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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 17, 1996
Roberts Pharmaceutical Corporation
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(Exact name of registrant as specified in its charter)
New Jersey 1-10432 22-2429994
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(State or other (Commission (IRS Employer
jurisdiction File Number) Identification
of incorporation) Number)
Meridian Center II
4 Industrial Way West
Eatontown, New Jersey 07724
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(Address of principal executive office, including zip code)
Registrant's telephone number, including area code: (908) 389-1182
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
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Roberts Pharmaceutical Corporation (the "Company") has announced that it
has completed private placements of $105 million of 5% Convertible Preferred
Stock, $.10 par value (the "5% Preferred Stock"), and $9.9 million of Common
Stock, $.01 par value (the "Common Stock"). A description of each of the
private placement transactions (the "Private Placements") is set forth below.
PREFERRED STOCK PLACEMENT
Pursuant to the terms of the several Preferred Stock Investment Agreements,
each dated as of August 29, 1996 (collectively, the "Preferred Stock
Agreement"), the Company issued and sold in a private placement to certain
accredited investors for $25.00 per share an aggregate of 4,200,000 restricted
shares of a newly-established series of preferred stock, designated as 5%
Convertible Preferred Stock, resulting in gross aggregate proceeds to the
Company of $105 million (the "Preferred Stock Placement"). Prior to this
issuance, the Company had no shares of preferred stock outstanding.
Each share of 5% Preferred Stock is entitled to receive dividends, payable
quarterly, at the rate of 5% per annum in preference to any payment made on any
other shares of capital stock of the Company. Any dividend payable commencing
more than 90 days after the date of issuance of the 5% Preferred Stock may be
paid, at the option of the Company, either (i) in cash or (ii) upon proper
notice, in additional shares of 5% Preferred Stock, valued at $25 per share, if
the Common Stock issuable upon conversion of such shares has been registered for
resale under the Securities Act of 1933, as amended (the "Securities Act").
Each share of 5% Preferred Stock is also entitled to a liquidation preference of
$25.00 per share, plus any accrued but unpaid dividends (the "Liquidation
Preference"), in preference to any other class or series of capital stock of the
Company. A consolidation or merger of the Company or a sale of all or
substantially all of the assets of the Company may, at the option of the holders
of the 5% Preferred Stock, be deemed a liquidation and dissolution of the
Company. Except as otherwise provided by applicable law, holders of shares of
5% Preferred Stock have no voting rights.
At any time after the earlier of (i) the date at which a registration
statement registering the shares issuable upon the conversion of the 5%
Preferred Stock under the Securities Act is declared effective and shareholder
approval of a proposal to approve the issuance of the full number of shares of
Common Stock to which holders of the 5% Preferred Stock are entitled upon the
conversion of the 5% Preferred Stock (the "Proposal") has been obtained, or (ii)
the close of business on the 91st day following the original issuance of the 5%
Preferred Stock (November 28, 1996), each share of 5% Preferred Stock shall be
convertible, at the option of the holder
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thereof, into shares of Common Stock. The number of shares of Common Stock
issuable upon conversion of the 5% Preferred Stock will equal the Liquidation
Preference of the shares being converted divided by the then-effective
"Conversion Price" applicable to the Common Stock. The Conversion Price, as of
any date, shall be 90% of the lowest trade price of the Common Stock as reported
by the Nasdaq National Market during a specified period of trading days (the
"Measurement Period") immediately preceding such date. For the first 120 days
following the original issuance of the 5% Preferred Stock, the Measurement
Period is 5 trading days. The Measurement Period increases by one trading day
for each 30 day period thereafter, up to a maximum of 13 trading days. The
Conversion Price may not be greater than 115% of the average of the means
between the closing bid and ask prices (as reported by the Nasdaq National
Market) for each trading day during the 90 day period following the date of the
original issuance of the 5% Preferred Stock (the "Conversion Cap"). The
Conversion Price is at all times also subject to customary adjustments for
events such as stock splits, stock dividends, consolidations and
reclassifications affecting the Common Stock.
The Company at its option may cause all outstanding shares of the 5%
Preferred Stock to be converted into Common Stock at any time beginning on
August 29, 1997 at a Conversion Price determined in accordance with the
provisions described above; however, the Company may not exercise its right of
conversion unless (i) the closing price of the Common Stock as reported by the
Nasdaq National Market (or such other principal market on which the Common Stock
is then traded) for the 20 consecutive trading days prior to the date the notice
of conversion is mailed has not on any day been less than 120% of the Conversion
Cap, and (ii) the shares issuable upon conversion of the 5% Preferred Stock are
registered for resale under the Securities Act under a registration statement
which became effective not more than 90 days after the date of issuance of the
5% Preferred Stock, and a current prospectus is available for delivery on the
date of conversion.
On August 29, 1998, all then outstanding shares of 5% Preferred Stock will
be automatically converted into Common Stock at the Conversion Price then in
effect.
