SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Earliest Event Reported: May 18, 1995
BRUNO'S, INC.
(Exact Name of Registrant as Specified in its Charter)
Alabama
(State or Other Jurisdiction of Incorporation)
0-6544 63-0411801
(Commission File Number) (I.R.S. Employer Identification No.)
800 Lakeshore Parkway
Birmingham, Alabama 35211
(Address of Principal Executive Offices/Zip Code)
(205) 940-9400
(Registrant's Telephone Number)
Item 2. Acquisition of Assets.
On April 20, 1995, Bruno's, Inc. ("Bruno's") entered into an Agreement
and Plan of Merger with Crimson Acquisition Corp. ("Crimson"), providing
for the merger of Bruno's and Crimson. This Merger was amended by a First
Amendment dated May 18, 1995 (the "Agreement"), which provided that the
Cash Election Price referred to in the Agreement be changed from $12.50 to
$12.00, and also provided that, upon completion of the Merger, Crimson
Acquisition Corp. will be granted warrants to purchase from Bruno's during
a ten-year period an additional 10,000,000 shares of Bruno's stock at
$12.00 per share.
On April 20, 1995, Bruno's, Inc. ("Bruno's") entered into a Stock
Option Agreement with Crimson Acquisition Corp. ("Crimson"), granting to
Newco an option to purchase 19.9% of the outstanding Common Stock of
Bruno's, Inc. at $12.50 per share. This Agreement was also amended by a
First Amendment dated May 18, 1995, which provided that the Option Price
referred to in the Stock Option Agreement be changed from $12.50 to $12.00
Item 7. Financial Statements and Exhibits.
Exhibits.
10.1 First Amendment to Agreement and Plan of Merger dated
May 18, 1995.
10.2 First Amendment to Stock Option Agreement dated May 18,
1995.
10.3 Press Release dated May 18, 1995.
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 thereunto duly authorized.
Date: May 30, 1995
BRUNO'S, INC.
By: /s/ Ronald G. Bruno
Ronald G. Bruno, Chief
Executive Officer and
Chairman of the Board
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EXHIBIT 10.1
FIRST AMENDMENT
FIRST AMENDMENT, dated as of May 18, 1995 (the "First
Amendment"), to the Agreement and Plan of Merger, dated as of April 20,
1995 (the "Merger Agreement"), between BRUNO'S, INC., an Alabama
corporation (the "Company"), and CRIMSON ACQUISITION CORP., an Alabama
corporation ("Newco"). Terms used herein that are defined in the Merger
Agreement are used herein as so defined.
WHEREAS, Newco and the Company desire to make certain amendments
to the Merger Agreement, as provided below.
NOW THEREFORE, in consideration of the premises and the mutual
covenants set forth below, the parties hereto agree as follows:
SECTION 1. Amendment to Section 2.01(a). Section 2.01(a) of
the Merger Agreement is hereby amended to read as follows:
"Each share of common stock of Newco issued and outstanding
immediately prior to the Effective Time of the Merger shall be
converted into (i) a number of shares of the common stock, par
value $.01 per share, of the Company following the Merger equal
to the quotient of (A) 20,833,333 divided by (B) the number of
shares of common stock of Newco outstanding immediately prior to
the Effective Time of the Merger, and (ii) a number of warrants
(as further described below, each a "Warrant") equal to the
quotient of (A) 10,000,000 divided by (B) the number of shares of
common stock of Newco outstanding immediately prior to the
Effective Time of the Merger. Each warrant shall entitle the
holder to purchase one share of Company Common Stock at a price
of $12.00 per share, subject to the anti-dilution adjustments
referred to in the next sentence. Each Warrant (i) shall be
exercisable at any time or from time to time in whole or in part
in the sole discretion of the holder from the Effective Time of
the Merger through the tenth anniversary of the Effective Time of
the Merger, (ii) shall be entitled to full anti-dilution
protection, (iii) shall provide (without limiting the ability of
the holder to elect a cash exercise) for the issuance by the
Company, at the election of the holder in its sole discretion and
in lieu of any payment of the exercise price by such holder upon
the exercise thereof, of newly issued shares of Company Common
Stock having a value equal to the difference between (x) the Fair
Market value (as defined below) at the time of such exercise of
such number of shares of Company Common Stock or such fraction of
a share) for which such Warrant is then exercisable and (y)
$12.00 per share multiplied by the number of shares (or fraction
of a share) for which such Warrant is then exercisable, (iv)
shall be freely transferable and upon exercise shall entitle the
holder of Company Common Stock acquired upon exercise thereof to
