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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):
November 8, 1996 (November 5, 1996)
Sport Supply Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-10704 75-2241783
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1901 Diplomat Drive, Farmers Branch, Texas 75234
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(214) 484-9484
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On October 11, 1996, Emerson Radio Corp. ("Emerson"), a beneficial owner of
approximately 670,000 shares of the Common Stock of Sport Supply Group, Inc.
("SSG"), delivered a written proposal to the Board of Directors of SSG, in
which Emerson proposed to acquire a controlling interest in SSG (the "Original
Proposal"). Under the terms of the Original Proposal, Emerson proposed to
purchase from SSG an additional 1,333,333 shares of newly issued common stock,
$.01 par value per share (the "Common Stock") of SSG at a purchase price of
$6.00 per share (for an aggregate consideration of approximately $8 million)
and proposed to purchase, for an aggregate consideration of $800, 5-year
warrants to acquire an additional 1,333,333 shares of Common Stock at an
exercise price of $6.50 per share, subject to adjustments. Had SSG accepted
the Original Proposal, upon acquisition of such shares, but prior to the
exercise of any of such warrants, Emerson would have owned approximately 25% of
the outstanding shares of the Common Stock. Assuming exercise of all such
warrants, Emerson would have owned approximately 35% of the outstanding shares
of the Common Stock. Emerson also requested registration rights on the resale
of the shares of Common Stock it would have owned, as well as on the exercise
and resale of the shares of Common Stock it could have acquired under the
warrants. In addition, Emerson proposed to arrange for foreign trade credit
financing of $2 million for the benefit of SSG to supplement existing credit
facilities.
As part of Emerson's Original Proposal, SSG was required to cause a
majority of the members of SSG's Board of Directors to consist of Emerson's
designees. Emerson's Original Proposal contemplated that SSG's current
Chairman of the Board and Chief Executive Officer would have resigned and been
retained by SSG as a consultant, on terms to have been negotiated. Emerson
would have caused SSG to comply with its current contractual obligations to
such officer upon the change of control. All other members of senior
management would have been retained. The Original Proposal was subject to
various conditions, including negotiating and executing definitive
documentation.
The foregoing description of the Original Proposal is qualified in its
entirety by reference to the Original Proposal. The Original Proposal is
attached as an Exhibit to a Form 8-K that was filed by SSG with the Securities
and Exchange Commission on October 22, 1996.
On November 5, 1996, Emerson delivered to SSG a revised proposal (the
"Revised Proposal"). Under the terms of the Revised Proposal, Emerson would
purchase from SSG 1,714,286 shares of newly issued Common Stock of SSG at a
purchase price of $7.00 per share (for an aggregate consideration of
approximately $12 million cash). In addition, under the Revised Proposal,
Emerson would purchase, for an aggregate consideration of $600, 5-year warrants
to acquire an additional 1,000,000 shares of Common Stock at an exercise price
of $7.50 per share, subject to adjustments. Based upon the number of shares of
Common Stock outstanding on the date hereof and assuming the Revised Proposal
is accepted in its current form, upon acquisition of such shares (but prior to
the exercise of any of such warrants) Emerson would own approximately 28% of
the outstanding shares of Common Stock. Emerson would own approximately 35%
of the outstanding shares of Common Stock upon exercise of all the warrants.
Under the Revised Proposal, Emerson clarified its position with respect to
language in the Original Proposal that appeared to require SSG's current
Chairman of the Board and Chief Executive Officer to resign as an employee,
officer, and director of SSG and each of its subsidiaries prior to closing.
The Revised Proposal clarifies Emerson's intention to cause SSG to honor its
contractual commitments to such officer, without any requirement that such
officer resign or enter into a consulting agreement or non-competition
agreement prior to closing. Emerson indicated its intent to pursue a revised
arrangement with such officer, but the finalization of such arrangement would
not be a condition to closing.
Finally, the Revised Proposal contemplates that Emerson be paid a
termination fee of $750,000, rather than $1,000,000 as contemplated by the
Original Proposal, if a transaction with Emerson is not consummated for any
reason except for the willful failure to close by Emerson. Except as modified
in the Revised Proposal, the terms of the Original Proposal remain unchanged,
except as may be modified in negotiation and set forth in definitive
documentation executed by Emerson and SSG. A Special Committee of Directors
formed by SSG's Board of Directors is reviewing the Revised Proposal and has
arranged to meet with representatives from Emerson.
