SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
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): April 30, 1998
THE CERPLEX GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-9725 75-1539534
(State of other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
9477 Waples Street, Suite 150, San Diego, California 92121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 552-1213
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Item 2. Acquisition or Disposition of Assets.
On April 30, 1998, Holly Acquisition Corp. ("Merger Sub"), a
wholly-owned subsidiary of Aurora Electronics, Inc. ("Aurora"), merged (the
"Merger") with and into The Cerplex Group, Inc. ("Cerplex") after the Merger had
been approved at a special meeting of Cerplex's stockholders and an increase in
the number of authorized shares of Aurora Common Stock and the name change from
Aurora Electronics, Inc. to The Cerplex Group, Inc. upon consummation of the
Merger had been approved at a special meeting of Aurora's stockholders. As a
result, Cerplex became a wholly-owned subsidiary of Aurora; Cerplex changed its
name to Cerplex, Inc. and Aurora changed its name to The Cerplex Group, Inc. The
Merger occurred pursuant to an Agreement and Plan of Merger, dated as of January
30, 1998 (the "Merger Agreement"), among Aurora, Merger Sub and Cerplex. As a
result of the Merger, each share of Cerplex's Common Stock was converted into
the right to receive 1.070168 shares of Aurora Common Stock. Cerplex
stockholders who otherwise were entitled to fractional shares of Aurora Common
Stock received cash in lieu thereof. Agreement on the exchange ratio was
achieved as a result of direct negotiations between the respective Chief
Executive Officers of each of Aurora and Cerplex, subject to approval by the
respective Boards of Directors of each of Aurora and Cerplex. Cerplex
stockholders received in the aggregate approximately 38.9 million shares of
Aurora Common Stock as a result of the Merger.
Cerplex provides repair services, spare parts sourcing and service
management for manufacturers of computer, communications and electronic office
equipment. In the computer marketplace, Cerplex primarily services display
terminals, printed circuit boards, laptops, networking equipment and
workstations. In the telecommunications marketplace, Cerplex primarily services
switching systems, payphones, video conferencing products, multiplexers, mobile
communications, transmission equipment, hubs and modems. In the office
automation marketplace, Cerplex services printers, scanners, fax machines and
high value products such as copiers, automatic transfer machines and other
paper-handling equipment.
For the period from March 4, 1998 through the effective time of the
Merger, George L. McTavish, the Chairman and Chief Executive Officer of Aurora,
also acted as Chief Executive Officer of Cerplex.
Costs associated with the Merger totaled approximately $5 million.
The Cerplex acquisition is being accounted for under the purchase
method of accounting, pursuant to which the assets and liabilities of Cerplex
have been recorded at their respective fair values and added to those of Aurora
as of the effective time of the Merger.
The background of the Merger is more fully described in the
Registration Statement of Aurora on Form S-4 (File No. 333-48725) (the
"Registration Statement"). The Merger Agreement was included as Appendix A to
the Prospectus (the "Prospectus") contained in the Registration Statement, and
is incorporated herein by reference as Exhibit 2 hereto.
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Item 5. Other Events.
On April 30, 1998, Aurora consummated a rights offering (the "Rights
Offering") to its then stockholders pursuant to which Aurora issued units (the
"Units") each consisting of senior subordinated notes and preferred stock for
aggregate proceeds of $33 million. In connection with the Rights Offering,
Aurora's majority stockholder, Welsh, Carson, Anderson & Stowe VII, L.P. ("WCAS
VII") and certain of its affiliated partnerships purchased Units for an
aggregate purchase price of approximately $32 million. After giving effect to
the Merger and the Rights Offering, WCAS VII and its affiliates held
approximately 67.1% of the outstanding voting capital stock of Aurora.
The proceeds of the Rights Offering were used to repay certain of
Aurora's then existing bank debt and for general corporate purposes.
