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) March 7, 1997
CERBCO, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-16749 54-1448835
(Commission File Number) (IRS Employer Identification No.)
3421 Pennsy Drive, Landover, Maryland 20785
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code:
(301) 773-1784 (tel)
(301) 322-3041 (fax)
(301) 773-4560 (24-Hour Fax Vault Information)
None
(Former name or former address, if
changed since last report)
<PAGE>
Item 5. Other Events.
See press release of the registrant dated March 7, 1997 attached
hereto.
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.
Date: March 7, 1997 CERBCO, Inc.
(Registrant)
By: /s/ Robert W. Erikson
Robert W. Erikson
President
<PAGE>
PRESS RELEASE
For Immediate Release
CERBCO ANTICIPATES $22 MILLION IN DEAL TO EXIT COPIER
SUBSIDIARY
LANDOVER, MD, March 7, 1997 - CERBCO, Inc. [NASDAQ: CERB] today
announced that it has entered into a definitive Investment, Redemption and Stock
Purchase Agreement (the "Agreement") pursuant to which Capitol Office Solutions,
Inc. ("COS") will redeem CERBCO's entire two-thirds stake in COS held by
CERBCO's wholly-owned subsidiary, CERBERONICS, Inc. ("CERBERONICS"), for a
redemption price of approximately $19,000,000. Under the Agreement, CERBCO will
also receive a two-thirds share of an approximate $5,000,000 pre-redemption
dividend of excess cash to be disbursed prior to closing. The total of
approximately $22,000,000 in cash to be received by CERBERONICS, to include both
the redemption price and the pre-redemption dividend, will be subject to formula
adjustment based upon audited financial statements at the time of closing and
would represent a pretax gain of approximately $10.00 per share to CERBCO
stockholders. Additional parties to the Agreement include Armen Manoogian,
President and one-third owner of COS, and Golder, Thoma, Cressey, Rauner Fund IV
("GTCR") of Chicago, Illinois. GTCR is the controlling shareholder of Global
Imaging Systems, Inc. of Tampa, Florida, one of three nationally recognized
consolidators of copier dealerships.
COS is a provider of copier and fax equipment sales, service and
supplies in the Washington, DC and Baltimore, MD metropolitan areas. CERBCO's
controlling interest in Insituform East, Incorporated, its other principal
operating subsidiary also held through CERBERONICS, will not be affected by this
transaction.
In connection with the transaction, GTCR will acquire from Manoogian a
portion of his current interest in COS for approximately $5,000,000, and
Manoogian will ratably participate in the pre-redemption dividend. GTCR will
acquire additional newly issued COS shares through an investment of at least
$1,000,000, and will arrange the additional financing that COS will need to
redeem CERBERONICS' shares. After the investment and redemption, GTCR will have
a two-thirds interest, and Manoogian a one-third interest, in the recapitalized
and leveraged COS.
For the purposes of this transaction, COS (excluding the pre-redemption
dividend) is being valued at $27,000,000. CERBERONICS' $19,000,000 redemption
price is equal to two-thirds of $27,000,000 plus a $1,000,000 control premium.
Manoogian's minority interest is being valued at $8,000,000 which, coupled with
his one-third participation in the pre-redemption dividend, places Manoogian's
transaction value at approximately $10,000,000. The total transaction value,
including the value of the anticipated pre-redemption dividend, is therefore
estimated to be approximately $32,000,000.
To provide continuity of management and ensure continued excellent
financial performance, Manoogian will stay on as President of COS and George and
Robert Erikson, currently directors of COS and principal shareholders of CERBCO
(the "Eriksons"), will serve as consultants to COS for a period of three years.
The transaction is conditioned, among other things, upon CERBCO
receiving an opinion from an investment banker stating that the consideration
for the redemption of CERBERONICS' shares of COS is fair to CERBCO from a
financial point of view. The transaction is also subject to receiving a
favorable vote of a majority of CERBCO shareholders other than the Eriksons, and
upon other customary conditions of transactions of this type. The Eriksons are
in favor of the transaction and have agreed to vote their CERBCO shares in favor
of the transaction, but only if there is likewise a favorable vote of a majority
of CERBCO shareholders other than the Eriksons. The parties anticipate closing
the transaction on or before June 30, 1997.
George Erikson, Chairman of CERBCO, said, "The Board is pleased to be
in a position to submit this transaction to the shareholders for approval. The
Board was unanimous in its belief that this transaction offers CERBCO a fine
return on its investment in COS. This favorable sale is consistent with CERBCO's
policy of maintaining strategic flexibility to enter or exit different markets
on an opportunistic basis. We have carefully watched the consolidations which
have taken place in the copier dealer and service industry in recent years, and
we believe that this is the right deal at the right time."
Robert Erikson, President and Treasurer of CERBCO, added, "Considering
the excellent financial results of COS in recent years, the question naturally
arises as to why CERBCO would presently entertain exiting such a star performer.
In partial answer, we are very mindful of an adage attributed to Bernard Baruch.
When asked, 'How did you become so rich?' he replied, 'By selling too soon.'
Similarly, we are not proposing the COS transaction for CERBCO to meet any
presently identified cash needs. Rather, we simply believe it may be both
prudent and a real opportunity for CERBCO to have a strong liquid position going
forward. We presently have the opportunity to lock in enormous gain and capture
large unrealized market appreciation at the very time both of a potentially
overheated stock market and of growing uncertainties for independent copier
dealers facing competition from large or emerging consolidators in the
industry."
CERBCO, Inc. [NASDAQ: CERB] is a parent holding company which, through
its wholly-owned subsidiary CERBERONICS, Inc., has controlling interests in
Insituform East, Incorporated [NASDAQ: INEI] (excavationless sewer and pipeline
rehabilitation), and Capitol Office Solutions, Inc. (copier and fax equipment
sales, service and supplies).
***
Contact: Robert W. Erikson George Wm. Erikson
President Chairman
(301) 773-1784 (301) 773-1784
