SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (date of earliest event reported): March 21, 1996
Dr Pepper/Cadbury North America, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-10064 75-2233365
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
P.O. Box 65086, Dallas, Texas 75265-5086
8144 Walnut Hill Lane, Dallas, Texas 75231-4372
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 360-7000
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Item 5. Other Events
(1) In a letter dated March 21, 1996 (the "No-Action Letter"), the Division of
Corporation Finance of the Securities and Exchange Commission stated that
it would not raise any objection if Dr Pepper/Cadbury North America, Inc.
("Dr Pepper") does not comply, as a separate registrant, with the periodic
reporting requirements of Sections 13 and 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). In accordance with the
No-Action Letter, Cadbury Schweppes plc ("Cadbury"), the ultimate parent
company of Dr Pepper, has, pursuant to a guarantee dated as of March 21,
1996 (the "Guarantee"), fully and unconditionally guaranteed Dr Pepper's 11
1/2% Senior Subordinated Discount Notes due 2002. In addition, in
accordance with the No-Action Letter, Cadbury will include as a footnote in
its periodic reports filed in accordance with the Exchange Act summarized
financial information of Dr Pepper, as specified in Rule 1-02 (bb)(1) of
Regulation S-X. The summarized financial information of Dr Pepper will be
as of the same dates and for the same periods as the consolidated financial
statements of Cadbury.
A copy of the No-Action Letter is attached as an exhibit hereto and is
incorporated by reference herein.
A copy of the Guarantee is attached as an exhibit hereto and is
incorporated by reference herein.
Item 7. Financial Statements and Exhibits
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Exhibit Number Description
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99.1 Letter dated March 21, 1996, of the Division of
Corporation Finance of the Securities and Exchange
Commission.
99.2 Guarantee, dated as of March 21, 1996, made by
Cadbury Schweppes plc in favor of the holders of the
11 1/2% Senior Subordinated Discount Notes Due 2002 of
Dr Pepper/Seven-Up Companies, Inc.
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Pursuant to the requirements of the Exchange Act, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly
authorized.
Dr Pepper/Cadbury North America, Inc.
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(Registrant)
March 28, 1996 By: /s/ Nelson A. Bangs
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(Date) (Signature)
Name: Nelson A. Bangs
Title: Senior Vice President
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EXHIBIT INDEX
Exhibit Number Description Page
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99.1 Letter dated March 21, 1996, of the Division
of Corporation Finance of the Securities and
Exchange Commission.
99.2 Guarantee, dated as of March 21, 1996, made by
Cadbury Schweppes plc in favor of the holders of
the 11 1/2% Senior Subordinated Discount Notes
Due 2002 of Dr Pepper/Seven-Up Companies, Inc.
EXHIBIT 99.1
March 21, 1996
RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE
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Re: Cadbury Schweppes plc (the "Company")
Dr Pepper/Cadbury North America, Inc. ("Dr Pepper")
Incoming letter dated March 20, 1996
Based on the facts presented, and noting that: (1) Dr Pepper is a
wholly-owned subsidiary of the Company; (2) the Company will fully and
unconditionally guarantee the principal of, premium, if any, and interest on the
debt securities issued by Dr Pepper (the "Notes"); and (3) summarized financial
information concerning Dr Pepper, which includes at least the information
described in Rule 1-02(bb) of Regulation S-X, will be included in the Company's
periodic reports under the Securities Exchange Act of 1934 (the "Exchange Act")
as long as the Notes are outstanding and are guaranteed by the Company, the
Division will not raise any objection if Dr Pepper ceases to file periodic
reports pursuant to Sections 13 and 15(d) of the Exchange Act with respect to
the Notes, following the Company's guarantee of the Notes.
Because this position is based on the representations made to the
Division in your letter, it should be noted that any different facts or
conditions might require a different conclusion. Moreover, this response merely
expresses the Division's position on enforcement action and does not express any
legal conclusion with respect to the question presented.
Sincerely,
Cecilia D. Blye
Special Counsel
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[Shearman & Sterling letterhead]
March 20, 1996
VIA FEDERAL EXPRESS
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Dr Pepper/Cadbury North America, Inc.
