<PAGE> 1
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) AUGUST 31, 1994
THE ACTAVA GROUP INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 1-5706 58-0971455
- -------------------------------------- -------------------------- ------------------------
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
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4900 GEORGIA-PACIFIC CENTER, ATLANTA, GEORGIA 30303
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: 404/658-9000
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ITEM 5. Other Events
On August 31, 1994, The Actava Group Inc. ("Actava") entered into
letters of intent with Orion Pictures Corporation ("Orion"), MCEG Sterling
Incorporated ("Sterling"), International Telcell, Inc. ("ITI"), and Metromedia
International Inc. ("MII") (ITI and MII are together referred to as "MITI")
providing for a combination of the foregoing companies (the "Proposed
Transaction") into one new company to be named "Metromedia International Group,
Inc."
Under the terms of the Proposed Transaction, each share of Orion common
stock would be exchanged for 0.57143 shares of Actava common stock or its
equivalent, each share of Sterling common stock would be exchanged for Actava
common stock or its equivalent at the same 0.57143 exchange ratio, and each
share of MITI common stock would be exchanged for 5.5614 shares of Actava
common stock or its equivalent. The foregoing exchange ratios will be subject
to certain adjustments depending on the trading range of Actava common stock.
Actava currently has approximately 18,335,186 shares of common stock
outstanding. As a result of the Proposed Transaction, it is currently
anticipated that Actava (based on current market prices and assuming it is the
surviving entity in the Proposed Transaction) would issue approximately
21,500,000 additional shares of common stock. All of the shares of common
stock of the surviving entity in Proposed Transaction will be identical to the
shares of Actava common stock currently outstanding, except that the shares of
common stock issued to Metromedia Company and its affiliates (including John W.
Kluge) will be entitled to three votes per share. It is currently anticipated
that Metromedia Company and its affiliates would control in excess of 50% of
the voting power of the surviving entity as a result of the exchanges of stock
contemplated by the Proposed Transaction.
The letters of intent contemplate that Actava will provide up to $55
million of interim financing on a secured basis to Orion, Sterling and MITI
prior to consummation of the Proposed Transaction.
Metromedia International Group, Inc. will be managed by a three person
Office of the Chairman consisting of John W. Kluge, the current Chairman of
Orion, as Chairman, Stuart Subotnick, Orion's current Vice Chairman, as Vice
Chairman, and John D. Phillips, President and Chief Executive Officer of
Actava, as President.
The closing of each of the transactions included in the Proposed
Transaction is contingent upon the closing of each other transaction included
in the Proposed Transaction. The consummation of the Proposed Transaction is
subject, among other things, to the successful negotiation and execution of
definitive agreements, approval of the Proposed Transaction by the Boards of
Directors and shareholders of Actava, Orion, Sterling, and MITI, the
completion of satisfactory due diligence investigations by each of the parties
to the Proposed Transaction, the receipt of all required lender consents, the
successful refinancing of the currently outstanding Orion debt, and the receipt
of all required regulatory approvals, including approval with respect to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
2
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ITEM 7. Financial Statements and Exhibits
(c) Exhibits
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Exhibit
Number Description
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99(a) Letter of intent regarding a contemplated business combination by and among The Actava Group Inc., Metromedia
International, Inc., and International Telcell, Inc. dated as of August 31, 1994.
99(b) Letter of intent regarding a contemplated business combination by and among The Actava Group Inc. and Orion Pictures
Corporation dated as of August 31, 1994.
99(c) Letter of intent regarding a contemplated business combination by and among Orion Pictures Corporation, MCEG Sterling
Incorporated and The Actava Group Inc. dated as of August 31, 1994.
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3
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ACTAVA GROUP INC.
---------------------------------------
Registrant
/s/ Frederick B. Beilstein, III
---------------------------------------
Frederick B. Beilstein, III
Senior Vice President and
Chief Financial Officer
Dated: September 2, 1994
4
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Exhibit Index
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Exhibit
Number Description
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99(a) Letter of intent regarding a contemplated business combination by and among The Actava Group Inc., Metromedia
International, Inc., and International Telcell, Inc. dated as of August 31, 1994.
