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) November 1, 1995
ADDINGTON RESOURCES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-16498 61-1125039
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) No.)
1500 North Big Run Road, Ashland Kentucky 41102
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number,
including area code (606) 928-3433
Former Name or Former Address, if Changed Since
Last Report: Not Applicable
<PAGE>
Item 2. Acquisition or Disposition of Assets
On November 2, 1995, Addington Resources, Inc. (the "Company")
completed the previously announced sales of its coal mining, mining
technology and citrus operations to Larry Addington, Bruce Addington and
Robert Addington.
The Company received $30,000,000 in cash, before certain working
capital adjustments, for the Company's coal mining subsidiaries and its
mining equipment, equipment manufacturing and licensing subsidiary. The
Company retained $4,000,000 in cash payments received from BHP Australia
Coal Pty., Ltd. under the Company's previously announced technology
sale. The Company also retained the right to receive certain other cash
payments (anticipated to be $3,000,000) from BHP. In addition, the
Company is entitled to receive a royalty for coal delivered by Tennessee
Mining, Inc., one of the subsidiaries sold, under its contract with the
Tennessee Valley Authority, with a maximum royalty of $12,580,652.
On November 2, the Company also completed the sale of its citrus
operations to Larry and Bruce Addington in exchange for 1,000,000 shares
of the Company's Common Stock held by them.
Larry and Steve Addington are directors and, together with Robert
and Bruce Addington, are significant stockholders of the Company.
Robert Addington was a director of the Company until August 4, 1995 and
Bruce Addington was a director until the recent annual meeting of
stockholders of the Company. In addition, until September 1995, Larry
Addington was Chief Executive Officer of the Company. The terms of the
sale transactions were determined by negotiation between Larry Addington
and representatives of the Company unaffiliated with the Addingtons and
were reviewed and approved by the Executive Committee of the Board of
Directors, consisting of Howard P. Berkowitz, Harold Blumenstein and
James Grosfeld. The Company has received an opinion from a leading
investment banking firm that the terms of the sales to the Addingtons
were fair, from a financial point of view, to the Company and its
stockholders other than the Addingtons.
In a separate transaction, the Company entered into a letter
agreement, dated November 1, 1995 (the "Addwest Agreement"), providing
for the sale to a private Canadian business group of all of the capital
stock of Addwest Minerals, Inc. ("Addwest"), which conducts the
Company's gold and industrial minerals operations. As consideration for
the purchase, the buyer will pay $600,000 in cash and either repay or
cause the release of the Company from liability in respect of $3,000,000
of Addwest's outstanding loan, aggregating $7,340,000 after principal
payments made on October 31, to N.M. Rothschilds & Sons Limited (the
"Rothschilds Loan"). The Company is required to repay the balance of
the Rothschilds Loan on the earlier of the closing of the sale and
December 29, 1995. Pursuant to the terms of the Addwest Agreement,
Addwest is required to have current liabilities not exceeding
$1,500,000, exclusive of certain other contractual obligations of
approximately $500,000, with purchase price adjustments to the extent
that current liabilities exceed or are less than that amount. The
complete terms of the proposed sale are set forth in the Addwest
Agreement, which is attached as Exhibit 10.1 to this Form 8-K and is
incorporated herein by reference. There can be no assurance that the
sale will be consummated. Failure of the buyer to consummate the
transaction will result in forfeiture of a $600,000 deposit with the
Company. The transaction follows the termination by an earlier intended
buyer of its proposal to purchase Addwest.
Upon consummation of the sale of the gold operations, the Company
will have completed the sale of all of its non-environmental operations,
with the exception of its limestone operations. The Company announced
in early August 1995 that is intended to focus solely on its
environmental businesses.
The Company intends to use the cash proceeds from the sale of its
coal mining and mining equipment, equipment manufacturing and licensing
subsidiaries to repay in full the outstanding bank debt of $26,000,000
at its environmental operations.
The sales to the Addington family and the Addwest sale will result
in an aggregate after-tax loss in the quarter ended September 30, 1995
of approximately $24,000,000.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial statements of business acquired.
Not applicable
(b) Pro Forma Financial Information
To be filed by amendment
(c) Exhibits
Exhibits 10.1 -- Letter agreement, dated November 1, 1995,
relating to the sale of Addwest Minerals, Inc.
<PAGE>
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.
ADDINGTON RESOURCES, INC.
