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: May 3, 1997
(Date of earliest event reported)
AMNEX, INC.
(Exact name of Registrant as specified in charter)
New York 0-17158 11-2790221
(State or other (Commission File No.) (IRS Employer Identi-
jurisdiction of fication Number)
incorporation)
101 Park Avenue, New York, New York 10178
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 867-0166
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Item 5. Other Events.
As indicated in the Proxy Statement of AMNEX, Inc. (the "Company"), dated
May 3, 1997, with regard to an annual meeting of shareholders scheduled to be
held on May 14, 1997 (the "Meeting"), the Company is presently contemplating an
offering of convertible subordinated debt securities (the "Debt Securities") in
the approximate principal amount of $50,000,000 to certain institutional and
qualified investors in the United States and certain investors outside the
United States (the "Offering"). It is contemplated that, if the Offering is
undertaken, the securities offered will not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and neither the Debt Securities
nor the underlying common shares of the Company (the "Underlying Shares") may be
offered or sold in the United States absent registration under the Securities
Act or an exemption from the registration requirements thereof. It is
contemplated further that, in connection with the Offering, the Company will
agree to file a shelf registration statement under the Securities Act with
respect to the Debt Securities and Underlying Shares within a short period of
time after completion of the Offering so as to permit the purchasers of the Debt
Securities to resell such Debt Securities and the Underlying Shares pursuant to
an effective registration statement. Any such resale will only be made by means
of a prospectus satisfying the requirements of the Securities Act.
The exact aggregate principal amount of the Debt Securities, interest rate
on the Debt Securities, price and other provisions relating to conversion of the
Debt Securities into common shares of the Company ("Common Shares") and the
other terms of the Debt Securities and the terms of such registration will be
determined in light of market conditions at the time of the Offering. Although
the terms of the contemplated Offering have not been fixed, the Company
anticipates that the conversion price for the Debt Securities would be between
18% and 22% in excess of market value of a Common Share at the time of issuance
of the Debt Securities. Based upon the contemplated size of the Offering, the
Company anticipates that the number of Common Shares that would need to be
reserved for issuance upon conversion of the Debt Securities would in all
likelihood be between 13,000,000 and 15,000,000. One of the proposals being
submitted for shareholder approval at the Meeting is an amendment to the
Company's Certificate of Incorporation pursuant to which the number of Common
Shares authorized for issuance would be increased from 40,000,000 to 70,000,000
(the "Authorized Share Increase"). Shareholder approval of the Authorized Share
Increase is a prerequisite for the consummation of the contemplated Offering.
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The Company has no firm commitment for the purchase of any of the Debt
Securities. No assurance can be given that the Company will undertake the
Offering or, if the Offering is undertaken, that the Company will consummate the
Offering in the amount or on the other terms anticipated or otherwise.
The proceeds of any such Offering are intended to be used to repurchase
certain outstanding convertible promissory notes and preferred shares of the
Company ("Preferred Shares"), and prepay certain other outstanding promissory
notes of the Company, held by clients of Friedli Corporate Finance AG. The
Company intends to use the balance of the proceeds to provide funds for
acquisitions and any short-term working capital needs. There are no definitive
arrangements in place with respect to acquisitions which would require the use
of any such cash proceeds or any of the additional authorized Common Shares.
The principal amounts and maturity dates of, and conversion prices for, the
promissory notes contemplated to be repurchased are as follows: (i) $500,000 due
within 90 days of demand, plus accrued interest (approximately $147,500 through
April 15, 1997), convertible at a price of $.20 per share into approximately
3,237,500 Common Shares at April 15, 1997; and (ii) $325,000 due May 1, 1997,
plus accrued interest (approximately $50,900 through April 15, 1997),
convertible at a price of $2.8125 per share into approximately 133,650 Common
Shares at April 15, 1997. The series and liquidation values of, and conversion
prices for, the Preferred Shares contemplated to be repurchased are as follows:
(i) 72,450 Series B Preferred Shares, valued at $5.00 per Series B Preferred
Share, convertible at a price of $.50 per Common Share into 724,500 Common
Shares; (ii) 1,413,337 Series D Preferred Shares, valued at $2.50 per Series D
Preferred Share, convertible at a price of $2.50 per Common Share into 1,413,337
Common Shares; (iii) 1,035,000 Series E Preferred Shares, valued at $2.8125 per
Series E Preferred Share, convertible at a price of $2.8125 per Common Share
into 1,035,000 Common Shares; and (iv) 415,250 Series F Preferred Shares, valued
at $5.00 per Series F Preferred Share, convertible at a price of $5.00 per
Common Share into 415,250 Common Shares. All such Preferred Shares carry voting
rights equal to the number of Common Shares into which they are convertible,
except that the Series D Preferred Shares have six-for-one voting rights. It is
anticipated that the convertible promissory notes, together with accrued
interest, and Preferred Shares would be repurchased at a
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purchase price of $3.50 for each Common Share into which such promissory notes
and Preferred Shares are convertible at the time of repurchase ("Underlying
Common Shares") (except that, with respect to the Series F Preferred Shares, the
repurchase price would be equal to the face value thereof). Such aggregate
repurchase obligation with regard to the approximately 6,540,000 Underlying
Common Shares and 415,250 Series F Preferred Shares would have been
approximately $26,600,000 had the repurchase occurred on April 15, 1997,
including the payment by the Company to the holders of the Preferred Shares of
an amount equal to accrued but unpaid dividends. Any acquired shares would
become treasury shares and, accordingly, would not be outstanding shares of the
Company.
The Company is seeking the agreement of the holders of the promissory notes
and Preferred Shares to the sale of such securities upon the above terms and
subject to the consummation of the contemplated Offering. In connection with
such agreement, the Company is seeking to obtain irrevocable proxies from such
holders with respect to the voting of any and all Common Shares and Preferred
Shares held by them at the Meeting. In addition, in connection with such
agreement, it is contemplated that the Company will prepay the principal amounts
of, and accrued and unpaid interest on, certain promissory notes in the
aggregate outstanding principal amount of $1,400,000 that are currently due on
October 4, 1999. No definitive arrangements are in place with respect to the
repurchase of the outstanding promissory notes and Preferred Shares, and no
assurances can be given that such transaction will occur upon the terms
contemplated or otherwise.
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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.
AMNEX, INC.
Dated: May 3, 1997 By: /s/ Kenneth G. Baritz
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Kenneth G. Baritz
Chairman of the Board
