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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 (Date of earliest event reported): October 6, 1995
INTERSYSTEMS, INC.
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Exact Name of Registrant as specified in charter
Delaware
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(State or Other Jurisdiction of Incorporation)
1-9547 13-3256265
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Commission file No. I.R.S. Employer Identification No.
8790 Wallisville Road, Houston, TX 77029
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(Address of Principal Executive Offices)
(713) 675-0307
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(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS
The Company and its subsidiaries, InterSystems, Inc., a Nebraska
corporation ("InterSystems Nebraska") and Chemtrusion, Inc. ("Chemtrusion"),
have embarked on plans for major internal and external expansion, in the form
of new facilities and new product lines, which will have the effect of greatly
expanding manufacturing capacity and rounding out product lines to reduce the
effects of seasonality on product demand, as more fully described below.
THE COMPANY
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POSSIBLE ACQUISITION OF INTERPAK HOLDINGS, INC. AND ELECTION OF
INDEPENDENT DIRECTORS TO THE BOARD OF DIRECTORS. The Company is proceeding
with the negotations for the acquisition of Interpak Holdings, Inc.
headquartered in Houston, Texas ("Interpak") from Helm Resources, Inc., which
currently owns approximately 36% of the Company's outstanding shares of Common
Stock.
In November and December, 1995, the Board of Directors of the Company
elected Mr. William Lurie and Mr. Leonard Friedman to the board as independent
directors, and created an Acquisition Committee which will be headed by Mr.
Lurie. Mr. Lurie is presently serving as president and a director of
Prevention & Early Resolution of Conflicts, Inc., a leading corporate
consulting firm. Prior thereto, he spent almost 20 years with International
Paper Company in increasingly important management positions, and thereafter
served as President of The Business Roundtable for ten years. Mr. Friedman is
President of LEFMARK, Inc., a leading Houston-based real estate holding and
management company. Mr. Friedman will join Mr. Lurie on the Acquisition
Committee.
The Committee will undertake an independent analysis of the transaction
utilizing the assistance of experts as it deems necessary and appropriate in
its discretion, and will negotiate at arms length with Helm Resources, Inc. in
order to determine if an acquisition can be completed. The discussions between
the Company and Interpak are in the preliminary stages and no agreement in
principle has been reached. If an agreement is reached, the acquisition would
be subject to a number of conditions, including the Company's arranging
financing to complete the acquisition and stockholder approval. The Company
may be required to undertake a debt or equity financing to have sufficient
available funds to pay any cash down payment.
Currently, the purchase price proposed by Helm is approximately
$5,000,000, which would be paid by a cash down payment, the assumption by the
Company of approximately $1,600,000 of Helm debentures and the issuance to Helm
of shares of Common Stock.
Interpak is a custom-packager of thermoplastic resins and also provides
warehousing and delivery services to plastics producers and distributors. The
Company believes that Interpak would complement the operations of its
Chemtrusion subsidiary, which specializes in the custom-compounding of plastic
resins by enabling the Company to provide plastic producers with single source,
value-added processing and packaging services from a fully integrated entity.
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In 1994, Interpak had revenues of $13,738,158 and a net loss of
$821,191. For the nine months ended September 30, 1995, Interpak had a loss of
$356,000. Although historically profitable, the loss from operations in 1994
was attributable in part to the reduction experienced by Interpak of its normal
rail car packaging and warehousing business due to distribution disruptions
caused by floods and a pipeline explosion in the Houston area in the fourth
quarter of 1994. These natural disasters resulted in an extreme shortage of
domestic thermoplastic resins, which caused the company's warehouse utilization
to fall to an all-time low of approximately 57%, as compared to approximately
82% as of the date of this Memorandum. The net loss for 1994 also reflects a
non-recurring charge of $330,000, primarily for accruing the loss from the
termination of two Interpak leases and related expenses.
