Exhibit Index at Page 3
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 30, 2000
GENESEE CORPORATION
(Exact Name of Registrant as Specified in Charter)
NEW YORK 0-1653 16-0445920
(State or other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
445 St. Paul Street, Rochester, New York 14605
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (716) 546-1030
Item 5. Other Events.
Genesee Corporation issued a news release on August 30, 2000, which
is filed with this report as Exhibit 99.
Item 7. Exhibits.
An exhibit filed with this report is identified in the Exhibit Index
at Page 3.
1
<PAGE>
SIGNATURES
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.
Genesee Corporation
Date: August 30, 2000 By /s/ Mark W. Leunig
Mark W. Leunig, Vice President and Secretary
2
<PAGE>
EXHIBIT INDEX
Page
Exhibit 99 News Release Dated August 30, 2000 4
3
<PAGE>
Exhibit 99
FOR IMMEDIATE RELEASE CONTACT: Mark W. Leunig
Director of Investor Relations
(716) 263-9440
GENESEE CORPORATION ANNOUNCES
AGREEMENT TO SELL BREWING BUSINESS AND PROPOSALS TO SELL
OTHER ASSETS AND DISSOLVE AND LIQUIDATE THE CORPORATION
ROCHESTER, NEW YORK, August 30, 2000 - Genesee Corporation (NASDAQ/NMS:GENBB)
today announced that the Special Committee of the Board of Directors, formed to
consider strategic alternatives for the Corporation's brewing business, has
approved an agreement to sell the brewing business in a management buy-out led
by Samuel T. Hubbard, Jr., President and Chief Executive Officer of the
Corporation.
Under the terms of the agreement announced today, the Corporation would
sell all of the brands and other operating assets of Genesee Brewing Company for
$22 million plus net working capital as of the closing date. $17.5 million plus
net working capital would be paid in cash at closing and $4.5 million would be
paid by Genesee taking back a three year note from the purchaser, bearing
interest at 12% per year. The Corporation estimates the transaction would result
in a net gain of approximately $5 million if it is consummated.
The sale is subject to a number of conditions customary to such
transactions, including purchaser financing, shareholder approval, regulatory
approvals and third party consents. "There is a tremendous amount of work to be
done to resolve all of the closing conditions and obtain all of the regulatory
approvals required to transfer ownership of the brewery," said Mark W. Leunig,
Vice President and Secretary of the Corporation. The agreement announced today
is not exclusive and allows the Corporation to entertain other offers that might
emerge prior to consummation of the management buy-out.
4
<PAGE>
The agreement for a management buy-out is the culmination of an
exhaustive two year effort to evaluate strategic alternatives for the
Corporation's brewing business. As part of this process, the Corporation, with
assistance from its investment bankers, conducted an extensive search, both
domestically and globally, for potential strategic and financial buyers for its
brewing business. As a result of this process the Special Committee concluded
that the management buy-out proposal offered the greatest value to the
Corporation's shareholders.
The proposed management buy-out will be submitted for approval by Class
A shareholders at the Corporation's Annual Meeting currently scheduled for
October 19, 2000. If shareholders approve the transaction and all other
conditions are satisfactorily resolved, the closing is expected to take place
within sixty days.
The Corporation announced that it has recently been served with a
purported class action lawsuit against the Corporation and its directors
challenging the management buy-out proposal and seeking injunctive relief and
compensatory damages. The Corporation believes the lawsuit is without merit and
will vigorously defend it.
The Corporation also announced that the Board of Directors approved a
proposal to seek approval from Class A shareholders at the Annual Meeting to
sell or otherwise dispose of all of the Corporation's other assets.
The Corporation previously announced that its equipment leasing subsidiary
has entered into an agreement in principle to sell a significant portion of its
lease portfolio. The sale is subject to a number of conditions customary to such
transactions, including satisfactory due diligence and negotiation of a
definitive agreement. If the sale is completed, the Corporation estimates that
it would receive approximately $13 million in proceeds. Because the proposed
sale is expected to generate a book loss, the Corporation recorded a pre-tax
charge of $3.1 million in the fourth quarter of its fiscal year ended April 29,
2000, which represents the estimated loss on the sale. This charge is net of the
projected income that is expected to be generated by that portion of the lease
portfolio which would not be sold. "The due diligence process for a portfolio of
approximately 120 leases is quite extensive, but is proceeding satisfactorily,"
said Mr. Leunig. If all closing conditions are satisfactorily resolved, the sale
of the lease portfolio is expected to close within sixty days.
5
<PAGE>
The Corporation also announced that it has entered into a letter of
intent to sell all of the stock of Ontario Foods, Inc., which represents the
Corporation's Foods Division, to Ralcorp Holdings, Inc. (NYSE:RAH). The sale to
Ralcorp is subject to a number of conditions customary to such transactions,
including satisfactory due diligence, negotiation of a definitive agreement
and approval by the Corporation's shareholders.
