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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) July 31, 1998
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First Pacific Networks, Inc.
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(Exact name of registrant as specified in charter)
Delaware 0-20238 77-0174188
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
871 Fox Lane, San Jose, California 95131
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 943-7600
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(Former name or former address, if changed since last report)
This Current Report, including exhibits, contains 5 pages.
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The Exhibit Index is located on page 5.
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ITEM 5.
On February 10, 1997, the Company voluntarily filed for relief under
Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). The
petition was filed in the United States Bankruptcy Court for the Northern
District of California, San Jose Division ( the "Court" ) and was assigned case
number 97-51077ASW. The Company is operating as debtor-in-possession under the
Bankruptcy Code. The Company has had limited capital available for
reorganization and has been seeking a strategic relationship or capital infusion
for such purpose and currently has no funds available to meet its current or
future operating needs. Any trading of the Company's stock at this time should
be considered highly speculative.
The Company entered into a letter agreement on July 31, 1998 to sell
substantially all of the assets of the Company to American Sterling Corporation
(ASC), a privately held company. The letter agreement was subject to a
definitive purchase agreement and Court approval of bidding procedures. On
August 6, 1998 the Court issued an order approving bidding procedures (which are
on file with the Court) to be used in the event that any third party wishes to
submit a competitive bid or offer.
On August 10, 1998, the Company filed a motion with the Court seeking
approval of the sale of substantially all of the assets of the Company pursuant
to an Asset Purchase Agreement (the "Agreement") with ASC. The Agreement
provides, among other things, for the sale of substantially all of the Company's
assets in exchange for $292,300 in current cash consideration and assumption of
certain contractual obligations and other liabilities. In addition, ASC will pay
contingent future consideration equal to 3% of net sales, as defined in the
Agreement, for a five year period from the date of the Agreement or $5,000,000,
whichever occurs first. The Agreement is subject to ASC negotiating agreements
to its satisfaction with Entergy Enterprises, Inc. (claim filed for $7,000,000)
and Asset Recovery Group, LLC ($278,000 plus accrued interest pursuant a Loan
and Security Agreement dated January 15, 1998). The management of the Company
has been informed by ASC that it currently intends to tender employment offers
to four members of the Company's management in the event that their transaction
is approved by the Court. The Court hearing to review competitive bids, if any,
and to approve the sale of assets is currently scheduled for Wednesday August
26, 1998.
In the event that the transaction is approved by the Court (and is
ultimately consummated) it is unlikely that any material amounts, if any, will
be available for shareholders after payments for allowed creditor claims. The
Company currently believes that if any funds ever become available to
shareholders it most likely will be several years before such an event would
occur.
Bidding procedures are available from the Court and require, among other
things, that a competitive bid must be tendered in the specified manner no later
than Wednesday August 19, 1998. Bidding procedures may also be obtained from
the Company's bankruptcy counsel Kaufman & Logan at 415-392-6677.
As mentioned above, the Company is without funds to meet its current or
future obligations and absent this transaction or a successful competitive
overbid transaction, the Company believes it would have no alternative but to
convert the proceedings to a Chapter 7 liquidation of the Company.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statement of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits
None
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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.
FIRST PACIFIC NETWORKS, INC.
Date: August 14, 1998 By: /s/ Kenneth W. Schneider
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Kenneth W. Schneider
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No. Description
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Not Applicable
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