PRIVATE PLACEMENT. On December 1, 1995, the Company commenced a private
placement of 25 Units consisting of 40,000 shares of Common Stock and 20,000
Common Stock Purchase Warrants for $55,000 per Unit. The Company reserved the
right to sell up to 35 Units, and to sell fractional Units. No minimum number
of Units must be sold. The purchase price per Unit is based upon the average
of the closing price of the common stock on the American Stock Exchange during
the ten trading days preceding November 15, 1995, which is the date the Board
of Directors of the Company authorized the offering, or $1.375. The purpose of
the offering is to raise funds for working capital.
INTERSYSTEMS NEBRASKA
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EXPANSION OF OMAHA FACILITY. In November 1995, InterSystems Nebraska
entered into a lease for a second 30,000 square foot facility in Omaha, thereby
nearly doubling total square footage under use to 70,000 square feet. In
connection with the expansion, the subsidiary has arranged $1.6 million in
equipment financing for advanced robotics, software and other automated
equipment to be installed in both facilities. Installation is expected to be
completed by mid-1996. The planned expansion and automation are designed to
render the combined facility efficient and state-of-the-art without changing
the present workforce, and to increase manfacturing capacity to permit
InterSystems Nebraska to meet its record backlog, bring subcontracted work back
into the plant and take on additional customers.
ACQUISITION OF THE TROPICAL MANUFACTURING GROUP, INC. InterSystems
Nebraska, through a subsidiary, has signed a letter of intent for the
acquisition of the assets of The Tropical Manufacturing Group, Inc.
headquartered in Miami, Florida ("Tropical"), and has entered into an operating
agreement with Tropical, which is engaged in the business of manufacturing and
selling commercial rolling doors and hurricane resistant doors and shutters in
South Florida. Under the operating agreement, Tropical (i) has assigned to
InterSystems Nebraska its rights to sell, market and distribute its products
and (ii) is manufacturing its products for the sole account of InterSystems
Nebraska, in exchange for the agreement of InterSystems Nebraska to pay
Tropical cost plus 1% for each product so manufactured. This is intended as an
interim arrangement which may be terminated at any time by InterSystems
Nebraska, and which will be terminated upon the purchase by InterSystems
Nebraska of all of Tropical's assets and the assumption of certain liabilities
of Tropical pursuant to a letter of intent signed by Tropical and the Company
in September 1995.
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The consummation of the purchase is conditioned upon arranging the
necessary financing to complete the purchase and obtaining clear title to the
assets of Tropical, which are currently subject to various tax and other liens.
At the present time, the cost of acquiring the assets of Tropical is expected
to be approximately $250,000, although transactional expenses and the cost of
clearing title may increase this estimate considerably.
The acquisition of this facility and product line is expected to
complement the present product demand of InterSystems Nebraska, which usually
peaks in the summer months and drops in the winter months, whereas TMG
experiences high product demand during hurricane season up to and including the
winter months.
CHEMTRUSION
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STATE-OF-THE-ART COMPOUNDING PLANT Chemtrusion has signed a letter of
intent, and is in the process of completing a definitive agreement, with a
leading worldwide polymer manufacturer to build and operate a new state-of-
the-art dedicated plastics compounding facility in the midwest. Execution of
the definitive agreement is expected in the next month or so. The agreement
calls for the payment of a management fee to Chemtrusion, which should have a
significant positive contribution to net income.
On December 6, 1995, Chemtrusion announced that it had signed a contract
to purchase 15 acres at the Clark Maritime Center in Jefferson, Indiana, the
economic center of the greater Louisville, Kentucky metropolitan area, for this
dedicated facility, which is scheduled to open in 1996.
NO ASSURANCE CAN BE GIVEN THAT THE COMPANY OR ITS SUBSIDIARIES WILL
SUCCESSFULLY COMPLETE ANY OF THE FOREGOING TRANSACTIONS.
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.
INTERSYSTEMS, INC.
By:/s/ Herbert M. Pearlman
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Herbert M. Pearlman, Chairman
Date: December 11, 1995
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