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Any description or disclosure made in this Form 8-K with respect to the
Revised Proposal is qualified in its entirety by reference to the Revised
Proposal. The Revised Proposal is attached hereto as an Exhibit and is
incorporated herein by reference.
On a matter unrelated to Emerson's proposals, effective October 30, 1996,
SSG's Principal Accounting and Financial Officer resigned from SSG. SSG is
currently seeking to hire a Chief Financial Officer.
(a) Exhibits
Exhibits Index:
<TABLE>
<CAPTION>
DESCRIPTION OF EXHIBIT
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<S> <C>
5(a) Letter to Sport Supply Group, Inc.
from Emerson Radio Corp. dated
November 5, 1996
</TABLE>
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SIGNATURE
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.
Sport Supply Group, Inc.
Date: November 8, 1996 By: /s/ Michael J. Blumenfeld
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Michael J. Blumenfeld
Chairman of the Board and
Chief Executive Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
5(a) Letter to Sport Supply Group, Inc.
from Emerson Radio Corp. dated
November 5, 1996
</TABLE>
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EXHIBIT 5(a)
November 5, 1996
Mr. Terry Babilla
Mr. Bob Philip
Mr. Bill Watkins
Sport Supply Group, Inc.
1901 Diplomat
Farmers Branch, Texas 75234
RE: REVISED EMERSON RADIO CORP. ("EMERSON") ACQUISITION
PROPOSAL FOR SPORT SUPPLY GROUP, INC. ("SSG")
Gentlemen:
We are in receipt of correspondence dated November 1, 1996 and
November 4, 1996 addressed to our counsel, Jeff Davis, from Terry Babilla,
advising Emerson that the SSG Board of Directors has designated a Special
Committee to enter into substantive negotiations with Emerson regarding its
Proposal of October 11, 1996 as amended and clarified hereby. Emerson
appreciates the opportunity to enter into substantive discussions with the
Special Committee and to conclude a transaction as promptly as possible. It is
our intention to follow the schedule suggested by LaSalle Business Credit, Inc.
which anticipated that a closing could occur within two business weeks after
Emerson and SSG had entered into a binding agreement. We believe that the
two-week period will allow us to complete negotiations and documentation with
LaSalle and/or Congress Financial Corporation and will permit SSG to complete
its documentation (e.g., fairness opinions) and receive any necessary third
party approvals.
Accordingly, in the interest of prompt consummation of a
recapitalization and refinancing transaction for SSG and subject to our
understanding, as set forth above, of the role and authority of the Special
Committee, Emerson hereby amends and clarifies its October 11, 1996 Proposal,
as follows:
1. Emerson, or a direct or indirect subsidiary of Emerson ("the
Purchaser"), will purchase directly from SSG 1,714,286 shares of newly
issued common stock (the "Stock") of SSG at a purchase price of $7.00
per share, for aggregate consideration of approximately $12 million.
2. The Purchaser will purchase from SSG, for $600, warrants (the
"Warrants") to purchase an aggregate of 1,000,000 shares of Stock at
an exercise price of $7.50 per share, subject to customary
anti-dilution adjustments. The Warrants shall have a term of five
years and have such other terms as shall be acceptable to Emerson.
3. Emerson will not require Michael Blumenfeld to resign as an
employee, officer, and/or director of SSG and each of its subsidiaries
prior to closing. Emerson will cause SSG to honor its contractual
commitments to Mr. Blumenfeld. Mr. Blumenfeld will not be required,
nor shall it be a condition to the transaction that he be required, to
enter into any consulting agreement or non-competition agreement prior
to closing. The foregoing should not be construed as an indication
that Emerson's position with respect to Mr. Blumenfeld has changed
from its initial Proposal. Rather, it is Emerson's intention to
clarify that the resolution of these matters outside the scope of
pre-existing agreements is not a precondition to closing of the
financing transaction, and is not an impediment to the prompt and
necessary recapitalization of SSG.
4. A termination fee shall be payable to Emerson by SSG equal to
$750,000 if a transaction with Emerson is not consummated for any
reason except for the willful failure to close by Emerson.
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Except as modified or clarified as specifically set forth above, the
terms of the October 11, 1996 Proposal shall remain unchanged, except as may be
modified in negotiation and set forth in definitive documentation executed by
Emerson and SSG. We hope that the foregoing revisions to our Proposal assist
the Special Committee in bringing this matter to a rapid resolution. We look
forward to meeting with you in Memphis.
Very truly yours,
/s/ Eugene I. Davis
Eugene I. Davis
President
EID/sw
cc: G. Jurick
J. Walker
J. Davis
