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) June 9, 1995 (June 8, 1995)
BIG O TIRES, INC.
(Exact name of registrant as specified in its charter)
Nevada 1-8833 87-0392481
(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File No.) Identification No.)
11755 East Peakview Avenue, Englewood, Colorado 80111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (303) 790-2800
7 Total Pages
Item 5. Other Events.
On June 8, 1995, the Company announced that it has approved in principle a
proposal to acquire the Company at a price of $16.50 per share (the
"Acquisition Proposal") submitted by a group of its management and Big O Tire
Dealers of America, a group of franchise dealers (the "Acquisition Group").
The Acquisition Proposal is subject to a number of conditions, including the
ability of the Acquisition Group to obtain financing commitments on acceptable
terms sufficient to finance the acquisition, participation in the Acquisition
Group of not less than 80% of the shares held by the Company's Employee Stock
Ownership Plan ("ESOP") and the ability of the ESOP to obtain an acceptable
fairness opinion, participation in the group of not less than 85% of the
Company's franchised Big O Tire dealers, and the negotiation of a definitive
merger agreement. The definitive agreement will provide that the Company may
terminate the merger agreement after July 21, 1995, if the Investment
Committee determines in its good faith judgment that the Acquisition Group
does not have the financial commitments sufficient to finance the acquisition,
and the Company may terminate the agreement after July 31, 1995, if the
Acquisition Group is unable to obtain participation in the Acquisition Group
by not less than 85% of the franchised Big O Tire Dealers or such requirement
has been waived by the Acquisition Group.
The Company has also agreed to advance or reimburse certain of the expenses of
the Acquisition Group in connection with the proposed merger. The Company
only agreed to such advancement or reimbursement provided that under certain
conditions the franchised Big O Tire Dealers participating in the transaction
agree to extend the term of their franchise agreements with the Company.
These expenses to be either advanced or reimbursed cover an amount up to an
aggregate (including all expenses previously reimbursed pursuant to prior
agreements with respect to reimbursement of fees and expenses) of $750,000
plus financing fees up to $217,000 on the condition that prior to any
reimbursement or payment of fees exceeding an aggregate of $500,000 (including
prior reimbursement), the franchised Big O Tire Dealers participating in the
transaction agree to certain franchise agreement extensions.
Item 7. Financial Statements and Exhibits.
(10.1) Acquisition Proposal to the Investment Committee of the Board of
Directors from certain members of management and a representative of Big O
Tire Dealers of America dated June 2, 1995, and signed by the Company on June
7, 1995.
[Signatures will follow on next page.]<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:
Date: June 9, 1995
BIG O TIRES, INC.
By: /s/ Philip J. Teigen
General Counsel and Secretary<PAGE>
EXHIBITS
1. (10.1) Acquisition Proposal to the Investment Committee of the
Board of Directors from certain members of management and a
representative of Big O Tire Dealers of America dated June
2, 1995, and signed by the Company on June 7, 1995.
June 2, 1995
VIA FACSIMILE
Investment Committee of the Board of Directors
Big O Tires, Inc.
11755 East Peakview Avenue
Englewood, Colorado 80111
Attn: Frank L. Carney
Dear Gentlemen:
As you are aware, over the past two months the undersigned members of
the senior management of Big O Tires, Inc. ("Big O") and the directors of Big
O Tire Dealers of America ("BOTA") have been working together to formulate a
financeable acquisition proposal to acquire the outstanding stock of Big O
following the Investment Committee's rejection of our offer to acquire such
stock at the price of $16.00 per share.
Based upon our efforts, we continue to believe that the combination of
Big O's senior management and dealers can offer the best price available and
can close a transaction in the shortest time. Thus, we are now in a position
to submit to you for your consideration a new proposal on behalf of a group to
be formed by an entity comprised of those franchised Big O Tire Dealers who
elect to participate and the undersigned members of Big O's senior management
to acquire all outstanding shares of common stock of Big O for $16.50 per
share in a cash merger. Our proposal is subject to:
(i) The obtaining of financing commitments on acceptable terms
sufficient to finance the acquisition. As you are aware, we have made
substantial progress in arranging the necessary elements of financing and
believe commitments will be in place within 10 days of the execution of a
merger agreement.
