SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: August 9, 2000
(Date of earliest event reported)
WPI Group, Inc.
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(Exact name of registrant as specified in its charter)
New Hampshire 0-19717 02-0218767
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1155 Elm Street Manchester, New Hampshire 03101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (603) 627-3500
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N/A
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(Former name or former address, if changed since last report)
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Item 1. Changes In Control of Registrant
On July 31, 2000, WPI Group Inc. ("WPI Group") and its
subsidiaries entered into a Convertible Note Agreement (the "Note
Agreement") with Sunrise Capital Partners, L.P. ("Sunrise").
Pursuant to the Note Agreement, Sunrise and certain other
participants (which include certain members of WPI Group's
management and some members of the Allard-Nazarian Group) will
invest up to $24.1 million in Convertible Subordinated Notes (the
"Notes"), common stock purchase warrants (the "Warrants") and
common stock of WPI Group. Sunrise and the other participants
will purchase the Notes, Warrants and common stock from the
Company in three series of approximately $14.1 million, $5
million and up to $5 million. WPI Group entered into the
financing arrangement in order to raise capital to help meet its
short-and-long term liquidity needs.
The Notes, which will mature three years from the date of
issuance, will bear interest at a rate of 10.75%. At the option
of WPI Group, interest on the Notes will be payable in additional
Notes. The Notes will be convertible at the election of the
holder into WPI Group common stock at a price of $1.75 per share.
If WPI Group's common stock is listed on the New York Stock
Exchange or the Nasdaq National Market and trades above $4.50 for
45 consecutive trading days, and certain daily trading volume
levels in the stock are maintained, WPI Group may require the
holders to convert the Notes into common stock on the stated
terms. In conjunction with the purchase of each series of Notes,
Sunrise and the other participants will purchase Warrants
representing the right to purchase 20% of the number of shares of
common stock which would be issuable upon conversion of each such
series of Notes. The Warrants, which will be exercisable at any
time at the option of the holder, will have an exercise price of
$1.75 per share.
On August 9, 2000, Sunrise and the other participants
purchased the first series of Notes, in aggregate principal
amount of approximately $14.1 million, along with 1.8 million
shares of WPI Group common stock and Warrants to purchase
approximately 1.6 million shares of WPI Group common stock.
Following this sale, Sunrise owned approximately 50% of the
outstanding voting shares of WPI Group on a fully-diluted basis
(assuming exercise of the Warrants and the conversion of the
Notes).
WPI Group's shareholders will need to approve an amendment
to WPI Group's Articles of Incorporation to increase the number
of authorized shares of common stock before additional Notes and
Warrants may be issued. In the event the amendment is approved
and additional Notes and Warrants are issued in accordance with
the terms of the Note Agreement, Sunrise would beneficially own
approximately 56% of the outstanding voting shares of WPI Group
on a fully-diluted basis (assuming exercise of all the Warrants
and conversion of all the Notes).
WPI Group will use the proceeds from the sale of the Notes,
common stock and Warrants to refinance, in part, amounts owed
under its existing senior credit facility with certain lenders,
including Fleet Bank-NH. The proceeds will also be used to repay
amounts owed to certain affiliates of Allard-Nazarian Group, Inc.
under a series of promissory notes dated August 3, 1998 and to
finance WPI Group's operations.
The funds invested by Sunrise were drawn from funds held for
investment. Sunrise Capital Partners, L.P. is a private
investment fund with over $200 million in committed capital
focusing on the acquisition of controlling interests in middle
market companies.
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Pursuant to the Note Agreement, for so long as any Notes
remain outstanding, WPI Group has agreed to nominate for election
to the Company's Board of Directors at least four nominees
designated by Sunrise.
Prior to the consummation of the financing transaction,
Stephen Carlotti resigned from the Board of Directors of the
Company. In connection with the financing transaction, four
additional Board members, Michael Foster, Irving Gutin, James
Risher and Steven Shulman, also resigned from the Board of
Directors.
Four nominees of Sunrise were elected to WPI Group's board
of directors in connection with the financing transaction: David
A. Presier, Managing Partner of Sunrise, and Joseph A. Julian,
Jr., Michael D. Stewart and Irwin N. Gold, each a principal of
Sunrise. WPI Group President and CEO John Allard was elected to
the additional post of Chairman of the Board following the
appointment of the Sunrise designees.
Participating with Sunrise in the $14.1 first series on
August 9, 2000 were The John R. Allard Revocable Trust of 1993,
Lisa A. Dibrigida, Kim A. Socha, The Michael E. Allard Revocable
Trust of 1994, Gerald R. Allard, The David and Angella Nazarian
Family Trust, The Samy Nazarian Trust, Younes Nazarian and
Richard A. Beyer. Collectively, these participating interests
represent approximately 11% of the outstanding voting shares of
WPI Group on a fully-diluted basis (assuming exercise of the
Warrants and the conversion of the Notes) following the sale on
August 9, 2000.
A copy of the Note Agreement is attached hereto as Exhibit
2.1 and incorporated herein by reference. The foregoing
description is qualified in its entirely by reference to the full
text of the Note Agreement. A copy of the press release
announcing the transaction is attached hereto as Exhibit 99.1 and
is also incorporated herein by reference.
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ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number Description
2.1 Convertible Note Agreement
99.1 Press Release Issued by WPI
Group, Inc. dated
August 9, 2000
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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.
Dated: August 16,2000 WPI GROUP, INC.
By: /s/ John R. Allard
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Name: John R. Allard
Title: President and Chief
Executive Officer
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EXHIBIT INDEX
Exhibit
Number Description Page
2.1 Convertible Note Agreement
99.1 Press Release Issued by WPI
Group, Inc. dated August 9,
2000
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