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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 31, 2000
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COMPOST AMERICA HOLDING COMPANY, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 0-27832 22-2603175
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
One Gateway Center, 25th floor Newark, New Jersey 07102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (973) 297-5400
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N/A
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(Former name or former address, if changed since last report.)
PLEASE ADDRESS ALL CORRESPONDENCE TO: Mark Gasarch, Esq.
40 West 57th Street
33rd Floor
New York, New York 10019
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Item 2. Acquisition or Disposition of Assets
On March 31, 2000 Compost America Holding Company, Inc. (the "Company")
entered into a Stock Purchase Agreement (the "Agreement") to sell to Synagro
Technologies, Inc., ("Synagro"), a Delaware corporation located at 1800 Bering
Drive, Suite 1000, Houston, Texas 77057, all of the shares of the Company's
wholly-owned subsidiary, Environmental Protection & Improvement Company, Inc.
("EPIC"), a New Jersey corporation, for a purchase price of approximately
$37,500,000 plus an earn-out anticipated to equal approximately $5,400,000 and
other adjustments. The Agreement provides that the obligation of Synagro to
complete this transaction is contingent upon Synagro obtaining a satisfactory
financing commitment no later than April 14, 2000, and other conditions,
including notification to the Company's nonconsenting shareholders in the manner
required by the New Jersey Business Corporation Act. The Company's Board of
Directors (the "Directors") and shareholders holding a majority of the Company's
voting common shares (the "Majority Shareholders") and the Directors of Synagro
already have approved the sale.
EPIC generates almost all of the Company's revenues and cash flow from
operations. The net cash proceeds from this sale, and from a loan from a
shareholder at closing, estimated to be approximately $40,550,000, will be used
primarily to (1) pay long term debt, (2) exercise the option to purchase
approximately 16% of American Marine Rail, LLC ("AMR") membership interests,
bringing the Company's potential ownership of AMR up to approximately 24%, (3)
pay EPIC employee termination costs, (4) pay short-term loans and legal fees to
the Company's Class A and Class C Preferred shareholders, (5) settle various
notes and accounts payable and other claims and (6) provide working capital for
the Company to conduct its business and pursue its development options.
Item 5. Other Events
On March 6, 2000 the Directors and the Majority Shareholders had
approved (1) a Sharing Agreement between the Company and the holders of its
Class A and Class C Preferred Shares (the "Preferred Shares"), affiliates of the
Company, (as amended and reapproved by the Directors and the Majority
Shareholders on March 23, 2000) which, in exchange for a release of such
holders' claims on the stock of EPIC, among other things, grants to these
holders of Preferred Shares a first lien on the proceeds of an earn-out
agreement with Synagro relating to the sale of EPIC and on the Company's AMR
interests to secure the partial redemption of these Preferred Shares, (2) the
restructuring of the loan of Lionhart Global Appreciation Fund and its
affiliates to the Company, (3) the repayment of certain other debts, (4) the
Company's exercise of its options to purchase approximately 16% of AMR's
membership interests, (5) the restructuring of a loan from a shareholder and the
granting of a first mortgage on the Company's Miami property to secure that
loan, (6) the settlement of various litigation matters involving the Company and
(7) the payment of financial advisory fees pertaining to the sale of EPIC to
Synagro.
On March 23, 2000 the Directors and the Majority Shareholders of the
Company approved amendments to the Designation of Rights of the Company's Series
A, Series C and Series D Preferred Stock (the "Preferred Stock") to provide that
(1) the Company may pay dividends on the Preferred Stock, in cash or in shares
of the Company's Common Stock, through November 3, 2004 (previously November 3,
1999) and (2) the Company must treat all three series of Preferred Stock alike
in terms of the payment of dividends.
On March 28, 2000 the Company was advised by Arthur Andersen LLP, the
Company's auditors for its fiscal year ended April 30, 1998, that Arthur
Andersen LLP had withdrawn its Auditors' Report dated January 12, 1999 on the
Company's financial statements for the fiscal year ended April 30, 1998. This
withdrawal was based upon the information set forth on pages 17, 19, F-12 and in
the Auditor's Report included in the Company's Form 10-KSB for its fiscal year
ended April 30, 1999, as filed on March 20, 2000.
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Item 7. Financial Statements and Exhibits
(c) Exhibits
2. Stock Purchase Agreement By and Between Synagro Technologies,
Inc. and Compost America Holding Company, Inc. dated March 31,
2000.*
4.1 Amendment to Series A Preferred Stock Designation of Rights*
4.2 Amendment to Series C Preferred Stock Designation of Rights*
4.3 Amendment to Series D Preferred Stock Designation of Rights*
99.1 Letter dated March 28, 2000 from Arthur Andersen LLP to the
Company*
* To be filed by amendment.
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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.
Date: April 4, 2000
COMPOST AMERICA HOLDING COMPANY, INC.
(Registrant)
By /s/ Richard L. Franks
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Richard L. Franks, Vice-President,
General Counsel, Asst. Secretary
