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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
CAROLCO PICTURES INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01
(Title of Class of Securities)
143763100
(CUSIP Number)
Mr. Richard Reiss, Jr.
Cumberland Associates
1114 Avenue of the Americas
New York, New York 10036
(212) 536-9700
(Name, Address and Telephone Number
of Person Authorized to Receive Notices
and Communications)
October 20, 1993
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Check the following box if a fee is being paid with the statement /X/.
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SCHEDULE 13D
CUSIP No. 143763100
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CUMBERLAND ASSOCIATES
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
a[ ]
b[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC,00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7. SOLE VOTING POWER
None
NUMBER OF 8. SHARED VOTING POWER
SHARES
BENEFICIALLY None
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER
REPORTING
PERSON 7,376,600
WITH
10. SHARED DISPOSITIVE POWER
None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,376,600
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%
14. TYPE OF REPORTING PERSON*
PN, IA
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Item 1. Security and Issuer.
This statement relates to the common stock, par value $.01 per share
(the "Common Stock" or the "Shares"), of Carolco Pictures Inc. (the
"Company"), which has its principal executive offices at 8800 Sunset
Boulevard, Los Angeles, California 90069.
Item 2. Identity and Background.
This statement is being filed by Cumberland Associates. Cumberland
Associates is a limited partnership organized under the laws of the State of
New York, and is engaged in the business of managing, on a discretionary
basis, nine securities accounts, the principal one of which is Cumberland
Partners. The address of the principal business and office of Cumberland
Associates is 1114 Avenue of the Americas, New York, New York 10036.
K. Tucker Andersen, Richard Reiss, Jr., Oscar S. Schafer, Bruce G.
Wilcox, Glenn Krevlin, Andrew Wallach and Eleanor Poppe are the general
partners (the "General Partners") of Cumberland Associates. The business
address of each of the General Partners is the same as that of Cumberland
Associates. Each of the General Partners is a citizen of the United States.
Neither Cumberland Associates nor any of the General Partners have,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), nor has any such person, during
the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of
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which any such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to a letter agreement, dated June 4, 1993, among the
Company, Cumberland Associates and the other parties thereto (the "Letter
Agreement," a copy of which is attached hereto as Exhibit 1), the holders of
approximately $14,600,000 in face amount of the Company's outstanding 10%
Convertible Subordinated Debentures due 2006 (the "10% Debentures") agreed to
exchange such 10% Debentures for an aggregate of 22,500,000 shares of Common
Stock at an exchange ratio of 1,500 shares of Common Stock for each $1,000
principal amount of 10% Debentures, subject to certain prospective adjustments
(the "Exchange"). Cumberland Associates, which beneficially owned $7,000,000
principal amount of the 10% Debentures as of the date of the Letter Agreement
(the "Owned Securities"), also agreed that the Exchange would be effected
pursuant to the terms of the proposed financial restructuring of the Company
described in the Company's Prospectus, Offer to Purchase, Consent Statement,
Proxy Statement and Solicitation of Acceptances of Prepackaged Plan of
Reorganization in connection with the Reorganization of the Company.
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On October 20, 1993, the date of consummation of the Exchange,
Cumberland Associates exchanged the Owned Securities for 10,500,000 shares of
Common Stock, constituting approximately 7.6%* of the shares of Common Stock
outstanding.
By virtue of Rule 13d-3 under the Securities Exchange Act of 1934
(the "Act"), each of the General Partners may be deemed the beneficial owner
of all of the Common Stock held by Cumberland Associates on behalf of
Cumberland Partners and the other managed accounts. None of the General
Partners, however, has independently invested any of his or her funds for the
purpose of purchasing the Common Stock.
Item 4. Purpose of Transaction.
