SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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: January 13, 1998
MARKETING SERVICES GROUP, INC.
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(Exact name of Registrant as specified in charter)
Nevada 0-16730 88-0085608
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(State or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation)
333 Seventh Avenue
New York, New York 10001
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(Address of Principal Executive Offices)
212/594-7688
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(Registrant's telephone number, including area code)
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ITEM 5. Other Events
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On December 24, 1997, Marketing Services Group, Inc. (the "Company") and General
Electric Capital Corporation ("GE Capital") entered into a Purchase Agreement
(the "Purchase Agreement") providing for the purchase on that day by GE Capital
of (i) 50,000 shares of Series D convertible preferred stock, par value $0.01
per share, of the Company (the "Convertible Preferred Stock"), and (ii) warrants
(the "Warrants") to purchase up to 10,670,000 shares of Common Stock, all for an
aggregate purchase price of $15,000,000. The Convertible Preferred Stock is
convertible into shares of Common Stock at a conversion rate, subject to
antidilution adjustments, which currently is equal to 88.31224, resulting in the
beneficial ownership by GE Capital of 4,415,612 shares of Common Stock. On an
as-converted basis, the Convertible Preferred Stock represents approximately 24%
of the issued and outstanding shares of Common Stock. The Warrants are
exercisable in November, 2001 and are subject to reduction or cancellation based
on the Company's meeting certain financial goals set forth in the Warrants or
upon occurrence of a qualified secondary offering, as defined.
The Convertible Preferred Stock is convertible at the option of the holder at
any time and at the option of the Company (a) at any time the current market
price, as defined, equals or exceeds $8.75 per share, subject to adjustments,
for at least 20 days during a period of 30 consecutive business days or (b) upon
the occurrence of a qualified secondary offering, as defined.
Dividends are cumulative and accrue at the rate of 6% per annum, adjusted upon
event of default, payable quarterly. The Convertible Preferred Stock is
mandatorily redeemable, if not previously converted, on the sixth anniversary of
the original issue date and is redeemable at the option of the holder upon the
occurrence of an Organic Change in the Company, as defined in the agreement.
The Company shall use the net proceeds of the sale of the Convertible Preferred
Stock and the Warrants to finance acquisitions approved by the purchaser, up to
$1,000,000 for computer systems upgrades and up to $2,000,000 for payments on
indebtedness to former owners of acquired subsidiaries.
SIGNATURES
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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.
MARKETING SERVICES GROUP, INC.
Date: January 13, 1998 By: /s/ Scott Anderson
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Title: Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Number Description
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10.1 Purchase Agreement dated as of December 24, 1997 by and
between the Company and GE Capital (A)
10.2 Stockholders Agreement by and among the Company, GE Capital
and certain existing stockholders of the Company,
dated as of December 24, 1997. (A)
10.3 Registration Rights Agreement by and among the Company and
GE Capital, dated as of December 24, 1997 (A)
10.4 Form of Certificate of Designation, Preferences and
Relative, Participating, Optional and Other Special
Rights of Preferred Stock and Qualifications, Limitations
and Restrictions Thereof for the Series D Convertible
Preferred Stock (A)
10.5 Warrant, dated as of December 24, 1997, to purchase shares
of Common Stock of the Company. (A)
20.1 Press release dated December 26, 1997 (B)
20.2 Press release dated January 6, 1998 (B)
(A) Incorporated by reference to the Company's Schedule 13-D, filed by
General Electric Capital Corporation, reporting an event occurring on
December 24, 1997.
(B) Filed herewith.
EXHIBIT 20.1
PRESS RELEASE
MARKETING SERVICES GROUP COMPLETES $15 MILLION
PRIVATE FINANCING
NEW YORK--December 26, 1997--Marketing Services Group, Inc. (Nasdaq:MSGI) Friday
announced the closing of a $15 million private financing with a Fortune 50
company.
Details will be made available the week of January 5.
MSGI (formerly known as All-Comm Media) provides database marketing, custom
telemarketing and telefundraising services, online consulting and Web design to
more than 800 commercial and not-for-profit clients in the United States and
Canada. The company operates through its wholly-owned subsidiaries, SD&A, Metro
Direct and Pegasus Internet.
Matters discussed in this release include forward looking statements that
involve risks and uncertainties, and actual results may be materially different.
Factors that could cause actual results to differ are stated in the company's
reports to the Securities and Exchange Commission including its 10-Q for the
period ended September 30, 1997 and its annual report on Form 10-K for the year
ended June 30, 1997.
Happy New Year!
EXHIBIT 20.2
PRESS RELEASE
MSGI RECEIVES $15 MILLION INVESTMENT FROM
GE CAPITAL SERVICES
Financing To Fund Acquisitions, Expand Technology
NEW YORK--January 6, 1998--Marketing Services Group, Inc. (Nasdaq:MSGI), a
marketing and information services industry leader, today announced that it has
received a $15 million investment from GE Capital Services, a wholly-owned
subsidiary of General Electric Company. The deal was closed on the evening of
December 23, 1997.
The $15 million investment translates into 50,000 shares of Series D convertible
preferred stock which may be converted into common shares by either the holder
or the issuer upon certain conversion provisions. The convertible preferred
stock carries a 6% dividend per annum, payable in the stock of the company. Jim
Brown, vice president of GE Capital Services' Equity Capital Group, will join
MSGI's board in 1998, and GE Capital Services has the option of appointing an
additional board member.
As one of the most frequent users of direct marketing services in the world, the
investment represents a strategic partnership for GE Capital Services. Under the
terms of the transaction, a letter of intent was signed for MSGI to provide
direct marketing services over a five-year time period to GE Capital and its
affiliates. "We appreciate this vote of confidence from GE Capital Services,"
commented Jeremy Barbera, chairman, CEO and president of MSGI. "There are, of
course, huge financial benefits: the capital infusion will allow us to make
acquisitions -- such as the purchase last week of Media Marketplace, which
basically doubled the size of our company -- and allows us to remain on the
cutting edge of technology, which is the core of all our operations. But, the
greatest benefit may turn out to be the support of an extraordinary
entrepreneurial company, and our ability to collaborate on any number of
programs and projects".
William Blair & Company served as financial advisor in this transaction. "To
their credit, William Blair spent several months working with us to locate the
correct strategic investor, understanding that although MSGI had a market cap of
under $100 million, we would soon break that threshold," noted Barbera. "We
appreciate their belief in us and their commitment to helping us realize our
potential". GE Capital Services, with assets of over US $227 billion, is a
global, diversified financial services company with 27 specialized businesses. A
wholly-owned subsidiary of General Electric Company, GE Capital Services, based
in Stamford, CT, provides equipment management, mid market and specialized
financing, specialty insurance and a variety of consumer services, such as car
leasing, home mortgages and credit cards, to businesses and individuals around
the world.
MSGI provides direct marketing and database marketing, custom telemarketing and
telefundraising, and online consulting and Web design to more than 900
commercial and not-for-profit clients in the United States and Canada. The
company operates through its wholly-owned subsidiaries, SD&A, Metro Direct,
Pegasus Internet and Media Marketplace. Matters discussed in this release
include forward looking statements that involve risks and uncertainties, and
actual results may be materially different. Factors that could cause actual
results to differ are stated in the company's reports to the Securities and
Exchange Commission including its 10-Q for the period ended September 30, 1997
and its annual report on Form 10-K for the year ended June 30, 1997.