With annualized sales of approximately $1.1 billion, Ralcorp produces a
variety of store brand foods that are sold under the individual labels of
various grocery, mass merchandise and drug store retailers. Ralcorp's
diversified product mix includes: ready-to-eat and hot cereals, crackers and
cookies, snack nuts, salad dressings, mayonnaise, peanut butter, jam and
jellies, syrups and various sauces. Terms of the deal, which is expected to
close within sixty days, were not disclosed.
The proposed sale to Ralcorp is the result of a careful assessment of
the strategic position of the Corporation's foods business in the rapidly
consolidating retail private label food industry. The Corporation concluded that
to compete effectively long term, its foods business would have to undertake a
rapid and aggressive growth strategy or combine with a larger entity. After
thorough evaluation of both alternatives, the Corporation determined that sale
of its foods business to a larger entity would produce the greatest value for
the Corporation's shareholders. The Corporation conducted a search to identify
potential strategic buyers, which ultimately produced the offer from Ralcorp.
If the sale of Ontario Foods to Ralcorp is consummated, Ralcorp would
retain Ontario Foods' management and employees and continue producing the Foods
Division's line of private label side dishes, dry soups and bouillon, beverage
mixes, and artificial sweeteners at the Foods Division's facility in Medina, New
York. "The sale to Ralcorp would align Ontario Foods with a strong, strategic
player, and should benefit both Ralcorp and Ontario Foods," said Karl D.
Simonson, President of Ontario Foods.
In light of the Board's decision to seek shareholder approval to sell
or otherwise dispose of all of the Corporation's assets, the Corporation
announced that the Board of Directors will also seek shareholder approval to
dissolve and liquidate the Corporation.
6
<PAGE>
If shareholders approve the proposal to dissolve and liquidate, the
Corporation would begin reporting all of its operations as discontinued under
rules governing liquidation accounting and would expect to make its first
liquidating distribution following the completion of the transactions announced
today. "The amount and timing of liquidating distributions will be dependent
upon timing of the closing of the brewing, equipment leasing and Ontario Foods
transactions, the liquidation of the Corporation's remaining assets and the
satisfaction of certain liabilities, the amounts of which cannot be determined
at this time," said Mr. Leunig.
The Corporation is evaluating strategies to sell or otherwise divest
the Corporation's remaining assets, which consist of a minority interest in a
privately-held remarketer of durable supplies for food service and industrial
users, and interests in three real estate investments. These assets are
currently carried on the Corporation's balance sheet at an aggregate book value
of $3.2 million.
Commenting on the announcement and liquidation process, Charles S.
Wehle, Chairman of the Corporation, said, "We believe that the transactions we
are working on to sell the Corporation's brewing, foods and equipment leasing
businesses will generate maximum value for our shareholders and maximum
opportunity for the employees, customers, suppliers and communities that have a
significant stake in the continued success of those businesses. The decision to
dissolve and liquidate the Corporation should enhance shareholder value by
unlocking the inherent value of the Corporation's assets. The actions announced
today are the result of a long and careful process of self assessment and
strategic review to identify the best way to maximize value for shareholders,
while balancing the interests of the Corporation's other constituencies. The
Board's efforts to devise a strategy that benefits all of our constituencies is
to be commended. I also want to thank our shareowners and employees for their
patience and loyalty throughout this very difficult and challenging process."
END
7
<PAGE>
NOTE: Statements made in this news release which are not historical,
including statements regarding the timing and results of the sale of the
Corporation's brewing, foods and equipment leasing businesses, the estimated
gain from the sale of the brewing business, the estimated proceeds from the sale
of the equipment leasing business, the dissolution and liquidation of the
Corporation and the expected distributions therefrom, are forward-looking
statements . Such forward-looking statements are subject to a number of risks
and uncertainties, and there can be no assurance that the expectations or
results reflected in those statements will be realized or achieved. Such risks
and uncertainties include, without limitation, the failure of the proposed
transactions to close for whatever reasons, the failure of shareholders to
approve the proposed transactions, further negotiation of terms and conditions,
purchase price adjustments, post-closing indemnification obligations, the
failure of the purchaser of the brewing business to obtain financing necessary
to consummate the transaction, the failure to satisfy other conditions necessary
to consummate the sale of the Corporation's operating businesses such as
completion of satisfactory due diligence, negotiation of definitive agreements
for the sale of the foods and equipment leasing businesses, failure to obtain
necessary regulatory approvals and third party consents, and the possibility
that a delay in resolving such conditions could jeopardize the transactions.
COPIES OF GENESEE CORPORATION NEWS RELEASES ARE AVAILABLE FREE OF CHARGE BY
CALLING PRNEWSWIRE'S COMPANY NEWS ON CALL AT 800-758-5804, EXTENSION
352775, OR ON THE INTERNET AT HTTP;//WWW.PRNEWSWIRE.COM/CNOC.
8
<PAGE>
