SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 22, 1997
Date of earliest
event reported: October 9, 1997
Forstmann & Company, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 1-9474 58-1651326
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(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
1155 Avenue of the Americas
New York, New York 10020
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(Address of principal executive offices) (Zip Code)
(212) 692-6900
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
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On October 9, 1997, the Board of Directors of Forstmann & Company,
Inc. (the "Registrant") declared a dividend of one Right for each outstanding
common share, $.01 par value per share (the "Common Shares") of the Registrant.
The Rights will be issued to the stockholders of record at the close of business
on October 29, 1997 and will expire in ten years, subject to earlier redemption.
Under certain circumstances, each Right entitles the registered holder to
purchase from the Registrant one Common Share of the Registrant or, in certain
circumstances, common stock of an acquiring company at one-half the market price
of such Common Shares or common stock, as the case may be. The Rights are
designed to make it more likely that all the Registrant's stockholders receive
fair and equal treatment in the event of any proposed takeover of the Registrant
and to guard against the use of partial tender offers or other coercive tactics
to gain control of the Registrant. The description and terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement") between the Registrant
and Norwest Bank Minnesota, N.A., as Rights Agent (the "Rights Agent").
Exercise Price
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When exercisable, except as set forth below, each Right entitles the
registered holder to purchase from the Registrant one Common Share, at a price
of $60 per share (the "Purchase Price"), subject to adjustment in certain
circumstances.
Transfer and Detachment
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Until the "Distribution Date," which is the earlier to
occur of (i) ten business days following the time (the "Stock Acquisition Time")
of a public announcement or notice to the Registrant that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership (as defined in the Rights
Agreement) of 25% or more of the outstanding Common Shares of
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the Registrant, and (ii) ten business days, or such later date as may be
determined by the Board of Directors of the Registrant, after the date of the
commencement of or announcement by a person of an intention to make a tender
offer or exchange offer for an amount of Common Shares which, together with the
shares of such stock already owned by such person, constitutes 25% or more of
the outstanding Common Shares, the Rights will be evidenced, with respect to any
of the Registrant's Common Shares certificates outstanding as of October 29,
1997 by such Common Share certificate with a copy of a Summary of Rights
attached thereto. The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Registrant's Common
Shares. Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after October 29, 1997, upon the
transfer or issuance of new Common Shares, will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier re-
demption or expiration of the Rights), the surrender for transfer of any of the
Registrant's Common Share certificates outstanding as of October 29, 1997, even
without a copy of the Summary of Rights attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by such
certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.
Exercisability
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The Rights are not exercisable until the Distribution Date. The
Rights will expire on October 28, 2007 unless earlier redeemed by the
Registrant.
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Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Registrant, including, without limitation, the
right to vote or to receive dividends.
Right to Acquire Stock at Half Price
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In the event that after the Stock Acquisition Time, the Registrant
is acquired in a merger or other business combination transaction or 50% or more
of the Registrant's assets, cash flow or earning power are sold or otherwise
transferred, the Rights Agreement provides that proper provision shall be made
so that each holder of a Right, upon the exercise thereof at the then current
exercise price of the Right, shall thereafter be entitled to receive that number
of shares of common stock of the acquiring company which at the time of such
transaction would have a market value (as defined in the Rights Agreement) of
two times the exercise price of the Right. In the event that the Registrant is
the surviving corporation of a merger and its Common Shares are changed or ex-
changed, proper provision shall be made so that each holder of a Right will
thereafter have the right to receive upon exercise that number of shares of
common stock of the other party to the transaction having a market value of two
times the exercise price of the Right.
In the event that a person or group becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right, other than Rights
that were beneficially owned by the Acquiring Person, which will thereafter be
void, will thereafter have the right to receive upon exercise that number of
Common Shares having a market value (as defined in the Rights Agreement) of two
times the exercise price of the Right. A person or group will not be deemed to
be an Acquiring Person if the Board of Directors of the Registrant determines
that such person or group became an Acquiring Person inadvertently and such
person or group promptly divests itself of a sufficient number of Common Shares
so that such person or group is no longer an Acquiring Person. Nor shall a
Person be an Acquiring Person because such person owned 25% or more of the
Common Shares on October 9, 1997, so long as such Person while continuing to own
at least 25% of the Common Shares, does not acquire an additional one percent or
more of the Common Shares.