99(b) Letter of intent regarding a contemplated business combination by and among The Actava Group Inc. and Orion Pictures
Corporation dated as of August 31, 1994.
99(c) Letter of intent regarding a contemplated business combination by and among Orion Pictures Corporation, MCEG Sterling
Incorporated and The Actava Group Inc. dated as of August 31, 1994.
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5
<PAGE> 1
Exhibit 99(a)
THE ACTAVA GROUP INC.
4900 Georgia-Pacific Center
Atlanta, Georgia 30303
August 31, 1994
Metromedia International, Inc.
41 West Putnam Avenue
Greenwich, Connecticut 06830
International Telcell, Inc.
41 West Putnam Avenue
Greenwich, Connecticut 06830
Gentlemen:
This letter sets forth our understanding with respect to a contemplated
transaction (the "Proposed Transaction") between The Actava Group Inc., a
Delaware corporation ("Actava"), and Metromedia International, Inc., a Delaware
corporation ("MII"), and International Telcell, Inc., a Delaware corporation
("ITI") which are in the process of finalizing a combination of their business
operations through the creation of a newly formed Delaware holding company,
Metromedia International Telecommunications, Inc. ("MITI") (the "Exchange").
1. The Proposed Transaction. The Proposed Transaction will have the
principal terms set forth on Exhibit A hereto.
2. Conditions. Consummation of the Proposed Transaction is subject to the
following conditions: (i) execution and delivery of definitive agreements
providing for the Proposed Transaction containing representations, warranties,
covenants and closing conditions which are mutually acceptable to the parties
hereto, (ii) satisfaction by the parties hereto with the results of their
respective legal and financial due diligence of one another, (iii) approval of
the Proposed Transaction by the Board of Directors and the shareholders of MITI
and Actava, (iv) consummation of (a) the proposed transaction between Actava
and Orion Pictures Corporation which is the subject of the letter dated as of
the date hereof between Actava and Orion Pictures Corporation, a copy of which
is attached as Exhibit B, and (b) the proposed transaction among Orion Pictures
Corporation,
<PAGE> 2
MCEG Sterling Incorporated and Actava which is the subject of the
letter dated as of the date hereof among Actava, Orion Pictures Corporation and
MCEG Sterling Incorporated, a copy of which is attached as Exhibit C, and (v)
receipt of all requisite regulatory approvals, including approval with respect
to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
3. Press Release. Promptly after the execution and delivery of this letter
by the parties hereto, Actava and Metromedia Company shall issue a press
release in a form agreed upon by such parties. Thereafter, except as may be
required by applicable law or pursuant to the rules and regulations of the New
York Stock Exchange, Inc., none of the parties hereto shall, and shall cause
their respective affiliates and representatives not to, issue or cause the
publication of any press release or other announcement with respect to the
Proposed Transaction without the consent of the other parties hereto.
4. Expenses. Each of the parties hereto agrees that if the Proposed
Transaction is consummated, Actava will pay the fees and expenses of the
parties hereto; provided, that, if the Proposed Transaction is not consummated,
each party will pay its own costs and expenses incurred in connection with the
transactions contemplated by this letter.
5. Governing Law. This letter shall be governed by the laws of the State
of New York without regard to the conflict of laws principles thereof.
6. Non-Binding Letter. This letter merely constitutes our current
understanding of the Proposed Transaction but, except as set forth in the last
sentence of this paragraph, shall not be binding upon the parties, nor shall it
impose any obligations on the parties. Except as set forth in the last
sentence of this paragraph, no binding obligation with respect to the Proposed
Transaction will result unless the definitive agreements are executed and
delivered by the parties. Notwithstanding the foregoing, paragraphs 3, 4 and 5
above and this paragraph shall constitute the legal, valid and binding
obligation of the parties.