Cumberland Associates acquired the 10,500,000 shares of Common Stock
pursuant to the Exchange described more fully in Item 3 above, on behalf of
its discretionary accounts. As of the date hereof, Cumberland Associates is
holding such Common Stock solely for investment and it has no present plans or
proposals with respect to any material change in the Company's business or
corporate structure or, generally, any other action referred to in
instructions (a) through (j) of Item 4 of the form of Schedule 13D. Depending
on market conditions and other factors, Cumberland Associates may make
purchases of Common Stock or may
____________________
*Based on 137,987,728 shares of Common Stock outstanding as indicated in the
Company's Form 10-Q for the fiscal quarter ended September 30, 1993 filed with
the SEC on November 15, 1993.
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sell or otherwise dispose of all or portions of such Common Stock, if such
sales and purchases would be desirable investments for the portfolios of its
accounts.
Item 5. Interest in Securities of the Issuer.
As of the date hereof, Cumberland Associates beneficially owned the
aggregate number and percentage of outstanding Common Stock set forth below:
Number of Shares Percentage*
7,376,600 (1) (2) 5.4%
Set forth in Appendix A attached hereto and incorporated herein by
reference are descriptions of the transactions in the Common Stock effected by
Cumberland Associates within the 60 day period prior to October 20, 1993
through the date of this filing.
In addition, each of the General Partners may, by virtue of his
position as general partner of Cumberland Associates, be deemed, pursuant to
Rule 13d-3 under the Act, to own beneficially the Common Stock of which
Cumberland Associates would possess beneficial ownership. Other than in their
respective capacities as
____________________
*Based on 137,987,728 shares of Common Stock outstanding as indicated in the
Company's Form 10-Q for the fiscal quarter ended September 30, 1993 filed with
the SEC on November 15, 1993.
(1) As to all of which, there is sole power to dispose or to direct the
disposition of such Shares.
(2) Cumberland Associates has no voting power with respect to any of the
Shares.
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general partners of Cumberland Associates, however, none of the General
Partners is the beneficial owner of any Common Stock.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Pursuant to its management agreements with all of the accounts except
Cumberland Partners and LongView Partners, Cumberland Associates receives an
annual management fee from each account holder, which includes a participation
in the net appreciation during the preceding fiscal or calendar year in the
value of the securities in each account. In the case of the accounts of
Cumberland Partners and LongView Partners, the management fee paid each year
to Cumberland Associates by each of Cumberland Partners and LongView Partners
does not include such profit participation.
Except as otherwise set forth in this statement, to the best
knowledge of the undersigned, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among or between the
undersigned, the General Partners and any other person with respect to any
securities of the Company, including but not limited to transfer or voting of
any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
The Letter Agreement is filed herewith as Exhibit 1.
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After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: March 4, 1994
CUMBERLAND ASSOCIATES
By: RICHARD REISS, JR.
Richard Reiss, Jr.
General Partner
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APPENDIX A*
1. TRANSACTIONS EFFECTED BY CUMBERLAND ASSOCIATES
DATE OF NO. OF UNITS NO. OF UNITS PRICE PER
TRANSACTION PURCHASED SOLD UNIT
07/14/92** 9,100 $1.25
07/15/92** 2,500 1.25
01/13/93** 25,500 1.03
01/14/93** 18,000 1.00
02/08/93** 1,000 0.88
04/22/93** 141,800 1.38
04/23/93** 15,000 1.38
10/14/93** 10,000 1.13
10/22/93 90,100 1.54
10/25/93 222,700 1.43
10/26/93 88,200 1.25
10/27/93 71,200 1.13
10/28/93 188,000 0.98
10/29/93 5,000 1.00
10/29/93 35,200 1.00
11/01/93 67,800 0.95
11/02/93 59,900 0.79
11/03/93 20,500 0.75
11/04/93 38,700 0.75
11/05/93 3,400 0.75
11/15/93 56,300 0.75
11/15/93 30,000 0.75
12/30/93 300,000 0.53
12/31/93 500,000 0.52
01/07/94 1,003,100 0.75
01/10/94 45,900 0.81
01/14/94 50,000 0.75
01/17/94 24,500 0.75
* Each of the transactions set forth in this Appendix was a regular way
transaction.