Dated: November 7, 1995 By: /s/ R. Douglas Striebel
R. Douglas Striebel
Vice President and Chief
Financial Officer
November 1, 1995
VIA FAX: 606-928-0450
Addington Resources, Inc.
1500 N. Big Run Road
Ashland, KY 41102
Attention: Kirby Taylor, President
Dear Sirs:
Re: Purchase of all of the shares of Addwest Minerals Inc. ("Addwest")
1. We represent 422390 B.C. Ltd. ("423390"), which company acts as a bare
trustee for the following persons or their nominees:
(a) George Davis
Barrister and Solicitor
#1100, Kapilano 100, 100 Park Royal South
West Vancouver, B.C. Canada V7T 1A2
Office: (604) 922-2151
Home: (604) 922-1702
Fax: (604) 925-0457
Bank: Royal Bank of Canada, Private Banking
4th Floor, 1050 West Georgia Street
Vancouver, B.C.
Attention: Linda Pearson (604) 665-5277
(b) Brian Fraser
Businessman
19353-3A Avenue, R.R. #6
White Rock, B.C. Canada V4P 1M7
Phone: (604) 538-4157
Fax: (604) 538-2144
Bank: Canadian Imperial Bank of Commerce
(c) James R. Houston, Jr.
#1100, Kapilano 100, 100 Park Royal South
West Vancouver, B.C. Canada V7T 1A2
Cell: 889-0056
Home: (604) 925-4290
Office: (604) 689-0544
2. 422390 (and its beneficiaries) is at arms length from Addington Resources,
Inc. ("Addington"), Addwest and any officers and/or employees of either.
3. We understand that Addwest is presently indebted to Rothchilds in the
approximate amount of US $9,300,000.00 (the "Rothchilds Loan") of which
$2 million was paid on 10/31/95 and that this loan is secured against the
gold production of Gold Road Mine, a First Charge lien against the assets
of Addwest, and the unlimited guarantee of Addington.
4. We understand that Addington wishes Addwest to realize upon Addwest's gold
forwarding contracts on or before closing (est. present value US
$475,000+), substantially all of this was realized in connection with the
$2 million principal payment on 10/31/95, with such proceeds to be used to
reduce the principal amount of the Rothchilds Loan.
5. We understand that Addwest also has the following "contractual and direct
liabilities" which, if this offer is accepted, will remain the obligation
of Addwest after closing:
(a) Gold Road - Arava contract (including a promissory note of Addington
and Addwest due July 10, 1996 in the principal amount of US $350,000
(the "Arava Note") from which obligation Addington is to be released
on or before the Closing), Parfet contract;
(b) Wind Mountain - Scot Properties Texas Inc. contract, Van Fleet-
Guilinger contract, University of Texas contract;
(c) Golden Zone - Mines Trust contract;
(d) Moss- Gintoff contract, Martinez contract, Williams contract;
(e) Pokorny - Texaco contract;
(f) Denver Office - Kuntz Development Co. contract; and
(g) Current liabilities, exclusive of (a) to (f) above, of not more than
US $1,500,000 (to the extent that current liabilities, exclusive of
(a) to (f) exceed US $1.5 million on Dec. 15/95, Addington shall be
liable for such excess; to the extent that current liabilities,
exclusive of (a) to (f), on Dec. 15/95 are less than US $1.5
million, 422390 shall pay the amount of such deficiency to Addington
on Dec. 15/95).
6. We understand that Addwest owns 100% of all of the assets and undertakings
as described in an undated Summary of Assets prepared by Addwest, (the
"Executive Summary" of which is attached as Schedule "A" and initialed by
the parties for identification); and includes, but is not restricted to,
all of the assets as set out in Schedule "B" attached hereto (initialed by
the parties for identification) and including the Briggs Property Royalty.
7. Provided that our understandings as set out above are correct, 422390 is
prepared to purchase 100% of the issued and outstanding shares of Addwest
from Addington without representation and warranty other than as to title
to the shares, on the following terms and conditions:
(a) Price US $3,600,000
(b) Payable
(i) Cash on acceptance of this
offer (the "Deposit") US $ 600,000
(ii) On Dec. 15/95 either: 3,000,000
A. by release by Rothchilds
of the guarantee provided
by Addington for Addwest's
loan from Rothchilds, or
B. cash in the amount of US
$3,000,0000 to be applied
to purchase or repay the
Rothchilds Loan
(iii)at closing, cash to the extent,
if any, that the current
liabilities of Addwest are less
than US $1.5 million
_________________________
US $3,600,000US $3,600,000
_________________________
(c) Closing (the "Closing Date").
