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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): May 13, 1998
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CROWN BOOKS CORPORATION
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(Exact name of registrant as specified in charter)
Delaware 0-11457 52-1227415
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
3300 75th Avenue
Landover, Maryland 20785
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 226-1200
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Not Applicable
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(former name or former address if changed since last report)
Page 1 of 7 pages.
Exhibit Index appears on page 7.
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INFORMATION TO BE INCLUDED IN REPORT
ITEM 1: CHANGES IN CONTROL OF REGISTRANT
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On May 13, 1998, Richfood Holdings, Inc., a Virginia corporation ("Richfood"),
accepted for purchase, pursuant to a tender offer, shares representing 96% of
the outstanding common stock, par value $1.00 per share (the "Dart Shares"), of
Dart Group Corporation ("Dart"), which owns approximately 52.3% of the shares of
common stock, par value $0.01 per share (the "Crown Shares"), of Crown Books
Corporation, a Delaware corporation (the "Company"). Accordingly, under the
rules and regulations of the Securities and Exchange Commission, Richfood
acquired control of the Company as of such date by virtue of its indirect
beneficial ownership of the Crown Shares.
The Dart Shares were acquired in a tender offer, commenced on April 15, 1998,
by Richfood and DGC Acquisition, Inc., a Delaware corporation and wholly-owned
subsidiary of Richfood ("DGC"), to purchase all of the outstanding Dart Shares
for a purchase price of $160.00 per share, subject to the terms and conditions
contained in the Offer to Purchase, dated April 15, 1998, by Richfood and DGC
and the related Letter of Transmittal (which, together with any amendments and
supplements thereto constituted the "Offer"). The Offer expired at 12:00
midnight, New York City time, Tuesday, May 12, 1998. At that time, 1,180,503
Dart Shares, constituting approximately 96% of the Dart Shares outstanding, were
validly tendered and not withdrawn. On May 13, 1998, all of the validly
tendered Dart Shares were accepted for purchase.
Richfood completed the acquisition of Dart on May 18, 1998, by merging its
wholly-owned subsidiary, DGC, with and into Dart, with Dart surviving as a
wholly-owned subsidiary of Richfood (the "Merger"). In the Merger, Dart Shares
that were not tendered in the Offer (excluding shares owned, directly or
indirectly, by Dart or any wholly-owned subsidiary of Dart or by Richfood, DGC
or any other wholly-owned subsidiary of Richfood and excluding
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Dissenting Shares (as defined in the Agreement and Plan of Merger (the
"Agreement"), dated as of April 9, 1998, by and among Richfood, DGC and Dart))
were automatically converted into the right to receive $160.00 per Dart Share in
cash. The Offer and Merger were conducted pursuant to the Agreement.
The aggregate purchase price of the Dart Shares acquired in the Offer or
converted in the Merger, and for the cash settlement and cancellation of
previously outstanding options to purchase Dart Shares, was $201,116,325, which
was determined in arms-length negotiations. The purchase price was funded from
borrowings under a credit facility provided by First Union National Bank ("First
Union"), as lender and administrative agent for a syndicate of banks, in an
aggregate amount of $450 million, $250 million of which is a five-year revolving
credit facility and $200 million of which is an eighteen month term loan.
Borrowings under the facility bear interest at a variable rate per annum, which
is initially equal to LIBOR plus 1%. The new credit facility contains provisions
requiring early repayment of the term loan or a portion thereof with: the net
proceeds of any new offerings of equity securities by Richfood; net proceeds of
borrowings of any long-term debt under any new credit facilities entered into by
Richfood or any of its wholly-owned subsidiaries; and with the net proceeds of
any sale of Dart's interests in (i) the Company, (ii) Trak Auto Corporation, a
Delaware corporation, the stock of which is 67.1% owned by Dart, (iii) Total
Beverage Corporation, a Delaware corporation and wholly-owned subsidiary of Dart
and (iv) certain real estate assets. The new credit facility also provides that,
in the event Richfood's senior debt rating is downgraded below investment grade
before the term loan is repaid, then, at the lenders' request, Richfood will
grant to the lenders a perfected first priority security interest in, among
other things, the Crown Shares owned by Dart. In the event any such pledge is
required and, thereafter, an event of default occurs and is continuing under the
credit facility, the lenders could have the ability to cause a further change in
control of the Company.
On May 18, 1998, the Company's Board of Directors increased the size of the
Board from three to five and elected Messrs. John E. Stokely and John C.
Belknap, each of whom is an executive officer of Richfood, to fill the resulting
vacancies. In its Schedule 13D, filed with the Securities and Exchange
Commission on May 26, 1998 (the "Schedule 13D"), Richfood indicated
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its expectation that, as soon as practicable, and after compliance with Rule
14f-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Company's Board of Directors will further increase the size of the
Board to seven and will fill the resulting vacancies with persons affiliated
with Richfood.
In its Schedule 13D, Richfood also expressed its intent to cause Dart to
divest its ownership of the Company as soon as practicable. Such a transaction
could take one or more of the following forms: (i) a sale of Dart's equity
interest in the Company, or a distribution of such equity interest to Richfood
to be followed by a spin-off of such equity interest to Richfood's shareholders;
(ii) a sale of all of the outstanding equity of the Company pursuant to a
merger, tender offer or share exchange; (iii) a sale of all or substantially all
of the assets of the Company, followed by a distribution of the net proceeds
thereof to the respective stockholders of the Company; (iv) a recapitalization
of the Company; or (v) a liquidation of the Company. Certain of such
transactions may cause the Crown Shares to no longer be eligible for listing on
The Nasdaq National Market and/or terminate the registration of the Crown Shares
under the Exchange Act.
Additional information with respect to the transaction described herein is set
forth in the exhibits hereto, which are incorporated herein by reference.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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c) Exhibits
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Number Exhibit
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2.1 Agreement and Plan of Merger, dated as of April
9, 1998, by and among Richfood, DGC and Dart.
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4.1 Credit Agreement, dated as of May 12, 1998, by
and among Richfood, as Borrower, First Union
National Bank, as Administrative Agent, Crestar
Bank, as Syndication Agent and The First
National Bank of Chicago, as Documentation
Agent.
Pursuant to Rule 601(b)(2) of Regulation S-K, the Company agrees to
furnish supplementally to the Securities and Exchange Commission, upon
request, any omitted schedules or similar attachments to the foregoing
Exhibits.
SIGNATURE PAGE FOLLOWS
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SIGNATURE
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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, thereunto duly authorized.
CROWN BOOKS CORPORATION
Date: May 28, 1998 By: /s/ Richard B. Stone
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Richard B. Stone
Chief Executive Officer
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EXHIBIT INDEX
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Exhibit No. Description Page
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(a) Agreement and Plan of Merger, dated as of April 9, 1998, by and
among Richfood, DGC and Dart (incorporated by reference to Exhibit
(c) to the Tender Offer Statement on Schedule 14D-1 filed with the
Securities and Exchange Commission by Richfood and DGC on April 15,
1998).
(b) Credit Agreement, dated as of May 12, 1998, by and among
Richfood, as Borrower, First Union, as Administrative Agent,
Crestar Bank, as Syndication Agent and The First National Bank of
Chicago, as Documentation Agent (incorporated by reference to
Exhibit (b) to the Form 13D filed with the Securities and
Exchange Commission by Richfood on May 26, 1998, reporting
Richfood's beneficial ownership of the Crown Shares).
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