** Short sales covered on 10/31/93.
<PAGE>1
EXHIBIT 1
June 4, 1993
Carolco Pictures Inc.
8800 Sunset Boulevard
Los Angeles, California 90069
Re: 10% Convertible Subordinated Debentures due 2006 (the "10%
Debentures") and Series D Convertible Exchangeable Preferred Stock
(the "Series D Preferred Stock") (collectively, the "Securities") of
Carolco Pictures Inc.
Dear Sirs:
On May 7, 1993, Carolco Pictures Inc., a Delaware corporation
("Carolco"), filed Amendment No. 1 to its Registration Statement on Form S-1
(Registration Number 33-56380) (as amended, the "Registration Statement") with
the Securities and Exchange Commission ("SEC"). The Registration Statement
includes a preliminary Prospectus, Offer to Purchase, Consent Statement, Proxy
Statement and Solicitation of Acceptances of Prepackaged Plan of
Reorganization (the "Prospectus") relating to the proposed financial
restructuring (the "Restructuring") of Carolco, which includes the
recapitalization of Carolco through either (i) the proposed exchange of all of
Carolco's outstanding debt securities and preferred stock as well as the cash
sales of a new series of preferred stock and new debt securities, or (ii) a
prepackaged plan of reorganization (the "Prepackaged Plan") pursuant to
Chapter 11 of the United States Bankruptcy Code encompassing generally the
same elements as the foregoing.
The terms of the Restructuring are as set forth in the Prospectus, except
that (i) the holders of Carolco 13% Senior Subordinated Notes due 1996 (the
"13% Senior Subordinated Notes") will be offered $1,000 in principal amount of
13%/12% Reducing Rate Senior Subordinated Notes (the "New Senior Subordinated
Notes") for each $1,000 principal amount of outstanding 13% Notes, (ii) the
holders of Carolco 14% Senior Notes due 1993 (the "14% Notes") will be offered
$1,000 in principal amount of 11.5%/10% Reducing Rate Senior Notes (the "New
Senior Notes") for each $1,000 principal amount of outstanding 14% Notes, and
(iii) pursuant to the Prepackaged Plan, Carolco would exchange the same
consideration set forth in clauses (i) and (ii) of this paragraph for all the
outstanding 13% Notes and outstanding 14% Notes. The terms of the New Senior
Notes and the New Senior
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Subordinated Notes are set forth in Exhibit A and Exhibit B to this letter,
respectively, and are incorporated herein.
Carolco proposes, among other things, (i) to issue an aggregate of
22,500,000 shares of common stock, par value $0.01 per share (the "Common
Stock"), of Carolco (to be increased by 4,500,000 additional shares (the
"Additional Shares") if the average Trading Price (as defined below) of the
Common Stock is below $.50 for the ten trading days after the mailing of the
Prospectus) in exchange (the "Exchange") for Securities at an exchange ratio
of (a) 1,500 shares of Common Stock for each $1,000 principal amount of 10%
Debentures, subject to increase to 1,800 shares of Common Stock for each
$1,000 principal amount of 10% Debentures if the Additional Shares are issued,
and (b) 75 shares of Common Stock plus $2.50 cash for each share of Series D
Preferred Stock, subject to increase to 90 shares of Common Stock plus $2.50
cash for each share of Series D Preferred Stock if the Additional Shares are
issued, excluding in each case the Securities held by Carolco's existing
strategic investors, and (ii) to solicit acceptances (the "Prepackaged Plan
Solicitation") to the Prepackaged Plan.
"Trading Price" shall mean, on any day, the last reported sale price of a
security on the New York Stock Exchange or, if such security is not listed on
the New York Stock Exchange, the last sale price of such security, as reported
in a composite published report of transactions which includes transactions on
the exchange or other principal markets on which such security is traded or,
if there is no such composite report as to any day, the last reported sale
price, regular way (or if there is no such reported sale on such day, the
average of the closing reported bid and asked prices) on the principal United
States securities trading market (whether a stock exchange, NASDAQ or
otherwise) on which such security is traded.