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Adjustments
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The Purchase Price payable and the number of Common Shares or other
securities or property issuable upon the exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on or a subdivision, combination or reclassification of the Common
Shares, (ii) upon the fixing of a record date for the issuance to holders of
Common Shares of certain rights, options or warrants to subscribe for Common
Shares or convertible securities at less than the current market price of Common
Shares or (iii) upon the fixing of a record date for the making of a
distribution to holders of Common Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends out of earnings or retained earnings
of the Company and dividends payable on Common Shares) or of subscription rights
or warrants (other than those referred to above). The number of Rights and the
number of Common Shares issuable upon exercise of each Right are also subject to
adjustment in the case of a stock split, combination or stock dividend on the
Common Shares prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Common Shares will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market value of Common
Shares on the last trading date prior to the date of exercise.
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Redemption or Exchange
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At any time prior to the earlier of (i) the Stock Acquisition Time
and (ii) October 28, 2007, the Registrant, by resolution of its Board of
Directors, may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "Redemption Price"). Immediately upon the action of the Board of
Directors of the Registrant electing to redeem the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
At any time after a person becomes an Acquiring Person and prior to
the acquisition by such person of 50% or more of the outstanding Common Shares
of the Registrant, the Board of Directors of the Registrant may exchange the
Rights (other than Rights beneficially owned by such person which have become
void), in whole or in part, for Common Shares of the Registrant at an exchange
ratio of one Common Share per Right (subject to adjustment). The Registrant may
at its option substitute shares of any substantially similar equity security of
the Registrant for some or all of the Common Shares of Capital Stock
exchangeable for Rights, at an exchange ratio of one share of such equity
security for each Common Share to be exchanged.
Amendment
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The Rights and the Rights Agreement can be amended by the Board of
Directors of the Registrant in any respect (including, without limitation, any
extension of the period in which the Right Certificates may be redeemed) at any
time prior to the Stock Acquisition Time. From and after such time, without the
approval of the stockholders of the Registrant or the holders of the Rights, the
Board of Directors may only supplement or amend the Rights Agreement in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
in the Rights Agreement which may be defective or inconsistent with any other
provision in the Rights Agreement, (iii) to shorten
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or lengthen any time period under the Rights Agreement or (iv) to make any
changes or supplements which the Registrant may deem necessary or desirable
which shall not adversely affect the interests of the holders of Right Certifi-
cates (other than an Acquiring Person or an affiliate or associate of any such
person), provided that the Rights Agreement may not be supplemented or amended
to lengthen (A) a time period relating to when the Rights may be redeemed or to
modify the ability (or inability) of the Registrant's board of directors to
redeem the Rights, in either case at such time as the Rights are not then
redeemable or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the Rights of or the benefits to
the holders of Rights (other than an Acquiring Person or an affiliate or
associate of any such person).
Issuance of Rights
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Each outstanding Common Share on October 29, 1997 will receive one
Right. As long as the Rights are attached to the Common Shares, the Registrant
will issue one Right with each Common Share it issues, so that all such shares
have attached Rights. Approximately 4.4 million Common Shares have been re-
served for issuance upon exercise of the Rights.
A copy of the Rights Agreement, which includes as Exhibit A the form
of Right Certificate, is attached hereto as Exhibit 1 and is incorporated herein
by reference. The foregoing description of the Rights is qualified in its
entirety by reference to such Exhibit.
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ITEM 7. EXHIBITS
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1. Rights Agreement between the Registrant and Norwest Bank
Minnesota, N.A., Rights Agent, dated as of October 9, 1997,
which includes as Exhibit A the form of Right Certificate.
(Exhibit I to the Company's Form 8-A dated October 22,
1997)
2.* Form of a letter to the Registrant's stockholders.
3.* Press Release issued by the Registrant on October 10, 1997.
* Filed herewith.
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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.
FORSTMANN & COMPANY, INC.