2
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If this letter correctly sets forth our understanding, please so acknowledge
by signing in the space indicated below and returning the enclosed copy of this
letter.
Very truly yours,
THE ACTAVA GROUP INC.
By: /s/ John D. Phillips
------------------------------------------
John D. Phillips
President and Chief
Executive Officer
ACCEPTED AND AGREED:
METROMEDIA INTERNATIONAL, INC.
By: /s/ Carl C. Brazell, Jr.
-------------------------
Carl C. Brazell, Jr.
President
INTERNATIONAL TELCELL, INC.
By: /s/ William B. Manning
-------------------------
William B. Manning
Senior Vice President
and Chief Financial
Officer
3
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Exhibit A
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Business Combination with MITI The Actava Group, Inc. ("Actava") and upon the consummation
of the Exchange, Metromedia International
Telecommunications, Inc. ("MITI") will enter into a
business combination as follows:
(a) Each of Metromedia Company's and its affiliates'
shares of MITI common stock will be exchanged for 5.56141
shares (subject to adjustment as described in paragraph (c)
below) of newly-issued Class A common stock of Actava,
which Class A common stock will have the same terms and
conditions as Actava's existing common stock except that it
will be entitled to 3 votes per share on all matters voted
upon by Actava's shareholders.
(b) Simultaneously, each of the remaining shares of
MITI common stock will be exchanged for 5.5614 shares
(subject to adjustment as described in paragraph (c) below)
of newly-issued Actava common stock registered under the
Securities Act of 1933, as amended entitled to one vote per
share on all matters voted upon by Actava's shareholders.
(c) The number of shares of (i) Actava Class A common
stock which Metromedia Company and its affiliates will
receive in the transaction for each share of MITI common
stock, and (ii) Actava common stock which MITI's remaining
shareholders will receive for each share of MITI common
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____________________
1/ Based upon 1,712,484 shares of MITI common stock
outstanding and subject to adjustment in the event of
the issuance and exercise of certain employee stock
options, stock awards and stock grants entitling the
holders thereof to acquire shares of common stock of
MITI.
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stock will, in each such case be adjusted if on the
business day prior to the closing date of the transaction,
the average of the closing price of Actava common stock on
the New York Stock Exchange, Inc. for the 20 most recent
trading days prior to such date (the "Average Closing
Price") is determined to be less than $10.50 per share, by
solving for "Y" in the following formula and dividing "Y"
by the number of shares of MITI common stock outstanding on
such date:
100,000,000 = "Y" x Average Closing Price.
Bridge Facility Actava will, as promptly as practicable following the
execution and delivery of this letter of intent, provide a
$55 million bridge loan facility to Orion Pictures
Corporation, MITI and MCEG Sterling Incorporated for their
respective capital needs prior to the consummation of the
transactions.
</TABLE>
2
<PAGE> 1
Exhibit 99(b)
THE ACTAVA GROUP INC.
4900 Georgia-Pacific Center
Atlanta, Georgia 30303
August 31, 1994
Orion Pictures Corporation
1888 Century Park East
Los Angeles, California 90067
Gentlemen:
This letter sets forth our understanding with respect to a
contemplated transaction (the "Proposed Transaction") between The Actava Group
Inc., a Delaware corporation ("Actava"), and Orion Pictures Corporation, a
Delaware corporation ("Orion").
1. The Proposed Transaction. The Proposed Transaction will have
the principal terms set forth on Exhibit A hereto.
