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UNITED STATES
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 26, 1998
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TRANS WORLD ENTERTAINMENT CORPORATION
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(Exact name of registrant as specified in its charter)
New York 0-14818 14-1541629
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
38 Corporate Circle, Albany, New York 12203
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518) 452-1242
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None
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
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On October 26, 1998, the registrant, Trans World Entertainment Corporation,
a New York corporation ("Trans World Entertainment"), agreed to acquire by
merger Camelot Music Holdings, Inc., a Delaware corporation ("Camelot"), for
1.90 shares of common stock of Trans World Entertainment for each share of
common stock of Camelot. Upon consummation of the merger, Camelot would become
a wholly-owned subsidiary of Trans World Entertainment. The agreement and plan
of merger (the "Merger Agreement") provides that the closing of the merger is
conditioned upon, among other things, the approval of the holders of a majority
of the outstanding shares of common stock of each of Trans World Entertainment
and Camelot, the effectiveness of a registration statement covering the shares
of common stock of Trans World Entertainment to be issued in connection with the
merger and the receipt of customary regulatory approvals.
Concurrently with the execution of the Merger Agreement, certain
stockholders owning a majority of the outstanding shares of common stock of
Camelot each entered into a voting agreement with Trans World Entertainment,
pursuant to which such shareholders agreed to vote their shares in favor of the
Merger Agreement, the merger and the other transactions contemplated by the
Merger Agreement, and against any proposal with respect to a similar transaction
with a third party. Similarly, the chief executive officer of Trans World
Entertainment entered into a voting agreement with Camelot, pursuant to which he
agreed to vote his shares (representing approximately 35.8% of the outstanding
shares of Trans World Entertainment) in favor of the Merger Agreement, the
merger and the other transactions contemplated by the Merger Agreement, and
against any proposal with respect to a similar transaction with a third party.
For additional information regarding the transactions contemplated by the
Merger Agreement, reference is made to a press release announcing the merger, a
copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits. The following exhibits are filed herewith and
incorporated herein by reference:
Exhibit No. Description
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99.1 Press Release dated October 26, 1998
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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 thereunto duly authorized.
TRANS WORLD ENTERTAINMENT CORPORATION
November 2, 1998 By: /s/ JOHN J. SULLIVAN
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Name: John J. Sullivan
Title: Senior Vice President-Finance
and Chief Financial Officer
EXHIBIT INDEX
Number Description
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99.1 Press Release dated October 26, 1998
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Exhibit 99.1
TRANS WORLD ENTERTAINMENT AND CAMELOT MUSIC HOLDINGS
ANNOUNCE STOCK MERGER
MERGED COMPANY TO HAVE SALES AND MARKET CAPITALIZATION
IN EXCESS OF $1 BILLION
Albany, NY, Oct. 26, 1998 - Trans World Entertainment Corporation (Nasdaq
NM: TWMC) and Camelot Music Holdings, Inc. (OTC BB: CMHDA) today announced
that they have signed a definitive agreement to merge in a stock-for-stock
transaction that will create the nation's largest mall based music retailing
company. The combined entity will have over 1,000 stores in 44 states. Both
companies carry a wide selection of entertainment products including compact
discs, prerecorded audio cassettes, videocassettes, DVD and related accessories.
The transaction is subject to customary closing conditions and regulatory
approvals, and is expected to close in early 1999.
The Board of Directors of each company has unanimously approved the
transaction and recommends the strategic merger. Each Camelot shareholder will
receive 1.9 newly issued shares of Trans World Entertainment common stock for
each Camelot share, resulting in the issuance of approximately 20.7 million new
shares. The transaction is intended to be accounted for as a tax-free
pooling-of-interests and is expected to be immediately accretive to earnings,
before considering savings due to anticipated synergies. "This strategic merger
creates value for both Trans World Entertainment and Camelot shareholders," said
Robert J. Higgins, Chairman, Chief Executive Officer, and President of Trans
World Entertainment. "Trans World's merger with Camelot opens the door to many
new opportunities that will further solidify the company's leading position in
the industry. With relatively few stores overlapping, this merger will allow us
to rapidly grow the store base by expanding our presence in existing areas of
operation while providing a springboard for expansion into new markets. In
addition, by acquiring Camelot's distribution facilities in Ohio we will
strengthen operating efficiencies and enhance overall financial performance."
Mr. Higgins will retain the titles of Chairman, CEO and President of the
combined company, which will operate under the name Trans World Entertainment
Corporation.
James E. Bonk, Chairman and CEO of Camelot Music Holdings, stated, "The
merger of these two high profile music retailers will leave behind their history
as competitors and enter the new year as the single largest mall based music
retailer. The distribution center and nearly 500 Camelot, Wall and Spec's
stores will continue to operate and grow in the new company. This business
combination will provide significant value for our shareholders."
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Two current members of Camelot's Board of Directors will join the Trans
World Entertainment Board upon the completion of the merger.
Jeff Maillet, fund manager for Van Kampen Prime Rate Income Trust, Camelot's
largest shareholder, stated that he is in full support of the transaction and
believes it will ensure Camelot's long-term participation in the retail
industry.
Trans World Entertainment, based in Albany, New York, operates 520 specialty
retail music and video stores, including 322 mall locations under the names
Record Town, Saturday Matinee, and F.Y.E. (For Your Entertainment), and 198
freestanding and strip center locations under the names Coconuts, Planet Music
and Strawberries Music, which was acquired in 1997.
Camelot Music, primarily a mall-based retailer, emerged healthy from
reorganization proceedings on January 27, 1998 and has since acquired both The
Wall, Inc., and Spec's Music Inc., expanding the company to 435 mall and 57
freestanding stores.
Goldman, Sachs & Co. advised Trans World Entertainment. Merrill Lynch & Co.
and Policano & Manzo LLC served as financial advisors to Camelot.
Certain statements in this report set forth management's intentions; plans,
beliefs, expectations or predictions of the future based on current facts and
analyses. Actual results may differ materially from those indicated in such
statements. Additional information on factors that may affect the business and
financial results of the Company can be found in filings of the Company with the
Securities and Exchange Commission.