(File no. 33-47597)
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Ladies and Gentlemen:
We are counsel for Cadbury Schweppes plc, a corporation organized
under the laws of England (the "Company") and its subsidiary Dr Pepper/Cadbury
North America, Inc. (formerly known as Dr Pepper/Seven-Up Companies, Inc.), a
Delaware corporation ("Dr Pepper"). Each of the Company and Dr Pepper is a
reporting company under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and files periodic reports with the Securities and Exchange
Commission (the "Commission").
On June 6, 1995, pursuant to an Agreement and Plan of Merger, dated as
of January 25, 1995 (the "Merger Agreement"), among DP/SU Acquisition Inc., an
indirect wholly owned subsidiary of the Company ("Acquisition"), the Company,
and Dr Pepper, a wholly owned subsidiary of Acquisition was merged (the
"Merger") with and into Dr Pepper, with Dr Pepper as the surviving corporation.
As a result of the consummation of the Merger, the Company, through its wholly
owned subsidiaries, now owns 100% of the outstanding capital stock of Dr Pepper.
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Office of Chief Counsel 2 March 20, 1996
In connection with these transactions and for the reasons set forth
below, on behalf of Dr Pepper, we hereby apply, pursuant to Section 12(h) of the
Exchange Act, for an order exempting Dr Pepper from the periodic reporting
requirements of Sections 13 and 15(d) of the Exchange Act, as contemplated by
footnote 2 to Topic 1-G of Staff Accounting Bulletin 53 ("SAB 53"), or, in the
alternative, we request confirmation from the Staff of the Commission that it
will not recommend any enforcement action to the Commission if Dr Pepper does
not comply with such reporting requirements, under the circumstances described
more fully below.
I. BACKGROUND INFORMATION
A. The Company. The Company is a foreign private issuer subject to the
reporting requirements of Section 13 of the Exchange Act. The Company's American
Depositary Shares, each representing four ordinary shares, are quoted on the
Nasdaq National Market. The Company is current in its reporting obligations
under Section 13 of the Exchange Act.
The Company, together with its subsidiaries, is an international group
principally engaged in the manufacturing, marketing and distribution of
internationally branded beverage and confectionery products. For the fiscal year
ended December 31, 1994, the Company had consolidated net sales of (pound)
4,029.6 million and consolidated net income of (pound) 261.9 million. On
February 25, 1996, the Company ranked as the thirty-ninth largest publicly owned
company in the United Kingdom in terms of market capitalization.
B. Dr Pepper. Dr Pepper, through its operating subsidiaries,
manufactures, markets, sells and distributes soft drink concentrates, extracts
and fountain syrups to licensed soft drink bottlers primarily in the United
States.
C. The Merger. On February 1, 1995, the Company commenced a tender
offer (the "Tender Offer") for all of the outstanding shares of common stock,
par value $.01 per share (the "Common Stock") of Dr Pepper and the associated
preferred stock purchase rights (together with the Common Stock, the "Shares").
Pursuant to the Tender Offer, on March 2, 1995 the Company completed its
purchase of 45,387,180 Shares, a substantial majority of the outstanding Shares.
The stockholders' meeting of Dr Pepper to vote on the Merger was held on June 5,
1995. At this meeting, the Merger was approved and on June 6, 1995 the Merger
was consummated.
On February 1, 1995 the Company, Acquisition and Dr Pepper filed with
the Commission a Schedule 14D-1 Tender Offer Statement (the "Schedule 14D-1")
and a Schedule 13D (the "Schedule 13D"). On April 28, 1995 Dr Pepper filed with
the Commission a Schedule 14A Information Proxy Statement (File No. 1-10064)
which includes a proxy statement/prospectus of Dr Pepper (the "Merger Proxy").
The Merger Proxy, the
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Office of Chief Counsel 3 March 20, 1996
Schedule 14D-1 and the Schedule 13D describe the Tender Offer and the Merger in
more detail.