2. Conditions. Consummation of the Proposed Transaction is
subject to the following conditions: (i) execution and delivery of definitive
agreements providing for the Proposed Transaction containing representations,
warranties, covenants and closing conditions which are mutually acceptable to
the parties hereto, (ii) satisfaction by the parties hereto with the results of
their respective legal and financial due diligence of one another, (iii)
approval of the Proposed Transaction by the Board of Directors and the
shareholders of Orion and Actava, (iv) consummation of (a) the proposed
transaction between Actava and Metromedia International Telecommunications,
Inc. which is the subject of the letter dated as of the date hereof among
Actava and Metromedia International, Inc. and International Telcell, Inc., a
copy of which is attached as Exhibit B, and (b) the proposed transaction among
Orion, Actava and MCEG Sterling Incorporated which is the subject of the letter
dated as of the date hereof among Orion and MCEG Sterling Incorporated, a copy
of which is attached as Exhibit C, and (v) receipt of all requisite regulatory
approvals, including approval with respect to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
<PAGE> 2
3. Press Release. Promptly after the execution and delivery of
this letter by the parties hereto, Metromedia Company and Actava shall
issue a joint press release in a form agreed upon by such parties. Thereafter,
except as may be required by applicable law or pursuant to the rules and
regulations of the New York Stock Exchange, Inc. or the National Association of
Securities Dealers Automated Quotation System, none of the parties hereto
shall, and shall cause their respective affiliates and representatives not to,
issue or cause the publication of any press release or other announcement with
respect to the Proposed Transaction without the consent of the other parties
hereto.
4. Expenses. Each of the parties hereto agrees that if the
Proposed Transaction is consummated, Actava will pay the fees and expenses of
the parties hereto; provided, that, if the Proposed Transaction is not
consummated, each party will pay its own costs and expenses incurred in
connection with the transactions contemplated by this letter.
5. Governing Law. This letter shall be governed by the laws of
the State of New York without regard to the conflict of laws principles
thereof.
6. Non-Binding Letter. This letter merely constitutes our
current understanding of the Proposed Transaction but, except as set forth in
the last sentence of this paragraph, shall not be binding upon the parties, nor
shall it impose any obligations on the parties. Except as set forth in the
last sentence of this paragraph, no binding obligation with respect to the
Proposed Transaction will result unless the definitive agreements are executed
and delivered by the parties. Notwithstanding the foregoing, paragraphs 3, 4
and 5 above and this paragraph shall constitute the legal, valid and binding
obligation of the parties.
2
<PAGE> 3
If this letter correctly sets forth our understanding, please so
acknowledge by signing in the space indicated below and returning the enclosed
copy of this letter.
THE ACTAVA GROUP INC.
By: /s/ John D. Phillips
------------------------------------
John D. Phillips
President & Chief
Executive Officer
ACCEPTED AND AGREED:
ORION PICTURES CORPORATION
By: /s/ Leonard White
-------------------------
Leonard White
President and Chief
Executive Officer
3
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Exhibit A
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Business Combination with Orion The Actava Group Inc. ("Actava") and Orion Pictures
Corporation ("Orion") will enter into a business combination
as follows:
(a) Each of Metromedia Company's and its affiliates'
shares of Orion common stock will be exchanged for .57143
shares (without giving effect to the issuance of Orion common
stock in connection with the acquisition being made by Orion
of MCEG Sterling Incorporated simultaneously with the business
combination described herein (the "Sterling Issuance"))
(subject to adjustment as described in paragraph (c) below) of
newly-issued Class A common stock of Actava/Orion, which
Class A common stock will have the same terms and conditions
as Actava's existing common stock except that it will be
entitled to 3 votes per share on all matters voted upon by
Actava's shareholders.
(b) Simultaneously, each of the remaining shares of Orion
common stock will be exchanged for .57143 shares (without
giving effect to the Sterling Issuance) (subject to adjustment
as described in paragraph (c) below) of newly-issued Actava/
Orion common stock registered under the Securities Act of
1933, as amended, entitled to one vote per share on all
matters voted upon by Actava's shareholders. The shares of
Orion common stock being issued to shareholders of MCEG
Sterling Incorporated ("Sterling") simultaneously with the
consummation of the business combination described herein will
be registered under the Securities Act of 1933, as amended,
entitled to one vote per share on all matters voted upon by
Actava's shareholders and will be exchanged using the same
ratio (i.e., .57143, subject to adjustment as described in
paragraph (c)) with the number of shares of Actava/Orion
common stock being issued subject to the maximum and minimum
consideration limitations set forth in the letter of intent
between Orion and Sterling dated the date hereof.
