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): October 28, 1997
PACIFIC AEROSPACE & ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Washington 0-26088 91-1744587
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
434 Olds Station Road, Wenatchee, WA 98801
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number,
including area code: (509) 664-8000
<PAGE>
ITEM 5. OTHER EVENTS
Termination of Proposed Plan to Form Information Technology Group and Related
Letters of Intent
Pacific Aerospace & Electronics, Inc. (the "Company") previously announced
signing nonbinding letters of intent to acquire six companies (the "ITG
companies"), in connection with the Company's proposed formation of an
information technology group. These companies are: Jungle Street, Inc. ("Jungle
Street"), MONITRx, Inc. ("MONITRx"), Quantum Interlink Internet, Inc.
("Quantum"), Digital Network Associates, Inc. ("DNA"), Brigadoon.com, Inc.
("Brigadoon"), and Market Visibility, Inc. ("Market Visibility"). Each of the
proposed acquisitions was subject to the completion of satisfactory due
diligence investigations and to certain other conditions, including without
limitation the negotiation and execution of definitive agreements and the
approval of the shareholders of the ITG Companies. The Company also entered into
operations consulting and expense reimbursement agreements ("operations
agreements") with Brigadoon, Jungle Street and Market Visibility, loaned funds
to Brigadoon, Jungle Street, and MONITRx, and guaranteed a $1,300,000 bank line
of credit to Jungle Street.
The Company terminated its nonbinding letters of intent and operations
agreement with Market Visibility on October 28, 1997, and with Brigadoon on
November 14, 1997. As of November 14, 1997, the Company had demanded repayment
of $1,630,000 that it loaned to Brigadoon pursuant to the terms of its
operations agreement. Also pursuant to the operations agreement, Brigadoon
issued a common stock purchase warrant to the Company. That warrant entitles the
Company to purchase 12.5% of the fully diluted common stock of Brigadoon for a
purchase price of $1,000,000, or for a reduced price of $500,000 if one or more
of the loans were not repaid when due. Brigadoon has not repaid the loans, but
has indicated its intention to do so to the Company. The Company and Brigadoon
are currently discussing repayment terms.
After completing due diligence investigations regarding the remaining ITG
companies, and after further consideration of the proposed formation of an
information technology group, the Company has decided not to form an information
technology group. The Company plans, instead, to continue to focus on its
strengths and capabilities in the aerospace market, the electronics market, and
similar markets. As a result, on November 25, 1997, the Company terminated its
nonbinding letters of intent with the remaining ITG companies and its operations
agreement with Jungle Street.
On November 25, 1997, the Company announced publicly that it had terminated
the remaining letters of intent and that it will not proceed with the formation
of an information technology group. Jungle Street, MONITRx, Quantum, and DNA
have informed the Company that they intend to merge their businesses in a manner
similar to that previously proposed for the information technology group. The
Company is currently discussing with Jungle Street arrangements for repayment
and/or refinancing of the $2,797,300 that the Company loaned to Jungle Street
under its operations agreement, and the $1,295,472 that it loaned to MONITRx
-2-
<PAGE>
under its letter of intent. In connection with refinancing those loans, Jungle
Street has agreed to issue to the Company warrants to purchase stock in the
entity resulting after the merger.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements
None required.
B. Exhibits
The following are filed as exhibits to this Current Report:
99.1 Press Release dated November 25, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PACIFIC AEROSPACE & ELECTRONICS, INC.
By: /s/ SHERYL A. SYMONDS
-------------------------------------
Sheryl A. Symonds
Vice President Administration &
General Counsel
Dated: December 2, 1997
-3-
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
99.1 Press Release dated November 25, 1997
-4-
Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: Donald A. Wright, President/CEO
Nick A. Gerde, Vice President/CFO
Phone: (509) 664-8000 Fax: (509) 664-6868
Richmont Consulting International: Edda Brown, President
Phone: (213) 658-8088 Fax: (213) 658-9075
PACIFIC AEROSPACE & ELECTRONICS, INC.
WILL FOCUS ON CORE BUSINESS
November 25, 1997 -- Wenatchee, Wash. -- Pacific Aerospace & Electronics, Inc.
(NASDAQ: "PCTH" and "PCTHW") announced today that it will continue to build its
Aerospace and Electronics Groups rather than adding an information technology
group to its current business structure. Over the past few months, the Company
has been investigating the potential costs and benefits of forming a group that
would concentrate on providing Internet access, highly specialized content,
proprietary software, and related services. Upon conclusion of its
investigations, the Company has determined that it will, instead, focus on its
strengths and capabilities in highly engineered manufacturing for the aerospace
and electronics markets. The Company intends to accomplish this both by internal
growth and through future acquisitions of companies whose businesses are related
or similar to the Company's core strengths.
As a result of this decision, Pacific Aerospace & Electronics, Inc. and four
companies have terminated non-binding letters of intent regarding acquisitions
for the proposed information technology group. The companies include Jungle
Street, Inc. (and its subsidiary Televar, Inc.), MONITRx, Inc., Digital Network
Associates, Inc., and Quantum Internet Interlink, Inc. These companies have
informed the Company that they intend to merge their businesses in a manner
similar to that previously proposed for the information technology group, and
the company is working cooperatively with them to facilitate an orderly
transition and to arrange repayment of funds that they had borrowed from the
Company. The refinancing of the Company's loans will include issuance to Pacific
Aerospace & Electronics, Inc. of warrants to purchase stock in the new company.
Don Wright, President and CEO of Pacific Aerospace & Electronics, Inc., said:
"We are pleased to see that the companies we were considering for the
information technology group recognize the vision of synergy that we had for the
group. We continue to believe that this group of companies can make a mark
together. However, as we evaluated our goals for our existing businesses and the
needs of companies in a completely different industry, we concluded that our
shareholders would be better served by focusing our resources and energy on the
strengthening markets served by the Aerospace and Electronics Groups."
<PAGE>
Pacific Aerospace & Electronics, Inc. earlier terminated non-binding letters of
intent with Brigadoon.com, Inc., and Market Visibility, Inc., which it was also
considering for the proposed information technology group.
Pacific Aerospace & Electronics is a consolidator of companies with compatible
products and services, and an integrator of technologies that provide
significant opportunities in related growth markets. The Company is organized
into two operational and marketing units. The electronics group develops,
manufactures and sell a broad range of precision components, filtering devices,
electronic assemblies and explosively bonded materials designed to operate with
a high degree of reliability in harsh environments such as the ocean, space and
the human body. The aerospace group provides machined, cast aluminum and metal
parts and component assemblies for commercial and military aircraft, heavy
trucking and automotive uses. Markets served by Pacific Aerospace & Electronics
include the aerospace, space, defense, medical, energy, transportation,
telecommunications and general electronics industries.
The Company's common stock trades on the NASDAQ National Market System under the
symbol "PCTH", and its warrants trade under the symbol "PCTHW".
Forward-looking statements in this release concerning trends or anticipated
operating results are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
not guarantees of future performance and are subject to risks and uncertainties
related to the Company's operations. These risks and uncertainties include, but
are not limited to, competitive factors (including the possibility of increased
competition or technological development, competitors, and price pressures);
legal factors (such as limited protection of the Company's proprietary
technology and changes in government regulation); and the Company's dependence
on key personnel and significant customers.
