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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 18, 1997
IMCO RECYCLING INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-7170 75-2008280
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
5215 NORTH O'CONNOR BLVD., SUITE 940
CENTRAL TOWER AT WILLIAMS SQUARE
IRVING, TEXAS 75039
(Address of Principal
Executive Offices)
(972) 869-6575
(Registrant's telephone number, including area code)
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With respect to each contract, agreement or other document referred to
herein and filed with the Securities and Exchange Commission as an exhibit to
this report, reference is made to the exhibit for a more complete description
of the matter involved, and each such statement shall be deemed qualified in
its entirety by such reference.
ITEM 5. OTHER EVENTS.
On September 18, 1997, IMCO Recycling Inc. (the "Company") announced
that it had entered into a non-binding letter of intent to acquire (the "Alchem
Acquisition") in a privately-negotiated transaction all of the capital stock of
Alchem Aluminum, Inc. ("Alchem"), in exchange for cash and 1,208,339 shares of
common stock, $0.10 par value per share ("Common Stock"), of the Company. The
amount of cash to be paid will be determined by deducting from $26,250,000, the
aggregate amount of Alchem's obligations for borrowed money outstanding as of
the closing date of the acquisition. At September 30, 1997, the amount of
Alchem's indebtedness for borrowed money outstanding was $13,416,000.
A total of 150,000 shares of Common Stock to be issued will be held
in escrow by the Company for three years from the closing date of the Alchem
Acquisition as potential recourse for the Company for breaches of
representations and covenants by the Alchem shareholders. The terms of the
letter of intent (which was amended on September 29, 1997) also provide that all
shares of Common Stock to be issued in connection with the Alchem Acquisition
will be contractually restricted from resale. Pursuant to the terms of the
purchase agreement to be entered into between the Alchem shareholders and the
Company, up to 350,000 shares of Common Stock may be transferred after one year
from the closing date, up to an additional 350,000 shares may be transferred
after two years from the closing date and all remaining shares may be
transferred after three years. In addition, the Company plans to grant
"piggyback" registration rights beginning in 1998 and rights to one demand
registration commencing after the third anniversary of the closing date to the
Alchem shareholders with regard to the shares of Common Stock to be issued in
the Alchem Acquisition. The Company intends to account for the Alchem
Acquisition using the purchase method of accounting.
Alchem is a producer of specification aluminum alloys for automotive
manufacturers and their suppliers and has been operating its facility located
in Coldwater, Michigan since 1972. Alchem and the Company have also been
operating under a joint venture agreement entered into in 1995 to construct and
operate an aluminum recycling plant adjacent to Alchem's processing facility in
Coldwater. This joint venture facility began operating in February 1997 and is
expected to reach full capacity in October 1997. Alchem's facility has an
annual melting capacity of 180 million pounds; the joint venture facility with
the Company has an annual capacity of 150 million pounds. For its fiscal year
ended October 31, 1996, Alchem had net sales of $112 million. For the six
months ended June 30, 1997, Alchem had net sales of $74 million.
The Alchem Acquisition will permit the Company to increase its
participation in the automotive industry, broaden its customer base and expand
its product range to include specification alloys. When the acquisition is
completed, it is estimated that approximately 30% of the Company's annual
domestic capacity will be supplied to the transportation sector. The
acquisition is expected to increase the Company's total 1998 processing
capacity to approximately 2.6 billion pounds.
The terms concerning the acquisition contained in the letter of intent
are non-binding on the signatories thereto. In addition, the Alchem Acquisition
is subject to the conditions contained in the letter of intent and conditions
to be contained in the purchase agreement to be entered into in connection with
the acquisition. Although the Company believes that such conditions will be
fully satisfied on or before the anticipated closing date of October 31, 1997,
many of these conditions are beyond the control of the Company and there can be
no assurance of when or whether the closing of the Alchem Acquisition
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will occur. Closing conditions will include the satisfaction of usual and
customary closing conditions including the absence of any injunction or other
legal restraint, the consent of third parties and governmental entities, the
accuracy in all material respects of the representations and warranties to be
made in the purchase agreement and the performance of all pre-closing
agreements.
Upon the closing of the Alchem Acquisition, it is expected that
William Warshauer, the primary stockholder of Alchem, his family and certain
affiliates of Alchem will own approximately 1.2 million shares of Common
Stock, or 8.7% of the total outstanding shares of Common Stock.
ITEM 7. FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
10.1 Letter of Intent dated September 15, 1997, by and
between the Company and Alchem Aluminum, Inc.
10.2 Amendment to Letter of Intent dated September 29, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
IMCO RECYCLING INC.
("Registrant")
Date: October 1, 1997 /s/ DON V. INGRAM
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Don V. Ingram
Chairman of the Board
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
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<S> <C>
10.1 Letter of Intent dated as of September 15, 1997, by and
between the Company and Alchem Aluminum, Inc.
10.2 Amendment to Letter of Intent dated September 29, 1997.
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EXHIBIT 10.1
September 15, 1997
Mr. and Mrs. William Warshauer
Alchem Aluminum, Inc.
368 West Garfield Avenue
Coldwater, Michigan 49036
Dear Bill and Louise:
This letter will confirm the understandings of IMCO Recycling Inc.
("IMCO") and each of you (the "Sellers") with respect to IMCO's purchase of all
of the outstanding shares of capital stock of Alchem Aluminum, Inc. ("Alchem").
The material terms of the proposed transaction are as follows:
1. Purchase of Stock. IMCO will purchase all of the outstanding capital
stock of Alchem (the 'Stock"), all of which is owned by the Sellers. At
closing, the Sellers will deliver the Stock to IMCO free and clear of all liens
and encumbrances.