Time is of the essence for the
closing of this transaction. Dec. 15/95
(d) Date of adjustments ("Adjustment
Date") and possession of the assets
of Addwest.
(i) as to gold produced and poured
into ingots on or before Dec.
15/95 (and all receivables
relating thereto.) Dec. 15/95
(ii) as to all current and contractual
liabilities other than those as
set out in paragraph 5 Dec. 15/95
(iii)as to assets, claims, NSR and
royalty payments, etc., including
obligations with respect to
severance or the Warn Act on or
after Dec. 15/95 (other than
severance due Doug Christopher,
Al Founie, and Charles Dalrymple).
(e) Subject to:
(i) Addington causing Addwest to have sufficient funds to pay down
the Rothchilds Loan at Closing to not more than US $3,000,000
(and Addington being released at Closing from any further
liability under its guarantee to Rothchilds);
(ii) Addwest having no current or contractual liabilities other
than those set out in paragraph 5 (and US $3 million to
Rothchilds or other lender) on Dec. 15/95;
(iii)Addwest carrying on all aspects of its business in the normal
course, and without interruption until Dec. 15/95 including
but not restricted to:
A. any and all current and ongoing leases for equipment
(aggregating approximately US $220,000) which are to be
paid out in full,
B. finishing at least 250 ft. of the "100 ft. lateral wall"
as presently planned for, and
C. increasing the present height of the tailings pond by
4 ft. to current engineered specifications.
8. The Deposit shall be non-refundable and be forfeited by 422390 in the
event that 442390 fails to consummate the purchase of the shares of
Addwest from Addington on or prior to Dec. 15/95 other than due to the
failure of Addington and/or Addwest to satisfy the conditions specified
herein.
9. We acknowledge we have had the opportunity to complete such due diligence
investigation of Addwest, its business, assets, liabilities and prospects
as we have determined to be necessary or appropriate and to ask such
questions of management of Addwest and Addington as we desire, and such
investigation has been completed. Other than as expressly set forth in
this letter, there are no governmental or third party consents or
approvals necessary for 422390 to consummate the transactions contemplated
hereby.
10. This agreement shall be governed by and construed in accordance with the
laws of the State of Colorado applicable to contracts made and to be
performed wholly within such state. For the purpose of assuring that
Addington may enforce its rights hereunder 422390 hereby irrevocably:
(a) agrees that any legal or equitable action, suit or proceeding
against it arising out of or relating to this letter or any
transaction contemplated hereby may be instituted in any state or
federal court in the City and County of Denver, State of Colorado;
(b) waives any objection which it may now or hereafter have to the venue
of any such action, suit or proceeding or any claim of forum non
conveniens;
(c) submits itself to the non-exclusive jurisdiction of any such state
or federal court for purposes of any such action, suit or
proceeding; and
(d) waives any immunity from jurisdiction to which it might otherwise be
entitled in any such action, suits or proceeding which might be
instituted in any state or federal court, and waives any immunity
from the maintaining of any action against it to enforce in any such
state or federal court or elsewhere, any judgment for money obtained
in any such action, suit or proceeding and, to the extent permitted
by applicable law, any immunity from execution.
11. This offer is open for acceptance until 12:00 Noon PST Wednesday, November
1, 1995.
12. If the offer as set out above is acceptable to you and your Board kindly
indicate so by signing the enclosed copy of this letter and returning same
to the writer at the above address. Upon receipt of same we will
forthwith deliver the Deposit by wire transfer to Schulte Roth & Zabel,
being the sum of US $600,000, in trust for Addington (such amount to be
released to Addington upon our receipt of all of the issued and
outstanding shares of Addwest free and clear of all encumbrances),
whereupon this letter shall be a binding agreement between Addington and
422390.
Yours very truly,
GEORGE DAVIS & COMPANY 422390 B.C. LTD. by its
authorized signatory
/s/ George Davis /s/ George Davis
George Davis George Davis
c.c. Stuart Freedman
Howard Birkowitz
Brian Fraser
James R. Houston, Jr.
Charles Williams
ACCEPTED & AGREED TO this 1st
day of November 1995.
/s/ Kirby Taylor
Kirby Taylor, President
Addington Resources, Inc.