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(c) The number of shares of (i) Actava/Orion Class A common
stock which Metromedia Company and its affiliates will receive
in the transaction for each share of Orion common stock, and
(ii) Actava/Orion common stock which Orion's remaining
shareholders will receive for each share of Orion common
stock, will in each such case be adjusted if on the business
day prior to the closing date of the transaction, the average
of the closing prices of Actava common stock on the New York
Stock Exchange, Inc. for the 20 trading days prior to such
date (the "Average Closing Price") is determined to be less
than $10.50 per share, by solving for "Y" in the following
formula and dividing "Y" by the number of shares of Orion
common stock outstanding on such date (without giving effect
to the Sterling Issuance):
120,000,000 = "Y" x Average Closing Price.
Refinancing of Orion In connection with the consummation of the transaction,
Debt Actava/Orion will refinance Orion's senior bank debt, its
senior debt to Sony Pictures Entertainment Inc. and its
subordinated debt issued to holders of claims in its plan of
reorganization. Orion's majority shareholder and its
affiliate will be released from their guarantee of Orion's
senior debt.
Management of A three person Office of the Chairman of Actava/Orion will be
Actava/Orion established to manage Actava/Orion. Orion's existing Chairman
will serve as the Chairman of Actava/Orion, Orion's existing
Vice Chairman will serve as Vice Chairman of Actava/Orion and
Actava's President will serve as President of Actava/Orion.
Bridge Facility Actava will, as promptly as practicable following the
execution and delivery of this letter of intent, provide a
$55 million bridge loan facility to Orion, Metromedia
International Telcell, Inc. and MCEG Sterling Incorporated for
their respective capital needs prior to the consummation of
the transactions.
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2
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Exhibit 99(c)
ORION PICTURES CORPORATION
1888 Century Park East
Los Angeles, California 90067
August 31, 1994
MCEG Sterling Incorporated
1888 Century Park East, Suite 1777
Los Angeles, California 90067
The Actava Group, Inc.
4900 Georgia-Pacific Center
Atlanta, Georgia 30303
Gentlemen:
This letter sets forth our understanding with respect to a
contemplated transaction (the "Proposed Transaction") among Orion Pictures
Corporation, a Delaware corporation ("Orion"), MCEG Sterling Incorporated, a
Delaware corporation ("Sterling"), and The Actava Group, Inc. a Delaware
corporation ("Actava").
1 The Proposed Transaction. The Proposed Transaction
will have the principal terms set forth on Exhibit A hereto.
2. Conditions. Consummation of the Proposed Transaction
is subject to the following conditions: (i) execution and delivery of
definitive agreements providing for the Proposed Transaction containing
representations, warranties, covenants and closing conditions which are
mutually acceptable to the parties hereto, (ii) approval of the Proposed
Transaction by the Board of Directors and stockholders of Orion, Sterling and
Actava, (iii) satisfaction by Orion of its legal and financial due diligence
review of Sterling, (iv) satisfaction by Sterling of its legal and financial
due diligence review of Orion and Actava, (v) consummation of (a) the proposed
transaction between Actava and Orion which is the subject of the letter dated
as of the date hereof between Actava and Orion, a copy of which is attached as
Exhibit B and (b) the proposed transaction between Actava and Metromedia
International Telecommunications, Inc., which is the subject of the letter
dated as of the date hereof between Actava and Metromedia International, Inc.,
and
<PAGE> 2
International Telcell, Inc., a copy of which is attached hereto as Exhibit C
hereto and (vi) receipt of all requisite regulatory approvals, including
approval with respect to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
3. Press Release. Promptly after the execution and
delivery of this letter by the parties hereto, Actava and Metromedia Company
shall issue a joint press release agreed upon by such parties. Thereafter,
except as may be required by applicable law or pursuant to the rules and
regulations of the National Association of Securities Dealers Automated
Quotation System, neither Orion nor Sterling shall, and shall cause their
respective affiliates and representatives not to, issue or cause the
publication of any press release or other announcement with respect to the
Proposed Transaction without the consent of the other party hereto.