On April 30, 1998, Aurora, Cerplex, Aurora Electronics Group, Inc., a
wholly-owned subsidiary of Aurora, and Cerplex Mass, Inc., a wholly-owned
subsidiary of Cerplex (collectively, the "Borrowers"), entered into a new loan
and security agreement with Greyrock Business Credit, a Division of
NationsCredit Commercial Corporation ("Greyrock"), pursuant to which they
obtained a term loan in the original principal amount of $36 million and
revolving credit facilities in an amount of up to $10 million. In connection
with Greyrock's extension of credit, the Borrowers granted Greyrock a security
interest in substantially all their assets, including Cerplex's interest in a
wholly-owned subsidiary in the United Kingdom and 65% of its interest in a
French subsidiary. In addition, the French subsidiary executed a negative pledge
with respect to its assets in favor of Greyrock. WCAS VII guaranteed all of the
Borrowers' obligations under the loan agreement, subject to a maximum liability
of $25 million. Proceeds from the term loan and the revolving credit facility
were used to prepay existing credit facilities of Aurora and Cerplex, to pay for
expenses of the Merger and to provide additional working capital.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired.
The following financial statements filed with the Securities and
Exchange Commission as a part of the Registration Statement are incorporated
herein by reference:
(1) The consolidated balance sheets of Cerplex as of December
31, 1997 and 1996, the related consolidated statements of
operations, stockholders' equity and cash flows for the years
ended December 31, 1997, 1996 and 1995, and the related Notes
to Consolidated Financial Statements contained in the
Prospectus contained in the Registration Statement (but no
other portion of the Prospectus).
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(2) The consolidated balance sheets of Cerplex as of March 31,
1998 and December 31, 1997, the consolidated statements of
operations and cash flows for the three months ended March 31,
1998 and March 31, 1997, respectively, and the related Notes
to Consolidated Financial Statements (Unaudited) contained in
the Quarterly Report on Form 10-Q of Cerplex for the quarter
ended March 31, 1998 (but no other portions of such Form
10-Q).
(b) Pro Forma Financial Information.
The following unaudited pro forma combined financial statements of
Aurora and related notes to unaudited pro forma combined financial statements
are incorporated by reference from the section captioned "Unaudited Combined Pro
Forma Financial Information" on pages 84 through 89 of the Prospectus contained
in the Registration Statement:
Unaudited Pro Forma Consolidated Balance Sheet as of December 31,
1997;
Unaudited Pro Forma Consolidated Statements of Operations for the year
ended December 31, 1997 and the three months ended December 31, 1997.
(c) Exhibits.
Exhibit 2 Agreement and Plan of Merger, dated as of January
30, 1998, among Aurora Electronics, Inc., Holly
Acquisition Corp. and The Cerplex Group, Inc.
(incorporated by reference to Appendix A to the
Prospectus contained in Aurora's Registration
Statement on Form S-4 (File No. 333-48725)).
Exhibit 23 Consent of KPMG Peat Marwick LLP
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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 hereunto duly authorized.
THE CERPLEX GROUP, INC.
Dated: July 17, 1998 By: /s/ Steven L. Korby
----------------------
Name: Steven L. Korby
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No.
2 Agreement and Plan of Merger, dated as of January 30, 1998,
among Aurora Electronics, Inc., Holly Acquisition Corp. and The
Cerplex Group, Inc. (incorporated by reference to Appendix A to
the Prospectus contained in Aurora's Registration Statement on
Form S-4 (File No. 333-48725)).
23 Consent of KPMG Peat Marwick LLP
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EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
The Cerplex Group, Inc.:
Our report dated February 23, 1998, contains an explanatory paragraph
that states that the Company has suffered recurring losses from operations, has
net stockholders' and working capital deficiencies as well as insufficient funds
to pay its secured and unsecured debt obligations which raise substantial doubt
about its ability to continue as a going concern. The consolidated financial
statements and financial statement schedules do not include any adjustments that
might result from the outcome of this uncertainty.
We consent to the use of our report incorporated herein by reference.
/s/ KPMG Peat Marwick LLP
Orange County, California
July 20, 1998