2. Purchase Price. The total purchase price for the Stock will be
$49,250,000, less the amount of Alchem's obligations for borrowed money as of
the closing. The purchase price will be paid in shares of IMCO common stock.
The average closing price of IMCO common stock for the 20 trading days
preceding the date of this letter will be utilized to determine the number of
shares of IMCO common stock to be issued at closing.
3. Registration Rights. The IMCO common stock to be issued at closing
will consist of newly issued shares not registered with the Securities and
Exchange Commission. In order to provide liquidity, IMCO will provide the
Sellers with "piggy back" registration rights beginning in 1998, and with one
demand registration right beginning three years after closing. The specific
terms of such registration rights will be mutually agreed upon.
4. Transfer Restrictions. All shares of IMCO common stock issued at
closing will be restricted from resale. However, up to 350,000 of the shares
may be freely transferred after one year, up to an additional 350,000 shares
may be transferred after two years, and all the remaining shares may be
transferred after three years.
5. Escrow. An aggregate of 150,000 shares of the IMCO common stock
issued at closing will be held in escrow for a period of three years in order
to assure IMCO an adequate remedy against potential breaches of the Sellers'
representation and warranties set forth in the definitive purchase agreement.
6. Employment Agreements. Key employees of Alchem will enter into
employment agreements, which will include non-competition provisions.
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7. Definitive Purchase Agreement. The parties intend to negotiate and
execute a definitive purchase agreement (which will set forth the definitive
terms of the transaction) as soon as is practicable. In the definitive purchase
agreement, Alchem and the Sellers will make standard representations and
warranties concerning title to the Alchem stock, the absence of material
litigation, the absence of environmental liabilities, the financial condition
of Alchem, and other standard representations and warranties which are
customary in a transaction of this nature.
8. No Other Negotiations. Until October 31, 1997, neither Alchem nor
any of the Sellers will enter into discussions or negotiations with any
individual or firm (other than IMCO) relating to the sale of all or
substantially all of the stock of Alchem, the sale of all or substantially all
of its assets, a merger or consolidation, the issuance of capital stock of
Alchem, or any other form of business combination or capital transaction with
Alchem. The Sellers will immediately terminate any other existing discussions
or negotiations with respect to any of the foregoing.
9. No Disclosure. All parties will hold this letter and its contents
in strict confidence, and will not disclose this letter or its contents without
the prior written authorization of the other parties, subject to the
requirements of applicable law.
10. Operations of Alchem. From the date of this letter until the
closing of the transaction, the Sellers will cause the operations of Alchem to
be conducted in the ordinary course, consistent with past practice.
11. Expenses. The Sellers (on the one hand) and IMCO (on the other
hand) will each pay all of their respective expenses in connection with the
transaction. However, IMCO will pay the filing fee in connection with the
initial filings of the parties under the Hart-Scott- Rodino Antitrust
Improvements Act of 1976.
12. Conditions. The transaction described above will be subject to,
among other conditions, the following:
(a) Execution and delivery of a definitive purchase agreement
setting forth the terms and conditions of the transaction,
and containing usual and customary representations and
warranties, covenants, indemnities and closing conditions;
(b) Approval of the Board of Directors of IMCO;
(c) Satisfactory "due diligence" examination by IMCO of all
aspects of the proposed transaction;
(d) Compliance with the Hart-Scott Rodino Antitrust Improvements
Act of 1976;
(e) There must be no material change in the financial condition
or operations of Alchem from that reflected in Alchem's
financial statements dated June 30, 1997; and
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(f) Receipt of a satisfactory Phase 1 environmental report.
No provision of this letter will constitute a legally binding
obligation of any party unless included in the definitive purchase agreement
contemplated hereby (except with respect to items 8 and 9, which are intended
to be legally binding).
If the foregoing terms correctly set forth our understandings, please
so indicate by executing the enclosed copy of this letter and returning the
copy to the undersigned.
Very truly yours,
IMCO RECYCLING INC.
By: /s/ Don V. Ingram
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Don V. Ingram
Chairman of the Board and CEO
AGREED TO AND ACCEPTED:
/s/ William Warshauer
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William Warshauer
/s/ Louise Warshauer
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Louise Warshauer
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[IMCO LOGO]
EXHIBIT 10.2
September 29, 1997
Mr. and Mrs. William Warshauer
Alchem Aluminum, Inc.
368 West Garfield Avenue
Coldwater, Michigan 49036
Dear Bill and Louise:
This letter will amend our previous letter of intent, dated September 15, 1997.
All terms used herein will have the same definitions as in the letter of
intent. Paragraph 2 of the letter will be amended, to read in its entirety as
follows:
"2. Purchase Price. The total purchase price for the Stock
will be $49,250,000, less the amount of Alchem's obligations for
borrowed money as of the closing. $23,000,000 of the purchase
price will be paid in shares of IMCO common stock, with the
balance to be paid in cash. The average closing price of IMCO
common stock for the 20 trading days preceeding the date of this
letter will be utilized to determine the number of shares of IMCO
common stock to be issued at closing."
All other terms of the letter of intent will be unaffected by this amendment.
If the foregoing terms correctly set forth our understandings, please so
indicate by executing the enclosed copy of this letter and returning the copy
to the undersigned.
Very truly yours,
IMCO RECYCLING INC.
By: /s/ DON V. INGRAM
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Don V. Ingram
Chairman of the Board and CEO
AGREED TO AND ACCEPTED:
/s/ WILLIAM WARSHAUER
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WILLIAM WARSHAUER
/s/ LOUISE WARSHAUER
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LOUISE WARSHAUER
[IMCO LETTERHEAD]
