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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): July 28, 1998
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CML Group, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
001-09630 04-2451745
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(Commission File Number) (I.R.S. Employer Identification No.)
524 Main Street
Acton, Massachusetts 01720
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(Address of Principal Executive Offices) (Zip Code)
(978) 264-4155
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On July 28, 1998, CML Group, Inc. (the "Company") announced that it had
sold to the State of Wisconsin Investment Board a redeemable subordinated note
for a purchase price of $20 million and established a senior credit facility of
up to $65 million with a maturity date of August 1, 1999 with funds managed by
DDJ Capital Management LLC (the "Funds") and BankBoston, N.A. In consideration
of the senior credit facility, the Company issued to the Funds and BankBoston
equity in the Company representing 19% of the Company's outstanding Common
Stock, calculated on a fully diluted basis.
The foregoing description of the announcement is qualified in its
entirety by reference to the full text of the Company's press release which is
filed as Exhibit 99 to this Current Report on Form 8-K and incorporated herein
by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) EXHIBITS.
The exhibit following the Exhibit Index is incorporated herein by
reference.
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SIGNATURE
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: July 30, 1998 CML GROUP, INC.
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(Registrant)
By: /s/ John A.C. Pound
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John A.C. Pound
Chairman of the Board and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit
Number Description
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99 Press Release dated July 28, 1998.
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EXHIBIT 99
CML News Release
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524 Main Street
Acton, Massachusetts 01720
Telephone: (978) 264-4155
Fax: (978) 264-4073
CML Group, Inc. Announces $20 Million
Subordinated Note Issuance and New Senior Credit Facility
ACTON, Mass. -- July 28, 1998 -- CML Group, Inc. (NYSE: CML), today
announced that it has sold to the State of Wisconsin Investment Board ("SWIB") a
redeemable subordinated note for a purchase price of $20 million and established
a senior credit facility of up to $65 million with a maturity date of August 1,
1999 with funds managed by DDJ Capital Management LLC (the "Funds") and
BankBoston, N.A. In consideration of the senior credit facility, CML has issued
to the Funds and BankBoston equity in CML representing 19% of the Company's
outstanding common stock, calculated on a fully diluted basis.
The Company stated that the subordinated note issued to SWIB (i) is due
July 27, 2003, (ii) is convertible, at the option of SWIB, into CML common stock
at a price of $4.00 per share, (iii) bears interest at the rate of 15% per
annum, (iv) is prepayable at any time by CML and (v) must be redeemed in full at
the election of SWIB after September 1, 2000. The Company added that its
obligations under the note are secured by a junior lien in substantially all the
assets of CML and its subsidiaries. The Company also granted SWIB a right of
first refusal in connection with future issuances of equity by the Company.
In addition to the issuance of equity to the Funds and BankBoston, the
terms of the senior credit facility include (i) the payment of annual interest
equal to the base rate (as defined in the credit facility) plus 4%, and, in the
event of CML's failure to reduce its senior credit facilities to specified
levels by April 1, 1999 through cash generated from operations, the sale of
assets or the raising of equity, additional interest payable in the form of a
payment-in-kind ("PIK") note accruing interest at the rate of 1.5% per month,
and all PIK notes shall bear interest at the rate of 1.5% compounded monthly,
(ii) a maturity date of August 1, 1999, (iii) a senior security interest in all
the assets of CML and its subsidiaries, and (iv) the payment of letters of
credit and commitment fees plus certain additional fees and expenses. The Funds
and BankBoston were granted anti-dilution protection in order to enable them to
maintain their equity position in the Company while the credit facility is
outstanding.
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CML is a leading direct marketer of products for consumers that enhance
healthy, active lifestyles. Its products are sold under the trade names
NordicTrack, Nordic Advantage and Smith & Hawken.
This new release contains forward-looking statements relating to the
Company's senior credit facility and redeemable subordinated note, and such
statements involve risks and uncertainties. In addition to the risk factors
referred to in the Company's Annual Report on Form 10-K for the fiscal year
ended July 31, 1997, factors which may affect the Company's future operating
results include: the market's response to the Company's new and existing
products; the impact of competition in the Company's marketplace; the ability of
the Company to successfully manage its marketing channels, including its
wholesale channel; the Company's continuing efforts to reduce costs; the
Company's ability to successfully execute the NordicTrack restructuring plan;
the Company's ability to successfully introduce new NordicTrack product lines;
the availability of capital resources; and delays in the introduction of new
products.
CONTACT: CML Group, Inc.
Lynn Harrison, 978/264-4155
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