UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
DISCOVERY ZONE, INC.
(Name of Issuer)
COMMON STOCK, $0.01 par value per share
(Title of Class of Securities)
25468B 10 7
(CUSIP Number)
Michael E. Heisley, Sr.
GMC Acquisition, Inc.
5600 Three First National Plaza, Chicago, Illinois 60602 (312) 419-8220
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 20, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
CUSIP No. 25468B 10 7
_________________________________________________________________
1 NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MICHAEL E. HEISLEY, SR.
_________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
_________________________________________________________________
3 SEC USE ONLY
_________________________________________________________________
4 SOURCE OF FUNDS*
WC
_________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
_________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
_________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF SHARES 5,500,000
BENEFICIALLY _______________________________________________________
OWNED BY 8 SHARED VOTING POWER
EACH -0-
REPORTING _______________________________________________________
PERSON 9 SOLE DISPOSITIVE POWER
WITH 5,500,000
_______________________________________________________
10 SHARED DISPOSITIVE POWER
-0-
_________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,500,000
_________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
_________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.5%
_________________________________________________________________
14 TYPE OF REPORTING PERSON*
IN
_________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SCHEDULE 13D
CUSIP No. 25468B 10 7
_________________________________________________________________
1 NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GMC ACQUISITION, INC.
_________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
_________________________________________________________________
3 SEC USE ONLY
_________________________________________________________________
4 SOURCE OF FUNDS*
WC
_________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
_________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEVADA
_________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF SHARES 5,500,000
BENEFICIALLY _______________________________________________________
OWNED BY 8 SHARED VOTING POWER
EACH -0-
REPORTING _______________________________________________________
PERSON 9 SOLE DISPOSITIVE POWER
WITH 5,500,000
_______________________________________________________
10 SHARED DISPOSITIVE POWER
-0-
_________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,500,000
_________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
_________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.5%
_________________________________________________________________
14 TYPE OF REPORTING PERSON*
CO
_________________________________________________________________
Schedule 13D
of
Michael E. Heisley, Sr.
and
GMC Acquisition, Inc.
with respect to the
Common Stock, par value $0.01 per share
of
Discovery Zone, Inc.
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the Common Stock, par value $0.01 per
share (the "Common Stock"), of Discovery Zone, Inc., a Delaware corporation (the
"Company"). The address of the principal executive offices of the Company is
205 North Michigan Avenue, Suite 3400, Chicago, Illinois 60601.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is filed on behalf of (i) GMC Acquisition, Inc.
("GMC") and (ii) Michael E. Heisley ("Heisley"). Heisley is the sole
stockholder, director and executive officer of GMC. The business address for
Heisley is 5600 Three First National Plaza, Chicago, Illinois, 60602. Heisley's
title and principal occupation is to serve as the Chairman, President and Chief
Executive Officer of Pettibone Corporation, principally a manufacturer and
seller of heavy industrial equipment. During the last 5 years, Heisley has not
(i) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws. Heisley is a citizen of
the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On December 20, 1996, GMC entered into a Stock Purchase Agreement,
attached hereto as Exhibit 1 (the "Stock Purchase Agreement"), with McDonald's
Corporation ("McDonald's") whereby GMC purchased from McDonald's a total of
5,500,000 shares of Common Stock for $1,000 (the "Stock Purchase"). GMC used
its working capital to fund the Stock Purchase.
ITEM 4. PURPOSE OF TRANSACTION
Except as provided herein, GMC and Heisley have no current plans with
respect to the disposition of the shares of Common Stock or the acquisition of
additional shares of Common Stock. However, they may dispose of all or a
portion of the shares of Common Stock held by them, if they determine at any
time that such disposition may be made at prices and on terms and conditions
they believe to be favorable, and they may acquire additional shares of Common
Stock if they determine at any time that such shares are available at prices and
on terms and conditions they believe to be favorable.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) - (b) GMC (and Heisley, indirectly through GMC) owns 5,500,000
shares of Common Stock. Such shares represent 9.5% of the issued and
outstanding shares of Common Stock (based on shares of Common Stock reported to
be issued and outstanding on March 29, 1996). Heisley has sole voting and
dispositive power with respect to all of such Shares.
(c) GMC and Heisley have not effected any transaction in the Common
Stock within the 60 day period immediately prior to the event requiring the
filing of this Schedule 13D.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Except as described in Items 2, 3 and 4 above, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) among GMC and
Heisley, or between them and any person with respect to any securities of the
Company, including but not limited to the transfer or voting of any of the
securities, finder's fees, joint ventures, loans or option arrangements, put or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Stock Purchase Agreement dated December 20, 1996 between GMC
Acquisition, Inc. and McDonald's.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: December 30, 1996 GMC ACQUISITION, INC.
By: /s/ Michael E. Heisley, Sr.
---------------------------
Name: Michael E. Heisley, Sr.