customary demand and incidental registration rights in respect of
such Company Common Stock, (v) shall provide for the payment of
documentary, stamp and other similar taxes by the Company and
(vi) shall otherwise be issued pursuant to one or more
agreements, certificates or documents containing terms
satisfactory to Newco. "Fair Market Value" shall mean, as of any
day on which the election by the holder is made under clause
(iii) of the preceding sentence (the "Exercise Date"), the
average for the second Trading Day (as defined below) preceding
such Exercise Date of the high and low reported sales prices
regular way of one share of Company Common Stock on such Trading
Day or, in case no such reported sale takes place on such Trading
Day, the average of the reported closing bid and asked prices
regular way of a share of Company Common Stock on such Trading
Day, in either case on the principal national securities exchange
in the United States on which the shares of Company Common Stock
are listed or admitted to trading, or if not listed or admitted
to trading on any national securities exchange on such Trading
Day, on the National Association of Securities Dealers Automated
Quotations National Market System, or if the shares of Company
Common Stock are not listed or admitted to trading on any
national securities exchange or quoted on such National Market
System on such Trading Day, the average of the closing bid and
asked prices of a share of Company Common Stock in the over-the-
counter market on such Trading Day as furnished by any New York
Stock Exchange member firm selected from time to time by the
Company. If the Company Common Stock is not quoted or listed by
any such organization, exchange or market, the Fair Market Value
of the Company Common Stock as of such Exercise Date shall be
determined in good faith by the Board of Directors of the
Company. "Trading Day" shall mean each weekday other than any day
on which any Company Common Stock is not traded on any national
securities exchange or the National Association of Securities
Dealers Automated Quotations National Market System or in the
over-the-counter market."
SECTION 2. Amendment to Section 2.01(c)(ii). Section
2.01(c)(ii) of the Merger Agreement is hereby amended by changing the Cash
Election Price referenced therein from "$12.50" to "$12.00".
SECTION 3. Amendment to Section 2.03(a). Section 2.03(a) of the
Merger Agreement is hereby amended by changing the number "2,413,000"
appearing therein to "4,166,667".
SECTION 4. Amendment to Section 2.04(a)(ii). Section
2.04(a)(ii) of the Merger Agreement is hereby amended by changing the
amount "$12.50" appearing in each place therein to "$12.00".
SECTION 5. Amendment to Section 4.01. Section 4.01(a)(vi) of
the Merger Agreement is hereby amended to add prior to clause (y) thereof
the following:
"(x) enter into any arrangements providing for vendor allowances which
involve or contemplate payments in excess of $100,000 in the
aggregate,".
SECTION 6. Amendment to Section 5.03(f)(ii). Section 5.03(f)(ii)
of the Merger Agreement is hereby amended by changing the amount "$270
million" appearing in each place therein to "$250 million".
SECTION 7. Amendment to Section 5.05(a). Section 5.05(a) of the
Merger Agreement is hereby amended (i) by changing the amount "$300,000"
appearing in each place therein to "$500,000" and (ii) by changing the
amount "$400,000" appearing in each place therein to "$600,000".
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SECTION 8. Amendment to Exhibit A. Paragraph 4 of Part "Second"
of Exhibit A of the Merger Agreement is hereby amended by changing the
number "30,000,000" appearing therein to "60,000,000".
SECTION 9. Representations and Warranties. The Company
represents and warrants to Newco as follows:
(a) Board Approval. The Board of Directors of the Company, at a
meeting duly called and held, has by unanimous vote of those directors
present (who constituted 100% of the directors then in office) (i)
determined that the Merger Agreement, as amended by this First
Amendment, and the Option Agreement, as amended by the First Amendment
thereto, and the transactions contemplated by such agreements, as
amended, taken together, are fair to and in the best interests of the
stockholders of the Company, (ii) determined, in accordance with
Section 10-2B-6.40 of the ABCA, that the transactions contemplated by
the Merger Agreement, as amended by this First Amendment, are in
compliance with Section 10-2B-6.40 of the ABCA and (iii) resolved to
recommend that the holders of the shares of Company Common Stock
approve the Merger Agreement, as amended by this First Amendment, and
the transactions contemplated thereby and hereby, including the
Merger.
