SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 29, 1995
Donnelly Corporation
(Exact name of Registrant as specified in its charter)
AMENDMENT NO. 1
Michigan 1-9716 0493110
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
414 East Fortieth Street, Holland, Michigan 49423
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 616-786-7000
Item 2. Acquisition or Disposition of Assets
On May 29, 1995, the Registrant acquired a majority interest in Hohe GmbH &
Co. KG ("Hohe"), a German limited partnership. The Registrant acquired 66 2/3
percent of the limited partnership interests in Hohe from the limited
partnership and 48 percent of the general partner from the Hohe family. The
Registrant does not directly control Hohe but, as the holder of the majority
of the limited partnership interests and as the largest holder of interests
in the general partner, the Registrant will be an active partner. The terms
of the acquisition were arrived at as a result of arm's length negotiations
between the management of the Registrant and the partners and creditors
of Hohe. The Registrant will invest approximately $32 million in equity and
subordinated loans in Hohe, financed with cash and the Registrant's U.S. bank
line of credit through NBD Bank, N.A. Of this $32 million investment,
approximately $3,600,000 was paid for the limited partnership interests and
approximately $17,000 was paid for the interest in the general partner.
Approximately $14.3 million has been and an additional approximately $14.3
million will be invested as subordinated debt. The initial debt carries
interest at 10 percent per annum with no principal payments due until
maturity on April 1, 1998. Payment thereafter is subordinated to other bank
debt and interest is adjusted to the Bundesbank discount rate plus 700 basis
points. Additional loans to Hohe of approximately $70 million are being
provided by several banks through refinanced and new debt.
The terms of the transaction allow the Registrant to increase its ownership
stake in Hohe through various options. The Registrant has options to increase
its ownership to 80 percent of the limited partnership interests and 100
percent of the general partner, exercisable at any time. The price to
exercise these options will be a total of about DM 767,000. The Registrant
also has an option to buy the remainder of the limited partnership interests,
exercisable after March 1998. The exercise price for this additional
20 percent is based on a formula of approximately five times earnings before
interest and taxes. The minimum price is DM 7,500,000 and the maximum price
is DM 15,000,000, subject to certain offsets for breaches of warranties and
representations. The payment for the limited partnership interests taking
the Registrant to 80 percent would be set off against the price for this
later option. Finally, the owners of the remaining limited partnership
interests have an option to require the Registrant to buy their limited
partnership interests at any time based upon the above formula, but with a
minimum of DM 2,500,000.
Hohe, based in Collenberg, Germany, serves many of the main auto producers
in Europe in exterior automotive mirrors, interior mirrors, door handles,
automotive tooling, and electronic components related to mirror systems.
With operations in Germany, Spain, and Portugal, Hohe's sales for the fiscal
year ending March 31, 1995, were approximately $220 million. Hohe will
continue to operate as a separate entity and use its assets primarily for
the purposes for which they have previously been used, although it is
currently anticipated that one galvanizing facility will be closed in fiscal
1996. In the future, certain other Hohe facilities may be closed or
consolidated into other Hohe facilities.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
2. An English language summary of an Acquisition Agreement
and related documents written in German between the Registrant,
Donnelly GmbH, Hohe GmbH & Co. KG ("Hohe") and other parties
related to Hohe dated May 25, 1995, pursuant to Rule 12b-12(d)
and Rule 306 of Regulation S-T.
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.
Date: June 13, 1995
DONNELLY CORPORATION
(Registrant)
/s/ William R. Jellison
William R. Jellison
Vice President, Chief Financial Officer,
and Treasurer
EXHIBIT 2
SUMMARY OF ACQUISITION AGREEMENT
The following is a summary of an Acquisition Agreement, dated May 25, 1995,
written in the German language between:
1. DONNELLY CORPORATION ("Donnelly Corporation").
2. DONNELLY HOLDING GmbH (at present still named
"Gustav" Beteiligungs- und Verwaltungsgesellschaft mbH
("Donnelly").
3. HOHE ANTEILSTREUHAND GmbH ("Hohe Anteilstreuhand").
4. HOHE GmbH & Co. KG ("Hohe KG").
5. HOHE VERWALTUNGS GMBH ("Hohe GmbH").
6. PAUL HOHE, ELISABETH HGOHE, PETER HOHE, DR.
MARIA HOHE-SCHRAMM, MARGARETE MEYER
(collectively the "Hohe Family" and individually a "Member of
the Hohe Family").