The undersigned, or a representative of the undersigned on its behalf,
participated in the negotiation of the terms of the Exchange, and has been
provided reasonable access to information relating to Carolco and the proposed
Restructuring and adequate opportunity to ask questions and receive answers
with respect thereto. The undersigned acknowledges receipt of a copy of the
preliminary Prospectus which includes the preliminary Prepackaged Plan as
Appendix I.
The undersigned holder of Securities ("Holder") and Carolco hereby agree,
subject to the terms and conditions below, as follows:
1. Carolco shall use its best efforts to obtain, at the earliest
practical date, the effectiveness of the Registration Statement. Promptly
upon the effectiveness of the Registration Statement, Carolco shall, in
accordance with all applicable laws, commence the Exchange and the Prepackaged
Plan Solicitation by furnishing the Prospectus included in the
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Registration Statement in its final form when it is declared effective by the
SEC to the holders of the Securities.
2. Holder represents and warrants to Carolco that, as of the date
hereof, (i) Holder is the beneficial owner of the Securities described below
(the "Owned Securities"), (ii) Holder is the registered or record holder of
the Owned Securities or, if it is not the registered or record holder, then it
has identified below the entity which is the registered or record holder (the
"Registered Holder"), and (iii) Holder has full power and authority to vote
and consent to matters concerning the Owned Securities and to exchange, assign
and transfer the Owned Securities in accordance with the terms of the Exchange
pursuant to the Restructuring and to instruct the Registered Holder, if any,
to do so.
3. Holder agrees to (i) vote in favor of the Prepackaged Plan, and (ii)
exchange the Owned Securities in the Exchange, pursuant to the terms of the
Restructuring described in the Prospectus modified as set forth in this
letter. Holder acknowledges that consummation of the Restructuring is
conditioned upon the occurrence of certain events, including, without
limitation, the events described in the Prospectus.
4. Holder consents to Carolco's disclosure in the Registration
Statement, and any amendment thereto and in related press releases, of
Holder's intention to support the Restructuring and agreement to participate
in the Exchange.
5. Holder shall not until November 30, 1993, (i) grant any proxies to
any person in connection with the Owned Securities to vote on the
Restructuring or the Prepackaged Plan except as is consistent with the
intention of Holder as described in paragraph 3 above, or (ii) sell, transfer
or otherwise dispose of the Owned Securities.
6. The Exchange will be made pursuant to the terms and conditions set
forth in the final Prospectus which will contain the revised terms of the
Restructuring as set forth in this letter.
7. On or prior to the Expiration Date (as defined in the Prospectus and
any supplements thereto), Holder shall deliver to American Stock Transfer &
Trust Company (i) a properly completed ballot (form to be provided by Carolco)
executed by Holder and, if applicable, by the Registered Holder voting to
accept the Prepackaged Plan with respect to the Owned Securities, and (ii)
certificate(s) representing the Owned Securities, accompanied by a letter in
the form of Exhibit C attached hereto (final form to be provided by Carolco
and is not attached hereto).
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8. The rights of all parties to this agreement are expressly
conditioned upon the effectiveness of the Registration Statement.
HOLDER
Name of Entity: Cumberland Associates
By: /s/Richard Reiss, Jr.
Name: Richard Reiss, Jr.
Title: Managing Partner
Owned Securities:
(check and complete as appropriate)
/X/ $7,000,000 principal amount of 10% Debentures
/ / 8,000 shares of Series D Preferred Stock
Registered Holder of Owned Securities:
(If applicable)
Morgan Stanley & Co.
Agreed and accepted as of
this 22nd day of June, 1993
CAROLCO PICTURES INC.
By: /s/Robert W. Goldsmith
Name: Robert W. Goldsmith
Title: Senior Vice President
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EXHIBIT A
TERMS OF 11.5%/10% REDUCING RATE SENIOR
NOTES (THE "NEW SENIOR NOTES")
Issuer: Carolco Pictures Inc.