(b) Opinion of Financial Advisor. The Company has received the
opinion of The Robinson-Humphrey Company, Inc. dated the date of this
First amendment, to the effect that the consideration to be received
in the Merger by the Company's stockholders, after giving effect to
the terms of this First Amendment, is fair to the holders of the
Company Common Stock from a financial point of view, a signed copy of
which opinion has been delivered to Newco.
SECTION 10. Effective Date; Continued Effectiveness. (a) Each
of the parties hereto agrees that the amendments to the Merger Agreement
contained herein shall be effective upon execution of this Amendment by
each party hereto.
(b) Except as amended by the foregoing, the Merger Agreement
shall continue in full force and effect.
SECTION 11. Expiration of Due Diligence Period. Each of the
parties hereto agrees that the right of Newco to terminate the Merger
Agreement pursuant to the terms of Section 7.01(h) of the Merger Agreement
shall terminate upon the execution of this Amendment by each party hereto.
SECTION 12. Counterparts. This Amendment may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 13. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of alabama,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws.
IN WITNESS WHEREOF, Newco and the Company have caused this First
amendment to be signed by their respective officers thereunto duly
authorized, all as of the date first written.
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CRIMSON ACQUISITION CORP.
By:______________________________
Name:
Title:
BRUNO'S, INC.
By: /s/ Ronald G. Bruno
Name: Ronald G. Bruno
Title: Chairman, CEO
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EXHIBIT 10.2
FIRST AMENDMENT
FIRST AMENDMENT, dated as of May 18, 1995 (the "First
Amendment"), to the Stock Option Agreement, dated as of April 20, 1995 (the
"Option Agreement"), between BRUNO'S, INC., an Alabama Corporation (the
"Company"), and CRIMSON ACQUISITION CORP., an Alabama corporation
("Newco"). Terms used herein that are defined in the Option Agreement are
used herein as so defined.
WHEREAS, Newco and the Company desire to make certain amendments
to the Option Agreement, as provided herein below.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth below, the parties hereto agree as follows:
SECTION 1. Amendment to Section 1.3(a). Section 1.3(a) of the
Option Agreement is hereby amended by changing the amount "12.50" appearing
therein to "12.00".
SECTION 2. Effective Date; Continued Effectiveness. (a) Each
of the parties hereto agrees that the amendments to the Option Agreement
contained herein shall be effective upon execution of this Amendment by
each party hereto.
(b) Except as amended by the foregoing, the Option Agreement
shall continue in full force and effect.
SECTION 3. Counterparts. This Amendment may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 4. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of Alabama,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws.
IN WITNESS WHEREOF, Newco and the Company have caused this First
Amendment to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CRIMSON ACQUISITION CORP.
By: __________________________
Name:
Title:
BRUNO'S, INC.
By: /s/ Ronald G. Bruno
Name: Ronald G. Bruno
Title: Chairman, CEO
EXHIBIT 10.3
BRUNO'S, INC
800 Lakeshore Parkway
Birmingham, Alabama 35211
(205) 940-9400
PRESS RELEASE
Birmingham, Alabama (May 18, 1995) - Bruno's, Inc. (Nasdaq/NM:BRNO) and
Kohlberg Kravis Roberts & Co. (KKR) today jointly announced the signing of
an agreement revising certain terms of the merger agreement between
Bruno's, Inc. and Crimson Acquisition Corp., a company formed by KKR. The
previous merger agreement was announced on April 20, 1995. The Board of
Directors of Bruno's, Inc. will recommend the revised merger agreement at a
special shareholders meeting. The transaction which is valued at
approximately $1.15 billion, including $220 million of debt and capitalized
leases, is expected to be consummated in August of 1995.
