UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed Pursuant to Section 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 2, 2000
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U.S. FRANCHISE SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-23941 58-2361563
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
13 Corporate Square, Suite 250
Atlanta, GA 30329
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(Address of principal executive offices)
Registrant's telephone number, including area code: (404) 235-7463
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Item 5. Other Events.
On June 2, 2000, U.S. Franchise Systems, Inc. ("USFS" or the "Company")
entered into a Recapitalization Agreement with SDI, Inc., Meridian Associates,
L.P. and HSA Properties, Inc., pursuant to which USFS will shortly commence a
self-tender for 8.66 million shares of Common Stock at a price of $7.50 per
share and business interests of the Pritzker family of Chicago will invest $75
million in the Company in exchange for $65 million of a new series of 8.5%
Redeemable Preferred Stock and $10 million of a new series of 6% Redeemable
Convertible/Exchangeable Preferred Stock.
The Convertible/Exchangeable Preferred Stock will initially be
convertible into 10 million shares of Common Stock at a conversion price of
$7.50 per share, or if lower, the average of the representative bid and asked
prices of the Company's Common Stock over a 21 trading day period ending on the
90th day following the completion of the transaction, but not less than $6.50
per share, subject to downward adjustment upon certain events. The
Convertible/Exchangeable Preferred Stock will participate with the Company's
common stock in dividends and other distributions and will vote together with
the common stock on an "as converted" basis.
Upon the completion of the transaction, Pritzker family business
interests, together with Mike Leven, chairman of the board and CEO of the
Company, certain of his family members and Steven Romaniello, executive vice
president, franchise sales and administration of the Company, will enter into a
shareholders agreement and will collectively control a majority of the
outstanding voting power of the Company.
The tender offer and the recapitalization are subject to customary
conditions, including the tender of at least 3 million shares of Common Stock,
receipt of shareholder approval of the issuance of the Preferred Stock and of
certain amendments to the Company's certificate of incorporation to facilitate
the transaction, and expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvement Acts of 1976.
A copy of the Recapitalization Agreement and the press release
announcing the transaction is attached hereto as exhibit and incorporated herein
by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits
2
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Exhibits Description
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2.1 Recapitalization Agreement, dated June 2, 2000, by and among U.S.
Franchise Systems, Inc., SDI, Inc., Meridian Associates, L.P. and
HSA Properties, Inc.
99.1 Press release of U.S. Franchise Systems, Inc. dated June 2, 2000
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
U.S. FRANCHISE SYSTEMS, INC.
Date: June 6, 2000 By: /s/ Stephen D. Aronson
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Stephen D. Aronson
Vice President and General Counsel
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Exhibit Index
Exhibits Description
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2.1 Recapitalization Agreement, dated June 2, 2000, by and among U.S.
Franchise Systems, Inc., SDI, Inc., Meridian Associates, L.P. and
HSA Properties, Inc.
99.1 Press release of U.S. Franchise Systems, Inc. dated June 2, 2000
5