7. DR. ERNST BRAUN (Only for the transfer of a limited
partnership interest and in his capacity as Chairman of the
Beirat of Hohe KG and Hohe GmbH).
Hohe Anteilstreuhand is the current owner of all of the limited partnership
interests in Hohe KG (except for a 4/10th percent interest owned by
Dr. Braun), all in trust for the Hohe Family. Hohe GmbH is the general
partner of Hohe KG and all of its stock is owned by Hohe Anteilstreuhand in
trust for the Hohe Family. Donnelly is a wholly owned subsidiary of
Donnelly Corporation.
I. DONNELLY LIMITED PARTNERSHIP INTERESTS
1.1
- 1.3 Purchase and Effective Date. Donnelly agrees to acquire a fixed
limited capital share of Five Million Deutsche Mark (DM 5,000,000) limited
partnership interest in HOHE KG for DM 5,000,000 payable in cash. All of
the partners will execute an Amended and Restated Partnership Agreement and
the interests of the partners as limited partners will be recorded in the
Commercial Register. The cash has been paid in escrow and will be disbursed
and the transaction consummated upon the filing in the Commercial Register.
1.4 Transfer of limited partnership interests. The Limited Partnership
Interests of the Hohe Family had been held in trust for the Hohe Family in
Hohe Anteilstreuhand and by Dr. Braun. Effective on the date of recording
in the Commercial Register, interests are transferred members of the Hohe
Family.
1.5 Put and Call Options
a. The Hohe Family members each have an option to require Donnelly
to purchase their limited partnership interests at any time after
closing. The price is based upon a valuation of Hohe KG
equal to five times the average earnings before interest and
taxes, minus non-operating liabilities, both averaged over
the two years preceding the exercise of the option. The
minimum aggregate purchase price is DM 2,500,000 and the
maximum is DM 15 million.
b. Donnelly has an option any time after closing to purchase up
to DM 1,000,000 of fixed limited partnership interests of
Hohe KG (13--1/3% of all outstanding limited partnership
interest) for DM 50,000 for each percentage limited
partnership interest.
c. At any time after March 31, 1998, Donnelly shall have the option
to acquire the remaining limited partnership interest in Hohe
KG. The purchase price will be based upon the same formula,
with a minimum aggregate price of DM 7.5 million and a
maximum of DM 15 million, in each case reduced by any payments
made for exercise of earlier options.
1.6 Set Offs, Reductions. Donnelly is entitled to set off certain
indemnity obligations from members of the Hohe Family against the purchase
price.
1.7 Acceleration. To the extent Donnelly has set offs from certain
indemnification obligations, it can accelerate options to purchase limited
partnership interests in such amount as would be covered by the amount of
the set off.
II. DONNELLY LOAN
2.1 Loan Terms. Donnelly Corporation commits to loan to Hohe KG DM 20
million, to bear interest at 10 percent per annum and to be payable on
April 1, 1998. However, the payment of such debt is subordinated to other
lenders, and if not paid on April 1, 1998, will carry interest at the
Bundesbank discount rate, plus 700 basis points.
2.2 Funding. The DM 3,000,000 earnest money deposited earlier and an
additional DM 17 million will be paid into escrow at closing, to be disbursed
when Donnelly's limited partnership interest has been recorded in the
Commercial Register.
III. CONDITIONS
The consummation of the transaction is conditioned upon the acquisition by
Donnelly of 48 percent of the outstanding stock of Hohe GmbH, the execution
of an Option Agreement for the remaining shares of Hohe GmbH, the notarial
recording of revised Articles of Association of Hohe GmbH and the entry of
Donnelly as a limited partner of Hohe KG in the Commercial Register. The
Option Agreement will provide that at any time Donnelly owns more than
75 percent of the limited partnership interest in Hohe KG, it has the option
to acquire the remaining stock of Hohe GmbH for a total price of DM 100,000.
IV. OTHER AGREEMENTS
The existing Bierat (shareholder, partner, silent partner and bank
committee operating Hohe KG) is terminated at the closing. The Hohe Family
agrees not to compete with the business of Hohe KG and authorizes Hohe KG
and Hohe GmbH to use the name "Hohe". Donnelly restates its present
intention with regard to the preservation of the business and operations of
Hohe KG and agrees to provide, by either loan or equity, up to an additional
DM 10 million if those funds are required. The former silent partnership
interests of Hohe KG are terminated, Peter Hohe agrees to assign a 2.8 percent
interest in Hohe KG's Portuguese subsidiary to Donnelly and Donnelly agrees
to the continuation of a monthly pension to Elisabeth Hohe.