(Registrant)
By: /s/ Rod J. Peckham
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Name: Rod J. Peckham
Title: Chief Financial Officer
DATE: October 22, 1997
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EXHIBIT INDEX
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Exhibit No. Description
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1. Rights Agreement between
the Registrant and Norwest
Bank Minnesota, N.A., Rights
Agent, dated as of October 9,
1997, which includes as
Exhibit A the form of Right
Certificate. (Exhibit I to
the Company's Form 8-A dated
October 22, 1997) --
2. Form of a letter to the
Registrant's stockholders. 11
3. Press Release issued by the
Registrant on October 10, 1997. 12
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EXHIBIT II
[Form of a letter to the Registrant's Stockholders]
October , 1997
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Dear Forstmann Stockholder:
Your Board of Directors views with concern the use of abusive tactics in
attempts to take over major companies. In response to that concern, the Board
on October 9, 1997 adopted a Common Share Purchase Rights Plan.
Under the Rights Plan, shareholders will receive one right to purchase one
share of common stock, at an exercise price of $60, for each share of common
stock of the Company held at the close of business on October 29, 1997. The new
rights will become exercisable in the event that any person or group acquires
25% or more of the Company's common stock, or announces a tender offer for 25%
or more of the Company's common stock. However, the Rights Plan "grandfathers"
positions in the Company's common stock in existence on October 9, 1997 and the
rights will not become exercisable because a person or group owned 25% or more
of the Company's common stock on such date so long as any such person or group
does not purchase an additional 1% of the Company's common stock.
The new rights are not being issued in response to any known effort to
acquire control of the Company.
The new rights will initially trade together with your common shares and
will be represented by your common share certificates. The new rights are not
currently exercisable and, as indicated in the enclosed press release, do not
become exercisable unless certain acquisition events occur with respect to the
Company. A complete description of the Rights Plan is enclosed.
Sincerely,
/s/ Robert N. Dangremond
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Robert N. Dangremond
Director, President and Chief Executive Officer
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EXHIBIT III
For More Information:
Betsy Gardner
FORSTMANN & COMPANY, INC. Director, Corp. Comm.
ADOPTS RIGHTS PLAN (212) 642-6927
New York, NY...October 10, 1997.... Forstmann & Company, Inc. announced today
that its board of directors has adopted a shareholders rights plan.
Under the new plan, shareholders will receive one right to purchase one share of
common stock, at an exercise price of $60.00 for each common share of Forstmann
held at the close of business on October 29, 1997. The new rights will become
exercisable in the event that any person or group acquires 25% or more of the
Company s common shares, or announces a tender offer for 25% or more of the
Company s common stock. However, the rights plan grandfathers positions in
the Company s common stock in existence on October 9, 1997 and the rights will
not become exercisable because a person or group owned 25% or more of the
Company s common shares on such date so long as any such person or group does
not purchase an additional 1% or more of the Company s common shares.
Should any person acquire 25% or more of the common shares of Forstmann, all
rights not held by the 25% stockholder become rights to purchase common shares
of Forstmann at a 50% discount. After a person crosses the 25% threshold and
before such person owns 50% or more of the Company s common shares, the board of
directors, instead of allowing the rights to become exercisable, may issue one
common share in exchange for each right (other than those held by the acquiring
person). In the event of a merger of Forstmann, the rights plan requires that
provision be made for the rights to become rights to purchase shares of the
acquiring person at a 50% discount.
The rights, which have a ten-year term, may be redeemed for a $0.01 per right by
the board of directors at any time prior to the time the rights become
exercisable.
The rights plan is intended to enhance the ability of the board of directors to
act in the best interests of the shareholders in the event of any proposed
takeover. The plan was not adopted in response to any specific effort to gain
control of Forstmann, and the board of directors is not aware of any such
effort.
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Forstmann & Company, Inc. is a leading designer, marketer and manufacturer of
high quality, fashion fabrics for use in the production of brand name and
private label apparel for men and women as well as fabrics for specialty
markets. The Company employs approximately 2,500 people and has operating
plants in Dublin, Milledgeville, Louisville, Georgia. The Company corporate
headquarters and marketing offices are located in New York City