The rules of the National Association of Securities Dealers, Inc. ("NASD")
provide that shareholder approval must be obtained in connection with a
transaction other than a public offering involving the sale or issuance of
common stock (or securities convertible into or exercisable for common stock)
equal to 20% or more of the voting power outstanding before the issuance for
less than the greater of the book or market value of the stock (the "NASD
Rule"). The number of shares of Common Stock issuable upon conversion of the
Preferred Stock depends on the Conversion Price in effect at the time of the
conversion. As a result, it is not possible to determine at this time the
number of shares of Common Stock issuable upon conversion of the 5% Preferred
Stock. The Company has agreed to use its best efforts to hold a shareholders
meeting to obtain any shareholder approval required to allow the full issuance
of Common Stock
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upon conversion of the 5% Preferred Stock. The Company intends to hold a
special meeting (the "Special Meeting") of its shareholders in the near term at
which shareholders will be asked to vote on a proposal to approve the issuance
to the holders of the 5% Preferred Stock of the full number of shares of Common
Stock to which such holders are entitled upon conversion (the "Proposal") and a
proposal to approve an amendment to the Company's Amended and Restated
Certificate of Incorporation which would increase the number of authorized
shares of Common Stock. Unless shareholder approval of the Proposal is
obtained, the Company will only be permitted to issue up to approximately
3,117,529 shares of Common Stock upon conversion of the 5% Preferred Stock and
the exercise of warrants issued in connection with the Private Placements.
If further issuances of shares of Common Stock upon conversion of the 5%
Preferred Stock or exercise of warrants issued in connection with the Private
Placements would constitute a breach of the Company's obligations under any
applicable agreements with the NASD or the Nasdaq National Market, or the rules
of such organizations, then for so long as such limitation shall continue to be
applicable and any shares of 5% Preferred Stock are submitted for conversion,
the Company, subject to its obligation to make "Special Redemptions" as
described below, will be obliged to redeem any shares of 5% Preferred Stock that
are submitted for conversion at a price equal to the greater of 111.11% of the
Liquidation Preference of such shares or the current value of the Common Stock
to which holders of such shares would otherwise be entitled to receive upon
conversion. Each redemption of 5% Preferred Stock, other than a "Special
Redemption" as described below, must be made no later than two business days
following the surrender of certificates representing the shares being converted.
Any delay in the payment of the redemption amount will cause the redemption
amount to accrue interest at the rate of one-tenth of one percent (0.1%) per day
until paid.
If shareholder approval of the Proposal is not obtained by November 27,
1996, the Company will be required to redeem (a "Special Redemption") at a
"Special Redemption Price" equal to 111.11% of the Liquidation Preference of the
shares being redeemed, a number of shares of 5% Preferred Stock determined by
dividing $75,000,000 (plus any earnings accumulated thereon from August 29, 1996
until the date of redemption) divided by the Special Redemption Price. The
Special Redemption of 5% Preferred Stock must be completed on November 28, 1996.
Any delay in the payment of the redemption amount will cause the redemption
amount to accrue interest at the rate of one-tenth of one percent (0.1%) per day
until paid. Pursuant to the terms of the Preferred Stock Agreement, the Company
has deposited $75 million (the "Redemption Funds") in a special redemption
account (the "Redemption Account") with Merrill Lynch Trust Company, as
redemption agent (the "Redemption Agent"), under instructions requiring the
Redemption Agent to use the Redemption Funds to pay the Special Redemption Price
if the Company's shareholders have not approved the issuance to the holders of
the 5% Preferred Stock of the full number of shares of Common Stock to which
such holders are entitled upon conversion by November 27, 1996. The Company has
granted a security interest in the
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Redemption Funds to the Preferred Stock Investors to secure its obligation to
pay the Special Redemption Price.
Five Directors of the Company have agreed to vote all shares of Common
Stock owned by them in favor of the Proposal and the proposal to increase the
number of authorized shares of Common Stock, and each of such Directors has
granted a proxy authorizing the purchasers of the 5% Preferred Stock to vote
such Director's shares in the event that the Director is not present at the
Special Meeting or has not previously submitted a written proxy approving such
proposals. Such Directors collectively owned shares representing approximately
9% of the Company's outstanding Common Stock as of September 12, 1996.
Yamanouchi Pharmaceutical Corp., the parent company of Yamanouchi Group
Holdings, Inc. which owned 5,048,500 shares of Common Stock as of September 12,
1996 (representing approximately 26.3% of the Company's outstanding Common Stock
as of such date), has indicated in writing to the Company that all of such
shares will be voted in favor of the Proposal.
The Company has agreed to register the shares of Common Stock issuable upon
conversion of the 5% Preferred Stock for resale under the Securities Act no
later than 90 days after original issuance. Any delay in such registration will
require that the Company pay to each purchaser of the 5% Preferred Stock, in
cash, 3% of the total purchase price of the Convertible Preferred Stock for each
30-day period of the delay (pro rated for any shorter period). In addition, any
suspension of the effectiveness of the registration statement during 1996 or
1997 will require that the Company pay a similar 3% penalty to the purchasers of
the 5% Preferred Stock who continue to hold such shares (or the shares of Common
Stock issued upon conversion of the 5% Preferred Stock) for each 30 days of
suspension (pro rated for any shorter period); provided, however, that no such
penalty will be imposed in 1997 unless the aggregate period of suspensions in
such year exceeds 30 days.