Title: Chief Executive Officer
/s/ Michael E. Heisley, Sr.
--------------------------------
Michael E. Heisley, Sr.
EXHIBIT 1
Stock Purchase Agreement dated as of December 20, 1996 by and between
McDonald's Corporation ("McDonald's) and GMC Acquisition, Inc. ("Purchaser").
WHEREAS, McDonald's is the owner of 5,500,000 shares of Discovery
Zone, Inc. ("Discovery Zone") common stock (the "Shares");
WHEREAS, McDonald's wishes to sell and Purchaser wishes to purchase
the Shares:
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. On the basis of the representations, acknowledgements and
agreements herein contained and subject to the terms and conditions herein set
forth, McDonald's agrees to sell to the Purchaser and Purchaser agrees to
purchase from McDonald's the Shares free and clear of any liens, claims or
encumbrances (except as otherwise provided herein), for a purchase price
previously agreed to by the parties. McDonald's shall deliver the stock
certificate or certificates representing the Shares to Purchaser on or before
December 31, 1996.
2. Purchaser acknowledges, represents and agrees that:
(i) it is an "accredited investor" within the meaning of
Rule 501(a)(1)(2) or (3) under the Securities Act of 1933 (the "Securities
Act"), an entity in which all of the equity owners are accredited investors
within the meaning of Rule 501(a)(1)(2) or (3) under the Securities Act or a
"qualified institutional buyer" within the meaning of Rule 144A of the
Securities Act;
(ii) it has received all financial and other information relating to
Discovery Zone and the Shares as it deemed necessary in connection with its
decision to purchase the Shares and that neither McDonald's nor any person
representing McDonald's has provided any financial or other information or made
any representation to it with respect to Discovery Zone upon which it is relying
in making its investment decision with respect to the Shares;
(iii) the Shares are being purchased for its own account for the
purpose of investment and not with a view to or for offer or sale in connection
with any distribution thereof;
(iv) the Shares may not be offered sold, transferred, pledged or
otherwise disposed of, unless it complies with all applicable federal and state
securities laws and regulations then in effect;
(v) it is aware that Discovery Zone has filed voluntary petitions for
bankruptcy relief under chapter 11, title 11, of the United Stats Code
("U.S.C.") and that any recovery in respect of the Shares will subject to a plan
of reorganization pursuant to 11 U.S.C. Section 1129 approved by the United
States Bankruptcy Court and that it must bear the economic risk of the entire
loss of its investment in the Shares and it has such knowledge and experience in
financial and business matters necessary to evaluate the merits and risks of
purchasing the Shares in such circumstances.
(vi) it has received a copy of the draft Joint Disclosure Statement
pursuant to 11 U.S.C. Section 1125 and First Amended Joint Plan of
Reorganization pursuant to 11 U.S.C. Section 1129 (collectively the "Joint
Plan") which has been proposed by the Debtors (as defined in the Joint Plan) and
Birch Holdings LLC;
(vii) such Joint Plan provides that the Shares are impaired under the
Joint Plan and shall be canceled, annulled and extinguished as of the Effective
Date (as defined in the Joint Plan) and that the holder of the Shares shall not
be entitled to receive or retain any property or interest in property on account
of such Shares under the Joint Plan;
(viii) if such Joint Plan (or other plan of reorganization with
similar language) were to be approved by the United States Bankruptcy Court, the
Shares shall be worthless;
(ix) it has received a copy of a Stipulation and Order Between
Debtors and McDonald's Corporation Providing For the Resolution, Settlement and
Compromise of Disputes And For Rent Deferrals and Allowance of Certain Claims
which was approved by the United States Bankruptcy Court for the District of
Delaware on November 18, 1996 (the "Stipulation") and it will not make any
objection to any of the terms and conditions of the Stipulation contained in any
plan of reorganization; and
(x) by this Stock Purchase Agreement, it is not purchasing from
McDonald's and McDonald's does not sell or otherwise transfer to it, any claims
rights or causes of action against any person(s) or entity (the "Claims")
arising out of or related to the circumstances of McDonald's acquisition of the
Shares or McDonald's retention of the Shares since the time that McDonald's
acquired them, including without limitation, Claims arising out of or related to
representations made to McDonald's in connection with McDonald's acquisition of
the Shares, provided, however, the Purchaser shall be entitled to receive any
distribution to equity holders under any plan of reorganization; but shall not
be entitled to any distribution to McDonald's as a result of McDonald's status
as a creditor of the Debtors.
3. This Stock Purchase Agreement contains the entire agreement of the
parties with regard to the subject matter hereof, and, except with respect to
the previously agreed purchase price supersedes any and all prior agreements and
understandings, oral or written, related hereto.
4. This Stock Purchase Agreement shall be interpreted and construed
under the laws of the State of Illinois.
McDonald's Corporation GMC Acquisition, Inc.
By: _________________________ By: __________________________
Its: Vice President Its: Vice President