D. The Notes. On January 24, 1996, Dr. Pepper commenced a tender offer
(the "Debt Tender Offer") for all of its outstanding 11 1/2% Senior Subordinated
Discount Notes due 2002 (the "Notes") and a consent solicitation (the "Consent
Solicitation") with respect to the adoption of certain amendments (the "Proposed
Amendments") to the indenture pursuant to which the Notes were issued (the
"Indenture"). The Debt Tender Offer and Consent Solicitation were consummated on
February 22, 1996 and Dr. Pepper purchased approximately $305 million principal
amount at final maturity of tendered Notes and received consents sufficient
under the Indenture to approve the Proposed Amendments. On February 22, 1996,
Dr. Pepper and the trustee under the Indenture entered into a supplemental
indenture to the Indenture which incorporated the Proposed Amendments. As of
March 1, 1996, approximately $40 million principal amount at final maturity of
the Notes were outstanding. The Notes are traded on the American Stock Exchange
(the "AMEX") and are registered pursuant to Section 12(b) of the Exchange Act.
As of March 1, 1996, Dr Pepper's only other outstanding securities are its
shares of Common Stock, all of which are owned by the Company. Dr Pepper's
reporting obligations under the Exchange Act arise solely under Section 12(b)
thereof as a result of the Notes being listed on the AMEX.
The Company will, subject to obtaining the relief requested herein,
fully and unconditionally guarantee the Notes (the "Guarantee"), as described in
detail below. A copy of the form of the Guarantee is attached hereto as Exhibit
A. The Company will notify Bank One, Texas, NA, as Trustee (the "Trustee") under
the Indenture dated as of October 28, 1992 between Dr Pepper and the Trustee,
which governs the Notes, of the issuance of the Guarantee. In addition, the
Company will send a copy of the Guarantee to the AMEX. In addition, the Company
will file a Current Report on Form 6-K with the Commission and Dr Pepper will
file a Current Report on Form 8-K with the Commission, each relating to the
issuance of the Guarantee.
II. BASIS FOR THE RELIEF REQUESTED
A. General. The Commission's position on the applicability of the
Exchange Act reporting requirements to an issuer of securities guaranteed by its
parent is set forth in footnote 2 to Topic 1-G of SAB 53. Footnote 2 provides
that where the issuer of the guaranteed security is wholly owned (as defined in
Rule 1-02(z) of Regulation S-X) by the guarantor and has more than minimal
operations of its own, the guarantee is full and unconditional, and the parent
guarantor is a reporting company under the Exchange Act, "upon application to
the Commission such a subsidiary would be conditionally exempted pursuant to
Section 12(h) of the Exchange Act from reporting obligations under such Act" if
the parent guarantor includes "summarized financial information," as specified
in
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Office of Chief Counsel 4 March 20, 1996
Rule 1-02(bb)(1) of Regulation S-X, about such issuer in the notes to the parent
guarantor's consolidated financial statements. See, e.g., Viacom Inc. (available
March 1, 1995); Del Monte Foods Company (available November 23, 1994); Union Oil
Company of California (available September 2, 1994); Grand Metropolitan Public
Limited (available June 17, 1994) (relief granted to finance subsidiaries which
proposed to issue debt securities that were absolutely and unconditionally
guaranteed by parent); Hawaiian Electric Company, Inc. (available Dec. 15, 1993)
(relief granted to subsidiaries in connection with planned offering of debt
securities pursuant to a registration statement on Form S-3, as well as similar
debt securities, unconditionally guaranteed by parent, which may be offered in
future); Dominion Textile, Inc. (available Dec. 14, 1993); CRA Limited
(available Nov. 18, 1993) (relief granted to finance subsidiary which proposed
to issue debt securities that would be fully and unconditionally guaranteed by
parent); The News Corporation Limited (available May 15, 1992) (subordinated
notes unconditionally guaranteed on a subordinated basis by parent); SAFECO
Corporation (available Mar. 5, 1991); Arvin Industries. Inc. (available Sept.
14, 1990); and Rexene Products Co. (available Mar. 30, 1990). For the Staff's
convenience, we have attached hereto as Annex 1 copies of all no-action letters
cited herein.
B. Analysis. As described below, Dr Pepper meets the criteria set
forth in footnote 2 to Topic 1-G of SAB 53 to be exempt from the reporting
requirements under Sections 13 and 15(d) of the Exchange Act so long as the
Company includes as a footnote to the periodic reports it files with the
Commission pursuant to the Exchange Act summarized financial information of Dr
Pepper, as specified in Rule 1-02(bb)(1) of Regulation S-X. The summarized
financial information would be as of the same dates and for the same periods as
the consolidated financial statements of the Company.
(1) "Wholly Owned Subsidiary". Dr Pepper is a "wholly owned
subsidiary" of the Company within the meaning of Rule 1-02(z) of Regulation S-X.