Exchange Ratio: The New Senior Notes would be issued to the
holders of the Company's 14% Senior Notes due
1993 (the "14% Notes"). For each $1,000
principal amount of outstanding 14% Notes
exchanged, a holder will receive $1,000
principal amount of New Senior Notes.
Interest: 11.5% per annum, payable semi-annually. In
addition, promptly after issuance of the New
Senior Notes, holders who exchange their 14%
Notes will receive accrued interest on the New
Senior Notes from January 1, 1993 until the date
of issuance of the New Senior Notes in cash.
The interest rate will be reset to 10%
commencing on the date Tele-Communications, Inc.
makes an equity investment in Carolco of at
least $10,000,000.
Maturity: Due on the seventh anniversary of issuance.
Mandatory Redemption: None.
Optional Redemption: Redeemable at any time, in whole or in part, at
the election of the Company, at the following
percentages of principal, plus all accrued
interest to the redemption date:
Prior to the
Anniversary of
Issuance Percent
Third 95
Thereafter 100
Ranking: Senior Indebtedness of the Company.
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Security: None. the New Senior Notes will be general
unsecured obligations of Carolco.
Listing: The New Senior Notes will not be listed on any
exchange.
Method of Distribution: The New Senior Notes will be issued to the
existing holders of the 14% Notes pursuant to an
exchange offer complying with the Securities Act
of 1933, as amended, or pursuant to the
Prepackaged Plan. The exchange offer will be
conditioned upon the holders of 85% aggregate
principal amount of each of the 13% Senior
Subordinated Notes due 1996 and 14% Notes
tendering their notes for exchange pursuant to
the respective exchange offer.
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EXHIBIT B
TERMS OF NEW 13%/12% REDUCING RATE SENIOR SUBORDINATED
NOTES (THE "NEW SENIOR SUBORDINATED NOTES")
Issuer: Carolco Pictures Inc.
Exchange Ratio: The New Senior Subordinated Notes would be
issued to the holders of the Company's 13%
Senior Subordinated Notes due 1996 (the "13%
Notes"). For each $1,000 principal amount of
outstanding 13% Notes exchanged, a holder will
receive $1,000 principal amount of New Senior
Subordinated Notes.
Interest: 13% per annum, payable semi-annually. In
addition, promptly after issuance of the New
Senior Subordinated Notes, holders who exchange
their 13% Notes will receive accrued interest on
the New Senior Subordinated Notes from January
1, 1993 until the date of issuance of the New
Senior Subordinated Notes 50% in cash and 50% in
New Senior Subordinated Notes. The interest
rate will be reset to 12% commencing on the date
Tele-Communications, Inc. makes an equity
investment in Carolco of at least $10,000,000;
provided, that such reset will not take effect
prior to the second anniversary of the date of
issuance of the New Senior Subordinated Notes.
Maturity: Due on the sixth anniversary of issuance.
Mandatory Redemption: None.
Optional Redemption: Redeemable at any time, in whole or in part, at
the election of the Company, at the following
percentages of principal, plus all accrued
interest to the redemption date:
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Prior to the
Anniversary of
Issuance Percent
Second 65
Third 70
Fourth 75
Fifth 80
Sixth 85
Ranking: Senior to the 13% Notes and junior to Senior
Indebtedness of the Company.
Security: None. The New Senior Subordinated Notes will be
general unsecured obligations of Carolco.
Listing: The New Senior Subordinated Notes will not be
listed on any exchange.
Method of Distribution: The New Senior Subordinated Notes will be issued
to the existing holders of the 13% Notes
pursuant to an exchange offer complying with the
Securities Act of 1933, as amended, or pursuant
to the Prepackaged Plan. The exchange offer
will be conditioned upon the holders of 85%
aggregate principal amount of each of the 13%
Notes and 14% Senior Notes due 1993 tendering
their notes for exchange pursuant to the
respective exchange offer.