V. WARRANTIES AND REPRESENTATIONS
5.1 Subsidiaries. The ownership and good standing of Hohe KG and all
subsidiaries is warranted.
5.2 Capital of Hohe. The outstanding capital of Hohe KG and the
subsidiaries is warranted.
5.3 Absence of Conflicts. There are warranties that the consummation
of the agreement is not in violation of any statutes, agreements, court
judgments or any corporate documents and that it will not result in any
default or encumbrance.
5.4 Financial Statements. The financial statements of Hohe KG for years
ended March 31, 1993, and 1994, are warranted, together with the financial
statements for March 31, 1995 to be prepared. A separate Closing Balance
Sheet, with certain adjustments set forth in an exhibit, is to be prepared by
Hohe's auditors, Coopers, Lybrand, Treuarbeit. That Closing Balance Sheet
is warranted and it is warranted that the deficit capital account of all
limited partners as shown on the Closing Balance Sheet is not less than
negative DM 10 million.
5.5 Liabilities. It is warranted that there were no liabilities not
shown on the financial statements or incurred in the ordinary course of business
since March 31, 1995.
5.6 Title to Assets. The ownership of all of the major assets of
Hohe KG is warranted.
5.7 Absence of Adverse Change. It is warranted that there are no adverse
changes in Hohe KG since January 31, 1995.
5.8 Litigation. There is a warranty that there is no litigation other
than that listed on the schedule attached and the Hohe Family is obligated for
the amount of any litigation, including that listed on the schedule, except
to the extent that it is reserved against the Closing Balance Sheet.
5.9 Intellectual Property. There are a number of warranties and
representations with regard to the ownership, use, licensing, and infringement
or noninfringement of various intellectual property rights.
5.10 Disclosure. There is a warranty that the Hohe Family and management
know of no material facts not disclosed.
5.11 Environmental Matters. Representations are made concerning the
existing status of certain environmental matters and stating that there are no
additional environmental issues.
5.12 Pensions. There is a warranty that there is no pension obligation of
Hohe KG except as shown on the attached schedule.
VI. GUARANTY LIABILITY OF HOHE KG
There is set forth the status of certain contingent liabilities of Hohe KG
based on guaranties of obligations of certain members of the Hohe Family. There
have been reserved to date DM 5.9 million for these liabilities. The parties
contemplate another DM 2.4 million of contingent liabilities based upon
Besserngsscheine (bond when able to pay) to the two banks, of which
DM 1.6 million will be charged to the Hohe Family's capital account on
the Closing Balance Sheet. The Hohe Family is obligated for guaranty
liability of Hohe KG in excess of the DM 5.9 million reserve and for
Besserungscheinne liability in excess of DM 2.4 million.
VII. OPINION OF COUNSEL
Hohe KG's counsel is to deliver its opinion to Donnelly at closing.
VIII. INDEMNIFICATION
Hohe Anteilstreuhand and each member of the Hohe Family indemnifies
Donnelly and Donnelly Corporation against breaches of representation or
warranties, to the extent such claims would create a negative capital on the
Closing Balance Sheet, dated March 31, 1995, in excess of a negative
DM 10 million. The Hohe Family Members are joint and severally liable, but
each Member's liability is limited to the remaining value of his or her
limited partnership interest. Warranty claims must be asserted within
ninety (90) days after the financial statements for Hohe KG's year ended
March 31, 1996, are completed, except for claims related to environmental
matters, tax payments or social security contributions.
IX. CLOSING
The closing will occur when all agreements are executed and payments
are made.
X MISCELLANEOUS
The parties agree to review and agree upon press releases, to comply
with the German Cartel Law and to take such measures as might be necessary in
order to effect the completion of the transaction. The parties will each pay
their own expenses of the transaction. If an advisory board is established
for Hohe KG, at least one member of the Hohe Family will be a member so long
as the Hohe Family owns 10 percent of the limited partnership interests.
Amendments to the agreement must be in writing and notices must be given in
writing in the manner prescribed and to the addresses set forth. The agreement
is binding upon all parties, is not assignable, and is subject to severability
if any particular clause is invalid. The agreement with its exhibits
constitutes the entire agreement of the parties, is governed by the laws of the
Federal Republic of Germany and is subject to court arbitration.
The undersigned hereby represents this summary to be a fair and accurate
English summary of the above described transactions.
Dated: June 13, 1995. DONNELLY CORPORATION
/s/ William R. Jellison
William R. Jellison
Chief Financial Officer