The revised agreement provides that the owner of each outstanding
share of Bruno's common stock can elect either to receive $12.00 (compared
with $12.50 in the originally released transaction) in cash for that share
or to retain that share. However, in no event can more than 4,166,667
shares of Bruno's common stock (approximately 5.3% of the outstanding
shares of Bruno's) be retained by present Bruno's shareholders. If more
than 4,166,667 of the outstanding shares elect to be retained, then the
4,166,667 shares available will be prorated among those electing to retain
and $12.00 in cash will be paid for all other shares. If fewer than
4,166,667 of the shares elect to be retained, the remaining available
shares will be prorated among those shares electing cash. The result of
these proration provisions will be that, after the merger, approximately
94.7% of the outstanding Bruno's shares will be exchanged for cash and
approximately 5.3% will be retained by existing shareholders. Following
the merger, Crimson Acquisition Corp. will own approximately 20,833,333
shares, or 83.3%, of Bruno's outstanding shares and the 4,166,667 shares
retained by Bruno's pre-merger shareholders will represent approximately
16.7% of Bruno's shares outstanding. After the completion of the
transaction, Crimson Acquisition Corp. will also be granted warrants to
purchase from Bruno's during a ten-year period an additional 10,000,000
shares of Bruno's stock at $12.00 per share. KKR, through Crimson
Acquisition Corp., will invest $250 million of equity in the transaction.
The terms of the merger agreement were amended to take into account
KKR's assessments of the levels of future cash flow of Bruno's, including
the possible non-recurring nature of certain income items and the level of
projected expenses necessary to provide adequate balance sheet reserves for
self-insurance claims.
Bruno's announced that it has reviewed the methodology it uses to
estimate required balance sheet reserves for self-insured worker's
compensation and general liability claims. The method previously used was
not based on actuarial estimates. Bruno's believes, and has been advised
by its auditors, Arthur Andersen LLP, that actuarial estimates of such
reserves are not required by generally accepted accounting principles.
However, Bruno's now believes that, based on actuarial estimates, the
potential exposure to Bruno's for these self-insured claims could be
greater than the reserves that had been established. Bruno's has concluded
that actuarial methods of establishing these reserves produce a better
estimate of the liabilities for these claims than the Company's prior
methodology. Bruno's has, therefore, decided to convert to the actuarial
method of computing these reserves and to record an adjustment to increase
these self-insurance reserves by approximately $22.2 million (approximately
$13.8 million net of income taxes) as a change in accounting estimate in
the third fiscal quarter ended April 8, 1995. Bruno's also adjusted third
quarter cost of sales by $5 million to exclude certain possible non-
recurring income. Bruno's third quarter financial results were previously
announced on May 1, 1995. The effect of these adjustments in the third
quarter is to reduce, from previously announced results, Bruno's net income
for the quarter from $12.3 million (or $.16 per share) to a net loss of
$4.6 million (or $.06 per share) and for the year to date from $37.9
million (or $.49 per share) to $21.0 million (or $.27 per share).
The other terms of the transaction remain substantially unchanged from
the April 20, 1995 agreement, including the provisions granting a pre-
merger option to KKR to purchase 19.9% of the outstanding common stock of
Bruno's, Inc. for an adjusted price of $12.00 per share, provisions
prohibiting Bruno's, Inc. from actively soliciting another purchase, and
provisions relating to the payment of certain fees and reimbursement of
certain expenditures to KKR. Certain Bruno family shareholders who hold,
in the aggregate, approximately 24% of the outstanding Bruno's stock have
agreed to vote their shares in favor of the revised merger transaction.
The merger, continues to be subject to customary conditions, including
the approval of Bruno's shareholders, the expiration of the antitrust
regulatory waiting period and KKR's ability to arrange financing. However,
the provisions granting KKR the right to terminate the agreement if not
satisfied with its "due diligence" have expired.
After the merger, Bruno's, Inc. will continue to operate as an
independent company under its current name with headquarters in Birmingham.
Bruno's, Inc. is a leading regional food retailer operating a total of 254
supermarkets in Alabama, Georgia, Mississippi, Florida, South Carolina, and
Tennessee.
Any offering of securities in connection with the merger will be made
only by means of a prospectus.
-END-
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