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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
April 23, 1999
(Date of earliest event reported)
AMERICAN SAFETY RAZOR COMPANY
(Exact Name of Registrant as Specified in Charter)
Delaware 0-21952 54-1050207
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification Number)
P.O. Box 500, Staunton, VA 24402-0500
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code:
(540) 248-8000
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Items 1. Change in Control of Registrant.
On April 23, 1999, RSA Acquisition Corp. (the "Purchaser"), a wholly
owned subsidiary of RSA Holdings Corp. of Delaware (the "Parent"), an
affiliate of J.W. Childs Equity Partners II, L.P. ("JWCP"), completed its
previously announced tender offer (the "Offer") for all the outstanding
shares of common stock of American Safety Razor Company (the "Company")
pursuant to the provisions of the Agreement and Plan of Merger, dated as of
February 12, 1999 (as amended from time to time, the "Merger Agreement")
among the Parent, the Purchaser and the Company.
11,820,983 shares of common stock (or 97.6% of the voting securities of
the Company) were purchased by Purchaser in the Offer and the remaining stock
will be acquired at $14.20 per share in a merger (the "Merger") pursuant to
the Merger Agreement which is expected to be completed within 60 days of the
date hereof. The aggregate amount paid, and to be paid, to acquire all of
the Company shares at $14.20 per share pursuant to the Offer and the Merger
(together, the "Acquisition") and to pay the related fees and expenses
incurred in connection with such transactions and the financings thereof is
approximately $211.6 million. JWCP has indicated to the Company that the
Acquisition is being financed by (i) approximately $90 million in equity
investment contributions made by JWCP or its affiliates to the Parent (the
"Equity Investment"), (ii) approximately $66.6 million of borrowings by the
Company pursuant to a senior secured credit facility (the "New Credit
Facility") with a group of financial institutions led by NationsBank, N.A.,
NationsBanc Montgomery Securities LLC and DLJ Capital Funding, Inc., which
facility provides for aggregate commitments of up to $190 million, and (iii)
approximately $55 million of unsecured, pay-in-kind subordinated debt issued
by the Parent to JWCP or one of its affiliates (the "JWC Note").
The New Credit Facility entered into on April 23, 1999 (the "Credit
Closing") is a senior secured facility consisting of a $25 million revolving
credit facility (the "Revolving Credit Facility") and a term loan facility of
$165 million (the "Term Loan Facility"). The Term Loan Facility consists of
a $65 million senior secured Tranche A Facility and a $100 million senior
secured Tranche B Facility. The Purchaser was the initial borrower for
drawings under the Term Loan Facility which were used to fund that portion of
the cash consideration of the Offer not funded by the proceeds of the Equity
Investment and the JWC Note. The Company, as the surviving corporation in
the Merger, will be the borrower under the Term Loan Facility for drawings
which are used to fund the repayment of certain existing indebtedness of the
Company and the payment of fees and expenses incurred in connection with the
Offer and Merger and any borrowings made under the Revolving Credit Facility.
Upon consummation of the Merger, the Company will assume the Purchaser's
obligations under the Term Loan Facility and $15 million of the JWC Note may
be indirectly refinanced with the proceeds of additional drawings under the
New Credit Facility. The Revolving Credit Facility will be available for
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working capital requirements and general corporate purposes and includes a
sublimit for the issuance of standby and commercial letters of credit.
The final maturity of the loans under the Tranche A Facility (the
"Tranche A Term Loans") is April 23, 2005 with interim amortization
commencing on the ninth month after the Credit Closing. The final maturity
of the loans under the Tranche B Facility (the "Tranche B Term Loans," and
together with the Tranche A Term Loans, the "Term Loans") will be April 23,
2007, with minimal amortization of the initial aggregate Tranche B Term Loan
advances in each of the first six years, and the remainder amortized equally
over the final two years. The Revolving Credit Facility will be available
until April 23, 2005, and extensions of credit outstanding thereunder on such
date will mature on such date. In the event that more than $20 million in
principal amount of the Company's outstanding 9 7/8% Series B Senior Notes
due 2005 (the "Senior Notes") remains outstanding after any payments for such
Senior Notes required to be made by the Company under the Indenture governing
such Notes, the maturity of the Term Loan Facility and the Revolving Credit
Facility will automatically be changed to January 31, 2005.
Mandatory prepayments of loans under the New Credit Facility will be
required with (1) the proceeds of certain non-ordinary course asset sales and
other dispositions of property, (2) 75% of excess cash flow, which will be
reduced to 50% upon the achievement of certain minimum financial ratios and
(3) the proceeds of certain issuances of equity and debt securities, in each
case subject to certain exceptions.