Rule 1-02(z) defines the term "wholly owned subsidiary" to mean "a subsidiary
substantially all of whose outstanding voting shares are owned by its parent
and/or the parent's other wholly owned subsidiaries." The only class of voting
securities issued by Dr Pepper is the Common Stock and all of such Common Stock
is owned indirectly by the Company through its other wholly owned subsidiaries.
(2) More Than Minimal Operations. Dr Pepper has more than minimal
operations. Dr Pepper, through its operating subsidiaries, manufactures,
markets, sells and distributes soft drink concentrates, extracts and fountain
syrups to licensed soft drink bottlers primarily in the United States. For the
fiscal year ended December 31, 1994, Dr Pepper had consolidated net sales of
$769.0 million and consolidated net income of $66.5 million.
(3) Full and Unconditional Guarantee. The Company will fully and
unconditionally guarantee, on a subordinated basis, the payment of principal,
premium (if
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Office of Chief Counsel 5 March 20, 1996
any) and interest on the Notes under the Guarantee. Upon default, there will be
no condition precedent to the Company's liability under the Guarantee, and the
holders of the Notes will not be required to proceed first against Dr Pepper
before attempting to collect from the Company under the Guarantee.
The fact that the Guarantee is subordinated should not have any effect
upon the relief requested. The subordination terms to which the Guarantee is
subject are customary types of provisions for the issuance of senior
subordinated debt. In the event of a default in the payment of any principal of
or interest or other regularly accruing fees on any obligations of the Company
to which the Guarantee is subordinated (the "Senior Company Obligations"), no
payment may be made by the Company with respect to the Guarantee until such
default has been cured or waived. However, the Company remains fully liable to
make payments under the Guarantee after any such default is cured or waived. The
subordination provisions of the Guarantee only define the relative rights of
holders of Senior Company Obligations and the holders of the Notes and such
subordination provisions do not impact the obligation of the Company to pay all
amounts due in respect of the Guarantee, which obligation is absolute and
unconditional. The subordination provisions of the Guarantee do not prevent the
holders of Notes from bringing an action against the Company to enforce the
terms of the Guarantee, subject to the obligation upon such holders to respect
the prior position of the holders of Senior Company Obligations with respect to
any property of the Company which might be recovered in such action. This
obligation, however, should not act as an impediment in any such action by a
holder of Notes to enforce his rights under the Guarantee.
The Staff has found in response to prior no-action requests that
subordinated guarantees were sufficient to satisfy the full and unconditional
guarantee requirement of Topic 1-G of SAB 53. See, e.g., Viacom Inc. (available
March 1, 1995); Evergreen International Aviation, Inc. (available Mar. 31,
1993); Abex Inc. (available Aug. 14, 1992); The News Corporation Limited and
News America Holdings Incorporated (available May 15, 1992); Promus Companies
Inc./Embassy Suites Inc. (available Mar. 27, 1990); Time Warner Inc. (available
Jan. 9, 1990).
(4) Parent Is a Reporting Company. The Company files periodic reports
with the Commission pursuant to Sections 13 and 15(d) of the Exchange Act.
D. Policy.
We believe that relieving Dr Pepper of its reporting obligations under
the Exchange Act is consistent with the public interest and the protection of
investors. Reporting summarized financial information of Dr Pepper, together
with the full financial statements of the Company, would provide a sufficient
basis for an investor to make a well reasoned
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Office of Chief Counsel 6 March 20, 1996
investment decision. Separate periodic reports for Dr Pepper would not provide
additional information which would be material to an investment decision from
the information which would be contained in the Company's consolidated financial
statements. Periodic filings by Dr Pepper would impose the costly burden of
multiple filings on the Company without furthering the public interest of the
protection of investors. Thus, the granting of an exemption of Dr Pepper from
the reporting requirements of Sections 13 and 15(d) of the Exchange Act, or
confirming that the Staff would not recommend any enforcement action to the
Commission if Dr Pepper does not comply with the reporting requirements of the
Exchange Act, in either case under the circumstances described in this letter,
would further the policy and spirit of Section 12(h) of the Exchange Act.
