<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): NOVEMBER 4, 1999
PREFERRED EMPLOYERS HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
001-12677 65-0698-779
------------------------ ------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
10800 BISCAYNE BOULEVARD
MIAMI, FLORIDA 33161
(Address of principal executive offices) (Zip Code)
- ---------------------------------------- ----------
(305) 893-4040
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
(NOT APPLICABLE)
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Page 1 of 6 Pages
Exhibit Index at Page 5
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On November 4, 1999, Preferred Employers Holdings, Inc., a Delaware
corporation (the "Company"), acquired 3,224,392 outstanding shares of common
stock, par value $.01 per share (the "Common Stock"), of the Company -- or
approximately 81.97% of the Common Stock owned by persons other than the
executive officers and directors of the Company, by means of a cash tender offer
(the "Offer").
Pursuant to the Offer, the Company offered to purchase all of its
outstanding shares of Common Stock (the "Shares) at a price of $5.00 per Share,
net to the seller in cash (the "Offer Price"), upon the terms and subject to the
conditions set forth in an Offer to Purchase, dated September 17, 1999 (the
"Offer to Purchase"), and in a related Letter of Transmittal, dated September
17, 1999. The Offer was made to all holders of Shares, including Mr. Mel Harris,
the Chairman of the Board and Chief Executive Officer of the Company, Mr. Peter
E. Kilissanly, President and Chief Operating Officer of the Company, and the
other executive officers and directors of the Company listed on Schedule I of
the Offer to Purchase (collectively, the "Remaining Stockholders"). The
Remaining Stockholders did not tender any Shares pursuant to the Offer.
The Offer expired at 5:00 p.m., New York City time, on November 3,
1999. Based on the final count by American Stock Transfer & Trust Company, the
depositary for the Offer, 3,224,392 Shares were properly tendered pursuant to
the Offer. Under the terms of the Offer, the Company accepted for purchase and,
on November 4, 1999, purchased all of the 3,224,392 Shares. As a result of the
Company having purchased all of the 3,224,392 Shares, Mr. Mel Harris, Chairman
of the Board and Chief Executive Officer of the Company became the beneficial
owner of approximately 71.0% of the issued and outstanding Shares of the
Company. Prior to the consummation of the Offer, Mr. Harris was the principal
shareholder of the Company, beneficially owning 30.1% of the issued and
outstanding Shares.
The source of funds for acquiring the 3,224,392 Shares was the
Company's working capital and borrowings from City National Bank of Florida
("City National") under a $7.5 million credit facility, pursuant to a Loan and
Security Agreement, dated October 12, 1999 (the "Loan"). Under the terms of the
Loan Agreement, the Company was required to use the proceeds of the Loan to
consummate the Offer. The Loan was fully drawn on November 4, 1999 and such
proceeds were used on that date to purchase all of the 3,224,392 Shares.
The Loan is a secured line of credit in a maximum principal amount of
$7.5 million. As collateral for the Loan, the Company granted City National a
first priority security interest in (i) all of the issued and outstanding shares
of common stock of Preferred Healthcare Staffing, Inc., a Delaware corporation
and the Company's wholly-owned subsidiary ("Preferred Staffing"), and (ii) all
of Preferred Staffing's accounts receivable.
The Loan matures on October 10, 2000. Interest on the Loan is due and
payable monthly until May 12, 2000 (the "Interest-Only Period"). After the
Interest-Only Period, commencing on May 12, 2000 (the "Adjustment Date"), the
Loan shall be repaid in monthly installments of
-2-
<PAGE> 3
principal based on a three-year amortization plus accrued interest. As of the
Adjustment Date, the Loan will no longer be considered a line of credit
facility, and the Company will no longer have the right to borrow any additional
sums under the Loan. Interest on the Loan shall accrue at a variable interest
rate of two percent (2%) per annum in excess of City National's base rate of
interest announced from time to time. The Company shall also pay a commitment
fee of $30,000 for the Loan, and a fee equal to one percent (1%) of each advance
made under the Loan in excess of $3.0 million.
