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) August 31, 2000
GLOBAL TECHNOVATIONS, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware 333-56083 84-1027821
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
7108 Fairway Drive, Suite 200
Palm Beach Gardens, FL 33418
Registrant's telephone number, including area code: (561) 775-5756
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Item 2. Acquisition or Disposition of Assets.
On August 31, 2000, Global Technovations, Inc. ("GTI") acquired 100% of the
outstanding common stock of Onkyo America, Inc. ("OAI") from Onkyo Corporation,
Onkyo Malaysia SDN. BHD., and Onkyo Europe Electronics GMBH. OAI is a
manufacturer and supplier of high quality audio speakers. It also sells overhead
sound systems installed in sports utility vehicles.
The purchase price was $25,000,000 plus a contingent sum of up to
$15,000,000 based upon the future post acquisition earnings of OAI (the
"Earn-Out") over a five-year period. At closing, GTI paid $13,000,000 in cash
and delivered the balance of $12,000,000 in promissory notes due in three years
together with accrued interest of 7.51%. The Earn-Out, if any, is due and
payable on August 31, 2005.
To facilitate the acquisition of OAI shares:
(i) GTI refinanced OAI's existing indebtedness with OAI entering into a secured
three-year $31,230,000 credit facility with GMAC Business Credit, LLC. The
proceeds were used to repay OAI's existing indebtedness owed to another
institutional lender and to lend part of the cash purchase price to GTI.
The credit facility consists of a revolving line of credit and two term
loans. The revolving line of credit is for a maximum of $20,000,000 subject
to meeting various financial and other covenants. Under the line of credit,
GTI may borrow up to 85% of eligible accounts receivable plus the lesser of
60% of all eligible inventory or $7,500,000. The term loans are for
$5,230,000 and $6,000,000. The $5,230,000 term loan is due in monthly
installments of approximately $72,639 with a balloon payment due on August
30, 2003 of approximately $2,615,000; the other term loan is due in monthly
installments of $100,000 increasing to monthly installments of $150,000 on
October 1, 2001 and again increasing to $250,000,000 per month on October
1, 2002. The final payment is due on August 30, 2003. Except for LIBOR
loans, which may be advanced under the line of credit, interest on each of
the loans under the credit facility is at the greater of the federal funds
rate established by the Federal Reserve Bank of New York plus one-half
percent or the published prime rate. At the closing, GTI borrowed a total
of $20,543,338 under the credit facility. The credit facility is secured by
a first lien on all of the assets of OAI. GTI guaranteed the credit
facility and pledged all of its outstanding stock of OAI as additional
security;
(ii) OAI borrowed $7,000,000 from the Wilmington Trust Company and George Jeff
Mennen, co-trustee u\a dated November 25, 1970 with George S. Mennen FBO
John Henry Mennen (the "Mennen Trust"). Mr. George Jeff Mennen is a
director of GTI. This loan is due in eight years and is secured by a second
lien on all of the assets of OAI; and
(iii)GTI borrowed $5,000,000 from the Mennen Trust. This loan is due in eight
years and is secured by a first lien on all of the assets of GTI except for
the capital stock and assets of OAI.
(iv) In connection with the loans made by the Mennen Trust, the Company issued
warrants to purchase 1,500,000 shares of its common stock exercisable at
$.94 per share over a 10-year period. The issuance of these warrants will
result in the Company incurring an expense of approximately $1,500,000
using the Black Scholes formula.
The interest on both loans made by the Mennen Trust is 12.5% per annum
payable monthly with 2 1/2% per annum accruing and due at the time the principal
is due.
OAI, based in Columbus, Indiana, owns a 130,000 square foot facility
containing its manufacturing plant and executive offices. It employs
approximately 425 people. It also maintains sales offices in Troy, Michigan, and
in Chula Vista, California.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
As permitted by Form 8-K, the required historical financial information
statements required by Regulation S-X will be filed by an amendment to this
Form 8-K no later than November 14, 2000.
(b) Pro Forma Financial Information
As permitted by Form 8-K, the required pro forma financial information
statements required by Regulation S-X will be filed by an amendment to this
Form 8-K no later than November 14, 2000.
(c) Exhibits
99.1 Credit Agreement between GMAC Business Credit, L.L.C. ("GMAC") and
Onkyo Acquisition Corporation ("OAC") with Schedules
99.2 Subordination Agreement of Mennen Trust in favor of GMAC
99.3 Guaranty of Global Technovations, Inc. ("GTI")
99.4 Stock Pledge Agreement of GTI
99.5 Omnibus Amendment Agreement of Onkyo America ("OAI") and OAC
99.6 Mortgage and Security Agreement of OAI
99.7 Security Agreement of Onkyo America Specialty Products, Inc. ("OASP")
99.8 Security Agreement of OAI
99.9 Patent and License Security Agreement of OASP
99.10 Stock Pledge Agreement from OAI
99.11 $7,000,000 Senior Secured 8-year Note of OAC payable to Mennen Trust
99.12 Subordinated Loan and Security Agreement of OAC in favor of Mennen
99.13 Plan and Agreement of Merger between OAI and OAC
99.14 $5,000,000 Senior Secured Note of GTI payable to Mennen Trust
99.15 Security Agreement of GTI to Mennen Trust
99.16 1,500,000 GTI Common Stock Warrants to Mennen Trust
99.17 Share Purchase Agreement with Schedules
99.18 Amendment to Share Purchase Agreement
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.
GLOBAL TECHNOVATIONS, INC.
By: /s/William C. Willis, Jr.
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William C. Willis, Jr.
Date: September 14, 2000 Chairman and Chief Executive Officer