(ii) Participation in the acquisition group by not less than 80% of the
shares held by Big O's ESOP and the ability of the ESOP to obtain an
acceptable fairness opinion.
(iii) Participation in the acquisition group by not less than 85% of
franchised Big O Tire Dealers.<PAGE>
Big O Tires, Inc.
June 2, 1995
Page 2
(iv) Negotiation of a definitive merger agreement. The definitive
agreement will provide that the Company may terminate the agreement after July
21, 1995, if the Investment Committee determines in its good faith judgement
that the undersigned does not have the financial commitments described in (i)
above, and may terminate the agreement after July 31, 1995, if the condition
described in (iii) above is not then satisfied or waived by the undersigned.
In consideration of our efforts to consummate the proposed merger, we
request that Big O agree that:
(1) Big O will promptly advance or reimburse the expenses incurred by
the undersigned in such efforts up to an aggregate (including all expenses
previously reimbursed pursuant to our prior agreements with respect to
reimbursement of fees and expenses) of $750,000 plus financing fees up to
$217,000 on the condition that prior to any reimbursement or payment of fees
exceeding an aggregate of $500,000 (including prior reimbursement) the
franchised Big O Tire Dealers participating in the transaction whose franchise
agreements expire before July 1, 2002, shall have signed acceptable Big O
franchise agreements for a minimum term of an additional three years beyond
the date that their current franchise expires, or July 1, 2002, if sooner,
without payment of a signing fee.
(2) Subject to applicable Nevada corporate law, Big O will indemnify
and hold harmless the undersigned and any other Big O dealers who participate
in the negotiations of the proposed transaction and each of their respective
employees, attorneys, investment bankers, and agents who are identified in
writing and approved by the Investment Committee for all costs and expenses
(including attorney fees) in connection with or arising out of any actions
brought or threatened relating to, directly or indirectly, the proposed
transaction and all prior transactions proposed with respect to the purchase
of Big O by the undersigned. Such indemnification shall survive the
termination of this letter agreement.
(3) While a definitive merger agreement is being negotiated, no
material expenditures will be made by Big O without the written consent of the
undersigned and no expenditures of any amount will be made by Big O in
contemplation of a restructuring or a reorganization introducing business
units.
We reserve the right to withdraw our proposal without prior notice in
the event that Big O solicits further proposals from any third party or
initiates any action which would result in a major change in the assets,
capitalization or corporate structure of Big O (including the incurrence of
additional debt other than for seasonal working capital needs for inventory
and receivables).<PAGE>
Big O Tires, Inc.
June 2, 1995
Page 3
If the definitive merger agreement has not been signed by June 21, 1995,
either of us may terminate this letter by notice to the other.
If this proposal is acceptable to you, please indicate your acceptance
and agreement by signing in the space provided below on the enclosed copy and
returning such copy to Steve Cloward or John Adams no later than 5:00 P.M.,
June 7, 1995, at which point this proposal, unless accepted, will expire.
Very truly yours,
Management participants:
Steven P. Cloward John B. Adams
Ron Lautzenheiser Brad Findlay
Thomas L. Staker Philip J. Teigen
Bruce H. Ware Gregory L. Roquet
Dennis J. Fryer Kelly A. O'Reilly
Allen E. Jones BOTA
By: /s/ Steven P. Cloward By: /s/ Wes Stephenson
Steven P. Cloward Wes Stephenson, President
ACCEPTED AND AGREED TO:
Big O Tires, Inc.
By: /s/ Frank L. Carney
Frank L. Carney, Chairman of the Investment Committee
Date: June 7, 1995