The Loan contains restrictive covenants which impose limitations on the
Company with respect to, among other things: (i) the creation of mortgages,
security interests and other liens in excess of $250,000 (exclusive of
employment agreements and all leases); (ii) indebtedness for borrowed money on
excess of $250,000; (iii) the sale or other disposition of accounts receivable
at less than face value; (iv) a change in control of the Company; and (v) the
payment by the Company of dividends. The Loan also contains various event of
default provisions, including default in payment of principal or interest of the
Loan, default in compliance with other terms of the Loan, bankruptcy,
replacement, removal or resignation of Mr. Mel Harris as Chief Executive Officer
of the Company, sale or assignment by Mr. Mel Harris of any Shares owned by him,
and in the event that the Company's earnings before interest, taxes,
depreciation and amortization for any quarterly period commencing with the
fourth quarter of 1999 falls below $1,000,000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
--------
10.1 Offer to Purchase, dated September 17, 1999.
10.2 Loan and Security Agreement, dated October 12, 1999, among the
Company, Preferred Healthcare Staffing, Inc. and City National
Bank of Florida.
10.3 Text of Press Release of the Company, dated November 5, 1999.
-3-
<PAGE> 4
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.
PREFERRED EMPLOYERS HOLDINGS, INC.
Date: November 17, 1999 By: /s/ Mel Harris
---------------------------------
Mel Harris
Chairman of the Board
and Chief Executive Officer
-4-
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NUMBER
----------- ----------- -----------
<S> <C> <C>
10.1 Offer to Purchase, dated September 17, 1999. *
10.2 Loan and Security Agreement, dated October 12, 1999,
among the Company, Preferred Healthcare Staffing,
Inc. and City National Bank of Florida. **
10.3 Text of Press Release of the Company, dated
November 5, 1999. (6)
</TABLE>
- ----------
* Incorporated by reference to Exhibit (d)(1) to Amendment No. 1 to the
Company's Rule 13e-3 Transaction Statement on Schedule 13e-3, dated
October 25, 1999 (the "Schedule 13e-3"), which Schedule 13e-3 was filed
with the Securities and Exchange Commission on October 25, 1999, and
incorporated by reference to Exhibit (a)(1) to Amendment No. 1 to the
Company's Rule 13e-4 Issuer Tender Offer Statement on Schedule 13E-4,
dated October 25, 1999 (the "Schedule 13E-4"), which Schedule 13e-4 was
filed with the Securities and Exchange Commission on October 25, 1999.
** Incorporated by reference to Exhibit (a)(2) to Amendment No. 1 to the
Company's Schedule 13e-3, and incorporated by reference to Exhibit (b)(2)
to Amendment No. 1 to the Company's Schedule 13E-4.
-5-
<PAGE> 1
FOR IMMEDIATE RELEASE
PREFERRED EMPLOYERS HOLDINGS, INC. ACQUIRES
APPROXIMATELY 82% OF OUTSTANDING SHARES
IN SUCCESSFUL TENDER OFFER
MIAMI, Nov. 5/PRNewswire/ -- Preferred Employers Holdings, Inc.
(Nasdaq, PEGI) announced today that it has acquired approximately 82% of the
outstanding shares owned by persons other than Management and other Company
insiders, as a result of its recently concluded tender offer.
The Company acquired 3,224,392 shares at a price of $5.00 per share.
The shares tendered included shares issued as a result of the conversion of
$2,150,000 in Convertible Notes. As a result, there are presently outstanding
2,261,561 shares, of which, 1,604,706 are held by Management and other Company
insiders.
Founded in 1988, Preferred Employers Holdings provides businesses with
workers' compensation and other business insurance products as well as risk
management and cost containment services and reinsures certain workers'
compensation and employers' liability insurance policies, and furnishes
temporary professional medical personnel to client hospitals.
For more information contact William R. Dresback or Jose M. Menendez at
(800) 433-5755.
-6-