Each purchaser of the 5% Preferred Stock has agreed that following the
conversion of the 5% Preferred Stock into Common Stock, such purchaser will not
on any trading day offer or sell publicly on a net basis more than the greatest
of (i) 20% of the average trading volume for the Common Stock for the five
consecutive trading days immediately preceding such date as reported by the
Nasdaq National Market, (ii) 20,000 shares, and (iii) 10% of the trading volume
for the Common Stock on such date.
The Company has agreed that except in a business combination, or under
existing employee stock incentive or purchase plans, the Company will not effect
any public sale or distribution of Common Stock or any securities exercisable
for or convertible into Common Stock during the 14 days prior to, and during the
90 days immediately following the effective date of the registration statement
filed on behalf of the purchasers of the 5% Preferred Stock under the
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Securities Act; provided, however, that the Company may effect such public sale
or distribution during the 90 days immediately following the effective date of
such registration statement if such sale or distribution of securities is at a
price equal to or greater than 120% of the Conversion Cap.
COMMON STOCK PLACEMENT
Pursuant to the terms of the several Stock Purchase Agreements, each dated
as of July 17, 1996 (collectively, the "Common Stock Agreement"), the Company
issued and sold in a private placement to certain investment funds 600,000
shares of restricted Common Stock at an issue price of $16.65 per share (the
"Common Stock Purchase Price") resulting in aggregate gross proceeds to the
Company of $9,990,000 (the "Common Stock Placement"). The last reported sales
price of the Common Stock on the Nasdaq National Market on July 17, 1996 was
$16.75 per share.
Subject to certain exceptions, if, during the six-month period following
the closing of such transaction, the Company sells any shares of Common Stock
for an issue price lower than the Common Stock Purchase Price, the purchase
price per share of such Common Stock shall be adjusted downward to equal such
lower issue price. Any such adjustment would be effected by issuing additional
shares of Common Stock to the holders who purchased in the Common Stock
Placement. No adjustment will be required in the event of sales of shares of
Common Stock by the Company (i) upon the conversion or exercise of any
convertible securities, options or warrants outstanding on the date of the
Common Stock Agreement, (ii) pursuant to the provisions of certain shareholder
approved employee benefit or incentive plans, (iii) to an entity which is a
strategic investor in the Company or an investor which is in a related industry,
as opposed to a financial investor, (iv) to the owners of another entity
acquired by the Company or (v) upon the conversion of the 5% Preferred Stock or
issuance of 5% Preferred Stock upon the exercise of warrants issued in
connection with the Preferred Stock Placement. As of the date of this Report,
no adjustment has been made in the Common Stock Purchase Price. Whether or not
any adjustment will be necessary in the future will depend upon factors which
cannot be predicted by the Company at this time including, among others, the
future market price of the Common Stock.
The Company has agreed to register the shares of Common Stock issued
pursuant to the Common Stock Agreement (including any shares issued upon any
future adjustment in the Common Stock Purchase Price) for resale under the
Securities Act of 1933, as amended (the "Securities Act"), and to use its best
efforts to cause such registration to become effective no later than November
20, 1996.
The placement agent for the Private Placements described above was Cappello
& Laffer Capital Corp. (the "Placement Agent"). In consideration for placing
such securities, the Placement Agent received aggregate cash compensation of 5%
of the gross proceeds received by
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the Company and the reimbursement of certain expenses. Further, the Company
also issued to the Placement Agent warrants to acquire an aggregate of 15,000
shares of Common Stock for a purchase price of $16.65 per share (the "Common
Stock Warrants") which expire in July 1999 and warrants to acquire 420,000
shares of 5% Preferred Stock for a purchase price of $25.00 per share (the
"Preferred Stock Warrants") which expire in August 1998. The Company is obliged
to register the shares of Common Stock issuable upon exercise of the Common
Stock Warrants and upon conversion of the 5% Preferred Stock issuable upon
exercise of the Preferred Stock Warrants for resale under the Securities Act.
The Company estimates that the aggregate net proceeds received by it from
the issuance of shares of Common Stock and 5% Preferred Stock in the Private
Placements was approximately $108 million (after cash fees to the Placement
Agent and estimated transaction expenses). Assuming shareholder approval of the
Proposal is obtained, the Company intends to use such funds primarily for
potential acquisitions of new products; continued development of existing
pipeline products; repayment of debt incurred in connection with prior product
acquisitions and capital expenditures. As of the date of this Report, the
Company has no agreement regarding any product acquisition and there can be no
assurance that any such opportunity will be identified or realized.
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.
Roberts Pharmaceutical Corporation
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(Registrant)
By: /s/ Anthony A. Rascio
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Anthony A. Rascio
Vice President
Date: September 13, 1996
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