4. Expenses. Each of the parties hereto agrees that if
the Proposed Transaction is consummated, Actava will pay the fees and expenses
of the parties hereto; provided, that, if the Proposed Transaction is not
consummated, each party will pay its own costs and expenses incurred in
connection with the Proposed Transaction.
5. Governing Law. This letter shall be governed by the
laws of the State of New York without regard to the conflict of laws principles
thereof.
6. Non-Binding Letter. This letter merely constitutes
our current understanding of the Proposed Transaction but, except as set forth
in the last sentence of this paragraph, shall not be binding upon the parties,
nor shall it impose any obligations on the parties. Except as set forth in the
last sentence of this paragraph, no binding obligation with respect to the
Proposed Transaction will result unless the definitive agreements are executed
and delivered by the parties. Notwithstanding the foregoing, paragraphs 3, 4
and 5 above and this paragraph shall constitute the legal, valid and binding
obligation of the parties.
2
<PAGE> 3
If this letter correctly sets forth our understanding, please
so acknowledge by signing in the space indicated below and returning the
enclosed copy of this letter.
Very truly yours,
ORION PICTURES CORPORATION
By: /s/ John W. Hester
-------------------------------------------
John W. Hester
Executive Vice President
and General Counsel
ACCEPTED AND AGREED:
MCEG STERLING INCORPORATED
By: /s/ John Hyde
----------------------------
John Hyde
President and Chief
Executive Officer
THE ACTAVA GROUP INC., as to Paragraph 4 only
By: /s/ John D. Phillips
----------------------------
John D. Phillips
President and Chief
Executive Officer
3
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Exhibit A
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Acquisition of Sterling Common Stock MCEG Sterling Incorporated ("Sterling") and Orion Pictures
Corporation ("Orion") will enter in an agreement which will
ultimately provide for an exchange by Sterling's
stockholders of their shares for shares of The Actava
Group, Inc. ("Actava") as described below. It is the
parties intention to effect the exchange of Sterling stock
for Actava stock pursuant to one or more "reorganizations"
within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended. Initially, the outstanding
shares of common stock of Sterling will be exchanged for
1,000,000 shares of Orion common stock.
Minimum Consideration Immediately following the acquisition of Sterling by Orion,
Orion will be acquired by Actava (the "Orion Acquisition")
and Orion agrees that in connection with the Orion
Acquisition, Sterling's former stockholders, as
stockholders of Orion, will receive Actava common stock
registered under the Securities Act of 1933, as amended,
with an aggregate value determined on the closing date of
the transaction of not less than $6.0 million (the "Minimum
Value"). If Sterling's former stockholders are to receive
Actava common stock with a value less than the Minimum
Value, Orion will provide the former Sterling stockholders
pro rata with an additional amount of cash or Orion common
stock (at Orion's option) sufficient for the former
Sterling stockholders to receive Actava common stock equal
to the Minimum Value.
Maximum Consideration Sterling agrees that the shares of Actava stock its former
stockholders receive in the Orion Acquisition shall not
have an aggregate value determined on the closing date of
the transaction of more than $8.5 million. If Sterling's
stockholders are to receive Actava common stock with an
aggregate value determined on the closing date of the
transaction of more than $8.5 million, the aggregate number
of common shares issued to Sterling's former stockholders
in the acquisition shall be adjusted such that the Actava
shares to be received by Sterling's former stockholders in
the Orion Acquisition will have an aggregate value of not
more than $8.5 million.
</TABLE>
19