With respect to the interest rates applicable to the New Credit
Facility, the borrower has the option of choosing interest rates per annum
equal to a margin (the "Applicable Margin") over either a domestic base rate
or a "eurodollar" rate. Depending on the leverage test and a variety of other
factors, (a) in the case of the Revolving Credit Facility and the Tranche A
Term Loans, the Applicable Margin will fluctuate between 2.00% and 3.25% per
annum in the case of eurodollar borrowings and 1.00% and 2.25% per annum in
the case of base rate borrowings and (b) in the case of Tranche B Term Loans,
the Applicable Margin will fluctuate between 3.25% and 3.75% per annum in the
case of eurodollar borrowings and 2.25% and 2.75% in the case of base rate
borrowings.
Commencing on April 23, 1999, the borrower will pay a commitment fee on
the unused portions of (1) the Revolving Credit Facility and the Tranche A
Facility ranging from 0.375% to 0.500% per annum depending on a leverage test
and a variety of other factors (calculated on a 360-day basis) and (2) the
Tranche B Facility of 2.75% (calculated on a 360-day basis), in each case,
such fee to be payable quarterly in arrears and on the date of termination or
expiration of the commitments.
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The borrower will pay letter of credit fees that are equal to the
Applicable Margin that would apply at such time to advances under the
Revolving Credit Facility, for which the borrower chose a eurodollar-based
rate of interest. In addition, the borrower will pay a fronting fee of 0.25%
per annum to the issuer of letters of credit for its own account. Both the
letter of credit fees and the fronting fees will be calculated on the amount
available to be drawn under each outstanding letter of credit.
The Company and each of the Parent, the Purchaser and, from and after
the consummation of the Merger, each of the existing and future direct and
indirect subsidiaries (with the exception of certain foreign subsidiaries) of
the Parent (collectively, the "Guarantors") have granted and will grant the
administrative agent and the various lenders under the New Credit Facility
valid and perfected first priority liens and security interests in
substantially all of their assets.
JWCP has informed the Company that the JWC Note is unsecured, pay-in-
kind subordinated debt issued by Parent to JWCP and is subordinated to the
prior payment in full of all senior debt, including but not limited to the
effective subordination of the JWC Note to the Company's Senior Notes and the
New Credit Facility . The JWC Note bears interest at the rate of 12.5% per
annum, paid in kind quarterly in arrears, with such interest to be computed
on the basis of twelve 30-day months in a year of 360 days. The final
maturity date for the JWC Note is December 31, 2007.
On April 23, 1999, as contemplated by the Merger Agreement, eight out of
nine directors (including two directors who were also officers of the
Company) of the Company resigned. In turn, over the next week, six new
directors were appointed by the Purchaser, all of which are affiliates of
JWCP. In connection with the consummation of the Offer, individuals serving
as the Company's Chief Executive Officer, President and Chief Operating
Officer resigned.
Pursuant to the terms of the Merger Agreement, subsequent to the
consummation of the Offer, Parent is entitled to designate up to such number
of directors, rounded up to the next whole number, to the Board of Directors
of the Company as will give Parent representation on the Board of Directors
proportionate to the Parent's and its affiliates' percentage ownership of the
outstanding shares of common stock of the Company; provided that prior to the
effective time of the Merger, the Board of Directors of the Company shall
always have at least one member who is neither an officer, director,
stockholder or designee of the Purchaser or any of its Affiliates (a
"Purchaser Insider"). Pursuant to the terms of the Merger Agreement and
prior to the consummation of the Merger, any amendment or termination of the
Merger Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent or the
Purchaser or waiver of any of the Company's rights thereunder, or any other
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action taken by the Board of Directors of the Company in connection with the
Merger Agreement, will require the concurrence of a majority of the directors
of the Company who are not Purchaser Insiders.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit 2.1 Agreement and Plan of Merger, dated as of February
12, 1999, by and among the Parent, the Purchaser and
the Company, incorporated herein by reference to
Exhibit (a)(1) to Schedule 14D-9, dated February 22,
1999.
Exhibit 2.2 Amendment, dated as of April 8, 1999, to the
Agreement and Plan of Merger, dated as of February
12, 1999, by and among the Parent, the Purchaser and
the Company (incorporated herein by reference to
Exhibit (a)(10) to Amendment No. 2 to Schedule
14D-9, dated April 13, 1999.
Exhibit 2.3 Second Amendment, dated as of April 23, 1999, to the
Agreement and Plan of Merger, dated as of February
12, 1999, by and among the Parent, the Purchaser and
the Company (incorporated herein by reference to
Exhibit 11(c)(4) to Amendment No.5 to Schedule 14D-1
of RSA Acquisition Corp., dated April 23, 1999.
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 thereunto duly authorized.
AMERICAN SAFETY RAZOR COMPANY
By: /s/ Thomas G. Kasvin
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Name: Thomas G. Kasvin
Title: Chief Financial Officer
Dated: May 7, 1999
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