SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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): September 26, 1997
THE KRYSTAL COMPANY
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(Exact name of registrant as specified in its charter)
Tennessee 0-20040 62-0264140
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(State of (Commission File No.) (IRS Employer
incorporation) Identification No.)
One Union Square, Chattanooga, Tennessee 37402
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(Address of principal executive offices, including zip code)
(423) 757-1550
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(Registrant's telephone number, including area code)
Item 1. Changes in Control of Registrant.
On September 26, 1997, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement") by and among The Krystal Company (the "Company"),
Port Royal Holdings, Inc. ("Port Royal") and TKC Acquisition Corp.
("Merger Sub") dated July 3, 1997, the Merger Sub was merged with and into
the Company with the Company as the surviving corporation (the "Merger"). As
a result of the Merger, each share of the Company's issued and outstanding
stock prior to the Merger was converted into the right to receive $14.50 in
cash, or $108,403,276 in the aggregate, and the Company became a 100%
wholly-owned subsidiary of Port Royal. Prior to the Merger, the Company's
largest shareholder was R.B. Davenport III, who was the beneficial owner of
49.9% of the Company's issued and outstanding shares of common stock.
On July 3, 1997, Port Royal entered into a Stock Option Agreement with
certain of the Company's shareholders ("Supporting Shareholders"), representing
approximately 53% of the then outstanding common stock, pursuant to which,
among other things, the Supporting Shareholders agreed to vote in favor of the
consummation of the Merger.
The sources of funds for the Merger were derived from the private
placement of Port Royal common stock for a total consideration of $35 million,
the sale of the Company's 10.25% senior notes due 2007 for a total
consideration of $100 million, and bank borrowings under a revolving credit
facility of $25 million with SunTrust Bank, Atlanta, NA as agent.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
No. Description
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2 Agreement and Plan of Merger dated July 3, 1997
by and among Port Royal Holdings, Inc., TKC
Acquisition Corp. and the Company.(1)
10 Stock Option Agreement dated July 3, 1997 by and
among Port Royal Holdings, Inc., R.B.
Davenport III, R.B. Davenport IV, First
Tennessee Bank National Association, Trustee
u/a/w Mary M. Purse, dated June 18, 1963,
Gordon L. Davenport, Jr. and First Tennessee
Bank National Association, Trustees u/a/w
Mary M. Purse, dated December 31, 1965.(1)
99 Press Release of the Company dated
September 26, 1997.
[FN]
(1)Incorporated by reference from the Company's definitive proxy statement
filed on Schedule 14A with the Securities and Exchange Commission on
September 15, 1997.
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.
September 26, 1997 THE KRYSTAL COMPANY
By:/s/Philip H. Sanford
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Philip H. Sanford
Chairman and Chief Executive Officer
THE KRYSTAL COMPANY ACQUIRED
Chattanooga, Tennessee -- September 26, 1997 -- The Krystal Company
(NASDAQ:KRYS) announced today that its shareholders at the Special Meeting
of Shareholders have adopted and approved a merger agreement with Port Royal
Holdings, Inc. pursuant to which a wholly-owned subsidiary of Port Royal
Holdings, Inc. will merge with Krystal, and shareholders of Krystal will
receive a net price of $14.50 per share cash.
The board of directors of Krystal, relying upon the advice of The
Robinson-Humphrey Company, Inc. that such transaction is fair from a financial
point of view to Krystal's shareholders, had previously unanimously approved
the transaction and recommended to Krystal's shareholders that the merger be
approved. A Letter of Transmittal for submitting shares will be mailed to
shareholders as soon as possible next week.
For further information:
Camden B. Scearce
(423) 757-1510