III. CONCLUSION
We respectfully request an order exempting Dr Pepper from the periodic
reporting requirements of Sections 13 and 15(d) of the Exchange Act, or, in the
alternative, confirmation by the Staff that the Division of Corporate Finance
will not raise any objection if Dr Pepper does not file periodic reports
pursuant to Sections 13 and 15(d) of the Exchange Act based on satisfaction of
the conditions set forth above. We are of the opinion that the relief requested
in this letter is consistent with the positions taken by the Staff in its
previous no-action letters, and, because no meaningful additional disclosure
would result by having Dr Pepper file separate periodic reports, is in
accordance with public policy as reflected in the Securities Act and Exchange
Act.
Pursuant to Securities Act Release No. 6269, a manually signed copy
and seven photocopies of this letter, each complete with all material being
submitted herewith, are being furnished to you. Please address your response and
any questions you may have to the undersigned at (212) 848-7058.
Very truly yours,
Alfred J. Ross, Jr.
EXHIBIT 99.2
GUARANTEE
GUARANTEE, dated as of March 21, 1996, made by Cadbury Schweppes plc,
a corporation organized under the laws of England (the "Guarantor"), in favor of
the holders of the 11 1/2% Senior Subordinated Discount Notes Due 2002 (the
"Notes") of Dr Pepper/Seven-Up Companies, Inc. ("Dr Pepper"). Capitalized terms
used but not defined herein shall have the respective meanings ascribed thereto
in the Indenture (as defined below).
W I T N E S S E T H:
SECTION 1. Guarantee. The Guarantor hereby unconditionally guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of the principal of, premium, if any, and interest on the Notes (the
"Notes Indebtedness"), according to the terms of such Notes and as more fully
described in the Indenture, dated as of October 28, 1992, between Dr Pepper and
Bank One, Texas, NA (the "Trustee"), as trustee (as amended, modified or
otherwise supplemented from time to time, the "Indenture").
SECTION 2. Guarantee Absolute. The Guarantor guarantees that the Notes
Indebtedness will be paid strictly in accordance with the terms of the
Indenture, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any holder of
the Notes with respect thereto. The liability of the Guarantor under this
Guarantee shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Notes Indebtedness, or any other amendment
or waiver of or any consent to departure from the Indenture;
(iii) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Notes Indebtedness; or
(iv) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Dr Pepper, or a guarantor.
SECTION 3. Waiver. The Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of merger or
bankruptcy of Dr Pepper, any right to require a proceeding filed first against
Dr Pepper, protest or notice with respect to the Notes or the indebtedness
evidenced thereby and all demands whatsoever.
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SECTION 4. No Waiver; Remedies. No failure on the part of any holder
of the Notes to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 5. Continuing Guarantee; Transfer of Interest. This Guarantee
is a continuing guaranty and shall (i) remain in full force and effect until the
earliest to occur of (A) the date on which the Guarantor shall consolidate with
or merge into Dr Pepper or any successor thereto, (B) the date on which Dr
Pepper or any successor thereto shall consolidate with or merge into the
Guarantor and (C) payment in full of the Notes Indebtedness, (ii) be binding
upon the Guarantor, its successors and assigns, and (iii) inure to the benefit
of and be enforceable by any holder of the Notes, the Trustee and their
respective successors, transferees, and assigns.
SECTION 6. Subordination. The payment of the Notes Indebtedness under
this Guarantee is hereby expressly subordinated to all Senior Guarantor Debt (as
defined below) to the same extent that the Notes Indebtedness is subordinated to
Senior Debt of Dr Pepper in accordance with the provisions of Article Twelve of
the Indenture.
For purposes of this Section 6 "Senior Guarantor Debt" means
Obligations of the Guarantor with respect to any Debt of the Guarantor
outstanding on the date of this Guarantee or Incurred by the Guarantor after the
date of this Guarantee, unless, in the case of any particular Debt, the
instrument creating or evidencing same or pursuant to which the same is
outstanding expressly provides that such Debt shall not be senior in right of
payment to the Guarantee.
SECTION 7. Reinstatement. This Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Notes Indebtedness is rescinded or must otherwise be returned by any
holder of the Notes or the Trustee upon the insolvency, bankruptcy or
reorganization of Dr Pepper or otherwise, all as though such payment had not
been made.
SECTION 8. Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
CADBURY SCHWEPPES PLC
By:______________________________
Name:
Title:
