference is made to the press release issued by the
Registrant on December 17, 1999, the text of which is attached hereto as Exhibit
99.1, for a description of the events reported pursuant to this Form 8-K.
Item 7. Exhibits
99.1 Press Release dated December 17, 1999.
2
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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.
GT INTERACTIVE SOFTWARE CORP.
Date: December 21, 1999 By: /s/ JOHN T. BAKER IV
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Name: John T. Baker IV
Title: President and
Chief Operating Officer
EXHIBIT 99.1
INFOGRAMES ENTERTAINMENT COMPLETES ACQUISITION OF CONTROLLING
STAKE IN GT INTERACTIVE SOFTWARE
$135 Million Investment Creates Global Interactive Entertainment Leader
LYON, FRANCE, NEW YORK, NY & SAN JOSE, CA, December 17, 1999- Infogrames
Entertainment S.A., an established leading developer, publisher and distributor
of interactive entertainment, today announced it has completed the acquisition
of a controlling interest in U.S.-based GT Interactive Software (Nasdaq: GTIS).
Infogrames Entertainment acquired the controlling stake through a total
investment of $135 million.
In addition to the cash infusion, GTIS is expected to benefit from significant
operating synergies and a stronger balance sheet. The company is taking
restructuring charges of approximately $70 million as it continues to
rationalize operations and move further toward profitability and enhanced
shareholder value.
Infogrames Entertainment
Headquartered in Lyon, France, Infogrames Entertainment (Paris Bourse: SICOVAM
5257; Bloomberg: IFG) is a leading company in the development, design,
publishing and distribution of interactive entertainment software for Nintendo,
Sega and Sony consoles and PCs. The company was founded in 1983 by its Chairman
and CEO, Bruno Bonnell. The company ranks as one of the top interactive
entertainment software companies worldwide.
Infogrames develops and distributes award-winning PC and video games for all the
top game consoles, including Sega, Dreamcast, Nintendo 64, Nintendo Game Boy
Color, PlayStation, and personal computer platforms. Its catalog includes world
famous licenses such as Warner Bros. "Looney Tunes" and "Mission: Impossible"
from Paramount. Original titles include "V-Rally", which has sold over 4.7
million units across nearly 60 countries. Infogrames owns one of the largest
distribution networks in the industry in Europe and Australia. For more
information on Infogrames' latest news developments, visit:
www.infogrames.com.
GT Interactive Software
Headquartered in New York, GT Interactive Software Corp. (Nasdaq: GTIS) is a
leading global developer, publisher and distributor of interactive consumer
software. The company maintains four divisions: Children's Publishing, Leisure
Publishing, Frontline Publishing and Distribution. The company has publishing
operations throughout the world with offices in the US, Canada, UK, Germany,
France, Holland and Australia. GTIS also has seven internal development studios:
Humongous Entertainment, Cavedog Entertainment, SingleTrac, WizardWorks,
Oddworld, Legend Entertainment, and Reflections. GTIS's ecommerce system
provides secure online transactions through each of the studios' Web sites and
www.gtstore.com. GTIS can be found on the Internet at www.gtinteractive.com.
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Safe Harbor Statement
All statements in this press release concerning future events are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements in
this press release include: statements concerning the expected operating
synergies and the enhancement of GTIS's financial resources as a result of the
transaction, all statements regarding GTIS's future profitability and all
statements concerning whether the transaction and GTIS's joining with Infogrames
will add value to GTIS shareholders or will benefit those shareholders. Such
statements involve risks and uncertainties which may cause results to differ
materially from those set out in the statements, and there can be no assurance
that such results will be achieved or that the plans, intentions or expectations
of Infogrames and GTIS will be realized. Important factors that could cause
actual results to differ materially from those in the forward-looking statements
include, but are not limited to: world-wide business and industry conditions;
adoption of new hardware systems; product delays; software development
requirements and their impact on product launches; relations with customers; the
risk that the additional capital provided by this transaction may not be
sufficient to sustain and develop GTIS's operations (including the possibility
that GTIS will experience negative net-cash flow from operations); risk of
further restructuring charges; difficulties in integrating GTIS's operation with
Infogrames; risks of actual or potential problems or difficulties in GTIS's
operations that Infogrames may not have discovered during its review of GTIS
prior to agreeing to the transaction; the risk that GTIS may not be able to meet
its commitment under its various agreements with banks and the consequent risk
of a default on one or more of such agreements; possible difficulties caused by
the burden on Infogrames' management resources that will be imposed by this
additional acquisition; and the risk that changes and innovations in GTIS
management, strategy or structure following the change of control could be
costly, disruptive to operations and unsuccessful in achieving improved
performance. The important factors that could cause actual results to differ
materially from those in the forward-looking statements also include other risks
and factors detailed in GTIS's filings with the Securities and Exchange
Commission including but not limited to the factors described on pages 9-15 of
the company's annual report on form 10-K for the fiscal year ended March 31,
1999. Such filings have discussed among other things: the difficulties GTIS
could encounter if it is unable to introduce new products on a timely basis;
possible inability to develop, market and publish new products if GTIS is unable
to secure or maintain relationships with independent software developers;
competition that GTIS faces for the services of independent software developers;
the risk that independent developers may publish their own products instead of
using GTIS to do so; possible inability to recover through sales advance royalty
payments made to developers; the risk that GTIS may not anticipate or adapt to
rapidly changing technology; possible cost increases resulting from control that
certain licensors exercise over GTIS's manufacture of products; all the
economical and political risks of doing business abroad; the risk the
distribution business may decline as competition increases and internet
technology improves; possible difficulties in protecting intellectual property
rights; risks to distribution revenues from the possibility that competitor
interactive game manufacturers may stop distributing product through GTIS; the
uncertainty and possible failure of successfully implementing an internet
strategy; risks created by litigation in which GTIS is currently involved; the
possibility that products, systems and sales may be subject to year 2000
problems; the risks created by the increasingly hit-driven nature of the
interactive game market, and the possibility that GTIS may not be the company
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manufacturing and distributing the hits; logistical problems associated with
distribution of products (including outsourcing distribution); and the risk that
GTIS may experience higher than anticipated product returns and may need to
provide greater than anticipated price protection.
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